China Semiconductor Technology Analysis Shows Still Years Behind Taiwan Manufacturing

China's Semiconductor Technology: Still Several Years Behind TSMC

An analysis of China's current semiconductor technology revealed that the country is still lagging several years behind industry leader Taiwan Semiconductor Manufacturing Co. (TSMC). This gap highlights the ongoing effectiveness of U.S. efforts to limit China's access to advanced chip technology.

Performance Comparison: SMIC vs. TSMC

Hiroharu Shimizu, CEO of Tokyo-based TechanaLye, a semiconductor research company that disassembles 100 electronic devices a year, provided insights into China's semiconductor capabilities. Shimizu compared the performance of two application processors: one from Huawei Technologies' Pura 70 Pro, released in April, and one from a top-of-the-line Huawei smartphone from 2021.

• Kirin 9010 (2023): Designed by Huawei subsidiary HiSilicon and mass-produced by Semiconductor Manufacturing International Corp. (SMIC), this chip is capable of producing 7-nanometer chips. Despite being subject to U.S. measures to suppress advanced chip technology, SMIC's 7-nm chip measures 118.4 square millimeters.
• Kirin 9000 (2021): Also designed by HiSilicon but mass-produced by TSMC, this chip features 5-nanometer technology and measures 107.8 square millimeters.

Although the two chips have similar areas and performance levels, TSMC's 5-nm chip still holds a technological edge. However, SMIC's capabilities are approaching a level three years behind TSMC based purely on the performance of the shipped chips. HiSilicon's design capabilities have also improved, enabling the production of chips with comparable performance to TSMC's 5-nm products despite their wider circuit width.

Domestic Production and Dependency

Huawei's Pura 70 Pro, for example, is equipped with a total of 37 semiconductors supporting various functions such as memory, sensors, cameras, power supply, and display. Of these, 14 were from HiSilicon, 18 from other Chinese manufacturers, and just five from foreign manufacturers. This indicates that about 86% of the phone's chips were made in China.

Impact of U.S. Regulations

The U.S. regulations primarily target cutting-edge server chips for artificial intelligence and other applications that could pose a military threat. For other types of chips, the U.S. is likely allowing their development as long as they do not pose such threats. This selective approach has only slightly delayed Chinese innovation while sparking efforts by the Chinese chip industry to boost domestic production.

Chinese Investment in Chipmaking Equipment

Chinese players have been aggressively investing in chipmaking equipment, making up 34.4% of global chipmaking equipment purchases in 2023. This is roughly double the figure for South Korea and Taiwan, according to industry group SEMI. China is expanding its mass-production capabilities by focusing on equipment that is not targeted by export restrictions on cutting-edge technologies.

Implications for the Industry

The fact that SMIC's 7-nm chips now rival TSMC's 5-nm chips in processing capability has significant implications for the industry. TSMC faces growing hurdles to stay ahead of Chinese rivals technologically as miniaturizing circuits becomes increasingly difficult. Despite these challenges, TSMC remains the industry leader, with its chips still outperforming those of its Chinese competitors in terms of technological advancement.

Conclusion

While China's semiconductor technology is improving rapidly, it still lags behind TSMC by several years. The U.S. regulations have had a limited impact on China's consumer products but have driven the Chinese industry to focus on domestic production and less advanced technologies. This ongoing competition underscores the critical role of semiconductor technology in global economic and geopolitical dynamics. TSMC's commanding lead, coupled with China's relentless pursuit of self-sufficiency, sets the stage for an escalating chip war that will continue to shape the future of the semiconductor industry.