[Why&Next] TSMC's Traitor, From Samsung's Mercenary to China's Semiconductor Hero

Liang Mong Son, CEO of Chinese semiconductor company SMIC, is currently at the center of attention in the global semiconductor industry. Chinese IT manufacturer Huawei shook the global information technology sector earlier this month by unveiling its new smartphone, the Mate 60 Pro, equipped with the latest semiconductor technology for the first time in three years. Inside the Mate 60 Pro is the semiconductor chip ‘Kirin 9000S,’ an application processor (AP) made using the latest 7-nanometer semiconductor process technology.

The United States has been desperately trying to prevent China from acquiring semiconductor process technology below 10 nanometers (1 nanometer is one billionth of a meter). The Mate 60 Pro is, in essence, a product that boldly demonstrates that U.S. semiconductor restrictions on China have failed. Huawei assembles its new smartphones using parts made by various companies. The company that manufactured and supplied the controversial latest semiconductor chip to Huawei is SMIC. There was controversy over whether China had truly produced 7-nanometer semiconductors. However, the global semiconductor industry had no choice but to acknowledge that China had indeed manufactured semiconductors using 7-nanometer technology. The decisive factor was that the CEO of SMIC, who claimed to have made the 7-nanometer chip, was Liang Mong Son, nicknamed the ‘Chip Wizard.’

Liang Mong Son studied semiconductors at the University of California, Berkeley. Originally from Taiwan, he joined TSMC in 1992. Liang was a standout engineer at TSMC. His role was significant in TSMC overtaking IBM in 2003 to become the industry leader in the 130-nanometer process. However, he did not receive treatment commensurate with his achievements. He was neither promoted nor given important positions and was sidelined. Liang boldly left TSMC.

His destination was Samsung. After resigning in 2009 and lecturing at a Taiwanese university, he joined Samsung in 2011. TSMC immediately filed a lawsuit in a Taiwanese court to prevent his move. In 2015, Samsung surprised the global semiconductor industry by becoming the first in the world to manufacture semiconductors using the 14-nanometer process. Liang Mong Son was the key figure behind Samsung’s 14-nanometer process development. At least, TSMC believed so. From TSMC’s perspective, he was a traitor. They felt that their representative engineer had turned into a mercenary for their rival Samsung, wielding a knife against his former company. In 2015, he left Samsung after the Taiwanese court ruled that he could not work there.

Afterward, Liang Mong Son embarked on another challenge. In 2017, he became CEO of China’s SMIC. The Wall Street Journal (WSJ) described Liang as follows: "A chip wizard with a magical touch who can turn even weak players into champions. Stubborn and prone to conflicts, he often becomes a free agent in the semiconductor industry." This succinctly summarizes his tumultuous yet innovative career, having worked at TSMC, Samsung, and SMIC. The semiconductor industry views him as the person tasked with the national mission of revitalizing the semiconductor sector. In 2019, the U.S. launched an all-out effort to prevent China from acquiring semiconductor process technology below 10 nanometers. The decisive blow was the ban on exporting extreme ultraviolet (EUV) equipment, essential for sub-10-nanometer semiconductor processes. Dutch company ASML, the sole producer of EUV equipment, was prohibited from supplying China. Following the U.S. stance, TSMC also stopped producing chips for Huawei. SMIC was China’s last hope. And Liang Mong Son did not betray China’s expectations. Chinese media flooded with articles stating that “independent innovation has laid the foundation for semiconductor self-reliance” and “U.S. sanctions have failed.”

In fact, rumors that SMIC had secured 7-nanometer process technology surfaced quite some time ago. In 2022, signals emerged that SMIC had produced 7-nanometer chips. There were rumors that SMIC had manufactured chips for cryptocurrency mining using the 7-nanometer process. Eventually, the ‘Kirin 9000S’ chip used in the Mate 60 Pro was released. Analysts believe SMIC exploited loopholes in U.S. regulations to secure 7-nanometer technology. Instead of EUV, they used older deep ultraviolet (DUV) equipment multiple times to draw 7-nanometer-level semiconductor circuits. This is the so-called multi-patterning technology also used by TSMC. Samsung Electronics and TSMC competed in the past to develop the 7-nanometer process. Samsung used EUV, while TSMC used DUV equipment. When making 7-nanometer semiconductors with EUV, the process is completed in one step. With DUV, multiple steps are required.

The Apple A12 processor, used in the iPhone XR released in 2018, was made using this method. SMIC appears to have produced 7-nanometer-level semiconductors by repeating the exposure process more than four times, similar to what TSMC did in the past. Dealer Paytel, founder of semiconductor analysis firm SemiAnalysis, stated, “China’s equipment is capable of producing products below 7 nanometers.”

In reality, China has been aggressively purchasing DUV equipment since the U.S. sanctions. The South China Morning Post (SCMP) reported that between January and July 2023, China imported $2.5 billion worth of ASML’s DUV equipment, a roughly 65% increase compared to the same period last year. This can be considered stockpiling. Rumors have also circulated that Huawei is collaborating with SMIC to build a new semiconductor factory. ASML announced that DUV equipment deliveries to China would cease by the end of the year, but this is akin to closing the barn door after the horse has bolted. China has already secured a sufficient amount of DUV equipment, reducing the effectiveness of the regulations.

Of course, many evaluate the technology China has acquired as incomplete. First, the 7-nanometer process using DUV is far more time-consuming and costly compared to the EUV process. There is a big difference between being able to produce something and being able to mass-produce and sell it. Mass production may face yield issues, with many defective products. Moreover, TSMC and Samsung have already started producing products using the 3-nanometer process. For example, the application processors in the current Galaxy series use 4-nanometer technology. Therefore, 7 nanometers is no longer considered cutting-edge technology.

It is also pointed out that securing 2-nanometer process technology, which Samsung, TSMC, and Intel are pursuing, is virtually impossible without EUV. This is why some analysts believe China’s semiconductor rise may have reached its limit.

A review of the Mate 60 Pro published by Hong Kong’s South China Morning Post (SCMP) reveals the limitations of the Kirin 9000S. SCMP reported that after actual use, the Mate 60 Pro’s chip performance is inferior to that of the iPhone 15 and Galaxy Z Fold 5. The gap will inevitably widen compared to the iPhone 15, which uses a 3-nanometer process chip. Huawei’s reluctance to actively promote the Mate 60 Pro’s chip performance is likely due to this recognition.

SCMP showed more interest in the operating system (OS). Huawei smartphones run on the company’s self-developed Harmony OS. Harmony is so similar to Android that it is often called a ‘knockoff Android.’ Conversely, this means it is not inconvenient to use. The difference from Android is that Google apps are not available. Instead of Google’s app store, Play, users can download various apps from a store called ‘App Gallery.’ For example, Instagram, Facebook, and X (formerly Twitter) can be installed and used.

Harmony is an operating system that can be used across various devices beyond smartphones, including TVs, vehicles, smartwatches, and PCs. In fact, the U.S. leads not only in semiconductors but also in operating systems. China’s state-run Global Times claimed that Harmony 4.0 demonstrates the failure of U.S. regulations against Chinese companies. However, overseas reactions have been cold. Market research firm IDC assessed that overseas consumers have no reason to buy Huawei phones that cannot use Google apps. IDC analyst Will Wong predicted, “It will take considerable time for Huawei to regain overseas users.”