Analysis shows TSMC's technology is only three years ahead of China's progress: US export restrictions have minimal impact – Taiwan Semiconductor (NYSE:TSM)

Analysis of China's semiconductor technology shows it is only three years behind Taiwan Semiconductor Manufacturing Company, Ltd. TSM.

What happenedThe report highlights the limited impact of US export restrictions on China's consumer chip production. Hiroharu ShimizuCEO of Techana Bleach, shared Insights with Nikkei, showing that China's chip capabilities are advancing rapidly.

Shimizu presented semiconductor circuit diagrams of two Huawei Technologies smartphones: the Pura 70 Pro, launched in April, and a 2021 model. The chip in the latest phone, Kirin 9010, was designed by HiSilicon and mass produced by International Semiconductor Manufacturing Corporation. (SMIC).

Despite US measures to curb advanced chip technology, SMIC is able to produce 7-nanometer chips. These chips are almost comparable in performance to TSMC's 5-nanometer chips, which were used in Huawei's 2021 phone.

SMIC's 7nm chip measures 118.4 square millimeters, while TSMC's 5nm chip measures 107.8 square millimeters. Both chips have similar performance levels, indicating SMIC's progress.

Shimizu noted that 86% of the Pura 70 Pro's chips were made in China. He said U.S. regulations are aimed primarily at cutting-edge server chips for AI and other applications, allowing other developments to continue.

“As long as the chips do not pose a military threat, the United States will likely allow their development,” Shimizu said.

Chinese companies accounted for 34.4% of global purchases of chipmaking equipment in 2023, doubling the figures for South Korea and Taiwan. This trend suggests China's growing mass production capacity and the potential impact on the industry.

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Why is it important?China's rapid progress in semiconductor technology comes amid rising global tensions over chip dominance.

The newly elected prime minister of the Netherlands is expected to block ASML Holding NV to assist Chinese companies with repair and maintenance services. This move could significantly affect China’s ability to produce advanced semiconductors, as ASML is the only supplier of extreme ultraviolet lithography machines.

Besides, Chen NanxiangChen, chairman of the China Semiconductor Industry Association, has predicted a significant rise in China's chip industry in the next three to five years. He stressed the industry's shift to a market-driven model, focusing on innovation in products, services and business models.

China has also committed more than 43.5 billion yuan (6.12 billion U.S. dollars) to build computing data centers, following the U.S. embargo on semiconductors. This investment is aimed at boosting China's data processing capabilities.

China's semiconductor spending has also surpassed that of the United States, with a commitment of $142 billion, reflecting the intense global race to dominate the chip industry. This substantial investment underscores the strategic importance of ensuring a steady flow of semiconductors.

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Image via Shutterstock

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote