Semiconductor Manufacturing International Corp ( SMIC ), the world’s third largest chip- foundry after Taiwan’s TSMC and South Korea’s Samsung, is reportedly struggling to increase the production yield of an artificial intelligence ( AI ) chip for Huawei Technologies.  ,
Since last year, SMIC has been making Huawei’s Ascend 910B, a 7 nm device which is said to be equal to 80 % of Nvidia’s A100 in terms of AI- training performance. Chinese media accounts said earlier this year that Huawei could make about 400, 000 to 500, 000 models of Ascend 910B in 2024.
Since the United States Department of Commerce urged chip-making products manufacturers and suppliers to stop shipping products to SMIC, Huawei has faced obstacles in the production of the Ascend 910B device, according to The Information, a San Francisco-based technology information website.  ,
It stated that Huawei will have to halt Huawei’s sale of the AI device to Taiwanese businesses like Tencent, Baidu, ByteDance, and Alibaba.  ,
According to a follow-up article from the Chosun Daily in South Korea on June 27, the production of Ascend 910B is estimated to be around 20 %.  ,
SMIC claimed to have been mass-producing the device for more than six weeks, but four out of five of the chips are also inoperable. On June 28, tech platforms and Chinese media widely quoted the two studies.  ,
But, a calculation made by Asia Times with open statistics showed another picture: Despite a 20 % offer, Huawei can still accomplish its goal of making 400, 000 to 500, 000 Ascend 910B cards with comfortable this year.  ,
Since 2019, SMIC has relied on Semiconductor Manufacturing South China Corp ( SMSC), its 38.52 %- owned, to produce 14nm or below chips.
SMSC has two fabs in Shanghai, known as SN1 and SN2, each with maximum monthly production capacity of 35, 000 12- inch wafers.  ,
According to public information, SN1 focuses primarily on producing 14nm chips, while SN2 produces 10nm and 7nm chips.  ,
It’s unclear whether SN2 reached its maximum capacity by the end of 2023 as scheduled. SMIC has n’t released SMSC’s financial and operational data since 2021, which is why.  ,
A technology columnist at Taiwan’s Anue news website said SN2 can produce 20, 000 12- inch wafers per month for 7nm chips.  ,
If SMSC only sets aside a 2, 000- wafer capacity for Ascend, it can already make 262, 000 chips per month or 3.14 million chips per year, given that each wafer can be split into 131 units of 910B chips.  ,
The actual yield of SMSC’s 7nm process is also unknown. Last September, Reuters estimated the figure at below 50 %. It may be around 30 %, according to a research note published by a Chinese website in March 2023.
But even if the yield is more like the Chosun Daily’s estimation, which is only 20 %, SMSC can still make 628, 800 Ascend 910B chips annually, meeting the target of 500, 000 units.  ,
In case there is any hiccup, Huawei can reduce the production of its HiSilicon Kirin 9010 chips to ensure the stable supply of Ascend 910B, which is priced at 120, 000 yuan ( US$ 16, 512 ) each in China.  ,
Because they are larger than typical processors, each wafer can only yield dozens of Ascend 910- series chips. In an article published on June 21, a Guangdong-based columnist with the pen name” Realistic Idealist” states that because AI chips have much higher social and market values, they should always be given more attention when there is a conflict between smartphone processors and them.  ,
He claims that while US sanctions will undoubtedly shorten China’s chip industry, they will also help it develop Chinese substitute goods over time. Once Ascend chips are widely available in China, he says, Nvidia’s downgraded products will have no market in the country.  ,
In March, Nvidia’s H20 chip, a downgrade model that fulfills US export rules, was ready for pre- ordering in China for about 100, 000 yuan each. Alibaba reportedly ordered over 30, 000 H20 chips.  ,
Sanctions against SMSC
SMIC currently holds four of the board‘s seats. The Big Fund’s National Integrated Circuit Industry Investment Fund Phase II and the Shanghai Integrated Circuit Industry Investment Fund Phase II, which both have a 23.08 % stake, are the other shareholders of SMSC.
Due to” China’s military-civil fusion (MCF ) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex,” the US Department of Commerce added SMIC, SMSC, and nine other units, to its Entity List in December 2020.
According to the US Commerce Department, US products that are specifically required to produce semiconductors at advanced nodes 10 nanometers or below are subject to a presumption of denial to stop China’s military modernization efforts.  ,
SMIC and SMSC could continue to expand their production by purchasing ASML’s most advanced deep ultraviolet ( DUV) lithography equipment until 2023, including the 2050i and 2100i. They can still currently find used DUV lithography equipment in China while ASML must still offer them maintenance services.  ,
Reuters reported that the US Commerce Department sent dozens of letters to US suppliers to SMIC in February of this year, suspending the sale to SMSC, in February of that year. Entegris was forced to stop millions of dollars worth of shipments of its chipmaking materials and parts to China from US suppliers.
Nazak Nikakhtar, a former assistant secretary for industry and analysis at the US Department of Commerce’s International Trade Administration ( ITA ), stated in a recent interview that the US government’s analysis of China’s technological capabilities is a little superficial, leading to ineffective sanctions and chip export controls.
Read: Yield and cost in doubt if Huawei revives 5G chips
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