The horizon is not so far as we can see, but as far as we can imagine

Tag: semiconductors

US Chip Sanctions On China Appear To Be Failing Hard

Huawei, the first company to be slapped with sanctions, has announced a phone with 5G capability with domestic 7nm chips.

Huawei Technologies and China’s top chipmaker SMIC have built an advanced 7-nanometer processor to power its latest smartphone, according to a teardown report by analysis firm TechInsights.

Huawei’s Mate 60 Pro is powered by a new Kirin 9000s chip that was made in China by Semiconductor Manufacturing International Corp (SMIC)…

…The processor is the first to utilize SMIC’s most advanced 7nm technology and suggests the Chinese government is making some headway in attempts to build a domestic chip ecosystem, the research firm said…

…Buyers of the phone in China have been posting tear-down videos and sharing speed tests on social media that suggest the Mate 60 Pro is capable of download speeds exceeding those of top line 5G phones.

(Oh, and while it performs better in some ways than the best iPhone or Samsung, it costs about half of what they do.)

When I talked to an expert a couple years ago, he told me it would take many years to really deal with the sanctions because of the difficulty in creating the “tech that creates the tech.”

But that appears to not be true. The West didn’t ban lithography machines until nowish (the Dutch will export them till the end of the year), but…

Shanghai Micro Electronics Equipment (SMEE) is expected to deliver by year-end its proprietary SSA/800-10W, a 28-nm lithography machine, according to a report last week by Chinese newspaper Securities Daily.

This is less advanced than what you can get from the West, and there’s a scaling issue, but the idea that the Chinese won’t catch up is absurd and always has been, and no country can scale faster than the Chinese.

The end result of the chip bans will be that China winds up with the largest chip industry in the world, and I’d bet that in ten to fifteen years (and perhaps sooner, as they keep coming in before forecast) they will be slightly in advance of the West.

Scale matters. The West sent the world’s manufacturing floor to China, and just as when it moved to the US the Americans took the overall tech lead (with Germany the only real competitor at the time), China will take the tech lead.

These sanctions should have been used only a couple years prior to a war. (A war with China would be horrific, and the West is not ready for one, especially right now with the massive equipment and munitions draw down for Ukraine.)

Chinese aren’t stupid, the West is no longer special, having sold its patrimony and the idea that the Chinese were somehow incapable of catching up in tech if sanctioned was always ludicrous.

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China Jumps Two Chip Generations Ahead: Why Chip Sanctions Backfired

Faster than most expected:

Semiconductor Manufacturing International Corp (SMIC, 中芯) has likely advanced its production technology by two generations, defying US sanctions intended to halt the rise of China’s largest chipmaker.

The Shanghai-based manufacturer is shipping bitcoin-mining semiconductors built using 7 nanometer technology, industry watcher TechInsights wrote in a blog post on Tuesday.

That would be well ahead of SMIC’s established 14 nanometer technology, a measure of fabrication complexity in which narrower transistor widths help produce faster and more efficient chips.

Since late 2020, the US has barred the unlicensed sale to the Chinese firm of equipment that can be used to fabricate semiconductors of 10 nanometers and beyond, infuriating Beijing.

Now, there’s a question if they can scale, but this is still a huge step. This means that they are ahead of Europe and the US, and behind only Taiwan and Korea. This is also sooner than almost all experts predicted: China did what Western technologists thought could not be done so quickly.

This speed, as I have noted in previous articles, is not that surprising; the technological lead always moves to the country which holds the world’s manufacturing floor. When Britain fell behind the US, it took about 30 years for them to lose their tech lead, but lose it they did. The same will happen with the US and Britain, but likely faster for obvious reasons like jets, the internet, and so on.

To put it simply, when you are right there with the factory floor, your innovation cycles are far faster, or in modern-speak, you iterate more quickly. You also have more practical experience with what actually works.

The “ban semi-equipment and semi-sales” to China card was a card, like the freezing of Russian foreign reserves, that you only get to play once at a great power. China is more than happy to subsidize chip manufacturers to learn how to make this tech domestically, and they are also crashing other key techs they’re behind in (like aviation), because it’s clear if the West would put a ban on semis, they’ll do it to anything or everything else.

China’s Job , and Xi has stated this publicly, is to make it so that they can’t be choked out by the US (the “West” is mealy-mouthed; the US makes the decisions, and the EU, Japan, and so on just do what they’re told, with occasional exceptions). Making Russia a locked-in junior ally with the sanctions regime made it so that China couldn’t be choked out on natural resources, and making it clear that crippling sanctions are on the board caused China to scramble to close the deficiency.

Unlike with choking out Japan over oil before WWII (which is why the Japanese felt they had to attack the US), however, the partial sanctions on China were not crippling, because unlike pre-WWII, the US is not the world’s primary industrial power, and it has its own dependencies on Chinese trade.

In realpolitik terms, because this is the case, sanctions should have been all at once, followed by war (I’m not for this, I’m massively against it, not least because of the issue of nukes). Half-assing it just gave China time to decouple its key dependencies and, as noted above, the anti-Russia sanctions were a gift from heaven to China.

The game continues, and if it were not for climate change, all the smart money would be on China as the pre-eminent world power within 20 years, probably sooner. As it is, a lot will depend on variables that humans have chosen not to control and soon will lack the ability to significantly control.


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