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Huawei and SMIC shocked the world when the Chinese smartphone company launched the Mate 60 Pro with a cutting-edge 7nm chip. Because of US-imposed sanctions, chip development has been precarious in China for years

Huawei and its partner Semiconductor Manufacturing International Corp (SMIC) leaned heavily on American technology to create an advanced chip in China last year, sources familiar with the matter revealed.

According to these sources, SMIC, based in Shanghai, utilized equipment from California-based Applied Materials Inc. and Lam Research Corp. to manufacture a cutting-edge 7nm chip for Huawei in 2023. The sources requested anonymity as the details are not public.

This undisclosed information underscores China’s ongoing reliance on foreign components and equipment for high-tech products such as semiconductors. Despite prioritizing technological self-sufficiency, China still depends on overseas resources for certain crucial technologies. Beijing has supported Huawei’s endeavours to enhance domestic chip design and production.

Representatives of SMIC, Huawei, and Lam declined to comment on the matter. Applied Materials and the US Commerce Department’s Bureau of Industry and Security, responsible for export controls, also refrained from providing comments.

Although hailed as a significant achievement in China’s semiconductor development, last year’s SMIC-produced chip powered Huawei’s Mate 60 Pro and sparked a surge in patriotic smartphone purchases in the country. While the chip falls short of global standards, it represents progress beyond what the US had hoped to curb China’s technological advancement.

However, the equipment used in its production still relied on foreign sources, including technology from Dutch manufacturer ASML Holding, as well as machinery from Lam and Applied Materials.

Leading Chinese chip equipment suppliers have been striving to catch up with their American counterparts, but their offerings remain less comprehensive and sophisticated. Despite efforts, China’s top lithography system developer, Shanghai Micro Electronics Equipment Group Co., trails behind industry leader ASML.

SMIC acquired the American machinery before US restrictions were imposed in October 2022. Following the ban, American suppliers withdrew their staff from China, and ASML prohibited its American employees from working with Chinese customers.

The US has since imposed further restrictions, prohibiting the sale of cutting-edge, US-origin technology to SMIC and Huawei, both blacklisted for alleged ties to the Chinese military.

These trade barriers prompted Huawei and SMIC to seek alternatives for building a domestic chip supply chain, culminating in the release of the Mate 60 Pro.

In response, the US initiated an investigation into Huawei’s processor, with Commerce Secretary Gina Raimondo pledging stringent actions for national security. Republican lawmakers have advocated for completely cutting off Huawei and SMIC’s access to US technology.

Commerce officials doubt SMIC’s ability to produce 7nm chips at scale without ASML’s lithography systems, highlighting technical challenges and potential limitations on chip production volume.

The US is urging allies to tighten restrictions on China’s semiconductor access, despite facing resistance in some countries due to trade implications.

Huawei emerges as a potential contender in China’s pursuit of AI chip development, posing a challenge to industry leaders like NVIDIA, according to CEO Jensen Huang.

As China navigates technological advancements amidst global scrutiny, its reliance on foreign technology underscores the complexities of international trade and national security concerns.

(With inputs from agencies)

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