Analysts said that China has produced a 5G smartphone using an advanced silicon chip on a miniature scale that is believed to be beyond its capabilities due to US-led export restrictions.

Analysis firm TechInsights said Huawei’s Mate 60 Pro is powered by the new Kirin 9000s chipset, which is manufactured in China by the partially state-owned Semiconductor Manufacturing Corporation (SMIC).

The research firm said its processor is the first to use SMIC’s more advanced 7nm technology, and indicates that the Chinese government is making some progress in its attempts to build a homegrown ecosystem of chips.

Since 2019, the US has restricted Huawei’s access to basic chipmaking tools to produce the most advanced phone models. Despite being a 5G equipment manufacturer, Huawei was previously only able to release limited batches of actual 5G phones with stock chips.

Huawei has been banned from providing 5G network equipment in many countries, including those of the Five Eyes security alliance, due to national security concerns raised by its ties to the Chinese government. Huawei has filed a lawsuit in a Lisbon court against operators there to prevent them from using its equipment in 5G mobile networks.

Dan Hutchison, an analyst with TechInsights, told Reuters the latest development came as a “slap in the face” for the US.

The most advanced chip SMIC was known to have previously manufactured had a larger 14nm bandwidth, because Washington blocked SMIC in late 2020 from acquiring the necessary machinery from Dutch company ASML.

But TechInsights said in 2022 that it believed SMIC was able to produce 7nm chips by modifying simpler machines that it could still freely purchase from ASML. However, some research firms have predicted that only 50% or less of the 7nm chips produced in this way will be usable, versus the industry standard of 90% or more, and this will limit the resulting smartphone shipments.

Outside of China, the best 7nm chips are made using a process called extreme ultraviolet (EUV) lithography — a closely guarded technology that the US is leading efforts to keep out of Beijing’s hands.

“(US) controls impose high costs for producing controlled technologies in China,” said Doug Fuller, a chip researcher at Copenhagen Business School, adding that the Chinese government is likely to foot the bill.

China is set to launch a new state-backed investment fund that aims to raise about $40 billion for the chip sector, as the country ramps up efforts to catch up with the United States and other competitors.

Huawei started selling its Mate 60 Pro last week. The specifications provided declared its ability to make satellite calls, but did not provide any information on the power of the internal chip.

Phone buyers in China are posting detailed videos and sharing speed tests on social media which indicate that the Mate 60 Pro is capable of download speeds that exceed those of leading 5G phones.

The launch of the phone caused a frenzy among social media users and state media in China, with some noting that it coincided with the visit of US Commerce Secretary Gina Raimondo.

Some analysts said there was a possibility that Huawei bought technology and equipment from SMIC to manufacture the chip rather than doing so in cooperation.

TechInsight’s findings were first reported by Bloomberg News.

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