China Has Found a Way to Get TSMC to Manufacture Its Chips, With Some Restrictions

The joint efforts of SMIC and Huawei has allowed them to take surprising advantage of ASML’s deep ultraviolet lithography (UVP) equipment. Earlier this year, they patented a technique with which they’re presumably producing 5nm integrated circuits known as SAQP (self-aligned quadruple patterning). Multiple patterning involves transferring a pattern to a wafer in numerous layers to increase the resolution of the lithographic process. And the SAQP technique is a more aggressive form of multiple patterning.

One of the problems China faces is that most of its semiconductor designers don’t have the resources to pursue a strategy like that of Huawei and SMIC. Not even these companies can help them. Multiple patterning has two significant problems: its yield per wafer is probably well below the 80% accepted by the industry as the minimum to ensure profitability, which makes the cost of each chip remarkably high.

The Goal: Get TSMC Back

It’s only a guess, but we can be sure that SMIC’s and Huawei’s production of 5nm and 7nm ICs only allows them to meet their own needs. Under these circumstances, most Chinese IC designers find it challenging to access state-of-the-art lithography, and some play a vital role in China’s strategy to develop its AI capabilities. MetaX and Enflame are two of these companies.

In late 2023, the two companies submitted designs for several AI GPUs to TSMC for manufacturing. The ASML lithography equipment the Taiwanese company uses contains U.S.-origin technologies, which allows the U.S. to impose conditions on its use. As such, the U.S. government isn’t allowing TSMC to produce innovative integrated circuits that China can use to bolster its supercomputers and AI data centers, let alone develop its weapons.

However, the U.S. ban isn’t absolute. NVIDIA, for example, can't sell GPUs in China with a performance higher than 70 TFLOPS FP32, but it can sell chips with performance below that limit. Something similar is happening at TSMC, although it isn’t entirely clear what the U.S. limit is. What we do know is that the designs that MetaX and Enflame have delivered to TSMC will be downgraded to comply with the U.S. ban.

So far, TSMC spokespeople haven't commented on the MetaX and Enflame orders but have confirmed that their agreements with all their customers respect international law. Either way, for Chinese chip designers, the possibility to access TSMC's lithography nodes is a breath of fresh air, even if they must significantly downgrade their designs. Until China has its own SVU facilities, its cutting-edge technologies will be in the hands of SMIC and Huawei. And at this point, having TSMC, albeit in a limited way, helps.

Image | TSMC

More Information | Reuters

Related | The U.S. Government Doesn’t Want China to Conquer Its Electric Car Market. The Reality Is That China Barely Sells Any Cars There