China X86 Chips Hitting The Market
Kam Bergmann
This wouldn't be the first time Nvidia and others have reworked their chips to comply with export restrictions. Last fall, after the first round of sanctions went into effect, Nvidia revealed a down-tuned version of its popular A100 accelerator of the Chinese market dubbed the A800. The chipmaker quickly followed it up with the Hopper-based H800 earlier this year.
The U.S. move is likely to hit not just China's semiconductor industry, but dozens of other businesses as well, such as electronics, artificial intelligence, and automobile manufacturing that depend on U.S.-made chips from companies like Nvidia and AMD. The stakes are high. For instance, Chinese electrical vehicle makers controlled 56% of the global market in the first half of 2022. Such vehicles depend heavily on semiconductor chips.
The US has (for now) set relatively high compute performance thresholds for these restrictions. For example, one of the thresholds is 4800 TOPS * bits (tera operations per second). Chinese companies designing cutting-edge chips for markets like mobile chipsets (e.g., UNISOC, Xiaomi, Oppo, and Vivo) or autonomous driving chips (e.g., Horizon Robotics) could stay well below such thresholds.
For instance, the Oct. 7 controls went beyond restrictions on the production of leading-edge logic chips, where China remains far behind the US and partners, to also cover (largely commoditized) memory chips, where China had been gaining market share. Specifically, the US tied advanced memory chips (defined by the US as chips with 128 layers or more for NAND and 18nm half-pitch or less for DRAM) to weapons of mass destruction (WMD) end-use to justify comprehensive licensing restrictions on manufacturing tools and software.
The memory chip example raises a critical question for both Chinese and foreign OEMs trying to weigh the pros and cons of sourcing chips from China: will US-led controls extend into other commercial areas where a national security argument can be stretched to undercut Chinese tech competitors, even if those companies are operating well below US-defined performance compute thresholds in more mature market segments?
Yangtze Memory Technologies Corp (YMTC) is a Chinese semiconductor integrated device manufacturer specializing in flash memory (NAND) chips. Founded in Wuhan, China in 2016, the company received backing from Tsinghua Unigroup. Prior to YMTC, China had no company capable of producing flash memory. Its consumer products are marketed under the brand Zhitai.
HiSilicon is reputed to be the largest domestic designer of integrated circuits in China.[36] In 2020, the U.S. instituted rules that require American firms providing certain equipment to HiSilicon or non-American firms who use American technologies that supply HiSilicon to have licenses[37] and Huawei announced it will stop producing its Kirin chipset from 15 September 2020, onwards.[38] HiSilicon has since been overtaken by Chinese rival UNISOC in terms of mobile processor market share.[39]
The latest trade restrictions, enacted by the US Commerce Department earlier this month, are likely to cause major problems for the Chinese domestic silicon industry, most prominently in the area of advanced chips. Overall, experts agree, current supplies of silicon have outstripped demand, even as individual markets, like the automotive sector, struggle with continuing shortages.
The semiconductor industry yearns to regain its model of open markets, free trade, intellectual property protection, full leverage of geographic competencies, innovation by a multicultural workforce, global collaboration in research and standards, and funding by global capital markets. From the industry's perspective, the case for deescalation is clear. While it would be heartening to see the U.S. and China walk back from the precipice and call a truce on chips and other bilateral flashpoints, the current reality is likely to be with us for some time. In the interim, global semiconductor firms should develop risk mitigation strategies and hold contingency plans for execution close at hand.
Amid all this tension, Chinese tech giants have ramped up their own chip production. Huawei itself introduced a new A.I.-powered chip to the market in August to help process large data. Likewise, Alibaba, the Chinese tech and e-commerce giant, announced in September it had developed its own A.I.-chip for use in its cloud computing services. These chips represent significant strides, but the firms still remain largely dependent on importing chips from outside mainland China's borders. Just a few days ago, Huawei's top executives made a trip to Taiwan to ensure that TSMC could continue supplying them with the most advanced chips.
IDTechEx forecasts that the global AI chips market will grow to US$257.6 billion by 2033. The report covers the global AI Chips market across eight industry verticals, with 10-year granular forecasts in seven different categories (such as by geography, by chip architecture, and by application). In addition to the revenue forecasts for AI chips, costs at each stage of the supply chain (design, manufacture, assembly, test & packaging, and operation) are quantified for a leading-edge AI chip. Rigorous calculations and a customizable template for customer use are provided, and analyses of comparative costs between leading and trailing edge node chips.
China has hit back at the Biden administration's decision to impose new restrictions on advanced chip exports. The foreign ministry said the curbs "violate the principles of the market economy and fair competition". The US Department of Commerce announced Tuesday that it planned to curb the sale of more advanced artificial intelligence chips to China, seeking to prevent its geopolitical rival from obtaining cutting-edge technologies that could give it a military edge. Nvidia said in a filing that the new export restrictions will block sales of two high-end artificial intelligence chips it created for the Chinese market - A800 and H800. It said that one of its gaming chips will also be blocked. The Semiconductor Industry Association, which represents 99% of the US semiconductor industry by revenue, said in a statement that the new measures are "overly broad" and "risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere".
China has hit back at the Biden administration's decision to impose new restrictions on advanced chip exports. The foreign ministry said the curbs \\\"violate the principles of the market economy and fair competition\\\". The US Department of Commerce announced Tuesday that it planned to curb the sale of more advanced artificial intelligence chips to China, seeking to prevent its geopolitical rival from obtaining cutting-edge technologies that could give it a military edge. Nvidia said in a filing that the new export restrictions will block sales of two high-end artificial intelligence chips it created for the Chinese market - A800 and H800. It said that one of its gaming chips will also be blocked. The Semiconductor Industry Association, which represents 99% of the US semiconductor industry by revenue, said in a statement that the new measures are \\\"overly broad\\\" and \\\"risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere\\\".
Nvidia expects US curbs on exports of high-performance chips to China to significantly reduce revenue in that valuable market, but is counting on that loss being offset by demand in other parts of the world
Kress said new United States export control regulations aimed at China and other markets including Vietnam and parts of the Middle East are expected to cause sales of Nvidia data center chips to suffer in those markets.
Sales of chips now requiring export licenses to China and other affected markets have accounted for a fifth to a quarter of Nvidia's data center unit revenue over the past few quarters, according to the company.
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