China's top chipmaker, SMIC, will struggle to produce cutting-edge Chips Competitively if it continues to be cut off from advanced equipment, analysts told CNBC. State-backed SMIC, or Semiconductor Manufacturing International Co., is making 7-nanometer semiconductor chips, placing it in the league of Intel and others. However, SMIC has been the target of U.S. sanctions since 2020 when it was put on a U.S. trade blacklist which restricts its access to certain technology. It has also been unable to obtain the extreme ultraviolet (EUV) lithography machines — which only Dutch firm ASML is capable of making. Without EUV machines, the Chinese tech giant is not able to produce the high-tech semiconductors on a large scale at lower costs.

However, analysts say that government support may help SMIC catch up to its domestic competitors. China has announced plans to increase research and development spending by more than 7% per

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