TriptiD
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They are both sanctioned but the list of sanctions on them is different. Unless you are saying that in China, the corporate structure and is just a sham and intellectual property of Huawei can be freely handed over to SMIC on the orders of the CCP, then the two entities are distinct and a Huawei product is not the same as a SMIC product.You don't seem to be aware that SMIC is under the same sanctions as Huawei. SMIC breaking 7nm represents the same thing as Huawei breaking 7nm.
Anyway, if you see a Reuters link I posted earlier, some analysts think that the 7nm chips were produced through DUV at very low yields. Western companies wouldn't do this because it is not economical but it seems Huawei had no other option and does not mind eating the loss.