D2D China: The Huawei Kirin 9000 Seen From China
Solid engineering, big ambitions, but many challenges remain
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Semis and Deep Tech
China has reportedly launched a third Big IC Fund, with RMB 1.3 trillion (US$ 178 billion). Not surprising, but still a big number. What matters most is how they direct those funds. How much will go to large established companies, to support companies on the US Entity List and state-owned enterprises? And will they be able to achieve more for their targeted sectors than the last $100+ billion they spent. (H/T to Dan Nystedt)
TSMC executive is not impressed with the progress of China’s semiconductor industry. Published prior to the launch of the Kirin 9000s, but we suspect his view has not changed.
Taiwan’s Commerce Magazine makes the case that the electronics industry has already begun to exit China. They are pushing the idea of “Alt-Asia”, or a constellation of companies across 14 other Asian countries which are enjoying a wave of investment as companies there seek to ramp up and hire talent out of South China. Too soon to tell how successful this will be.
Chinese companies continue to move upstream in the TV industry. They are now entering the large screen, high end of the market.
As much as everyone in China seems to be celebrating Huawei’s success with the Kirin 9000 (see below), one thing that chip demonstrates is how expensive it is to compete in the processor market. As companies like Huawei bulk up to innovate their way around US restrictions, they are driving up the cost of talent, which is starting to hurt smaller companies.
Even as handset maker Oppo seems to have exited the design of its own semis, competitor Xiaomi is pushing ahead with plans to bring internally designed chips to its own phones and cars.
A history of one of China’s largest chip companies Vail (韦尔). From fairly humble origins, the company has grown through a rigorous M&A program over the years. Interesting for the insight into the very big divergence in corporate culture between US and China semis companies.
We have argued that consolidation among China’s semis companies is inevitable. Maybe it is starting, but it will probably take some time before a real wave develops.
Automotive, Industrial and Macro-Economics
Zongyuan Zoe Liu has published a deep study of how China built up its sovereign wealth funds. This goes far beyond electronics but is important for understanding how China’s capital system works, much of which is directly relevant to their semis investments. The Information published a good extract of her book as well.
The Financial Times makes the case that China’s battery industry has already entered a state of massive oversupply. Readers will be familiar with this concept as we have pointed out this played out with smartphones and now seems to be happening with EVs. Eventually, the rest of the world will stop accepting China’s excess supply.
GTA Semi raised $1.8 billion (source in Chinese), on top of the ~$1 billion it has already raised. GTA is a foundry for automotive semis with a long history. The latest round was composed of a long list of investment firms, state entities and companies including Xiaomi, SAIC and Skyworth. As we said last issue, there is A Lot of trailing edge capacity coming online in China.
China’s car makers are expanding their logistics networks with investments in shipping and ports. They do not need these investments to service their domestic market.
A somewhat academic overview of the development of China’s high speed rail technology base.This is a dense read, but demonstrates how Chinese companies transition from a reliance on foreign technology to independence to exporters of technology. We are seeing this play out in electric vehicles right now.
Software and the Cloud
Huawei has opened a data center in Saudi Arabia to power their Cloud service. Reuters points out that Huawei has said it will invest $400 million in Saudi over five years. That is a big number in absolute terms, but not that big in hyperscale data center terms.
China has a thriving music scene. This podcast with Professor Andrew Field gives a good introduction to how that emerged. We were witnesses to much of this history, so of course we have already bought Field’s Book “Rocking China” It is important to remember that China is a lot more than geopolitics, exports and electronics.
For Paid Subscribers below we take a look at what people in China are saying about Huawei.