SINGAPORE, March 16 - Hua Hong Group has developed advanced chipmaking techniques that can be applied to artificial intelligence chips, according to four people familiar with the matter, marking a notable step in China’s drive toward greater technology self-sufficiency. Its contract-manufacturing arm, Huali Microelectronics, is preparing a 7-nanometre manufacturing process at its Shanghai facility, the sources said, which would make Hua Hong the second domestic player with such capabilities.
Currently, Semiconductor Manufacturing International Corp is the sole domestic producer publicly known to be manufacturing chips at the 7 nm node. The sources declined to be named because the information has not been made public. Hua Hong Group is China’s second-largest chipmaker.
Reports indicate that Hua Hong’s progress happened amid an easing of certain U.S. technology export restrictions since last year, a shift that allowed Nvidia to resume sales of some high-performance AI chips to China. Despite that relaxation, Chinese authorities have promoted the adoption of domestically manufactured alternatives as part of a broader policy goal to reduce dependence on foreign suppliers.
Details remain limited on how Hua Hong achieved the 7 nm capability, what its manufacturing efficiency will be, and which foreign or domestic equipment vendors were engaged in the development, the sources said. Hua Hong Group, Huali Microelectronics, Hua Hong Semiconductor and Huawei did not respond to requests for comment.
Three of the sources said that Huawei Technologies has been collaborating with Hua Hong on the 7 nm technologies. All sources who provided information to reporters requested anonymity because the progress has not been disclosed publicly.
Industry observers note that producing 7 nm chips typically requires sophisticated equipment. For example, SMIC has used ASML’s immersion tools for 7 nm production, but analysts have said that yields - the share of functional chips from each silicon wafer - have remained weak. ASML declined to comment on questions about deliveries.
Test production and equipment
Huali began research and development work on 7 nm processes at Hua Hong Fab 6 last year, supported in part by domestic equipment suppliers. One supplier mentioned by a source was SiCarrier, a company backed by Huawei, which reportedly tested its tools at a facility in Shenzhen last year. SiCarrier did not respond to a request for comment.
In December, Hua Hong Semiconductor announced plans to acquire a controlling stake in Huali and to raise 7.56 billion yuan to finance technological upgrades and research at the foundry. The fundraising and planned takeover were described by a source as part of a broader effort to accelerate capability development.
Two sources said Huali is targeting initial 7 nm production of a few thousand wafers per month by the end of the year, with an intention to scale capacity subsequently. One source added that Chinese GPU designer Biren is using Huali’s 7 nm line for tape-out, the stage where a chip design is converted into a physical prototype for verification ahead of mass production. Biren was placed on a U.S. trade blacklist in 2023 and lost access to TSMC’s contract manufacturing services shortly after; Biren did not respond to requests for comment.
Foundry footprint and process nodes
Hua Hong Fab 6 is the group’s most advanced facility among seven foundries and presently manufactures logic chips using 22 nm and 28 nm nodes, according to the company website. By contrast, Fab 5 operates using more mature process technologies, ranging from 40 nm to 55 nm.
Currency conversion noted in reporting showed an exchange rate of $1 = 6.8855 yuan.
The development at Huali illustrates progress within parts of China’s domestic foundry sector, but specific operational metrics - including yield performance, supplier lists, and commercial ramp timelines beyond the initial guidance of a few thousand wafers per month - were not provided by the sources and remain unverified publicly.