[Peace&Chips] Huawei Phone 7nm Chip, Potential Use of Chinese EDA... Overconfident US, Persistent China

Huawei Unveils Latest Phone with 7nm AP
How 7nm AP Emerged Amid US Sanctions

KB Securities Raises Possibility of Using Chinese EDA Tools
"China Has Not Achieved Localization... Long-Term Attention Needed"

Editor's NoteSemiconductors, known as the rice of modern industry. Although it's a term we hear every day, it's often hard to explain. Peace & Chips will make the complex concepts and overall flow of the semiconductor industry easy to digest for you. Just bring your spoon.

[Peace&Chips] Huawei Phone 7nm Chip, Potential Use of Chinese EDA... Overconfident US, Persistent China

Last week, the United States was thrown into turmoil because of Huawei. Despite facing U.S. sanctions, Huawei unveiled a new 5th Generation Mobile Communication (5G) smartphone equipped with the advanced 7-nanometer (nm; 1 nm is one billionth of a meter) application processor (AP) called the 'Kirin 9000s.'

The AP is a key chip that acts as the brain of a smartphone. This AP was designed by HiSilicon, a fabless (semiconductor design) company established by Huawei, and was produced and supplied by SMIC, a Chinese foundry (semiconductor contract manufacturer).

The semiconductor industry is paying close attention to how Huawei managed to equip its smartphone with an AP produced using the 7 nm process despite the comprehensive pressure from the U.S.

Image of Huawei 'Mate60 Pro' with 7nm AP / [Image source=Huawei official website]

Starting in 2020, the U.S. engaged in a full-scale hegemonic competition with China and imposed various sanctions on Huawei citing security reasons. As a result, Huawei was unable to procure foreign semiconductors. Since then, the U.S. has continued to tighten regulations to block advanced semiconductor production within China.

So far, the prevailing opinion in the industry is that older deep ultraviolet (DUV) equipment was used instead of extreme ultraviolet (EUV) equipment, which is subject to U.S. sanctions. There are also claims that Chinese electronic design automation (EDA) tools might have been utilized during the chip design process.

Hyoju Kang, a researcher at KB Securities, said, "China's EDA technology has been evaluated as remaining in the analog (older) semiconductor field, and even Huawei is known to be researching and developing 14 nm technology. The mass production of this 7 nm product can be interpreted as China having made rapid technological progress in the EDA field."

EDA tools are software used for circuit design and error checking, essential in semiconductor design. Therefore, they are a major means by which the U.S. exerts pressure on China. In fact, the U.S. has prevented Huawei from using domestic EDA tools. Since the top two companies in the EDA tool market (Synopsys and Cadence) hold over 60% market share, the U.S. has weaponized this dominance.

In response, China has continued efforts to localize EDA tools. Recognizing EDA as one of the weaknesses of its semiconductor industry and designating semiconductors as a core national security industry, China has identified EDA development as a key task. In practice, various supports have been provided to help EDA-related companies grow, and domestic semiconductor companies have been encouraged to use Chinese-made EDA tools.

However, the industry generally believes these efforts have not yielded significant results. The dominance of existing EDA tool companies is overwhelming, and there are still few companies in China that can be considered successful in localization. There are also claims that Chinese-made EDA tools might not have been used in the production process of the 7 nm AP installed in Huawei smartphones.

Nonetheless, experts say it is important to pay attention to China's moves from a long-term perspective. Jonghyuk Oh, a senior researcher at the Korea Institute for International Economic Policy, said, "Only one or two Chinese companies have succeeded in localization, so there are still many gaps overall," but added, "Since China continues to attempt localization, it is worth watching."

China's EDA tool companies entering the domestic market is also a point of interest. An industry insider said, "There are quite a few Chinese companies that have entered Korea, and many former employees of domestic semiconductor companies work there." Although their influence in Korea is not large, they are actively expanding their business, including through low-price strategies.