No, SMIC
does compete internationally, against TSMC (1st) and Samsung (2nd).
For example Apple sourced their smartphone and tablet CPUs from Samsung (South Korea) and later TSMC (Taiwan).
Samsung has an US fab at Austin but it has limited production capacity there. TSMC supposedly plans to build a US fab but currently has none.
The leading US fab company is GlobalFoundries, but they are owned by a Persian Gulf state and don't have enough capital to buy the latest machine tools or to design new processes anymore. So they are stuck at 14nm or 12nm I think. However GlobalFoundries uses a SOI process which is more suitable for telecommunications (radio) or radiation hardened chips than regular silicon so they have clients there. Intel does have fabs too but they are also behind TSMC and Samsung but still ahead of GlobalFoundries. Intel originally did not produce chips for 3rd parties but more recently this past decade they have started producing FPGAs for 3rd parties as they cannot ammortize the cost of their newer fabs with CPU production alone. Intel's business model is basically screwed. GlobalFoundries is a merger of several lagging semiconductor fabs the main of which used to be owned by AMD in the US and Germany. AMD since sold their fabs because they did not have enough capital from PC chip production to justify it and now outsource chip production to TSMC.
SMIC has less advanced manufacturing processes but lower prices than the competition.
Ever since SMIC got ex-TSMC personnel they managed to develop their own 14nm and soon, hopefully, N+1 that should be ~10nm.
They also have a roadmap to produce 7nm chips eventually using their existing DUV immersion lithography tools. Their process should be less efficient at producing chips than TSMC's because it will require more passes (with multiple-patterning). TSMC supposedly uses EUV on the passes which imprint the finer details on chips. China got banned from EUV tool imports and so SMIC had to come up with this less efficient process. 5nm and below it is unlikely they can produce chips with DUV alone. SMIC was ramping up their production lines for 14nm and 10nm production with immersion lithography and Huawei was one of their main customers. So don't say SMIC didn't try to support Huawei. Sometimes people think producing chips is easy but from design to initial manufacturing it takes 18 months time to produce a chip. You also cannot easily transfer a design from, say, TSMC to SMIC or vice-versa, or Samsung to TSMC or vice-versa, etc, because the processes aren't the same. You have to redesign the chip and tapeout. Huawei and SMIC did this for their 14nm smartphone processor the Kirin 710A.
Neither Taiwan nor South Korea produce lithography machine tools. The main DUV lithography tool vendors are in Europe (ASML) and Japan (Nikon) I think. There are other tool vendors but their tools do not support immersion which means they cannot be used at 45nm and below. Immersion lithography uses the same light sources but like the name implies uses water, besides just lenses, to focus the light. ASML is the only world supplier of EUV lithography tools. They are in the Netherlands but their lenses come from Germany and their EUV light sources come from Cymer in the USA. The US can basically cut their supply anytime they wish.
