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Last month, China’s largest chipmaker—Semiconductor Manufacturing International Corporation (SMIC)—surprised semiconductor observers when it announced it had acquired the technology to produce advanced 7-nanometre semiconductors. However, the question remains: how much money will the company be investing into the production to scale the business?

These 7nm semiconductors are a generation behind what are at present the most advanced semiconductors in mass production. The key providers for 5nm semiconductors are Taiwan Semiconductors Manufacturing Company and Samsung from Korea. The 7nm semiconductors are sufficient for processing large data sets in servers, pcs, and smartphones. The main issue SMIC has to overcome now is how to set-up a production facility with modern lithography equipment that can put integrated circuit patterns on a wafer surface by exposing it to light only once. As of now, US sanctions prohibit the acquisition of EUV equipment, and therefore the company is expected to use older EUV technologies that require multiple rounds of pattering. To circumvent the US sanctions, SMCI could be forced to use little-tested homemade solutions which, if successful, would probably accelerate China’s decoupling from the world.

Dutch equipment maker company ASML and Nikon from Japan are the key companies developing and manufacturing 5nm and 7nm EUV foundry technologies. Mastering the pattering of 5nm and 7nm is not easy; Intel spent years moving from 10 to 7, and we would expect that a similar challenge is awaiting SMCI.