The U.S. – China trade war is anticipated to strengthen the contribution of China’s semiconductor industry globally.
China, the largest market for semiconductors with over 60 percent contribution, is now focusing on in-house manufacturing of components to support the suppliers and their clients who are affected by the U.S. sanctions.
In a breakthrough in the global chipset manufacturing industry, Semiconductor Manufacturing International (SMIC), the largest semiconductor foundry in China, has made an innovative 7-nm chip design.
The development comes in line with the announcement from IP solutions provider Innosilicon that it has completed a “chip tape-out and testing based on the FinFET N+1 technology of Semiconductor Manufacturing International Corp (SMIC).” The chip tape-out is the final step in the chip design process.
According to Liang Mengsong, co-CEO of SMIC, the N+1 7-nm node is a significant improvement over its current 14-nm production node and is similar to the 7-nm process used by global leaders like Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung.
However, the N+1 7-nm chipset lags behind in terms of performance improvement. Compared to industry standards of 35 percent, the N+1 7-nm process promises only 20 percent improvement in performance. In future, the company plans to develop an N+2 process of higher performance improvement and with features similar to that from TSMC, Mengsong added.
Goldman Sachs, in its July 2 report, had predicted that SMIC would move from 14-nanometer to 12-nm chips during 2020, but would not reach production of the 7-nm chip process until 2023, or 5-nm until 2025. On the other hand, TSMC already produces 7-nm chips and will soon have 5-nm chips.
TSMC is the world’s largest contract chipmaker, with expected quarterly revenues of $10.2 billion in Q1 2020. SMIC is the fifth largest chipmaker company with expected quarterly revenues of $848 million in Q1 2020, according to research firm TrendForce.
Following the conflicts arising from the trade sanctions, in July, SMIC raised funds worth around US$7.55 billion (53.23 billion yuan approximately) through an IPO. Earlier this year, the company also secured about US$2.5 billion from funds backed by the Chinese government.
The N+1 foundry node may also help SMIC “to break its reliance on top-level Extreme Ultraviolet (EUV) machine made by Dutch microchip machine maker ASML,” said Mengsong. ASML is subject to U.S. export control as its products contain American technology.
Though SMIC is generations behind TSMC in terms of technology, SMIC is catching up by adopting mature technologies like N+1. With support from the government and through initiatives like Project 02, China semiconductor industry is expected to usher in the new era.
Rajani Baburajan
