Nikkei Asia: "China Seeks to Expand Advanced Chip Production Fivefold"

"SMIC and Hua Hong Aim to Reach Monthly Output of 100,000 Wafers Within 1-2 Years"

China's major semiconductor manufacturers are seeking to expand their advanced semiconductor production capacity by more than fivefold to respond to demand related to artificial intelligence (AI).

According to a report by Nikkei Asia on the 25th, Semiconductor Manufacturing International Corporation (SMIC), China's largest foundry (contract semiconductor manufacturing) company, second-largest foundry company Hua Hong Semiconductor, and semiconductor companies linked to Huawei plan to newly build or expand facilities for producing advanced chips.

The plans include process nodes at the 7-nanometer (nm, one-billionth of a meter) or 5-nanometer level, according to sources familiar with the matter. In general, the smaller the nanometer figure, the more advanced the process technology.

The most advanced chips currently in mass production worldwide are at 3 nm, and Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest foundry, has begun introducing 2 nm mass production.

Two of the sources said that Chinese manufacturers are aiming to increase their current monthly output of advanced semiconductor wafers, which is below 20,000, to 100,000 within the next one to two years.

One of the sources added that China has also set a more aggressive target of securing an additional capacity of 500,000 wafers by 2030. As the United States continues to impose export controls on advanced chips to China, the Chinese government is accelerating its push for technological self-reliance.

China's drive for technological self-reliance, including actively fostering alternatives to Nvidia, the global leader in AI chips, is promoting the expansion of domestic production of advanced logic chips. However, some point out that it remains uncertain whether China will actually be able to achieve its targeted capacity expansion, given that access to cutting-edge extreme ultraviolet (EUV) lithography equipment and other tools is still restricted.

Donnie Teng, a semiconductor analyst at Nomura Securities, stated, "Ultimately, whether Chinese AI chip developers can continue to grow and strengthen their competitiveness depends on their access to advanced domestic chip production."

He continued, "As cooperation with overseas foundry companies has become limited, many firms have started trial production with SMIC and have begun placing orders," adding, "Their future is closely tied to how effectively local Chinese chip manufacturers can support them."