China builds Nvidia-TSMC alternative

By Alimat Aliyeva

China’s Hua Hong Group Corporation, the country’s second-largest contract semiconductor manufacturer, has developed technologies to produce advanced chips optimized for artificial intelligence applications. This marks a major milestone in Beijing’s effort to reduce dependence on foreign semiconductor technology, AzerNEWS reports.

A division of Hua Hong, Huali Microelectronics Corporation, is preparing to launch a 7-nanometer (7nm) process technology at its factory in Shanghai. Until now, SMIC Corporation was the only Chinese manufacturer capable of producing microchips at this level of miniaturization, making Huali the country’s second player in the ultra-advanced semiconductor market.

Official details about the project remain scarce: production efficiency, yield rates, and the full list of equipment suppliers have not been disclosed. However, sources indicate that Huawei Technologies, which collaborates closely with Huali, played a pivotal role in the development of this 7nm technology.

The project is supported by a domestic ecosystem: local hardware companies, including the Huawei-backed startup SiCarrier, provide research and development support. Early customers have already begun testing the new production line. For example, Chinese GPU developer Biren is using Huali’s 7nm facility to create physical chip prototypes before scaling up for mass production.

The new 7nm production will be based at Hua Hong Fab 6 in Shanghai, a factory that previously manufactured logic chips using more mature 22nm and 28nm processes. Huali aims to reach an initial output of several thousand silicon wafers per month by the end of this year, with plans for further expansion in the coming years.

The key challenge remains the profitability of 7nm production. Analysts note that SMIC currently produces 7nm chips using previous-generation immersion lithography machines from Dutch company ASML, and the yield of usable chips is extremely low, making production expensive. Huali will need to overcome similar technical and economic hurdles to make the new facility commercially viable.

If successful, this development could reshape China’s domestic semiconductor industry, strengthening its self-sufficiency in AI and high-performance computing chips — a critical technology area amid ongoing global supply chain tensions.