China’s Hua Hong Group has achieved a significant milestone in advanced chip manufacturing, developing technologies capable of producing artificial intelligence (AI) chips, according to sources familiar with the matter. This move strengthens Beijing’s drive for technological self-reliance.
The company’s contract chipmaking unit, Huali Microelectronics, is preparing to launch a 7-nanometre (nm) chip production process at its Shanghai plant. This would make Hua Hong the second Chinese chipmaker to reach this level of sophistication, after China’s largest contract chipmaker, SMIC, which currently remains the only domestic producer of 7 nm chips.
The development follows the easing of certain U.S. tech export restrictions, which allowed Nvidia to sell its second-most-powerful AI chips to China last year. Despite this, Beijing continues to promote domestic alternatives to reduce reliance on foreign suppliers.
Details on how Hua Hong achieved the 7 nm capability, its production efficiency, and the equipment providers involved remain unclear. However, sources indicate that Chinese tech giant Huawei Technologies has collaborated with the company on these advanced technologies. Hua Hong Group, Huali, Hua Hong Semiconductor, and Huawei declined to comment.
SMIC currently relies on ASML’s Dutch immersion lithography machines for 7 nm production, but analysts note that yields—the percentage of usable chips per wafer—remain low. ASML declined to comment on deliveries.
Test Production and Partnerships
Huali began R&D for 7 nm chips at its Hua Hong Fab 6 facility last year, supported by domestic suppliers including Huawei-backed SiCarrier, which tested its equipment in Shenzhen. Huali plans an initial production capacity of a few thousand wafers per month by year-end, with future expansion anticipated.
Chinese GPU designer Biren is already using Huali’s 7 nm line for tape-out, a process that finalizes chip designs into physical prototypes before mass production. Biren was placed on a U.S. trade blacklist in 2023, losing access to TSMC’s manufacturing services.
Hua Hong Fab 6, the group’s most advanced foundry, currently produces logic chips with 22 nm and 28 nm nodes. In comparison, Fab 5 focuses on more mature technologies ranging from 40 nm to 55 nm.
The move signals China’s continued push to advance domestic semiconductor capabilities and reduce dependence on foreign chipmakers amid global tech tensions.