A report by Bloomberg Thursday found that Semiconductor Manufacturing International Corp (SMIC). China’s premier chip manufacturer has developed the ability to produce chips to the highest Western standards despite US sanctions that had been designed to prevent such an advance.

According to a report by industry blog Tech Insights, which Bloomberg has confirmed, SMIC has produced Bitcoin mining semiconductors with 7-nanometer technology since last July. The figure represents the size of the transistors involved, and the smaller the figure, the smaller the transistors, and the more transistors that can be fit on a single chip. The more transistors on a chip, the faster and more efficient it will be.

Previously SMIC had only produced chips to a standard of 14-nanometers, and the US government had hoped to prevent any advance beyond that level. In 2020, the US government had banned export of equipment capable of producing 10nm and below level chips to SMIC. Currently the US government is focusing on preventing Dutch supplier ASML from supplying similar machines to SMIC.

Although ASML is already forbidden from selling its most advanced equipment to SMIC, the Biden administration is trying to tighten the ban to include less advanced technologies as well.

Currently Taiwan’s TSMC and South Korea’s Samsung can make 7nm semiconductors, while US-based Intel is slated to release its own 7nm chip next year. Currently the most advanced US and European chips are only 12nm.

It is not clear how China has reached this level of technological sophistication. Some have suggested they may have modified their 14nm tooling.

In addition to representing a dangerous advance for Chinese technological sophistication, the new chips also pose a threat to the geopolitical battlefield, where Washington has been trying to leverage its access to technology to deny Russia access to Western technology in retaliation for the invasion of Ukraine.

In March, the US Department of Commerce threatened SMIC with the withholding of manufacturing software the company required, if the company continued to export semiconductors to Russia and Belarus. The Chinese had refused to join in the Western sanctions regime against Russia, saying it would, “continue to maintain normal trade, economic, and financial ties” with Russia.

For its part, SMIC maintained they have never had any Russian customers, and the company has, “always been operating in compliance” with US sanctions.

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