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Noteworthy Items

Semis and Deep Tech

Lithos Graphene has some thoughts about the state of China’s lithography industry. The summary: they are far behind the rest of the world.

Satellites are rising in prominence in discussions of cellular networks. China has plans in this field, looking to incorporate their satellite technology into the 6G Standard.

Lidar maker Hesai is suing the US government for its inclusion on the entity list. If this makes it to trial we will be reading all the discovery materials we can get our hands on. An important test case.

Interview with a semis industry talent recruiter. A few things stand. First, note how high salaries have gotten for ASICs designers in China, closer to US levels than Taiwan. The article also looks at the industry through the lens of Zeku, the chip design team of handset maker Oppo. It went from the highest paying designer to out of business in just a few years. It’s 3,000 employee got snapped up quickly, but its closure forced many other non-chip companies to rethink their internal plans. Now factor Oppo reportedly restarting these efforts.

There is a theme in this week’s press links. We came across an almost universal notion that China’s chip industry is too crowded. This is leading to layoffs, company closings and an IPO winter. But as long as the spigot of government funding remains open, we are unlikely to see major consolidation.

The decline and bankruptcy of Baowei Storage is a tale that is likely to play out in many other companies. Too much competition, weak pricing leads to unsustainable losses, and for reasons not entirely clear they were unable to get any more funding.

Another look at China’s top MCU companies. As we look for companies which will emerge on the global stage, we suspect at least one will come from this list.

A leading Chinese academic journal made a list of the top ten R&D achievements of 2023. Half of these strike us as gimmicks, the other half as arcane materials advances for which it will take many years to discern their significance.

A fairly sober analysis of the impact of US restrictions on China semis with a focus on whether or not the US will extend those restrictions to more mature process nodes. The author concludes that it will be much harder (but not impossible) for the US to restrict trailing edge fabs in China, but the harm it would do to China semis is much more serious than that of the leading edge restrictions.

Huawei

Call it a comeback. Huawei retakes the top market share position in smartphones in China.

Apple is rumored to be working on foldable devices. Not to be outdone, Huawei is working on a triple folding device. They are also designing a spatial computing headset.

A history of Huawei’s chip division HiSilicon. We learned a lot from this, the unit has an interesting history. And despite being viewed as an under-performer (especially by other parts of Huawei) it ended up with considerable capabilities.

Automotive, Industrial and Macro-Economics

China’s economy is not doing well. The real estate sector appears to be due for a structural downsizing, greatly reducing a major component of the economy. The government has many possible policy responses to the situation, but it appears to have chosen to export its way out of the hole it is in. There is a lot of talk about government bodies at all levels shifting their support from real estate to solar, electric vehicles and semiconductors as a replacement. This seems to overlook the fact that all of those are already operating in conditions of high over capacity. Maybe the government will try other approaches down the road, because there is only so far that those three can take the whole country. For everyone else expect to see surges in low-price imports from China.

The major US food chains are all expanding in China. Starbucks now has over 7,000 stores in China.

Car maker BYD is building a 600 node charging network in Brazil. Unlike in the US, Chinese EV brands are building competitive charging networks, which strikes us as unsustainable. On the other hand, who else is going to build the network in Brazil?

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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.