The ongoing race between China and the United States in semiconductor development has seen heightened tensions, as the U.S. expresses concerns over China's potential use of this technology to bolster its military capabilities. Despite the U.S. imposing stricter semiconductor restrictions on China in October 2023, it appears that these measures have not significantly hindered China's progress.
According to a CNN report, the U.S. prioritized tightening restrictions initially imposed on China in 2022, which contained several loopholes. The updated rules are intended to enhance control effectiveness and prevent evasion of these restrictions. "We will increase effectiveness of our controls and further shut off pathways to evade our restrictions," said US Commerce Secretary Gina Raimondo. She added that efforts would continue "to protect our national security by restricting access to critical technologies, vigilantly enforcing our rules, while minimizing any unintended impact on trade flows."
In response to these export restrictions, China has prioritized self-sufficiency in chip development. Furthermore, the Netherlands and Japan have collaborated with the U.S. to limit China's access to advancements in chip technology and machinery. The Financial Times reports that Semiconductor Manufacturing International Corporation (SMIC), China's largest chipmaker, is projected to develop new smartphone processors by late 2024. SMIC has established new production facilities in Shanghai and has been mass-producing chips designed by tech giant Huawei.
However, SMIC's production of 5nm chips seems less profitable compared to those produced by Taiwan Semiconductor Manufacturing Company (TSMC). As per an Asia Times report, SMIC's yield for 5nm chips is estimated at only 30-40%, whereas TSMC boasts a yield exceeding 80%. Despite this lower profit margin, indications suggest that SMIC will proceed with these developments as a demonstration of Chinese companies' capacity for technological breakthroughs amidst the U.S.'s chip export ban.
