SMIC Rumored To Have Achieved 95% 14nm Chip Yield – But Industry Insiders Doubt The Claim

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China's chip darling, the Semiconductor Manufacturing International Corporation (SMIC) has managed to achieve a 95% yield with its 14nm semiconductor process suggest industry sources in the East Asian country. This bit of information, if true, will place SMIC on a level comparable to the Taiwan Semiconductor Manufacturing Corporation (TSMC). However, as the claims make their way into the press, some experts have also questioned whether it's possible for SMIC to achieve the high rate given that the 14-nanometer node accounts for less than 10% of the company's overall product sales.

SMIC's Product Mix Raises Questions About 14nm High Yield Rate

The rumors of a 95% yield rate, if true, imply that SMIC has perfected the 14-nanometer manufacturing process, and as a result, the company is ready to move forward to advanced nodes. While the next step in the node hierarchy is 10nm, the Chinese fab is believed to be moving directly to 7nm - undoubtedly spurred into action following American sanctions against Huawei Technologies Ltd. which limit the company's ability to procure chips manufactured on high-end technologies through Extreme Ultraviolet (EUV) lithography.

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In 2020's final quarter, sales of chips manufactured through 14nm and 28nm contributed only 5% to SMIC's overall revenues, dropping from the roughly 15% share that the two nodes had achieved in the previous quarter. At the same time, the company shipped roughly the same amount of wafers, 1.4 million, and it earned $980 million in revenue, which also dropped sequentially.

Combining the yield and revenue mix percentages together, engineers working for Taiwanese chip firms have doubted the viability of the claims. They believe that given that 14nm's revenue percentage dropped in the fourth quarter, it is unlikely that a yield increase independent of an increase in output for a process can happen.

Yield in the chip manufacturing process refers to the number of chips in a wafer that passes quality control requirements and deemed worthy of moving to the next step.

Inside a clean room of China's Semiconductor Manufacturing International Corporation (SMIC). The company's shares closed 1.20% higher in Hong Kong today. (Image Credits: REUTERS/ Nir Elias)

IF the rumors are true, then during the current quarter, SMIC should have significantly increased the number of 14nm products that it has shipped to customers. Given the ongoing chip shortages, the fab has seen more orders flow in from both Huawei and Qualcomm, with the U.S. chip designer going as far as submitting requests for the tools that SMIC needs to manufacture chips on older process nodes. These nodes are the ones hit the hardest with the ongoing shortage, and government scrutiny of license applications of American companies such as Lam Research and Applied Materials has been high due to concerns that the equipment might b USD to produce nodes 10nm and below.

A Qualcomm affiliate in China, Huawei and SMIC have also entered into an agreement to form a research and development organization dubbed the SMIC Advanced Technology Research & Development (Shanghai) Corporation. The entity will be used to research the 14nm node, and SMIC will be the majority shareholder.

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The development marks the beginning of closer cooperation between U.S. firms and the Chinese chip factor as the former look to diversify their procurement options.

Even as SMIC moves forward in developing the 14nm node, its options to move beyond the process are limited. Process nodes including 10nm require more complex manufacturing techniques if the older Deep Ultraviolet (DUV) lithography machines are used, and SMIC's ability to procure the latest Extreme Ultraviolet (EUV) machines from Dutch company ASML remains limited. Without access to these machines, the fab will find it increasingly difficult to progress to smaller nodes - while the world, including TSMC, races to 3nm.

The author has no position in any of the stocks mentioned. WCCF TECH INC has a disclosure and ethics policy.
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