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China may be making more advanced chips despite U.S. sanctions — but it still faces big problems

China’s ambition to become a global semiconductor powerhouse is making headway despite crippling US sanctions. While the country may be eeking out more advanced chips than anticipated, its path to true independence remains riddled with obstacles.

The US, aiming to curb China’s technological ascent, has imposed stringent export restrictions on advanced chipmaking equipment and technology. This aimed to stifle China’s progress in critical areas like artificial intelligence and supercomputing.

However, China’s determination is proving resilient. Domestic chipmakers like SMIC are pushing boundaries, achieving limited production of 7nm and even 5nm chips, defying expectations. This progress is fueled by massive investments in research and development, as well as collaborations with foreign companies not bound by US restrictions.

But the road ahead is far from smooth. The crucial EUV lithography machines, essential for producing the most advanced chips, remain out of reach due to US pressure. This forces China to rely on older, less efficient technologies, resulting in higher production costs and lower yields (usable chips produced).

Furthermore, China’s chip ecosystem lacks the maturity and depth of established players like Taiwan and the US. The country still relies heavily on imported intellectual property and materials, making it vulnerable to future disruptions.

Despite these challenges, China’s progress is undeniable. Its tenacity and strategic investments could potentially chip away at US dominance in the long run. However, the battleground remains dynamic, and the outcome hinges on China’s ability to overcome technological hurdles, build a self-sufficient ecosystem, and navigate the geopolitical landscape. The coming years will be critical in determining whether China can truly crack the code of chip independence.

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