SMIC Well on Its Way to 5-nm Breakthrough, Observers Say

In summation:

Semiconductor Manufacturing International Corp. (SMIC) is likely to, in the next few years, again defy the U.S. government by manufacturing chips with feature sizes as small as 5 nm, industry insiders told EE Times.

The production of 7-nm silicon by China’s largest chipmaker just days ago has crossed a red line set by the U.S. government to keep its rival nation stalled at the 14-nm node. SMIC’s widely reported breakthrough erodes the U.S. strategy to use export controls and blacklists to halt China’s technological progress, according to Dick Thurston, former chief legal counsel for Taiwan Semiconductor Manufacturing Co. (TSMC).

“I never had any doubt that they would be doing 7 [nm], and I still don’t have any doubt that they’ll do 5 nm without the EUV tools,” he told EE Times.

The number of new phones suggests the yield at SMIC for the new process node is much higher than the 10% that some have suggested, according to Paul Triolo, who advises tech clients at Albright Stonebridge Group.

“Industry sources within China suggest that the yield is in the 70% range and getting better, which is usually the case with these types of efforts to push existing equipment beyond what it was intended for,” he told EE Times.

There is a limited roadmap for SMIC/Huawei to reach advanced nodes beyond some layers at 5 nm, Triolo added.

Given that SMIC has figured out multi-patterning for 7 nm, they can likely figure it out for 5 nm, Semiconductor Advisers President Robert Maire said in a newsletter provided to EE Times.

“SMIC has clearly proven it can get around the EUV ban,” Maire told EE Times. “Applied Materials, Lam, KLA and others are still shipping tons of tools to China, which is their largest market by far and growing.”

The only source interviewed by EE Times last week who would hazard a guess about how soon SMIC might have a 5-nm chip was Maire.

Maire’s estimate? “Likely somewhere between one and three years,” he said. “If SMIC is keeping pace, probably about two years.”

The U.S. Department of Commerce (DoC) controls on SMIC have been ineffective, he added. “European, , various companies are not 100% following what the U.S. has asked them to do.”

While it is likely that U.S. officials will consider some further measures against both SMIC and Huawei, both are already on the Entity List and subject to the FDPR provision, leaving the “nuclear option” of Treasury Department sanctions, Triolo said.

“Any move in this direction would have a major negative impact on U.S.-China relations, which have seen some minor improvement after four Cabinet-level visits of U.S. officials to Beijing,” he added.

Whether DoC restrictions can successfully inhibit China, “my answer is no,” Thurston said.

“We’ve let the cat out of the bag. We’ve opened up competition to countries that can access all these tools. All this can be replicated.”

China’s chipmaking capabilities are not well-understood in Washington, Thurston said. “How do you actually estimate China’s technological capability? We don’t really understand. U.S. companies have done a poor job. I’m sure TSMC understands much better than others.”

The “high walls, small yard” strategy of U.S. National Security Advisor Jake Sullivan to keep China behind the U.S. as many technology generations as possible faces a challenge.

“While U.S. officials have stressed that export controls are narrowly tailored to national security-related issues, no U.S. official has clearly explained how a consumer smartphone like the Mate 60 rises to the level of a national security concern,” Triolo said. “It remains unclear whether extraterritorial export controls like the FDPR, which would restrict one Chinese company from selling to another Chinese company, would stand up to serious scrutiny in terms of international law.”