China-based chipmaker Semiconductor Manufacturing International Corp (SMIC), despite facing potential US and allied sanctions, continues to be the top domestic contract chip manufacturer and ranks among the world’s top ten, notably bolstered by its cutting-edge technology advancements.
According to Robert Castellano, president of The Information Network, SMIC enjoys investment support from state-run funds in China, allowing the company to expand its chip production using 300mm silicon wafers and locally advanced lithographic procedures. Digitimes reported that SMIC is primed to master not only the 5nm, but also a version of the 3nm manufacturing process. The company reportedly established a 7nm product manufacturing line for Huawei in the middle of last year.
The report showed progressive revenue growth for SMIC over the years from 2021 to 2023, with only sporadic exceptions. The company’s revenue is also expected to consistently increase by 2% in the current quarter. Such resilience in the face of US and allied sanctions suggests that SMIC is equipped to handle such adverse situations. The company witnessed an increase in revenue from the processing of 300mm silicon wafers; from holding 64.4% in the fourth quarter of 2022 to 74.2% in the last quarter. This growth is likely attributed to the company’s keen focus on cutting-edge chip technology. While the processing volume of silicon wafers in 200mm equivalent increased by 11.4%, the conveyor loading level remained below 80%, indicating room for improvement in terms of cost efficiency.
Experts predict that the low production yield level of the company’s 7nm process, which currently does not exceed 50%, is unlikely to pose a significant problem in the future. Firstly, product quality is set to improve. Secondly, government backing will help SMIC offset the costs related to defective products. With Huawei planning to place orders for 5nm chips from SMIC for its Ascend 920 accelerators and Kirin 9100 mobile processors, demand for SMIC’s services should only continue to rise, with the former ready to support SMIC with substantial advance payments if required.
