The group’s contract chipmaking arm, Shanghai Huali Microelectronics, is preparing a 7-nanometre (nm) production process at its facility in Shanghai. If fully implemented, the development would make Hua Hong the second Chinese semiconductor manufacturer capable of producing chips at that level of sophistication.
Currently, the country’s leading foundry, Semiconductor Manufacturing International Corporation (SMIC), is the only domestic chipmaker known to manufacture 7 nm chips.
Collaboration With Huawei
Sources familiar with the development said Chinese technology giant Huawei Technologies has collaborated with the Hua Hong group on the 7 nm process. The cooperation is seen as part of broader national efforts to build a resilient semiconductor ecosystem after years of export restrictions from the United States.
None of the companies involved — Hua Hong Group, Huali, its affiliate Hua Hong Semiconductor, or Huawei — responded to requests for comment.
Reuters was unable to determine exactly how Hua Hong achieved the new manufacturing capability, the efficiency levels of the process, or which international equipment suppliers may have been involved.
U.S. Export Controls and Domestic Push
The progress comes amid shifting geopolitical dynamics around technology trade. Washington eased some export controls last year, allowing U.S. chip giant Nvidia to resume sales of its second-most powerful AI chips to China.
Despite the relaxation, Beijing has continued encouraging Chinese firms to rely on domestically produced semiconductor technologies in an effort to reduce dependence on foreign suppliers.
Meanwhile, SMIC has reportedly relied on immersion lithography machines produced by Dutch semiconductor equipment maker ASML to manufacture 7 nm chips, although analysts say production yields have remained relatively low.
ASML declined to comment on questions regarding equipment deliveries.
Test Production Underway
Research and development on the new process reportedly began last year at Hua Hong Fab 6, the most advanced fabrication plant within the Hua Hong network. The project has received support from domestic equipment providers, including Huawei-backed semiconductor equipment company SiCarrier, which previously tested its machinery at a facility in Shenzhen.
Huali is planning initial production capacity of several thousand wafers per month by the end of the year, with plans to scale up output later.
One of the first potential users of the new production line is Chinese graphics chip designer Biren Technology. The firm is reportedly preparing a tape-out — the stage where a chip design is finalized and sent for prototype manufacturing before mass production.
Biren was placed on a U.S. trade blacklist in 2023, which cut it off from manufacturing services provided by Taiwanese chipmaking giant TSMC.
Upgrading China’s Semiconductor Capabilities
The move follows a December announcement by Hua Hong Semiconductor that it plans to acquire a controlling stake in Huali and raise about 7.56 billion yuan ($1.1 billion) to fund technological upgrades and expand research at the foundry.
Hua Hong’s Fab 6 currently produces logic chips using 22 nm and 28 nm process nodes, while another facility, Fab 5, manufactures chips using older technologies ranging from 40 nm to 55 nm, according to the company.
Industry observers say the potential rollout of domestic 7 nm production could mark a key milestone in China’s long-term goal of achieving greater self-sufficiency in advanced semiconductors, particularly those used in artificial intelligence and high-performance computing.