US Sanctions Stall Huawei’s AI Chip Development, Lagging Behind TSMC Until 2026!

Huawei’s push into the AI sector has hit a significant roadblock as the company faces difficulties in acquiring state-of-the-art EUV (Extreme Ultraviolet) technology from ASML. This bottleneck has meant that Huawei’s Ascend AI chips have not moved past the 7nm process—a stark contrast to competitors like Nvidia, according to Bloomberg. This stagnation not only hinders Huawei but signals a broader technological lag for China, potentially extending for years. By comparison, TSMC introduced its 7nm technology in 2018, and SMIC launched similar technology in 2021, lagging years behind. The persistence of the 7nm process through 2026 at SMIC marks a lengthy period in an industry where advancements occur rapidly.

The latest Ascend AI chip iteration, the Ascend 910C, is manufactured using the older 7nm technology from SMIC. The shift to sub-7nm manufacturing scales necessitates EUV technology, which has been made inaccessible to China’s chipmakers due to recent sanctions. These restrictions force local manufacturers to rely on inferior equipment and resort to complex methods like quadruple patterning, which is not only resource-heavy but also prone to alignment errors, leading to lower production yields.

Sources familiar with the situation have indicated that these sanctions will confine Huawei’s leading chips to the 7nm process until at least 2026. In contrast, TSMC is preparing to launch its 2nm-class N2 node next year. This technological disparity also impacts Huawei’s Mate series smartphones, which utilize the company’s own Kirin chips to compete with Qualcomm and MediaTek. It appears increasingly unlikely that a 5nm Kirin SoC will emerge anytime soon.

Adding to the difficulties, SMIC, China’s primary semiconductor producer and a local competitor to TSMC, reportedly struggles to meet the growing demand and maintain a consistent supply of its 7nm wafers. This issue casts doubt on China’s ambitious semiconductor initiatives, which are supported by substantial government investment. Meanwhile, Japan is not sitting idle, as it plans to launch a substantial $65 billion strategy to rejuvenate its chip sector.

In an attempt to bridge the technological gap, Huawei has been actively recruiting TSMC employees, offering salaries nearly three times higher to leverage their expertise. Recently, TSMC disclosed that Huawei has been circumventing U.S.-led export restrictions by using a proxy to obtain the Ascend 910B AI chip. To remain competitive on the global stage, China, with companies like Huawei relying on local manufacturers such as SMIC, must overcome the challenges presented by the lack of access to advanced EUV technology.