Despite US efforts to impede the Asian country’s technical progress, Chinese chipmakers anticipate producing next-generation smartphone chips as early as this year, the Financial Times reported this week.

The largest chipmaker in China, SMIC, has assembled new semiconductor production lines in Shanghai to mass produce chips created by Huawei, according to a report that cites people with knowledge of the situation. According to the sources, SMIC intends to make five-nanometer chips using its current inventory of US and Dutch-made machinery.

“With the new 5nm node, Huawei is well on track to upgrade its new flagship handset and data center chips,” one of the people told FT. The Chinese tech giant, impacted by sanctions, began selling its Mate 60 Pro smartphone, which employs advanced seven-nanometer CPUs, successfully in September 2023.

The Chinese government has been making significant investments to create an independent semiconductor supply chain in response to tightening regulations. In 2022, the US President Joe Biden’s administration imposed extensive export limits with the goal of impeding China’s technical advancement, citing worries about national security. A prohibition on the selling of specific semiconductor chips manufactured anywhere in the world using US equipment to China was one of the measures, as was a ban on the transfer of chips intended for artificial intelligence and supercomputing systems.

China has been critical of the export restrictions on several occasions, saying that they violate internationally accepted market laws. According to Mao Ning, a spokesman for the Chinese Foreign Ministry, Washington’s limitations damage supply chains and go beyond the idea of national security last month.

Citing arms sales to Taiwan and the unilateral penalties imposed by the US on Chinese companies and persons, Beijing has also issued its own sanctions on five American defense sector enterprises.

As Chinese companies have continued to purchase US chip manufacturing equipment by taking advantage of loopholes in export rules, some industry reports have contended that Washington’s tech limitations have failed to have the desired effects.

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