D2D China: Unintended Consequences
Huawei movers deeper into autos and the data center, MCUs, IP and more
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Semis and Deep Tech
Memory maker Changxin Xinqiao raised $5 billion from the Big IC fund to help fund its $20 billion DRAM plant. These are big numbers, a pretty strong signal that they think they can build competitive DRAM, a further blow to US sanctions which theoretically should have prevented this from happening.
We can add electric vehicle (EV) maker Nio to the list of companies designing their own chips. They launched their first last month, a Lidar controller. It comes as no surprise that China’s EV makers are going down the internal silicon path. More surprising is the scope of their offerings. They are working on more than high-value digital logic, they are getting into also sorts of analog markets as well.
Xiaomi is hiring a lot of people for its internal silicon design team. This will become critical as they seek to differentiate themselves from other Android vendors and compete with Apple. (See below about the launch of their own operating system.)
China has 1,400 DUV systems, and they are adding 500 to 600 more a year through 2026. Below we write about the unintended consequences of the US goverment’s chip restrictions.We do not think anyone in Washington had “Major boost to ASML’s sales to China” in their planning briefs.
An overview of China’s microcontroller (MCU) industry. Some new names for us on this list. This is likely to be a major area of growth for China’s semis companies and a growing problem for NXP, ST Micro and On.
Alibaba released its Zhenyue chip. Interesting that it is one more diversification area for hyperscaler chip design. They are moving into more areas of the data center stack.
As much as China’s semis industry seems to be on a roll lately, there are many market observers who remain cautious, if not outright skeptical, that the industry can maintain this momentum.
A very deep dive into China’s market for semiconductor intellectual property (IP). This highlights an area that we are spending a lot more time on lately as it grows in importance for everyone. The key takeaway is that China is starting to develop solid IP providers for low end devices (think IoT and embedded) but has a long way to go for more complex, digital chips.
A look at the results of 147 Chinese chip companies’ Q3 earnings. There should be a better way to do this….
Last month we wondered if Huawei would be able to use its “7nm” process to produce chips beyond mobile. The answer appears to be yes, with Baidu reportedly buying a version of the 910 for its AI workloads. A few caveats. This is just a version of the chip Huawei has produced for mobile, raising the question as to the scalability of SMIC’s manufacturing process and Huawei’s design capacity. Secondly, the performance of this chip lags Nvidia’s previous generation GPU (the A100). Baidu is making the best of the situation, but this is not an ideal solution for them.
Huawei is preparing to export ‘intelligent vehicles’, in conjunction with automotive OEMs.
Another list of Huawei’s suppliers. There are a few of these circulating around WeChat, mostly presented as a guide for the domestic investment community. We imagine there is someone at the US BIS taking careful notes. Also, we have to admit we are impressed that people have been able to put these together.
Automotive, Industrial and Macro-Economics
Changan Automotive is buildng a plant in Thailand. China’s electric vehicle (EV) makers know that eventually they will start to hit trade restrictions, and seem to be proactively building up manufacturing facilities around the world to forestall any regulatory response. This would probably be impossible with internal combustion engines, or at least only possible at much smaller scale.
Software and the Cloud
Xiaomi has unveiled its HyperOS operating system. This is critical if they ever want to climb out of the morass of Android competition. Xiaomi is probably the only company the can pull this off but building an OS is not easy.
Wenzhou is a fascinating city. A coastal trading town with a very long history of trade. More recently, it was for a long time the largest city in China without a railroad link to the rest of the country. This allowed its merchants to operate with a wide degree of autonomy during the worst years of central planning. When China opened up its economy in the 1980’s people from Wenzhou applied their entrepreneurial skill to build businesses across the country. And almost no one outside of China has ever heard of the place.
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For Paid Subscribers below we take a look at some of the unintended consequences of the US restrictions on China semis.