SMIC Prepares for U.S. Chip Restrictions: Stockpiling Chip Manufacturing Supplies


SMIC Chip

In August, Chinese tech giant Huawei unveiled its flagship smartphone, the Huawei Mate 60 Pro, and this announcement caused a couple of waves around the globe. The Huawei Mate 60 Pro smartphone is truly impressive but that is not the main driving force behind its popularity. However, the world was shocked by Huawei’s ability to reintroduce the Kirin chip and incorporate 5G technology in its phone despite facing sanctions from the United States. This is where SMIC, China’s largest chip manufacturing foundry, comes into play. It has been confirmed that the company behind the manufacturing of the new Kirin 9000s chip is SMIC.

The Chinese telecommunication equipment maker was able to manufacture only 4G smartphones for a couple of years now due to sanctions. In its previous flagships, the Huawei P60 Pro and the Mate 60 series, the company obtained licenses to use the Snapdragon 8+ Gen 1. However, it could only use the 4G version of this chip. On the other hand, SMIC was restricted to manufacturing 14nm chips due to U.S. sanctions.

SMIC Can Now Create 7nm Chip SMIC Chip

In July 2022, SMIC was reported to have imitated TSMC’s 7nm technology to produce its Bitcoin Miner SoC for cryptocurrency mining. Now, it seems that SMIC can create 7nm chipsets like the Kirin 9000S found in the 5G-capable Mate 60 Pro. Huawei plans to sell up to 20 million units of this device. Even though the Kirin 9000S, at 7nm, is two generations behind the 3nm A17 Pro chip powering the iPhone 15 Pro and iPhone 15 Pro Max.

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According to a recent report from the Chinese website money.UDN.com (via Tom’sHardware), SMIC is accumulating the necessary supplies to produce more Kirin 9000S chips. SMIC has reportedly made orders with its supply chain in Taiwan to secure materials for producing the Kirin 9000S over the next two years. The report highlights two possible reasons behind the foundry’s actions.

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Why is SMIC Stockpiling Chip Manufacturing Supplies? SMIC Chip

There are two potential reasons behind SMIC’s actions. One possibility is that it fears further U.S. sanctions against Huawei. Mainly due to concerns about the Kirin 9000S chipset it used in 5G phones. Tighter sanctions could prevent SMIC from producing cutting-edge 5G silicon, including the Kirin 9000S SoC.

The other possibility is that SMIC anticipates a surge in demand for Huawei’s Mate 60 Pro, Mate 60 Pro+, and Mate 60 RS. Therefore, the company had to place more orders for these chips. Despite not utilizing the 3nm process node, Huawei may still need to use the Kirin 9000S in future flagship models. This also includes the upcoming P70 series.

While Huawei and SMIC’s collaboration has sparked a wave of nationalism in China. This could potentially lead to increased smartphone shipments for Huawei this year, there’s a looming concern. If SMIC cannot advance beyond the 7nm manufacturing process, their business could face a decline. The critical question is how the U.S. Commerce Department will react to this situation.

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