Low yield for SMIC-Huawei Nvidia knockoff? So what? – Asia Times
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Asia Times
Covering geo-political news and current affairs across Asia
Semiconductor Manufacturing International Corp (SMIC), the world’s third largest chip-foundry after Taiwan’s TSMC and South Korea’s Samsung, is reportedly struggling to increase the production yield of an artificial intelligence (AI) chip for Huawei Technologies.
Since last year, SMIC has been making Huawei’s Ascend 910B, a 7 nanometer chip which is said to be equivalent to 80% of Nvidia’s A100 in terms of AI-training efficiency. Chinese media reports said earlier this year that Huawei could make about 400,000 to 500,000 units of Ascend 910B in 2024.
On June 25 The Information, a San Francisco-based technology news website, reported that Huawei has faced obstacles in the manufacturing of Ascend 910B chip since officials of the United States Department of Commerce urged chip-making equipment makers and suppliers to stop shipping products to SMIC.
It said Huawei will have to delay its shipment of the AI chip to Chinese customers including Tencent, Baidu, ByteDance and Alibaba.
A follow-up story published by the Chosun Daily in South Korea on June 27 said that the production yield of Ascend 910B is around 20%.
It said SMIC has been mass producing the chip for more than six months but four out of five chips are still defective. The two reports were widely quoted by technology websites and Taiwanese media on June 28.
However, a calculation made by Asia Times with public figures showed another picture: Despite a 20% yield, Huawei can still finish its target of making 400,000 to 500,000 Ascend 910B chips with ease this year.
Since 2019, SMIC has relied on Semiconductor Manufacturing South China Corp (SMSC), its 38.52%-owned unit, to produce 14nm or below chips.
SMSC has two fabs in Shanghai, known as SN1 and SN2, each with maximum monthly production capacity of 35,000 12-inch wafers.
Public information shows that SN1 mainly focuses on the making of 14nm chips while SN2 produces 10nm and 7nm chips.
It’s unclear whether SN2 reached its maximum capacity by the end of 2023 as scheduled. That is because SMIC has not published SMSC’s financial and operational figures since 2021.
A technology columnist at Taiwan’s Anue news website said SN2 can produce 20,000 12-inch wafers per month for 7nm chips.
If SMSC only sets aside a 2,000-wafer capacity for Ascend, it can already make 262,000 chips per month or 3.14 million chips per year, given that each wafer can be split into 131 units of 910B chips.
The actual yield of SMSC’s 7nm process is also unknown. Last September, Reuters estimated the figure at below 50%. A research note published by a Chinese website in March 2023 said it may be about 30%.
But even if the yield is more like the Chosun Daily’s estimation, which is only 20%, SMSC can still make 628,800 Ascend 910B chips annually, meeting the target of 500,000 units.
In case there is any hiccup, Huawei can reduce the production of its HiSilicon Kirin 9010 chips to ensure the stable supply of Ascend 910B, which is priced at 120,000 yuan (US$16,512) each in China.
“Each wafer can only yield dozens of Ascend 910-series chips as they are larger than usual processors. But because AI chips have much higher social and market values, they should always enjoy a higher priority when there is a fight of production capacity between smartphone processors and them,” a Guangdong-based columnist with the pen name “Realistic Idealist” says in an article published on June 21.
He says US sanctions have no doubt hurt China’s chip sector in the short run but they will accelerate the development of Chinese substitute products in the long run. Once Ascend chips are widely available in China, he says, Nvidia’s downgraded products will have no market in the country.
In March, Nvidia’s H20 chip, a downgrade model that fulfills US export rules, was ready for pre-ordering in China for about 100,000 yuan each. Alibaba reportedly ordered over 30,000 H20 chips.
SMIC currently controls four out of seven seats on SMSC’s board. Other shareholders of SMSC include the National Integrated Circuit Industry Investment Fund Phase II (with a 23.08% stake), also known as the Big Fund, and the Shanghai Integrated Circuit Industry Investment Fund Phase II (with a 11.54% stake).
In December 2020, the US Department of Commerce added SMIC, together with SMSC and nine other units, to its Entity List as a result of “China’s military-civil fusion (MCF) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex.”
US items uniquely required to produce semiconductors at advanced technology nodes 10 nanometers or below are subject to a presumption of denial to prevent such key enabling technology from supporting China’s military modernization efforts, according to the US Commerce Department.
However, SMIC and SMSC could still expand their production by purchasing the most advanced deep ultraviolet (DUV) lithography machines such as 2050i/2100i from ASML until the end of 2023. As of now, they can still source second-hand DUV lithography equipment in China while ASML has to provide maintenance services to them.
In February this year, Reuters reported that the US Commerce Department had in late 2023 sent dozens of letters to US suppliers to SMIC, suspending permission to sell to SMSC. Among the US suppliers, Entegris had to halt millions of dollars worth of shipments of its chipmaking materials and parts to China.
In a recent interview with Asia Times, Nazak Nikakhtar, former assistant secretary for industry and analysis at the US Department of Commerce’s International Trade Administration (ITA), said the US government is a little bit superficial in its analysis of China’s technological capabilities, resulting in its ineffective sanctions and chip export controls.
Read: Yield and cost in doubt if Huawei revives 5G chips
Follow Jeff Pao on X at @jeffpao3
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