SMIC founder: the AI boom can pay off even without leading-edge process nodes

SMIC's founder expressed confidence that the company and other Chinese chipmakers will be able to profit from the artificial intelligence boom despite US sanctions and technological restrictions.

How sanctions cornered SMIC

SMIC, China's largest contract semiconductor manufacturer, has been under US sanctions for more than two decades. The restrictions bar the company from buying equipment to make chips on the most advanced technologies (finer than 7 nanometers). That is critical in the global microelectronics race, where leading-edge process nodes are seen as the key to competitiveness and the highest margins.

SMIC, it would seem, should have retreated. But its founder sees the situation differently: the restrictions are indeed serious, but they do not shut the company out entirely; they change the playing field.

Demand for "yesterday's" technology is growing

Here is the key point: not every AI application requires the most advanced chips. Yes, flagship GPUs for training models need the leading edge. But a huge segment of AI applications, including inference at the network edge, on-site video analysis, data-stream processing and IoT device control, runs well on chips built at 14 or 28 nanometers, and even older nodes.

Demand for such chips is growing precisely because AI is moving out of data centers and into the real world. Applications are needed everywhere: in cars, cameras, robots and sensor devices.

SMIC can produce exactly these chips without any restrictions:

• Processors for edge computing and IoT
• Power management and power control circuits for AI systems
• General-purpose processors and cut-down GPU versions for local inference
• Components for communication and networking devices
• Specialized chips for industries (medicine, manufacturing, automobiles)

SMIC plays on volume and reliability

The company's founder stressed that even with technological limits, SMIC remains competitive because demand exists and it is able to manufacture. High demand plus production capability equals reliable revenue. The company is focused on optimizing quality and costs on the technologies available to it, in order to maximize margins in the niche where it can operate.

"We see huge demand for mid-range chips and we see that we can meet it.

That means we will remain profitable," reads SMIC's stated position.

The strategy is not new: earn on scale and reliability instead of chasing the cutting edge. But amid the AI boom, this approach looks even more attractive.

What this means

The AI boom creates opportunities even for companies outside the leading technological edge. SMIC is counting on this logic: demand is growing, it can manufacture, so it will be profitable. For the global market, this means that advanced technologies and older process nodes will coexist for a long time. AI innovation will develop on chips of different generations.