A reappraisal of China's semiconductor strategy

Playing Into China’s Hands
A trade war couldn’t occur at a worse time for the rest of the tech industry.

JUNE 13TH, 2019 - BY:
The fallout over blacklisting Huawei in particular, and China in general, has set the tone for a nasty global race. But it is almost certain to produce a different result than the proponents of a trade war are expecting.

The idea behind tariffs and the blacklisting of Huawei is to starve China of vital technology. So far, the impact has been minimal. Reports from inside of China are equating these moves as China’s “Sputnik moment.” And despite the rhetoric on both sides, China has been preparing for this moment for some time. The South China Morning Post earlier this week that Huawei secretly has been developing its own operating system to rival Google’s Android.

The race has begun. Tariffs and trade restrictions only made it more obvious. Behind the scenes, China has been looking to decrease its reliance on imported chips and technology for years. It now has no choice but to make that happen. Whether China will that can threaten the likes of SK Hynix and Samsung, or develop processors to challenge companies such as Arm and Intel, remains to be seen. And China’s ability to execute on any of this is still yet to be proven.

Nevertheless, there are several factors that have helped to flatten the playing field over the past 12 to 18 months. Those shifts will minimize the impact of any shortfalls in technology, and help to make China more self-sufficient, if not more globally competitive.

To begin with, the slowdown in benefits from scaling features has shifted everyone’s focus from scaling to architectures and microarchitectures. While there are still some benefits to be had at 5nm and 3nm, the manufacturing and design costs are exorbitant, and there may sufficient gains from new chip architectures to sidestep the move down to those nodes. SMIC, China’s largest fab, currently is working on a 7nm process. If the foundry can get that working, it may be sufficient to keep China competitive even with chips developed at the next couple of nodes, where power/performance improvements are expected to be in the 20% to 30% range.

But that may be of limited value over the long term. Some of the new AI/ML chips under development could see improvements of several orders of magnitude for specific tasks, particularly multiply/accumulate operations. The bigger challenges for China are in the memory arena, and the country’s domestic suppliers have stumbled repeatedly. Still, it’s one thing to stumble in a global marketplace. It’s quite another to produce memory chips for a captive home market, particularly if they can be heavily subsidized at first.

Even there, China has a cushion. It can establish interfaces and packaging approaches that are more standardized than what the rest of the industry has been able to achieve. The whole chiplet approach has bogged down due to a lack of standardized interfaces. If China is building all of its own chips, that should be much simpler to standardize internally. So while the economies of scale in memory or other components may not materialize enough to be competitive on a global scale, those may be sufficiently offset by the economics of chiplets in a package.

There’s another piece to this puzzle, as well. The rapid expansion of AI and edge computing has no precedent. These are green-field opportunities, and they are based on massive amounts of training data. China has been collecting more data than any country on the planet. Its understanding of possible use cases is unparalleled, and its ability to develop training data for AI systems provides a massive advantage over external rivals. It also has one of the most advanced implementations of 5G communications in the world, and it has enough open source code and internally developed IP to be a serious competitive threat on a global basis.

So a trade war and sanctions against a global powerhouse may sound like a major threat on paper, but the outcome could be quite different for China’s semiconductor industry.

华为已自行设计PA，Skyworks等美国半导体公司很受伤
2019-06-10 13:32:56 来源：EETOP
美国总统特朗普7日接受福斯电视台专访时表示，他会与大陆达成贸易协议；另据香港南华早报报导，中美两国政府正在寻找机会重新开始谈判，但是预计进展会很缓慢。

对于中美贸易对峙欲罢不能的情况，资深产业分析师陆行之在脸书上说，Lumentum、Qorvo、Inphi、ADI因华为禁售案陆续下修第二季营收预期达5％-8％，Skyworks也宣布下修8％的营收预期到7.55-7.75亿美元，Skyworks公布过去六个月，华为占其营收12％，并说一拿到禁售令即停止所有产品出货，显见除了旧产品维修外，没有所谓的三个月缓冲期。


陆行之说，现在要看Qualcomm、Micron、Xilinx、Broadcom、德仪、赛普拉斯、Marvell、II-VI、On Semi、Mellanox、WDC何时下修。而最近原Skyworks、Qorvo功率放大器GaAs代工厂指出，华为已经直接自行设计PA。


由产业下修营收展望的动作来看，陆行之认为，特朗普政府对美国行业没有帮到忙，反而是在害他们。


安联台湾科技基金经理人廖哲宏表示，华为事件虽重击相关电子供应链，对于美国企业而言，华为禁售令造成华为营收全数变成零，影响重大，对于非美国的企业而言，因为华为砍单或减单，第二季展望也势必下修，但是，品牌厂商的此消彼长，也创造新的商机，可留意因华为事件的转单受惠科技股。



Article says Huawei already started to make RF GaAs PA chip on its own. That's a milestone.

You need Special PA chip to drive the signal to antenna for cellphone. huawei Digital Kirin CPU can't drive antenna. It's not enough just make a 7nm CPU chip

Via Xyz
Taiwan IC design houses to see Huawei orders ramp up
Cage Chao, Taipei; Jessie Shen, DIGITIMES
Friday 21 June 2019
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Taiwan-based IC design houses are expected to enjoy a ramp-up in orders placed by Huawei, which intends to reduce its reliance on Qualcomm and other US chip giants, starting the second half of 2019, according to industry sources.

Huawei has stepped up purchases of chip components from Taiwan-based companies, in the face of a ban on its purchases of US-made parts, said the sources. An estimated 20-50% increase will boost the related Taiwan-based suppliers' revenues in the second half of 2019 and 2020, the sources indicated.

In addition to MediaTek, analog IC suppliers On-Bright Electronics, Richtek Technology and Silergy, MEMS microphone specialist ZillTek Technology, networking IC company Realtek Semiconductor, power amplifier suppliers Airoha Technology and Richwave Technology, and server management SoC provider Aspeed Technology reportedly will benefit from Huawei's diversification efforts, the sources noted.

Silicon IP providers Andes Technology, eMemory Technology and M31 Technology are also pinpointed as among the beneficiaries.

Huawei's revenues will likely take a US$30 billion hit over the next two years from the US ban, said Ren Zhengfei, founder and CEO for the China-based telecom equipment and mobile device vendor, at a recent event in Bejing. Earlier in 2019, Ren expressed confidence the ban on sales to his company would have little impact.

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China sees Taiwan supply chain as alternative to IDMs for power IC devices
Julian Ho, Taipei; Willis Ke, DIGITIMES
Wednesday 19 June 2019
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China ICT makers are keen on turning to Taiwan supply chain as they seek alternative import sources of discrete power semiconductor devices, especially medium- and high-end ones long dominated by US and Europe IDMs, to counter uncertainties of the US-China tariff war and trade sanctions on Huawei.

HL Chiang, general manager for power semiconductor at Lite-On Semiconductor, said a new supply chain in Asia is quietly taking shape for China ICT firms as they are moving to sharply reduce the ratios of orders placed with US and Europe IDMs by turning to suppliers in Taiwan and other Asia countries.

Many China firms have directly approached Taiwan makers for the supply of diverse discrete power devices, including high-end SiC Schottky diode and IGBT, according to industry sources. In the short term, Taiwan makers of the devices will sustain significant tech superiority over their China peers.

Lite-On Semi has made deployments in fast recovery diodes (FRD), SiC Schottky diodes and IGBT, and will kick off volume production of IGBT modules incorporating FRD for use in white household electrical appliances to fulfill orders from leading China brand vendors within one year, in addition to rolling out IGBT components for industrial control systems, the sources said. Moreover, the company is also developing SiC MOSFET components for automotive applications.

Lite-On has also tapped into the supply chains of China's top-3 makers of auto-use battery management systems (BMS) with its transient-voltage suppression (TVS) diodes, the sources said. The company will roll out system integration solutions such as micro modules combing FRD and MOSFET for automotive applications in 2020.

Besides Lite-On, many more Taiwan diode suppliers are also devoting efforts to supply discrete power semiconductor devices for automotive and industrial control applications, including Taiwan Semiconductor, Panjit International, Eris Technology, and HY Electronic. In addition, Actron Technology is moving to conduct volume production of auto-use LLD (low-loss diode) devices for first-tier automotive clients, the sources said.

On another front, second-tier foundry houses such as Mosel Vitelic, Episil Technologies, Vanguard International Semiconductor (VIS) and Powerchip Semiconductor Manufacturing, mostly dedicated to 6- and 8-inch wafer foundry, are also optimistic about their medium- and long-term revenue prospects, as they are poised to embrace orders from US and Europe IDMs and China chipmakers for fabricating medium-and high-voltage power devices that see increasing market demand.

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Not sure if the license Zhaoxin has w/ Intel or AMD is a permanent x86 license or not. In any case, I believe the base version of the x86 ISA patent has run out.

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Shanghai plant produces CPU with 3.0GHz base frequency, meeting international standard
Source:Global Times Published: 2019/6/20 14:10:42

The first Central Processing Unit (CPU) in China to reach the base frequency of 3.0GHz was released by the Shanghai Zhaoxin Semiconductor Co Wednesday, marking a major breakthrough in the country's semiconductor industry.

It was the first time that a China-produced CPU reached 3.0GHz, which is the international mainstream standard, and the product marks a major breakthrough by significantly narrowing the gap between Chinese chipset makers and their international competitors.

Some of the most popular CPU products in the world are all designed with a base frequency of 3.0GHz or above.

For instance, the Xeon W-3175X produced by Intel has a base frequency of 3.1GHz, and the Ryzen Threadripper 2950X has a 3.5 GHz base frequency. [ed: note these are server cores, not consumer CPUs] The 16nm 3.0GHz x 86 CPU products made by Shanghai Zhaoxin Semiconductor Co are from the KX-6000 and KH-30000 series.

According to a report by local news site jfdaily.com, the capacity of the latest KX-6000 series has increased by 50 percent compared to the previous generation, now reaching the equivalent of the mainstream 7th generation i5-7400 by Intel.

The semiconductor design and manufacturing, deemed a strategically important sector for the economy, is flourishing domestically, especially in Shenzhen and Shanghai.

The number of companies in Shanghai that currently have an integrated circuits business has reached 600 with almost 180,000 employees. The scale of the industry in Shanghai accounts for 22 percent of the nation's total, according to the report.

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U.S. Blacklists More Chinese Tech Companies Over National Security Concerns

By and

WASHINGTON — The Trump administration added five Chinese entities to a United States blacklist on Friday, further restricting China’s access to American technology and stoking already high tensions as President Trump and President Xi Jinping of China prepare to meet in Japan next week.

The Commerce Department that it would add four Chinese companies and one Chinese institute to an “entity list,” saying they posed risks to American national security or foreign policy interests. The move essentially bars the entities, which include one of China’s leading supercomputer makers, Sugon, and a number of its subsidiaries set up to design microchips, from buying American technology and components without a waiver from the United States government.

The move could all but cripple these Chinese businesses, which rely on American chips and other technology to manufacture advanced electronics. Those added to the entity list also include Higon, Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, and Wuxi Jiangnan Institute of Computing Technology, which lead China’s development of high performance computing, some of which is used in military applications like simulating nuclear explosions, the Commerce Department said.

It follows similar efforts to ban other Chinese tech companies from accessing American technology, including telecom equipment giant Huawei, which was added to the blacklist in May. The administration is also considering adding Hikvision, a surveillance-technology company, to the list, .


But a fast resolution is looking increasingly unlikely. Both sides on remaining tough in further trade talks and the Chinese government has said it is putting together its own of foreign companies and people, an apparent first step toward retaliating against the United States for denying vital American technology to Chinese companies.

Sugon is one of China’s most important makers of high-performance computers and servers, with 10 out of the top 20 fastest supercomputers in China, according to China’s TOP100 rankings in 2018. The immensely powerful machines serve entities including China’s government and power weather prediction capabilities and its largest technology companies.

Most are also studded with American technology — in most cases the computers rely on a mix of microchips from Intel and Nvidia. By placing the company on the list, the Trump administration would effectively cut it off from the tiny brains it needs to make the billions of calculations required to model weather patterns and support video apps and online shopping.

Also on the list was a Sugon subsidiary that had formed a partnership with the American chip maker Advanced Micro Devices to create microchips that could satisfy security demands for Chinese government customers. Some Chinese officials said the chips could be used in . By relying on chips made by AMD and Intel, Sugon’s supercomputers are able to run a wider array of software than some of the country’s faster computers built around domestically produced chips.

With just over $1 billion in revenue last year, Sugon is tiny compared to Huawei, which was placed on the entity list last month. Still, its exclusion from American technology will represent an especially bitter pill for Beijing to swallow, as its supercomputers form the core of some of the Chinese government’s most sensitive and important systems.

Sugon supercomputers support State Grid, the monopoly that runs China’s electric grid; China Mobile, the country’s largest telecom services provider; and the China Meteorological Administration, which runs weather prediction. It also makes data centers for companies like e-commerce giant JD.com and Bytedance, the owner of social media app TikTok.

The companies could still obtain a license to purchase American technology. But their presence on the list suggests that they would receive intense scrutiny, and such an approval might be unlikely.
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My comments:
- This ban seems mainly "symbolic" -- Hygon doesn't sell outside China anyways. Sugon will likely suffer in their Intel-based supercomputer sales, but Wuxi Jiangnang (an SOE, I believe) will survive and build on their current AMD tech.

N00813 said:

My comments:
- This ban seems mainly "symbolic" -- Hygon doesn't sell outside China anyways. Sugon will likely suffer in their Intel-based supercomputer sales, but Wuxi Jiangnang (an SOE, I believe) will survive and build on their current AMD tech.

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No different than Obama's ban, and no more effective.

The problem is the AMD licenses and if they can continue to make Zen chips in TSMC since it’s still mostly US tech.

Name two US Semiconductor firms acquired by China under the radar just before Trump came onboard??

Do some research.

Good. Good. Actually Great. I can't find any other scenario where China is compelled enough to push ahead on Semiconductors. Keep 'em coming.

N00813 said:

Not sure if the license Zhaoxin has w/ Intel or AMD is a permanent x86 license or not. In any case, I believe the base version of the x86 ISA patent has run out.

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Derived from Cyrix. Its permanent.

Zhaoxin CPU mostly for domestic consumption. Even if license got revoked, it won't matter.