China’s Hua Hong Group has reportedly developed advanced chip manufacturing technology that could allow it to produce artificial intelligence chips domestically.
According to people familiar with the development, the company’s contract chipmaking arm, Huali Microelectronics, is preparing a 7-nanometre chip production process at its manufacturing plant in Shanghai.
If successful, this would make Hua Hong the second Chinese company capable of producing chips using 7 nm technology.
At present, China’s largest contract chipmaker SMIC is the only domestic company that has the ability to produce chips with 7 nm technology.
Hua Hong is currently the second-largest chip manufacturer in China and plays an important role in the country’s semiconductor industry.
The development comes as China continues to strengthen its domestic technology sector after facing restrictions from the United States on advanced semiconductor equipment and chip exports.
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Although Washington has eased some export controls in recent months, allowing companies like Nvidia to sell certain artificial intelligence chips to China, Beijing is still encouraging its companies to develop and buy local technology.
Sources said Chinese technology giant Huawei Technologies has also been working with Hua Hong to develop the 7 nm chip production technology.
However, the companies involved have not publicly confirmed the collaboration.
According to reports, research and development work on the 7 nm chips began last year at Hua Hong’s Fab 6 facility.
Domestic equipment suppliers, including Huawei-backed technology company SiCarrier, are believed to have supported the project by testing manufacturing equipment during the development phase.
Hua Hong Semiconductor also announced earlier that it plans to acquire a controlling stake in Huali Microelectronics and invest around 7.56 billion yuan, which is about $1.10 billion, to upgrade technology and expand research at the factory.
The company plans to begin small-scale production of 7 nm chips with an initial capacity of a few thousand wafers per month by the end of this year.
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Production could increase further in the future depending on demand and technological improvements.
Chinese chip designer Biren is reportedly using Huali’s 7 nm production line for “tape out”, which is the stage where a chip design is turned into a physical prototype before mass production begins.
Biren was placed on a United States trade blacklist in 2023 and lost access to Taiwan’s TSMC manufacturing services shortly afterward.
Currently, Hua Hong’s Fab 6 facility produces logic chips using 22 nm and 28 nm technology, while its Fab 5 plant manufactures chips using older processes ranging between 40 nm and 55 nm.
Experts say the move toward 7 nm production represents an important technological step for China’s semiconductor industry.
