In China a second contract factory for producing 7‑nm microchips will open.

Brief summary

- SMIC is a recognized leader in the Chinese semiconductor industry, and through its own efforts it has been able to start producing 7 nm chips without Western equipment.

- Now Hua Hong Group (through its subsidiary Huali Microelectronics) plans to follow this example and open a contract manufacturing facility for 7‑nanometer ICs in Shanghai.

- Support from Huawei Technologies and the lithography manufacturer SiCarrier will help Hua Hong master the necessary technology, and Biren is already using it for AI accelerator prototypes.

Detailed analysis
1. Situation with SMIC
SMIC is considered the leading Chinese chip maker both in terms of production volume and applied technologies. A few years ago the company began producing 7‑nm ICs while bypassing restrictions on access to Western equipment.

2. New plans for Hua Hong
According to Reuters, Huali Microelectronics intends to open a contract plant in Shanghai where it will manufacture 7 nm chips for Chinese developers. Hua Hong already ranks second among contract manufacturers in the country – following SMIC is logical.

3. Unknown details
- The exact equipment used by Hua Hong has not been disclosed.
- The scale of future production and the yield rate are still unknown.
- Huawei Technologies is likely to provide assistance, as it has been under U.S. sanctions since 2019 and must seek alternative component sources.

4. SiCarrier contribution
The Chinese lithography equipment manufacturer SiCarrier, backed by Huawei, has already been working on implementing 7‑nm technology in Huali since last year. By the end of this year the company plans to produce several thousand silicon wafers monthly and then increase throughput further.

5. Practical application
AI accelerator developer Biren uses Huali’s 7‑nm technology to create prototypes of new chips. In 2023, Biren lost access to TSMC’s Taiwanese supply chain due to sanctions, which heightened the need for local production.

6. Hua Hong infrastructure
Hua Hong has seven semiconductor fabrication plants; the most modern is Fab 6, where the 7‑nm chip production will be implemented. Currently the company officially announces only technologies from 22 to 55 nm.

Conclusion:

SMIC has already proven that Chinese fabs can develop 7‑nm technology without Western resources. Hua Hong Group, led through Huali Microelectronics, intends to replicate this success with support from Huawei and SiCarrier, and open a new contract center in Shanghai for producing chips at this level. Specific equipment details and scale are still unknown, but the prospects for development look promising.