According to Digitimes, MyDrivers, and ICSmart reports, the company may let go of half of its 300 employees, as access to Taiwan Semiconductor Manufacturing Company’s (TSMC) advanced 7nm process has been cut off.
TSMC recently restricted access to its “advanced” nodes—ranging from 7nm to the upcoming 2nm process—for Chinese semiconductor firms. While TSMC’s 7nm technology debuted in 2018, it remains pivotal in China, where domestic fabs like SMIC have yet to achieve mass production capabilities at this scale.
Founded in 2021, Hongjun Microelectronics aimed to revolutionise cloud computing with Arm-based server CPUs. Led by seasoned executives from Intel and Alibaba, the company secured over $100 million in venture capital and successfully launched its first server CPU prototype. TSMC’s recent restrictions could render this milestone moot, forcing Hongjun to redesign its chips for less advanced nodes—a process that could cost tens of millions of dollars.
The tape-out stage, where a chip prototype is fabricated, represents one of the most resource-intensive parts of semiconductor design. For Hongjun, the inability to access TSMC’s 7nm technology could necessitate starting over, a prospect that raises significant financial hurdles.
With only $100 million in funding, Hongjun’s resources are stretched thin. Analysts suggest that the company might have struggled to scale up even without the restrictions.
" Hongjun might have been destined for layoffs whether TSMC restricted the 7nm node or not," noted Digitimes.
The reported layoffs at Hongjun exemplify the broader impact of the ongoing U.S.-China technology trade war. Just days ago, the US announced new export controls targeting Chinese access to advanced semiconductor and AI technology, further straining China’s tech industry.
While Chinese firms have expressed confidence in domestic alternatives, the situation at Hongjun illustrates the steep challenges of achieving self-sufficiency.
Industry insiders warn that Hongjun's future remains uncertain without access to TSMC’s advanced nodes or a substantial influx of capital. The company’s ambitious plans for the server CPU market may be on hold as it grapples with geopolitical and financial pressures.
