China’s leading chipmaker is testing its first domestically produced advanced lithography machine for 7nm chips, even as regulators intensify scrutiny of U.S. rival Nvidia Corporation NVDA.
SMIC Tests Homegrown Lithography Technology
Semiconductor Manufacturing International Corporation or SMIC, China’s top chip producer, has begun pilot runs using a deep-ultraviolet lithography machine made by Shanghai-based startup Yuliangsheng, reported the Financial Times, citing people familiar with the matter.
The machine represents China’s most advanced attempt yet to reduce reliance on foreign technology and bypass U.S. export restrictions. Analysts say that if successful, the breakthrough would mark a significant step toward self-sufficiency in producing chips critical for artificial intelligence.
Lin Qingyuan, semiconductor analyst at Bernstein, said, “If successful, it would represent an important step for Chinese companies, which could build on this breakthrough for more advanced machinery.”
Also Read: US-China Trade War: American Kids To Get Fewer, Costlier Dolls This Christmas, Here’s Why
Targeting 7nm Production With Domestic Tools
The trial equipment is being used to manufacture 28nm chips with multi-patterning techniques aimed at producing 7nm processors, the report noted, citing people briefed on the project.
In theory, the tools could also be pushed to produce 5nm chips at low yield, though still far behind global leader Taiwan Semiconductor Manufacturing Co. TSM, which is preparing to mass-produce 2nm chips later this year.
Most of Yuliangsheng’s machine components are domestically made, though some are still sourced abroad. SMIC faces a lengthy process before the tool can achieve production stability and yield rates needed for mass manufacturing.
Nvidia Faces Antitrust Pressure In China
While SMIC pushes forward, Beijing has stepped up pressure on Nvidia.
On Monday, China’s market regulator extended its antitrust probe into Nvidia’s 2020 acquisition of Israeli chipmaker Mellanox, alleging violations of conditional approval terms.
Potential penalties could include fines of up to 10% of Nvidia’s prior-year sales in China, a market that contributed roughly 13% of its revenue last fiscal year.
China has also launched anti-dumping and anti-discrimination investigations into U.S. semiconductor companies, including Texas Instruments and Analog Devices.
The move comes as the U.S. and China hold sensitive trade talks in Madrid, underscoring how semiconductors remain central to their rivalry.
Strategic Rivalry Intensifies
The dual track of domestic breakthroughs and regulatory crackdowns highlights Beijing’s strategy: advancing homegrown semiconductor capabilities while applying pressure to U.S. rivals.
Having a prototype is one thing, Bernstein’s Lin cautioned, adding that putting it into volume production and competing with ASML is another. “This could take another few years.”
For now, SMIC is targeting mass production of chips with Chinese-made lithography tools as early as 2027, even as China’s push for semiconductor independence reshapes the global AI race.
Price Action: Nvidia stock has gained 26.44% so far this year and is up 51.29% over the past 12 months, per Benzinga Pro.
According to Benzinga’s Edge Stock Rankings, NVDA maintains strong momentum across short, medium and long-term horizons. Additional insights can be found here.
Read Next:
Apple May See Fewer Searches In Safari, But Google CEO Sundar Pichai Insists AI Is Fueling Overall Query Growth: ‘Far From A Zero-Sum Game’
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: NESPIX from Shutterstock