China able to mass produce 7-nm chips in two years, replace imports: analyst

Deputies to the National People’s Congress (NPC) put forward suggestions to raise investment in the integrated circuit (IC) sector and speed up import substitution of chips, sparking confidence that Chinese companies will be able to mass produce 7-nanometer semiconductors in two years.

Delixi Group Chairman Hu Chengzhong, an NPC deputy, said in a proposal seen by the Global Times on Tuesday that China should focus on technological breakthroughs in the research and development of high-end ICs to raise the import substitution rate and break foreign chip manufacturers’ domination.

Industry insiders said the US’ persistent attack on Huawei is expected to motivate domestic companies to replace imported chips with domestic ones earlier than planned.

Xiang Ligang, directorgeneral of telecoms industry association Information Consumption Alliance, said he is confident that Chinese companies like Shanghai-based Semiconductor Manufacturing International Corp will be able to mass produce 7-nm and even 5-nm chips in about two years.

“The reason why domestic firms can’t produce high-end chips is not due to technological obstacles but lack of customers,” Xiang said, noting that the US’ crackdown will definitely drive domestic giants like Huawei to shift to domestic suppliers. That in turn will boost demand for domestically made chips.

On May 15, the US Department of Commerce said it was amending an export rule and its Entity List to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology.” read a statement on its website.

China is the world’s largest chip user, but it has a low selfsufficiency rate and the supply of key manufacturing equipment and materials primarily relies on imports.

Hu said there is huge scope for domestically made chips to replace imported ones, as China imported $312 billion worth of ICs in 2018, while the market for domestic ones was only $37 billion.

“To jump start growth, the domestic semiconductor industry has to nurture enough talent and seek breakthroughs in innovative materials to overtake the US in the sector,” an industry insider surnamed Ma told the Global Times on Tuesday.

Chen Mingbo, an official with the Shanghai government, proposed at the two sessions to establish an IC industry fund of 100 billion yuan ($14.01 billion) in Shanghai that would lead the development of high-end industries, the Shanghai Securities News reported on Tuesday.

“In the long term, China’s growing strength in making high-end semiconductors will inflict devastating damage on US companies like Qualcomm, 70 percent of whose clients are Chinese firms now,” Xiang said.

The Huawei Kirin 710A chip, based on 14-nm technology, has recently achieved commercial mass production.