Building leading chips without EUV
US export controls cut China off from EUV scanners, leading-edge foundry capacity and, since December 2024, imported HBM. Huawei's answer is more chips per system, made on SMIC's DUV-only processes, while CXMT races to make HBM at home.
SMIC N+3: "5 nm-equivalent", without EUV
Epoch AI describes N+3 as roughly 5 nm-equivalent; other analysts call it a 7 nm-class node made with DUV multi-patterning. Epoch expects SMIC to stay at about 5 nm-equivalent density until at least the end of the decade, with lower yields and higher cost per wafer than TSMC.
Atlas 950 SuperPoD
Up to 8,192 Ascend 950DT chips, 8 EF FP8 / 16 EF FP4 and 16.3 PB/s interconnect. Huawei claims 6.7× the compute of NVIDIA's NVL144 but uses about 57× as many chips, and its vice chairman concedes Huawei trails on single-chip performance. No official power figure has been published.
The HBM bottleneck
- A stockpile of 10M+ foreign HBM stacks bought before the Dec 2024 controls is expected to run out in 2026 (Epoch AI)
- CXMT HBM3 remained in sampling through 2026
- CXMT HBM3E: small-scale production from late 2026 (Reuters) or 2027 (Tom's Hardware), at a reported 20–30% yield vs ~70% at SK hynix, with performance closer to HBM3
A captive market
NVIDIA's China data-centre share is reported near zero, Huawei expects about $12 billion in AI-chip revenue and says it cannot build enough to meet domestic demand. The Council on Foreign Relations argues the 950 series has a lower total processing performance (TPP, the export-control metric) than the 910C, and that controls should stay.
HBM revenue share, Q2 2026
DEEP DIVEA timeline of US export controls
| Date | Measure |
|---|---|
| 2019–2020 | Huawei added to the Entity List; foreign-produced chips made with US tools for Huawei restricted. |
| Oct 2022 | Broad rules limit exports of advanced AI chips and of equipment for advanced logic and memory to China, and restrict US persons from supporting advanced fabs there. |
| Oct 2023 | Rules updated with a performance-density metric (total processing performance), closing gaps that allowed modified chips; more equipment covered. |
| Dec 2024 | Controls on high-bandwidth memory and more semiconductor equipment; more Chinese entities listed. |
| Jan–May 2025 | An "AI diffusion" framework with country tiers was issued and later rescinded; licensing of specific products to China continued to change. |
The Netherlands and Japan introduced parallel controls on lithography and other tools, so the most advanced EUV scanners have never been shipped to China, and newer DUV immersion systems also require licences.
RESPONSEChina's strategy
- Investment: the third National Integrated Circuit Industry Investment Fund ("Big Fund III", 2024) raised about 344 billion yuan (around $47 billion), focusing on equipment, materials and memory.
- Process: SMIC produces 7 nm- and 5 nm-class chips with DUV multi-patterning, at lower yield and higher cost than EUV processes.
- Accelerators: Huawei Ascend, Cambricon and others supply domestic AI chips; system-level scale (SuperPoDs) compensates for weaker individual chips.
- Memory: CXMT for DRAM and HBM, YMTC for 3D NAND.
- Materials leverage: China restricted exports of gallium and germanium (2023) and later other critical minerals, materials used in compound semiconductors and optics.
SUBSIDIESIndustrial policy elsewhere
RISKConcentration and chokepoints
Several points in the supply chain depend on one company or one region: EUV scanners (ASML, the Netherlands), leading-edge logic manufacturing (mostly TSMC in Taiwan), advanced packaging (largely TSMC), HBM (three companies), EDA software (three US companies) and certain materials and chemicals (Japan for photoresists, China for gallium and rare earths). Any disruption in one of these would affect almost all advanced chips, which is why governments now treat semiconductors as strategic infrastructure.