Mainland China’s leading semiconductor-chip foundry, SMIC, drops industry bombshell

SMIC to move to mass production at 14 nanometers in first-half 2019

Very recently, reports have surfaced that Shanghai Manufacturing International Corporation (SMIC), the largest semiconductor-chip foundry on the Chinese mainland, is poised to begin volume production at a 14-nanometer process node in the first half of this year. Sources indicate that the initial product will be a FinFET-type device targeting the smartphone market.


For many Western observers of China’s capabilities in chip design and fabrication, this will be startling news. The casual assumption is that China is forced to import the vast majority of the chips it uses because it lacks technical know-how at leading nanometer-scale geometries, with most domestic production reserved for commodity ICs.


There’s more. It was generally understood that SMIC was targeting a 2020 timeframe for 14nm mass production. That SMIC is confident first-half 2019 is ‘doable’ is quite remarkable. The implication is that pilot runs quickly resulted in satisfactory yields and that costly, time-consuming design re-spins had proved unnecessary. SMIC, in fact, could be more than a couple of quarters ahead of schedule. Media reports in China and Taiwan indicate that yields could be as high as 95%.


The goal from the get-go – 14 nanometers

SMIC’s advanced process ambitions first became apparent in mid-2015, when a four-cornered JV was announced between SMIC, Huawei, IMEC (a Belgium-based research centre in nanoelectronics) and Qualcomm, whose objective would be the development of an advanced semiconductor chip-making capability in China. SMIC was to have the controlling stake in the project.


Known as the SMIC Advanced Technology Research and Development (Shanghai) Corporation, the partnership agreed to focus on the production of 14-nanometer FinFET devices in a 3D format. This was extremely ambitious. Stated simply, if 14-nanometer production could be achieved, then China would have reached certainly not parity with the capabilities of chip manufacturers such as Intel and Samsung, but at least a competitive market positioning.


The next milestones: Looking past 14nm

SMIC won’t be standing still. The next milestones will be production at 10nm and 7nm, with the latter enabled by EUV (Extreme Ultraviolet) lithography. While EUV is considered right at the cutting edge of semiconductor lithography and challenging to implement, in 2018 SMIC purchased a step-and-scan EUV system from ASML, for some US$120 million.


Inevitably SMIC will need to expand its fab capacity, but with national policy favouring targeted investment in the semiconductor sector, and with the global chip industry currently in sustained growth mode, funding of some US$10 billion should be available for additional state-of-the-art 300mm-wafer processing lines, with a total capacity of 70,000 wafers per month projected for 2021. With the urgent global transition to 5G cellular rapidly escalating throughout 2019 and beyond, SMIC is unlikely to lack customers. It is 5G, after all, that could re-ignite the smartphone marketplace, currently considered, by many analysts, saturated. That consumers are bored by the slowing pace of innovation in smartphones is another possibility.


Shanghai Huali another 14nm candidate

SMIC is not the only China chipmaker driving 14 nanometers. In November 2016, the Shanghai Daily reported that Shanghai Huali Microelectronics had begun construction of a 38.7 billion yuan (US$7 billion) 300mm-wafer fab. Beginning in 2018, production capacity would be 10,000 wafers per month, reaching 40,000 wafers per month in 2022, on completion of construction. According to Huali, the fab’s process technology would be at both the 28nm and 14nm nodes.


In May of 2016, the China Daily reported that capital equipment for the new fab includes the NXT 1980Di from ASML, noting that this was “…the most advanced immersion lithography tool in the Chinese market at the moment.”


Initial 14nm production volumes at SMIC and Shanghai Huali are likely to be relatively limited, but if production stays on schedule and competitive yields are maintained, then in 2019, China’s semiconductor-chip industry will have come of age.






View of Shanghai (home of SMIC and Shanghai Huali Microelectronics)

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