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Reports of a China chip-making breakthrough are behind the curve but US sanctions are increasingly too little, too late and out of date
So, it looks like China has found a way to mitigate some of the damage from the West's embargo on chip making technology. They have managed to create chips at the 7-nm level, which was thought impossible without the most advanced manufacturing methods. You may remember that Trump instituted a ban on the most advanced chip manufacturing technology to China. The problem is that this may have been too little, too late.
A TechInsights report stating that a bitcoin mining integrated circuit (IC) sold by MinerVa “appears to be manufactured in SMIC 7-nm technology node” has triggered an outburst of commentary about the failure of American sanctions to stop the advance of Chinese semiconductor technology.
TechInsights is a Canadian provider of semiconductor-related analysis and intellectual property services to technology companies and other subscribers. It is known for its reverse engineering capability.
Referred to as “China-based” by Bloomberg, MinerVa Semiconductor is registered in Canada. But the three directors listed in its registration are Chinese and the address given for one of them is in China’s Henan province. The “About Us” section on the company’s website is blank.
MinerVA Semiconductor claims that its MinerVa7 is “one of the best-valued chips” for mining Bitcoin and that it “utilizes mature foundry technology to ensure chip yield, quality and reliability.”
Semiconductor Manufacturing International Corp, or SMIC, is China’s largest semiconductor foundry (contract manufacturer) and a prominent target of US technology sanctions aimed at curbing China’s access to advanced chips and the capacity to produce them.
The report describes SMIC’s efforts to put 7-nm process technology into production as a qualified success. After noting similarities with Taiwan Semiconductor Manufacturing Company’s (TSMC) 7-nm process, it goes on to say that SMIC’s System-on-Chip (SoC) device seems to be a low-volume “steppingstone” that has the logic but not the memory aspects of a standard TSMC or Samsung product.
This is possible because “bitcoin miners have limited RAM [random access memory] requirements,” the report said. For reference, an SoC is an IC that incorporates a processing unit (logic), memory and other components, creating a specialized computer or other type of electronic system in a single device.
China is still using "Deep Ultra-Violet (DUV) lithography," having been denied access to "Extreme Ultra-Violet (EUV) lithography-based processes now used by TSMC and Samsung, by the West." This was thought to deny them the ability to make sub-10-nm chips, but they have found a way to get down to 7-nm.
TechInsights also points out that SMIC’s use of Deep Ultra-Violet (DUV) lithography has resulted in a more complex and costly process that probably has lower yields than the Extreme Ultra-Violet (EUV) lithography-based processes now used by TSMC and Samsung.
But SMIC has no choice. It must use DUV because the US Commerce Department put in on its Entity List in December 2020, stating at the time that “Items uniquely required to produce semiconductors at advanced technology nodes – 10 nanometers or below – will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military-civil fusion efforts.”
The U.S. is now trying to institute a full ban on all D.U.V. technology, thus cutting China completely off from Western manufacturing tech.
The Entity List restricts trade with foreign entities – persons, corporations, governments – without a license from the Commerce Department. In practice, this has meant that sales of EUV lithography equipment to SMIC and other Chinese semiconductor makers are banned. Sales of other types of equipment – quite a lot of it, according to media reports – has been permitted.
The production of EUV equipment is monopolized by ASML of the Netherlands, but it incorporates a light source made by an American company, Cymer, which ASML acquired in 2013. The Dutch government has to date supported the sanctions.
US sanctions may prevent SMIC from upgrading from DUV to EUV, but they have not stopped it from developing process technology at 10-nm and below. As a result, the US government is now seeking to ban sales of DUV lithography equipment to SMIC.
This will limit China's ability to produce anything smaller than 7-nm. The most advanced devices use 3 and 5-nm chips.
The TechInsights report has generated headlines but its basic message – that SMIC has crossed the line drawn by the US government – has been known for more than a year. On April 5, 2021, ComputeNorth – an American supplier of cryptocurrency, blockchain and other distributed computing services based in Minnesota – reported that:
“Previously available exclusively to private industrial clients, the MinerVa MV7 Pro is now becoming available on a global scale as one of the latest and most popular high-performance bitcoin miners on the market today. The MV7 utilizes the latest SMIC 7nm chip, and while its outlook appears promising, there is still much to be revealed regarding the miner and its longer-term performance.”
7-nm is the actual limit of DUV lithography: The 5-nm and 3-nm processes developed by TSMC and Samsung will not work without EUV.
It is quite likely that the US government has until recently not tried or not been able to impose a ban on the sale of DUV equipment to China because it would have forced ASML to abandon a large and fast-growing market.
It would also have hurt second source supplier Nikon and had a severe knock-on impact on makers of other semiconductor production equipment, including American market leaders Applied Materials, Lam Research and KLA.
While US sanctions have targeted the leading edge, SMIC has built a substantial business serving the bulk of the semiconductor market. Founded in 2000, it now ranks fifth in the world in terms of semiconductor foundry revenues after TSMC, Samsung Foundry, UMC and Global Foundries.
While recent sanctions have targeted S.M.I.C., some say more should have been done earlier, as they are now a powerful player in the market, ranking "fifth in the world in terms of semiconductor foundry revenues."
SMIC is the smallest of the middle-ranking foundries. Data from Gartner shows that in 2021, industry leader TSMC was 10 times larger than SMIC, Samsung Foundry 1.6 times larger and Global Foundries 21% larger. Other foundries in Taiwan, China and elsewhere are much smaller than SMIC.
SMIC fabricates a wide range of products for its customers, including power management ICs, microprocessors, image sensors, radio frequency and other devices used in wireless communications. It also makes touch controller ICs. In 2021, 64% of its sales were made in China, 22% in North America and 14% in Eurasia.
SMIC operates 200mm and 300mm wafer fabs (factories) in Shanghai, Beijing, Tianjin and Shenzhen, and has three new 300mm fabs under construction. Semiconductor foundry services generate more than 90% of SMIC’s revenues, with the rest coming from mask making, testing and other related services.
Headquartered in Shanghai, SMIC is traded on the Shanghai Stock Exchange Star Market and the Stock Exchange of Hong Kong. Its largest shareholder is China’s State-owned Assets Supervision and Administration Commission (SASAC), which has a 16% stake in the company.
The MinerVA news has had no significant impact on the share price so far. Meanwhile, it appears that the Americans are trying to close the stable door after the horse has bolted. Like that phrase, their policy may be as outdated.
Source.
So, TLDR, it looks like China has found a way to sidestep some of the limitations from not having the most advanced chip fabrication technology. I have read about this issue for a few years now, with the arguments focusing on the need for revenue of the chip fab companies balanced against the need to retard their chip fab tech growth. What does Sherdog think about this development?
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