China’s semiconductor ambitions could be edging forward as Hua Hong Semiconductor (HHUSF) works to develop more advanced chip manufacturing capabilities that may support artificial intelligence processors. People familiar with the matter said the company’s contract manufacturing unit, Huali Microelectronics, is preparing a 7-nanometre chipmaking process at its Shanghai plant, a step that could make it the second Chinese chipmaker able to produce chips at that technology level after SMIC (SMICY). The effort arrives as Beijing continues encouraging domestic technology companies to adopt locally produced chips even after Washington eased some export restrictions that now allow Nvidia (NVDA) to sell its second-most-powerful AI chips to China.
The 7-nanometre initiative reportedly began last year at Hua Hong’s Fab 6 facility, with development supported by domestic equipment suppliers including Huawei-backed SiCarrier. Sources also indicated that Huawei has been collaborating with Hua Hong on the technology, though details surrounding the production process, equipment used, and potential manufacturing efficiency have not been disclosed. Fab 6 currently represents the most advanced facility within Hua Hong Group, which today manufactures logic chips using 22-nanometre and 28-nanometre process nodes.
Early production plans could remain limited as the company evaluates the technology. Sources said Huali is targeting initial output of a few thousand wafers per month by the end of the year, with ambitions to expand production capacity later. Chinese GPU designer Biren is reportedly using the 7-nanometre line for tape-out testing after losing access to Taiwan Semiconductor Manufacturing Company’s 
TSM contract manufacturing services shortly after being placed on a U.S. trade blacklist in 2023. Elsewhere within the group, Hua Hong’s Fab 5 facility continues producing chips using mature manufacturing processes ranging from 40-nanometre to 55-nanometre nodes.
