It’s going to turn out that a nation of billions can, surprisingly, figure out how to make chips domestically once it is no longer possible obtain them efficiently from external markets. This might take a few years to ramp up but it will happen and the market will be flooded.
Most people I’ve talked to on forums like this believe it is impossible for various reasons that center around technical competence.
I am no lover of Chinese governmental policies but this attitude is both racist and risky. I am old enough to remember people saying Japam was only good at copying Western inventions, for example. I also remember a few years later when everyone wanted to learn to speak Japanese and The Book of Five Rings was the hot CEO book of the month.
China will figure this out.
and the market will be flooded.
China will figure this out.
Nope. China won’t figured it out and will only be able to do semiconductors that trail behind a lot for a very long time. The smallest node that actually works for them is 16 nm, SMIC’s 7 nm in the new Kirin 9000S Chip is not even close, especially compared to the Krin 9000 wich is made with TSMCs 5nm node. Performance and Efficiency are up to 45% behind TSMCs stuff (Which is not something that can be explained away with just because of the smaller node).
But that’s not all: The way SMIC manufactures these chips is extremely expensive, due to the fact that they have to use multi-patterning. This also effects yields significant. They have no chance to compete on the open market against Samsung, Intel and TSMC, even with the high subsidies from the Chinese government. Also, while the way they are being produced allows for 6 nm, the gate length and contact width are going to reduce yield even more.
So they simply can’t flood the market.
I feel like this is very short sighted. Yes, they can’t do it now. Yes, they are far behind…
But as a manager and a father, the textbook way you get someone to truly learn something and grow is to give them pointers, give them a reason to want to do it, and then let them figure it out on their own. This is how kids learn to walk, how people get good at games, how employees are pushed to learn and grow in their roles, and how countries develop their own tech.
China clearly has enough examples and pointers (legally or not), and now we have a given them a reason to do it (barring them from importing it, but still needing the tech). It will take a while, and their end goals and processes might be different than what ours were. I.e., Sometimes my kid thinks of doing something a different way and it still works. Time will tell. But in the end, they will have their own logistics, their own factories, and their own products. They might be worse, but they could definitely be better, that’s all up to them.
If you wanted China to stay dependent on us, then this was not the right move.
Eventually maybe. But it will be super tough to get to the leading edge, because by the the time they reach where the rest of the world currently is, the rest of the world will go a couple more steps ahead.
What companies like ASML have achieved are half a century of R&D that even if china just copy, paying no attention to IP, there are so many things to perfect. Things like the specialized mirrors and optics that are needed.
China can probably one day get to where the rest are currently in a few years, but to both manufacture and keep per unit costs down at the same time is not an easy hurdle to cross.
SMEE already has an advanced DUV lithography machine. SMIC already knows how to scale foundry operations. China can already domestically produce basically everything needed in a lithography machine
Literally, literally, China’s only issues are the gap from DUV to EUV. These include the light source, photo resist, and a few other factors, but it’s by no means building from the ground up.
Edit: oh, and Chinese lithography machines are notoriously cheap compared to the competition
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I work with a few people from China. What do you think they will say if I ask them if they have a way to say yes to other people in the language they speak when they call their parents?
I would wager that if you asked that question to Chinese people, they’ll answer something like “we use 对, which means correct”, as I explained earlier.
Ask them if they like ice cream, but to answer in Chinese.
They are not going to say “对", they’ll say ”喜欢“（I like it), “不喜欢”,(I don’t like it) or some variation.
They won’t say 对 because “correct” doesn’t answer the question “do you like ice cream?”
You can get an approximate or what you can assimilate as a functional answer to your questions, but you’ll never get a “yes”.
That’s just how “yes” works in all Chinese languages and dialects.
And this is the tip of the iceberg.
Lacking a word for"yes" is one difference among thousands this culture has that determines their reactions to what you think are subtle influences, while you are assuming that culture will react in a way that you understand, even though you can’t understand it by virtue of your simple, practical differences and context.
I have one counterpoint: 嗯
I don’t see the relevance.
How about “shi”…?
Bearing in mind that this is a fraction of a percent of the cultural differences, "是“ means “it is” and "不是“ means “it isn’t”. Neither of them mean yes or no, and would be an incorrect answer to “do you like ice cream?”
" Do you like ice cream?"
" It is."
You can understand what they’re going for, but you are not prompting the response you would expect to because that answer doesn’t exist in those languages or in those cultures.
The framing and context of a single word seems small, but when you’re asking a child “do you like ice cream” but you’re not allowed to ask it in anway that they can say yes or no to you and employ the complexities and implications of those words, the situation is different.
" You like ice cream, correct or incorrect?"
They’ll answer you, but you’ve taken away their independent facility to formulate an answer.
" Ice cream is good, is it or is it not?"
Again, they’ll answer you, within the strict confines of your question. There’s no gray area in your question, which is how you have to ask it in order to elicit any sort of response.
You give them two possible answers, they choose one.
That in turn shapes how you and they see questions in general. How questions and behavioral prompts like the types you’re suggesting are perceived, are asked and responded to.
You can imagine how linguistic formation can determine thought processes pretty quickly, layer upon each other and result in a consciousness you don’t quite recognize.
And that’s from one word among a couple dozen thousand, and those are all only words and ignoring all other parts of the culture.
what does this have to do with semiconductors?
It’s a response to an example from a commenter saying that if the US treated China like the comments are treats their own child, they’ll be able to manipulate and receive a desired response, and that the US is going about semiconductor sanctions wrong.
This is a terrible analogy, as the US and China do not have a paternal relationship, or share similar cultural or behavioral contexts or environments, and there’s no reason that the US should expect China to respond to its prompts how the US expects china too
theres nothing paternal about relationships between countries
in fact we are siblings.
Nothing paternal, that was the problem here. It’s a pretty insulting analogy
Maybe cousins, with the distance, equal standing and cultural differences.
7nm isn’t close to 5nm? There’s a difference of 45%? What! No way!
Fact is, the Huawei Mate 60 has moved over 30 million units. While that’s in no way comparable to Apple’s 200+ million units annually, it’s a significant scale representing a robust supply chain that’s capable of churning out functioning chips. If, by your claims, yields are low because of an immature process, then you’d only expect yields to go up as the process matures.
Yield is not a static factor, but one built on by process development and co-design. You can look at how Intel’s yields have increased over the years: they refrained from using EUV on their 10nm (Intel 7) process and, while they ran into a bunch of engineering challenges and delays, still ended up shipping Intel 7 at scale.
These aren’t unsolvable issues, but ones of engineering and manpower and skill. EUV still requires multi-patterning for 3nm, so it’s not like the problem has been eliminated.
That is the opposite conclusion of this article you didn’t read and it’s extremely unlikely for many reasons.
China will eventually be able to compete in the mass semiconductor commercial market fort non-essential chips, but are about as far away from today’s advanced chip manufacturing as your '99 iMac is from the Oculus Rift.
If the sanctions remain in place and are effective, the only way China will catch up is to develop an entirely new manufacturing process(which they are trying to do, blindly) as well as develop comparable physical fab technology to tsmc(which at their current tech is like trying to build a pixel 9 from scratch with hands tools).
Anecdotes from forum users can be entertaining but are not indicative of anyone who knows anything about the industry, and this article explains very clearly why the market will change but China is facing near to completely insurmountable challenges when it comes to competing in the advanced semiconductor market.
Taiwan, the only country that could help china with this, is strongly opposed to China on most fronts, direly opposed to helping China technologically since that would mitigate Taiwan’s leverage, and has allied themselves with the most powerful and technologically advanced country in the world(outside of semiconductors; smooth move Taiwan), another opponent of China based on their national security, on which the states spends obscenely more money and resources on then anyone else.
“Well china could take over taiwan our they did Hong Kong.”
In which case, tsmc would physically destroy their fabs and data, China would gain nothing and lose any goodwill they’ve been cultivating and spending billions on, with more sanctions than before and end up even further behind than they already are.
The distance China is late to the chip game and the extreme technological limits of cutting-edge semiconductor manufacture are not racist and it’s nonsensical of you to imply they are.
It’s not impossible that the Chinese could catch up eventually, and they have plenty of resources to try, but manufacturing advanced semiconductors without knowledge, resources and access is not an obstacle to be overcome like the Japanese refining manufacturing methods for mainstream global technologies and factory management strategies, this is more like trying to throw a dart without any hands or feet from your apartment to a dart board in another country, and then the dart changes into a butterfly, lands on a flower, pollinates it and the flower turns into a baboon that composes sonnets.
Frankly, I think you’re missing the forest for the trees.
Yes, SMIC is behind the big players, but these newer node shrinks are delivering increasingly small iterative gains. Meanwhile, leakage power is becoming an increasingly important concern for smaller nodes, and much of the technologies that these advanced nodes are delivering (e.g., backside power, 3D stacking) are not coupled with the node itself. Indeed, there’s no reason GAAFET (or whatever people are calling it these days) needs a smaller node, only that it doesn’t really make financial sense on a larger one. It would, if, say, you wanted to develop the technical capability and had idle engineering cycles waiting for machines. So, what does this mean? SMIC can progress at will on everything except the node itself. It’ll remain behind on sheer density, but Intel showed that you can be stuck on a single node for the better part of a decade and still be a market leader. SMIC already knows how to scale a fab (the Huawei Mate 60 moved more than 30 million units in less than a year).
On the process side, SMIC will be behind but not obscenely so. What about at the architecture level? Here, there lies a big problem. Most of the world has been locked in to the CUDA ecosystem. They’re tied to Nvidia for any massively parallel computing needs, and Nvidia can charge whatever price they want. This is, unsurprisingly, a problem, because Nvidia’s hardware is, believe it or not, not the most optimized for a wide variety of applications. There’s been an abundance of research into specialized accelerators for applications like machine learning and scientific computing (and indeed, also many real-world designs) which deliver up to an order of magnitude increase in perf/W, but, perhaps more importantly, a substantially reduced TCO due to not having to pay Nvidia’s obscene prices. Indeed, this can be seen by the fact that Huawei’s Ascend accelerators are actually getting tractíon in the Chinese market. So, at scale, China will be hogging up more electricity for low-capital-cost data centers with higher operating cost… Fortunately, China has an obscene amount of basically free green energy coming online in the next few years.
So, what’s all this concern about? It’s pretty simple: mobile applications are constrained by energy-efficiency, and you can’t get around key energy-efficiency limits without shrinking the transistor. Fortunately, advanced nodes aren’t used in most military or space applications due to reliability concerns… So, the main application for them will be consumer-focused applications like smartphones, autonomous vehicles, and drones. This is a rather annoying problem given that China is betting their next decade of growth on the EV transition, but it’s not insurmountable in the near-term given the sheer cost advantage China has in shipping non-autonomous EVs due to efficiencies in the rest of the supply chain. The same holds for drones, where DJI is the undisputed market leader. For smartphones, Huawei has the largest captive market in the world and Apple is rapidly losing market share.
Ok, so, having established the challenges, how far away is SMIC from a solution?
As discussed, SMIC already operates fabs at scale for 7nm, and indeed SMEE has demonstrated the ability to ship a DUV lithography machine. Intel7 is also entirely DUV, so this isn’t all that surprising. NAND processes still use DUV as well. Intel’s TSMC N7-equivalent process first started shipping with Ice Lake in late 2019, while SMIC’s 7nm process started shipping with the Kirin 9000S in mid 2023. SMIC is expected to start shipping 5nm at volume later this year (how? I’ll never know, but clearly the yields are alright because they’re going to be supplying Huawei again).
I’ll stress this again and again: yields are for the most part, an engineering problem. Getting high yield with multi-patterning requires some absurdly complex engineering, but it’s not inherently impossible with tight enough tolerances. It wouldn’t be economically viable in an open market where EUV is available, but it isn’t.
The big concern right now is, surprisingly, not on the manufacturing side but on the software side. There is no equivalent in the world for American EDA tools. None. The minute sanctions stretch towards EDA, China will be set back by more than a decade. China lacks EDA tools for newer nodes.
I’m not sure what you think “missing the forest for the trees” means by combatively agreeing with my broad strokes analysis of the situation(forest) by listing a couple dozen of your own technical corroborating details (trees).
It was an interesting read, though.
Did you send it to the wrong person?
Your claims are that China is 20 years behind and lacks the technological know-how to catch up. My claim is that China is 5 years behind hardware-wise, already knows how to scale fabrication for near-bleeding-edge nodes, that those 5 years are only marginally important because of the end of Moore’s Law, and that Nvidia’s effective monopoly makes that 5 year lead very tenuous indeed. Essentially, that the West’s technology node lead is basically irrelevant.
This entire semiconductor war is operating under the assumptions that China is bound by power and production constraints (due to cost) and thus cannot outpace US AI development. Military/space applications don’t care, Huawei’s already fucked by sanctions, consumer electronics OEMs are untouched by sanctions, edge devices consider 28nm to be the brand shiny new node…
Basically, it pins the entire issue on the back of Nvidia. Of course, Nvidia is now charging $40k per H100, Facebook holds the bulk of them, and the cost of building a GPU cluster is skyrocketing.
Meanwhile, construction is cheap in China due to oversupply in the construction industry, electricity is cheap in China due to oversupply in the green energy industry, and basically everything 14nm+ is also cheap due solely to already having the equipment to build it. Nvidia’s lead in efficiency cannot offset 40k capex, which is what the next few years will show.
So, surprisingly, my conclusion is that China’s lack of bleeding-edge node capability does not have a significant immediate geopolitical implication. China is perfectly capable of building 28nm chips, and with that 14nm is rather trivial. This is using either domestic supply chains or unsanctioned foreign supply chains. Should China languish for another decade, we may run into problems, but SMIC is on track to release 5nm this year (widely estimated to be the peak economically achievable by DUV quad-patterning) and SMEE has already announced a domestic ArFi DUV lithography machine. The supply chain is there. The gap towards EUV is twofold: the high-power light source and the photoresist. Reminder that both TSMC 7nm and Intel 7 do not use EUV, and their yields are perfectly acceptable (both nodes took some time to scale, I’ll admit). Everything else is a matter of throwing manpower at the problem.
Let’s take a step back and assume that China is stuck in their current state indefinitely. That is, they can produce DUV machines absurdly cheaply, but will never have an EUV machine. Even if China is stuck on 7nm while Intel rolls out 18A, so what? $/transistor isn’t scaling with node anymore, so the main driver is perf/W. Given that China’s green energy transition will pump absurd amounts of electricity into the grid in the near term, the more accurate driver is work/J. This matters solely, solely for mobile applications where reliability isn’t a concern.
Again, a strangely confrontational near total agreement with my conclusions that China will be able to easily produce consumer-centered microchips and have difficulty closing the gap to cutting edge microchips.
Two differences of opinion but I can see:
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You argue that progressively more advanced microchips don’t matter, I cannot see how having more advanced thinking machines is going to be a less important to automation, AI, national security going forward than they already are.
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you believe it’s only a matter of “throwing manpower at the situation” for the Chinese to catch up to TSMC, which does not bear out.
If restaurant A has one cook that has created the most popular omelet through a set of interdependent recipes and complex creative cooking methods, and restaurant B next door hires a new cook every week, instructs them how to create an adequate omelette, and asks them to create a better omelet than the cook at A, restaurant B could easily be stuck with 100 cooks who have learned how to create an adequate omelette and are continuing that set of processes without ever finding a better recipe.
It does not automatically follow that having more cooks is going to result in a better omelette.
Culturally, Taiwan thrives on innovation and creativity. China survives by hierarchy, tradition and established processes.
Again, it isn’t impossible that those one hundred cooks will come up with the perfect omelette, although it’s illogical to think all it takes is hiring more cooks and teaching them the recipe for an adequate omelette to create a better omelette then the cook at restaurant A.
More efficient chips do not have emergent behaviours (outside of, say, mobile and autonomous vehicles). More efficient chips make things more economical. Total compute capability is a function of manufacturing capability (which reflects in capital cost), electricity (which reflects in operating cost), and efficiency (which also reflects in operating cost). If your manufacturing capability is obscene and your electricity output is obscene, then you can handwave a lot of efficiency concerns by just scaling the number of chips you have in a system. In terms of aggregate computing capability, 5nm is more than sufficient to keep pace given enough scale.
There’s an interesting figure that I saw a while ago: China’s % of electricity generation dedicated to data centers is lower than both the US and EU, and due to top line electricity generation growth this proportion is basically not expected to move in the next decade. China has a LOT of freedom to tank efficiency losses that other regions simply do not.
There’s a small condition here that scaling usually has some degree of losses, but for LLM training it’s basically non-existent and for supercomputing it’s supposed to be around 10% losses due to networking/etc.
That is interesting, do you recall where you saw that data about electricity generation growth in different countries?
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This is a very different take from “Chinese people just can’t do this no matter how much time, money, and talent they devote to it” which is what I’m taking about.
Yes, mine is a different, or accurately, a more comprehensive take.
I do address your quoted concern here briefly in the second paragraph of my earlier comment.
“China will eventually be able to compete in the mass semiconductor commercial market fort non-essential chips, but are about as far away from today’s advanced chip manufacturing as your '99 iMac is from the Oculus Rift.”
Maybe even as far away as a calculator is from the rift.
Chinese chutzpah isn’t as important here as the actual technological gaps and rarity of the software processes and absolutely globally unique fabs of tsmc.
It’s not a matter of wanting it, the practical, actual limitations of the endeavor mean something severely phenomenal, miraculous or devastating is going to have to happen for the Chinese to close any sort of chip gap in the “few years” you predict.
A lot can happen in ten years these days. For some reason I always have to state this every time this topic comes up: I never said it was going to be easy. It’s not going to be fast. It is going to happen, though.
Changing your assessment from “a few years” to “ten years” makes it more likely China could catch up, sure, and is very different from what you originally said.
I haven’t made the claim you think it’s easy, I said that the technical challenges the Chinese are facing developing new chip technologies are not at all the same challenges as your example of Japanese developing better methods for manufacturing common global products.
Reorganizing the company error-reporting structure, like Japan did with Toyota, is not going to help China develop advanced chips.
Modern chipmaking is a task orders of magnitude more difficult working with technologies orders of magnitude smaller, with a minute and unique knowledge and manufacturing base aware of Chinese corporate statecraft and committed to not leaking their newest processes. Those sources also have the best research teams and research development technology globally.
The technology is not linear. They cannot continue making smaller chips following an iterative, logical process and throwing more man hours at it. If the sanctions remain effective and China is unable to pull off a stunning degree of corporate statecraft, they will have to come up with entirely new processes on the atomic scale.
“It is going to happen.”
What is? China matching TSMC’s current chipmaking capabilities, at which point TSMC will be years ahead again?
It conceivably could, in your new timeline of a decade rather than the few years you predicted earlier.
Must it? Not at all.
You have adequately demonstrated your knowledge. Ten years is not that long. It’s happening. We should prepare for it, not deny the reality which is what most do.
“It’s happening?”
If you mean that China is attempting to close the semiconductor manufacturing gap, that’s correct.
If you mean that they are closing that gap, that’s baseless.
There’s no evidence that they are any closer to closing that gap in manufacturing advanced microchips even with the billions of dollars they’ve poured into the industry since before US sanctions began.
The forum users you were talking about may not be preparing for the Chinese investment in semiconductor infrastructure, but the u.s government has been for years.
We didn’t invite TSMC to set up in Arizona because we wanted a cool company in our backyard. It’s directly related to the imposed sanctions and the knowledge that China will attempt to close that gap.
Biden isn’t investing tens of billions of dollars into chip manufacturing on a whim, it’s a deliberate preemptive response to what has obviously been coming for a while with Taiwan refusing to integrate with China and holding such technological superiority over China.
China will eventually be able to compete in the mass semiconductor commercial market for non-essential chips, but are about as far away from today’s advanced chip manufacturing as your '99 iMac is from the Oculus Rift.
Their 3.7Ghz x86 CPU on DDR5 is only about 7 years out of date tops only on the clockspeed. Kinda close to a coffee lake.
Not to mention China has been funding and driving RISC-V research and development for years, especially with their open source projects using linux.
They’re not doing this blind, even 26nm die manufacturing is common knowledge now.
High end chips just happen to be a very expensive market both in resources and technological scale, which is why it primarily grew as a global consortium of companies relying on each other to produce the final product
China has already perfected the art of replicating a globalized industry at home because they have the resources and internal funding. The complexities and proprietary information involved with current gen chip production won’t stop them lol. They don’t need to aggressively attack Taiwan in any way to achieve what they need. Maybe some cyber espionage to speed things up, which they have done before with military tech, but nothing more lol.
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It’s absolutely incredible to me that US thought they could hobble a nation of 1.4 billion that has a superior education system and produces more STEM graduates than US does. This was the definition of hubris.
Holy shit that is a fascinating read. Reads like a presidential brief.
I try my best for this community :)
