Huawei Technologies is said to resume the manufacturing of its 5G Kirin chips with SMIC’s “nearly 7 nanometer” technology later this year but yield and cost of this project remain questionable.
After Huawei was sanctioned by the United States in May 2019, Taiwan’s TSMC in September 2020 stopped producing Kirin chips for the Shenzhen-based telecommunication equipment maker.
The company has run out of its 5G chip inventory in the third quarter of 2022. It can only import 4G chips from Qualcomm or make them locally to maintain its smartphone business.
From time to time, rumours have said Huawei will make its 5G chips domestically. But the company has dismissed them.
A new round of media reports on this topic has emerged since Counterpoint Technology Market Research, a Hong Kong-based data analysis firm, said in a report on June 2 that “Huawei HiSilicon will relaunch the Kirin chipset with 5G support, utilizing SMIC’s N+1 manufacturing process.”
The report said that, due to SMIC’s N+1 process’s low yield rate (below 50%), Huawei can only ship two to four million 5G chips this year. It added that the 5G chipset won’t be used in flagship models such as Mate and P series devices but in mid-end ones such as Nova and Enjoy smartphones.
Some IT columnists questioned why Huawei wants to revive its old 5G chips. Counterpoint later deleted its “forward-looking comments and opinions” to avoid misunderstanding.
Citing three research firms, Reuters reported on July 12 that Huawei should be able to procure 5G chips domestically using its own semiconductor design tools and SMIC’s foundry services. Without providing more details, one of the research firms said shipments could reach 10 million units per year.
Nikkei reported on July 27 that Huawei plans to restart making 5G chips as early as this year. It said the company’s 5G devices will not hit stores until 2024.
Until now, neither Huawei nor SMIC has commented on all these reports, beyond denying on June 14 a rumor that its coming flagship smartphone Mate60 will allow 5G connection.
N+1 process
Since the US banned ASML from shipping the extreme ultraviolet (EUV) lithography to China in 2019, the Semiconductor Manufacturing South China Corp (SMSC), a SMIC subsidiary, has accelerated research into using immersion deep ultraviolet (DUV) lithography to make 7nm chips.
SMIC, the China IC Fund and the Shanghai IC Fund have a stake of 38.52%, 37.64% and 23.85% stake in SMSC, respectively.
DUV can make 28nm chips with single exposure, 14nm chips with double exposure and 10nm chips with triple exposure. Foundries avoid using quadrupal exposure to make 7nm chips due to a significant drop in yield.
Using DUV, TSMC’s yields of 14nm and 7nm chips are 95-96% and 80%, respectively. SMSC claimed that the yield of its 14nm chips reached 95% but it has never disclosed the yields of smaller chips.
A research note published by a Chinese website in March said SMSC’s yields of 14nm, 10nm and 7nm chips are 65%, 50% and 30%, respectively.
EUV can make 3-7nm chips with single exposure and 2nm or below with multiple exposures.
In October 2020, SMSC successfully used its FinFET N+1 process to make 10nm chips, which were said to be equivalent to 7nm chips in performance.
Liang Mong-song, managing director of SMIC and former TSMC research and development director, had told the media that the N+1 chips can only be used in low-energy processors. N+2 chips can be used in high-energy processors, he said, but their production cost is higher.
SMSC silently sold its N+1 chips to MinerVa Semiconductor, a Henan-based bitcoin miner supplier, in July 2021, according to TechInsights. MinerVa was originally registered in Canada but it has become a Hong Kong company since May this year.
Limited production scale
Public information has shown that SMSC can produce up to 35,000 12-inch wafers per month. IT writers say the foundry only produces 10,000 wafers for its “near-7nm” chips each month.
Each wafer includes hundreds or thousands of microchips, depending on the chip size. Assuming Huawei is given all the 10,000-wafer production capacity while each wafer has 300 microchips, it can produce 10.8 million chips annually at a 30% yield – or 18 million chips at a 50% yield.
Huawei said in June that it targets to ship 40 million smartphones this year, up from 28 million units last year.
An IT columnist writes in an article published by Zillion Intelligence on June 7 that Huawei may use 5G chips in its Nova smartphones, which are priced at around 2,500 yuan (US$348) each.
A Taiwan-based IT writer surnamed Liang says that, due to low yield of its project, Huawei can only supply 5G chips for some of its smartphones as a symbolic move to counteract the US sanctions. She says margins for SMIC are low in this deal.
Liang points out that Huawei may want to stay low profile for this project for the moment to avoid bringing on more US curbs, which would disrupt its plan to obtain chip-making tools from the US, the Netherlands and Japan.
In mid-May, SMIC quietly removed 14nm fabrication technology from the list of its services on its website. It said it focuses on 28nm and larger chips.
Lithography is the goal
It has remained unclear why Huawei and SMIC would push this low-profit project. But it’s a fact that the project came after the government changed its strategy in subsidizing lithography research earlier this year.
In July last year, Ding Wenwu, the head of the China IC Fund, which is also known as the “Big Fund,” was probed as Beijing leaders got infuriated after the nation’s decade-long investments failed to create a DUV lithography.
Last December, media reports said China was working on a one-trillion-yuan support package for its chip sector. The money would be delivered in the form of subsidies and tax credits to support chipmakers’ production and R&D over the next five years.
Beijing will also allow Chinese technology giants and chipmakers to play a bigger role in state-backed research projects, the Financial Times reported on March 21.
On May 11, Liu Xunfeng, chairman of the state-owned Shanghai Huayi Holding Group, was nominated by the China IC Fund to join the board of SMIC. On July 17, Liu replaced Gao Yonggang to become SMIC’s chairman.
Read: US sanctions bite as Huawei runs out of phone chipsets
Follow Jeff Pao on Twitter at @jeffpao3