below_freezing
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Loongson aka. LongXin/Godson processor is around the level of 2006-2007 Pentium chips. The upcoming Loongson 3B 8-core processor is slated for release this year and is expected to be comparable to state of the art CPUs of 2008-2009. Loongson 3B is planned as the CPU for China's follow-on supercomputer to Tianhe-IA (current world's fastest supercomputer using Intel CPUs+Nvidia GPUs) and is expected to dispense of the CPU+GPU design in favor of only the Loongson 3B processor in a 100% indigenous supercomputer.
The Loongson 3C 16-core 28nm processor is expected 2nd half of 2011 or 2012 and is expected to be comparable to state of the art CPUs of 2010-2011. Currently, the best China fabs can only produce 45nm semiconductor parts so China is almost assuredly outsourcing production of this part, probably to STM Microelectronics, but there is probably minor consideration of sourcing through TSMC in Taiwan.
China isn't anywhere near 32nm fab tech. It's best parts are made at SMIC at 45nm and that's not even for logic circuits. There are international technology sanctions against China (Wassenaar Arrangement) across the board including state of the art fab tech that restricts it to getting older generation semiconductor manufacturing equipment. The only reason China is getting any fab equipment better than 65nm is because it's own research & development is able to research and produce this themselves. So, the Wassenaar Arrangement as a voluntary international technology export restrictions cartel allows such technology transfer once China has clearly ALREADY ACHIEVED the ability to produce such prior restricted technology themselves anyways.
I was aware that there were severe sanctions against china in semiconductor technology. However you said that we can manufacture 45 nm; that implies that we can manufacture photolithography equipment. i haven't found any on sale though. do you know where to buy a china made photolithography chamber?