Chips: China leapfrogs U.S. restrictions
China wasn’t supposed to be able to build a smartphone like this, said Vlad Savoy and Debby Wu in Bloomberg. The new Mate 60 Pro from Chinese tech giant Huawei has impressed analysts with “cellular speeds on a par with 5G devices like Apple’s latest iPhones.” A teardown of the device by independent experts revealed it uses “an advanced 7-nanometer processor” fabricated in China by Semiconductor Manufacturing International Corp., or SMIC. The Biden administration’s export controls were designed to stop China from using foreign-made parts to build anything beyond 14nm chips, which are eight years behind the latest global technology. The U.S. said last week it’s investigating how China produced the chips, which “raise questions about the efficacy of a U.S.-led global campaign to prevent China’s access to cutting-edge technology.”
This punches a hole in Biden’s “Great Wall of Silicon,” said Andrew Salmon in The Washington Times. Huawei was able to make this technical leap partly because it “stockpiled chip inventory as its foreign supplies shut down.” But it also highlights China’s determination to keep up in the tech race. “Chips are capital intensive, and Beijing is reportedly planning to launch its third fund—worth $40 billion, its biggest so far—to support its chip sector.” China has used U.S. curbs as a galvanizer, said Ana Swanson in The New York Times. The surprise launch of the new phone came during U.S. Commerce Secretary Gina Raimondo’s visit, and vendors immediately began selling “phone cases for the new model with Raimondo’s face imprinted on the back.” Doctored images also showed Raimondo holding the new phone near the phrase, “Huawei mobile ambassador.”
This may be near China’s technological ceiling, said Jacky Wong in The Wall Street Journal. “Huawei and SMIC will likely be able to push ahead at most only another generation” using its current production process. Going beyond that, though, requires highly specialized $200 million extreme ultraviolet lithography machines, made exclusively by the Dutch manufacturer ASML, which is barred from taking new orders from China. Policymakers can wait before deciding whether they need to patch their regulatory fence, said Tim Culpan in Bloomberg. But the immediate takeaway is that the U.S. has written rules—export restrictions on chipmaking equipment—that don’t really achieve their ends. China had to use techniques that were costlier and less efficient, likely running the chips through a simpler process multiple times, but did manage to achieve their goals. “It’s highly unlikely Chinese chipmakers can squeeze more out of old tools,” but thus far, “the success of the sanctions is painted in shades of gray.”