China Pushes Deeper Into Advanced Chips With New 7nm Drive

The Chronify

March 16, 2026

China’s semiconductor push has reached a new stage, as Hua Hong Group, the country’s second largest chipmaker, is preparing to enter 7 nanometre chip production through its contract manufacturing arm, Huali Microelectronics, according to a Reuters report citing people familiar with the matter. The move would make Hua Hong only the second Chinese foundry after SMIC with domestic 7nm capability, a step seen as important for China’s effort to reduce dependence on foreign chip suppliers and strengthen local artificial intelligence supply chains.

The report said Huali is readying a 7nm process at its Shanghai plant, where test production is already under way. Initial capacity is expected to reach a few thousand wafers per month by the end of 2026, with plans to expand output later. Reuters also reported that Chinese GPU designer Biren is using Huali’s 7nm line for tape out work, an early stage in turning chip designs into physical prototypes before mass production.

The development adds fresh momentum to Beijing’s long running semiconductor self sufficiency campaign. Although Washington has eased some export controls since last year, including rules allowing Nvidia to sell its second most powerful AI chips into China, Chinese authorities have continued urging firms to rely more on domestic alternatives. Reuters said this policy backdrop has helped create demand for homegrown foundry capacity, especially for advanced AI related chips.

Reuters further reported that Huawei has been collaborating with Hua Hong on the 7nm effort. It also said domestic equipment suppliers, including Huawei backed SiCarrier, have supported research and testing tied to the new process. While Reuters could not independently determine the full manufacturing route, yields, or the exact equipment mix used to achieve the capability, the report points to a wider Chinese effort to build advanced production capacity with fewer foreign inputs. Earlier reporting from the South China Morning Post highlighted SiCarrier’s emergence as a closely watched Chinese chip equipment player linked to Huawei’s broader semiconductor ambitions.

Company and industry filings show Hua Hong has also been restructuring to strengthen its manufacturing base. Hua Hong Semiconductor announced plans in late 2025 to acquire a controlling stake in Huali, while Reuters said the group also aimed to raise 7.56 billion yuan for technology upgrades and research. Separate market coverage from Tom’s Hardware said the deal reflects a broader consolidation trend in China’s foundry sector as chipmakers pool assets and capital to push deeper into advanced manufacturing.

Huali’s Fab 6 is currently the most advanced facility in the Hua Hong system. Official company information shows Hua Hong and Huali have historically focused on specialty and mature nodes, with Huali’s known commercial strengths centered on 22nm and 28nm class production. A successful 7nm ramp would mark a major jump beyond that base, though analysts and past reporting have noted that China still faces major challenges in yield, equipment access, and production efficiency at advanced nodes.