Semiconductor Manufacturing International Corp (SMIC), China’s largest chip maker, is planning to mass-produce 5-nanometer chips for Huawei Technologies later this year, despite facing low yields and high production costs. This decision is seen as a strategic move by Huawei and SMIC to demonstrate technological prowess in the face of the US chip export ban. However, commentators have suggested that the project is more politically motivated than commercially viable.

SMIC may be able to produce 7nm and 5nm chips with yields of 50% and 30-40%, respectively, by using immersion deep-ultraviolet (DUV) lithography. The cost of using this lithography method is reported to be several times higher than extreme-ultraviolet (EUV) lithography, which is commonly used for producing chips at this scale. Additionally, SMIC is said to be pricing its 5nm and 7nm products at a 40-50% premium over similar technology nodes offered by TSMC.

The production of 5nm chips with DUV lithography requires a four-time patterning technique, which includes multiple exposures and etching processes, leading to increased production costs and reduced yield if not done accurately. The yield of SMIC’s 7nm chips is reported to be less than one-third of those produced by TSMC.

Huawei has previously released 7nm chips manufactured by SMIC, with industry experts confirming that the 7nm chip was made using SMIC's N+2 process via DUV lithography. However, it was later revealed that the 9006C chips used in Huawei's Qingyun L540 laptop were from inventory delivered before TSMC was banned from making chips for Huawei, suggesting that SMIC is preparing its 5nm process through DUV.

TSMC has achieved significant yields for its 7nm and 5nm chips, reaching 93.5% and 80%, respectively, in 2019, and is currently working on making 3nm chips with a yield of 55%.

SMIC has utilized ASML’s NXT:2000i to produce the Kirin 9000S, and it has been mentioned that there are fewer than five ASML systems in China as advanced as the NXT:2000i. ASML has to apply for export licenses from the Dutch government for all shipments of its most advanced immersion DUV lithography systems, and the Dutch government partially revoked its license for the shipment of certain lithography systems to China from the beginning of 2022.

While SMIC's decision to mass-produce 5nm chips for Huawei signifies a push for technological advancement and self-reliance in the face of international restrictions, it also presents technical and economic challenges due to low yields and high production costs associated with the use of DUV lithography.