China’s Breakthrough in Chipmaking Signals Worrying Shift in Global Tech Leadership

The release of Huawei’s Mate 60 smartphone represented a breakthrough for China’s advanced chipmaking capabilities that has alarmed US officials. At the heart of the device is Huawei’s new Kirin 9000s processor, which is manufactured using 7nm production technology. This demonstrates that China is now only 4-5 years behind the most cutting-edge 3nm chips, rather than the 8-10 years that US export controls aimed to enforce. So how did Huawei and its domestic chip manufacturer, SMIC, pull this off? And what might it mean for the future of global technology leadership?

US Export Controls Fail to Keep China’s Chipmaking Technology Back

For years, the US has tried to restrict China’s access to the advanced semiconductor technologies needed to power leading-edge devices. Advanced lithography machines from ASML in the Netherlands have been banned from export to China. Huawei’s chip design unit HiSilicon previously relied on Taiwan’s TSMC to manufacture its cutting-edge designs. But US sanctions severed this relationship in 2020.

The intention was to hamper progress towards China’s goal of establishing a self-reliant and advanced domestic chip industry. But the Kirin 9000s suggests these export controls have failed. While it lacks the extreme scaling of 3nm chips from TSMC and Samsung, its 7nm transistors are still generations ahead of what US officials thought Chinese firms would be stuck with.

Key Questions Raised By China’s Advanced Chipmaking Progress

Huawei’s surprising progress with 7nm chipmaking raises several key questions about the future of this strategically important industry:

  • How exactly did Chinese firms manufacture advanced 7nm designs despite lacking the EUV lithography machines used by TSMC and Samsung?
  • Can China efficiently mass produce 7nm chips to make them commercially viable?
  • Will China be able to progress to 5nm and 3nm technology without access to tools like EUV lithography?
  • What impact with China’s chipmaking advances have on leading US firms like Intel, Nvidia and Qualcomm?

Understanding China’s Chipmaking Breakthrough

It appears SMIC manufactured the Kirin 9000s using older deep ultraviolet (DUV) lithography equipment it was allowed to import from ASML. Experts previously believed that relying solely on DUV would prevent progress beyond 10nm or so. But SMIC seems to have creatively leveraged these tools to implement a 7nm process. This demonstrates the rapid improvements China is making even with second-rate equipment.

However, efficiently scaling 7nm mass production could still pose major hurdles. One reason the Mate 60 sold out so fast may simply have been low yields of the Kirin 9000s, rather than extreme demand. Progressing to 5nm and smaller nodes without EUV will only get harder. But with Chinese government and private investment plans totalling over $100 billion, the progress made so far means advanced domestic chipmaking capabilities could gradually be built.

Counting the Costs of Cutting Off China from Technology

Faced with China’s chipmaking achievements, some American hawks are now calling for Huawei and SMIC to be banned from accessing any US technology whatsoever. In the short term this would certainly set them back, as integration with established industry ecosystems remains crucial.

But taking an uncompromising line also risks accelerating China’s motivation and investment in homegrown alternatives. Excluding Chinese firms from global semiconductor value chains would rob leading American chip companies of their largest market. Ultimately, this would eat into the revenues needed to fund continual innovation and stay ahead of international rivals.

Conclusion: China’s Tech Ambitions Becoming Harder to Constraint

The Mate 60 and its Kirin 9000s chip shows that China’s technology ambitions are becoming increasingly difficult for foreign powers to hold back. Despite America’s best efforts, Chinese firms are narrowing the gap in advanced chipmaking at a worrying pace. While challenges around efficient mass production remain, the breakthroughs made so far suggest it’s only a matter of time. Shutting Chinese companies out of international tech ecosystems altogether could backfire by steeling their resolve to compete. With tens of billions in government support, China has both the motivation and resources required to gradually build advanced domestic chip capabilities rivaling the best in the world. America’s global technology leadership therefore faces a more serious threat than ever before from an increasingly capable rival superpower.