China makes microchip breakthrough in blow to Biden’s tech sanctions

China has made a major breakthrough in microchip manufacturing, undermining US President Joe Biden’s efforts to block Beijing from accessing the most advanced technology.

Chips in Huawei’s latest smartphone appear to have been made using cutting-edge techniques developed in Europe, using technology that is now subject to trade restrictions.

Research company TechInsights analysed the Mate 60’s main processor chip and concluded it was manufactured using what is known as EUV, or extreme ultraviolet lithography. EUV is an advanced manufacturing technique used to etch a chip’s inner workings into its silicon.

A closely-guarded secret, EUV was developed by Dutch company ASML and incorporated into its multi-billion dollar chip manufacturing machines. China is now largely blocked from buying these machines under trade restrictions spearheaded by the US.

The Mate 60’s processor chip was made by China’s Semiconductor Manufacturing International Corporation (SMIC), a partly state-owned foundry.

While the chips used in the Mate 60 are benign, the suggestion that Beijing now has access to this manufacturing technology will cause alarm in Washington.

President Biden has sought to restrict China’s access to the most advanced chip technology for fear that it could be put to military use.

SMIC, which is China’s biggest microchip manufacturer, was placed on a US “blacklist” in 2020 because of the “unacceptable risk” that its products could be used for military purposes. SMIC denies it works with the military.

TechInsights vice-chairman Dan Hutcheson told Bloomberg, which first reported on China’s tech breakthrough: “It’s a pretty important statement for China.”

Shares in SMIC jumped 10pc in Hong Kong on the report.

Huawei prompted concerns that China had made a breakthrough in EUV technology last year when it filed a patent related to the technique.

The Kirin 9000S chip in its new Mate 60 appears to use a so-called “7 nanometre” process node – a measure of how small, and thus powerful, a chip’s circuitry is.

Current US sanctions prohibit China from importing manufacturing equipment for process nodes smaller than 14nm, a technology that was considered cutting-edge in 2015.

TechInsights’ Mr Hutcheson in a research note: “This brings us to the question of China’s inability to obtain the optics, materials, and light sources needed to have EUV capability in its fabs.

“SMIC’s technology advances are on an accelerated trajectory.”

Huawei Mate 60 was launched last week during a visit to Beijing by US commerce secretary Gina Raimondo.

Huawei and SMIC were contacted for comment.