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Opinionated - China Chipping Away to Semiconductor Dominance

EDA tools will be the biggest hurdle. If China solves this issue then we can expect something substantial from China. Otherwise its all is like license production.
:coffee: :-)
Ever heard of a Chinese EDA software company called E-EPIC based in Nanjing. It announced a breakthrough in October last year.
Following that there are a number of other EDA startup that were announced in China.
So everything is already happening and very rapidly.
 
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This is just an indication of China's progress - the slimy weasels will only clear nodes China has already or will soon achieve self-sufficiency in in an attempt to take sales from Chinese companies. I guarantee that in a few years, ASML will suddenly be granted a licence to export its EUV to China.

Time to ban all Western chip equipment imports where China is self-sufficient. This way they don’t get a share of the Chinese market when they come begging.
 
IMO it may have something to do with the acute chips shortage that has crippled US automakers. The problem won't go away with any Presidential Executive Order.

Whatever the machinery is already set into motion and China will not divert from its present course and that is to achieve self reliance and sufficiency.

The other breaking news is President Xi Jinping has heaped his praise for Jack Ma's Alibaba for their contribution to poverty elevation in China.
This is especially confusing to Western News Media who earlier claimed that President Xi is personally responsible for the persecution of Jack Ma. :coffee:

Don't get it wrong, these approvals for the licence are issued by US FCC and not by President Biden. He hasn't done anything yet. It was Trump who was responsible for issuing those executive orders back in December 2020.
i don't think its the FCC, its the commerce or state department. Export licenses are issued by these two entities, and not asking their respective secretaries to stop those licenses is already a win for China.
 


China’s TCL Is Looking to Invest in Chip Sector, Founder Says
China’s TCL Is Looking to Invest in Chip Sector, Founder Says

(Yicai Global) March 4 -- Chinese display maker TCL Technology Group has set up a semiconductor business division and is exploring investment opportunities in the chip industry to boost the firm’s competitiveness, according to its founder.

TCL is looking at making investments in the areas of power semiconductor devices and integrated circuit design through its chip industry investment fund, Li Dongsheng told Yicai Global.

In particular, TCL plans to expand the production capacity of PSDs amid increasing demand from manufacturers, including new energy vehicle makers, Li said. The Huizhou-based company also aims to seek breakthroughs in the chip design fields of smart devices, displays, and renewable energy, he added.

Li, who is also a deputy to this month’s National People's Congress, has prepared a proposal to advance the nation’s display manufacturing sector.

China’s annual production of new displays has topped CNY400 billion (USD61.8 billion), and its liquid-crystal display industry is the world’s biggest. But it has yet to become a powerhouse in new display technologies.

TCL is already vying for opportunities via acquisitions. Unit TCL China Star Optoelectronics Technology is in the process of purchasing Samsung Electronic’s LCD panel plant in the eastern Chinese city of Suzhou with the transaction expected to close this month.
 

Chinese tech giant Alibaba's research and innovation institute DAMO Academy says it will increase its investment in technology in an effort to achieve major breakthroughs in areas including chips and quantum computing.

"Alibaba pioneered the exploration of cloud computing in China 12 years ago with its self-developed operating system that broke the foreign monopoly on the underlying cloud computing technology," said Jeff Zhang Jianfeng, head of DAMO Academy.

Alibaba said it has formed a research system with DAMO Academy as the core, and laid out in the fields of artificial intelligence, chips, quantum computing, blockchain and autonomous driving.

DAMO Academy has 14 labs, research centers in eight regions around the world, and incubated two high-tech companies, PingTouGe Semiconductor and Xiaomanlv.

Alibaba has invested more than RMB 100 billion ($15.4 billion) in overall technology and R&D in 2020, with more than 60% of the company-wide technical staff.




Alibaba's DAMO Academy says aiming for major breakthroughs in chips and quantum computing-CnTechPost


(Source: Alibaba Cloud)
 


China’s TCL Is Looking to Invest in Chip Sector, Founder Says
China’s TCL Is Looking to Invest in Chip Sector, Founder Says

(Yicai Global) March 4 -- Chinese display maker TCL Technology Group has set up a semiconductor business division and is exploring investment opportunities in the chip industry to boost the firm’s competitiveness, according to its founder.

TCL is looking at making investments in the areas of power semiconductor devices and integrated circuit design through its chip industry investment fund, Li Dongsheng told Yicai Global.

In particular, TCL plans to expand the production capacity of PSDs amid increasing demand from manufacturers, including new energy vehicle makers, Li said. The Huizhou-based company also aims to seek breakthroughs in the chip design fields of smart devices, displays, and renewable energy, he added.

Li, who is also a deputy to this month’s National People's Congress, has prepared a proposal to advance the nation’s display manufacturing sector.

China’s annual production of new displays has topped CNY400 billion (USD61.8 billion), and its liquid-crystal display industry is the world’s biggest. But it has yet to become a powerhouse in new display technologies.

TCL is already vying for opportunities via acquisitions. Unit TCL China Star Optoelectronics Technology is in the process of purchasing Samsung Electronic’s LCD panel plant in the eastern Chinese city of Suzhou with the transaction expected to close this month.

TCL need to come out with LCD/touchscreen drivers with good documentation for all applications ranging from HDMI drivers for TV/computers to SPI/parallel drivers for embedded applications. They need to come out with their own plug and play modules to get engineers interested in trying them out. Flood the market with cheap LCD chipsets and modules.
 



Chinese GPU Designer MetaX Wraps Up Early Stage Fundraiser, Led by LCP, Matrix Partners
Chinese GPU Designer MetaX Wraps Up Early Stage Fundraiser, Led by LCP, Matrix Partners
(Yicai Global) March 9 -- MetaX Integrated Circuits, a Chinese graphics processing unit design startup, has secured hundreds of millions of yuan in its pre-Series A+ round of funding, less than a month after its pre-A round.
The latest funding was jointly led by Lightspeed China Partners and Matrix Partners China, and participated by CTC Capital, Sequoia Capital, and ZhenFund, the Shanghai-based company said in a statement yesterday. It also garnered hundreds of millions of yuan in its pre-A round.
The startup, which was founded at Lingang Special Area of the China Shanghai Pilot Free Trade Zone last September, is eyeing the field of high-performance GPU processors, a sector dominated by global giants such as Nvidia and Advanced Micro Devices.
China's GPU market is expected to reach about CNY27 billion (USD4.1 billion) in scale by 2025, according to IDC. GPU chips account for about half of GPU servers' costs.
Chinese companies' rising demand for supercomputing in their research and development will drive a continuously growing demand for high-performance GPUs, and MetaX is one of the few firms in the field with its own intellectual property, said Zhu Jia, associate partner at Lightspeed China Partners.
Zhu added that the venture capital firm is optimistic that MetaX will be able to fill the domestic technological gap in the field of high-performance computing in the future.
MetaX focuses on developing general-purpose GPUs. The products are mainly used in traditional GPUs and mobile applications, artificial intelligence, cloud computing, and data centers, according to the firm's website.
Members of MetaX's technical team have more than 15 years of experience in high-performance GPU design on average, ranging from 40 nanometers to 7 nm. Three core founders have worked together for more than 10 years with their respective backgrounds in hardware, software, and architecture.
 


China's leading contract chipmaker SMIC's 14nm process yields have reached 90-95 percent, tying TSMC's equivalent process, according to a March 10 report by financial website Xuangubao.cn.

SMIC is at full capacity for all processes, with orders for some mature processes already scheduled for 2022, the report said.

SMIC said on March 3 that it had reached a $1.2 billion product purchase order with ASML of the Netherlands.

On March 4, ASML said the agreement related only to DUV lithography. The agreement was signed on Jan. 1, 2018, and runs initially through Dec. 31, 2020, and was extended on Feb. 1, 2021, to the end of December 2021.

SMIC's equipment supply for mature processes such as 14nm and 28nm has already been licensed by the US, as previously reported.


SMIC co-CEO Liang Mong Song previously said the company's 28nm, 14nm, 12nm, and N+1 technologies have entered volume production at scale, and 7nm technology development has been completed and can enter risky volume production in April this year.

Liang said the most critical and also the most daunting 8 technologies of 5nm and 3nm have been launched and can enter the development stage when the EUV extreme ultraviolet lithography arrives.

SMIC went public in China in July last year, and 40% of the listed proceeds were used for the 12-inch chip SN1 project, 20% as reserve funds for advanced and mature process R&D projects, and 40% as supplementary working capital.

SMIC owns or holds several 300mm and 200mm wafer fabs in Shanghai, Beijing, Tianjin, Shenzhen, and Jiangyin.



SMIC's product yields using 14nm process said to have reached TSMC's level-CnTechPost



(Source: SMIC)
 
China's “Semiconductor Theranos”: HSMC
Kevin Xu


China’s semiconductor ambition just had its first ponzi scheme fully exposed: Wuhan Hongxin Semiconductor Manufacturing (HSMC).

The HSMC ponzi scheme was led by a trio of characters, who have zero expertise in semiconductor (or anything tech related), but are experts in manipulating local government subsidies, construction contractors, a renowned but gullible former TSMC executive, and China’s desperate need for homegrown chips to pull of a heist so large it makes Theranos look amateur.

Details of this scheme, documented and exposed in this 36Kr article (in Chinese; hat tip: Jordan Schneider), illuminates a bigger structural problem in China, where the central government’s desires, and the local governments’ desire to satisfy those desires, can produce to ripe opportunities to scammers to steal and profit on a monumental scale.

(Note: during the course of writing this article this week, the 36Kr report was deleted.)

The Heist
Let’s first summarize the major elements of the HSMC heist that unfolded between late 2017 and early 2021 (which may read like a movie script, not real life):

Part I -- the Trap:

  • Throughout 2017, a man by the name of Cao Shan traveled across China looking for a local government to invest in his semiconductor scheme. (“Cao Shan” is actually a fake name this person uses, because his real name is already tainted by the scams he used to do back in his hometown.)
  • Cao eventually found an accomplice, Mr. Long Wei, who worked his connections to get the City of Wuhan’s East-West Lake District Government to provide land and investment.
  • Long brought another close friend into the fold: Ms. Li Xueyan, a small business owner who has opened restaurants and sold Chinese rice liquor.
  • The trio -- Cao, Long, Li -- formed the board of directors of what became HSMC.
Part II -- the Money:

  • Throughout 2018, the trio worked to secure two sources of “income”: direct subsidies from the East-West Lake District Government (aka taxpayer money) and deposits from construction contractors who want to build the HSMC factory.
  • Sourcing both government subsidies and contractor deposits is a strategy for scam factory projects to increase the amount of money to be scammed.
  • The East-West Lake District Government decided to invest in HSMC partly because of its jealousy of a local rival district, which attracted and incubated a successful flash storage manufacturer.
  • To make themselves look important and powerful, the trio would spread false rumors about their personal background. Long was rumored to be the grandson of some high-level official, while Li would pretend to be the sister of some other political figure.
  • By May 2019, HSMC has received 6.5 billion RMB (~$1 billion USD) of investment from the district government. Cao and Long have quit the board, giving Li and her cronies full control. Cao began going to other provinces to set up similar ponzi schemes.
Part III -- Chiang Shang-Yi, TSMC, and ASML:

  • By June 2019, the trio targeted and successfully persuaded Chiang Shang-Yi, the legendary founding CTO of TSMC, to join HSMC as its CEO.
  • To convince Chiang, HSMC spread false rumors publicly that it has already attracted 100 billion RMB (~$15 billion USD) of investments. They also took advantage of Chiang’s gullibility and professional insecurities. (At the time, Chiang was a consultant at SMIC, China’s largest chip foundry, with relatively little influence.)
  • Using Chiang’s aura, HSMC started aggressively poaching engineers from TSMC with salary packages worth 2 to 2.5x more than what they were earning.
  • Chiang also used his industry reputation to convince ASML, the Dutch company and world’s leading manufacturer of lithography equipment, to sell one DUV equipment to HSMC. (DUV is not the most advanced equipment, but this is still a huge coup given heavy US pressure at the time on the Dutch government to not sell to China.)
  • By December 2019, the ASML equipment was delivered to HSMC amidst huge fanfare. The company also secured more investment due to this accomplishment from the district government, totaling 15.3 billion RMB (~$2.4 billion USD).
  • One month later, the same equipment was offered as collateral to a local Wuhan commercial bank for a 580 million RMB loan (~$90 million USD) -- another new source of “income” for the heist.
Part IV -- HSMC Collapses, Heist Completed:

  • During the first half of 2020, while Wuhan was ravaged by the coronavirus, the trio began siphoning HSMC money away.
  • One of its primary methods was conducting employee training programs with a company run by Li’s younger brother.
  • HSMC also refused to pay its construction contractors money, owing tens of millions of dollars.
  • By July 2020, it became clear that HSMC was a scam. Chiang left the company. The Wuhan city government started leaking news that HSMC is running out of money.
  • By November 2020, Li was pushed out of the company and the East-West Lake District Government took full ownership of HSMC.
  • By January 2021, Chiang rejoined SMIC. HSMC furloughed all its employees for 40 days and reduced salaries across the board.
This is a timeline (in Chinese) of the major events put together by the 36Kr team:

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Central and Local


While the HSMC saga may read like a movie script and an isolated incident, it’s a symptom of a structural problem. This symptom is amplified by the high-profile nature of China’s need to produce its own semiconductors.

From the outside, a common stereotype and myth about China is that Beijing’s central government is omnipresent and omnipotent. In reality, the dynamic is more of a call-and-response; the central government calls with directives, local governments respond with implementation plans.

I described the importance of understanding this dynamic last year in Part II of my “Open Source in China” series. I emphasized the role that provincial governments play in aligning and allocating resources according to the central government’s desires, in order to compete for star projects and build new companies. Local officials are motivated to deliver results for political advancement.

In a recent piece by Matt Sheehan of the think tank MarcoPolo, he also illustrated this relationship when analyzing China’s plans around “5G+ Industrial Internet.” Four months after the central government issued its “5G+ Industrial Internet” guidance, the Guangdong provincial government issued its implementation plan, and the city of Huizhou in the Guangdong province soon issued its own plan to align with the provincial government’s plan. What tangibly resulted was Guangdong (the province) offering a 30% public cloud discount to push businesses to move to the cloud, while Huizhou (the city) pledging 100 million yuan (~$14 million USD) in subsidies to attract so-called “intelligent manufacturing projects” to set up shop there.

HSMC is the archetypal child of this system -- a new shiny company with a rockstar legendary CEO that would’ve done wonders for the political future of officials in Wuhan and the East-West Lake District, if it had succeeded. The allure was so strong that no one from the district government bothered to scrutinize the outlandish promise that Cao pitched -- HSMC will start producing 14nm chips right away, then quickly advance to 7nm chips and compete directly with TSMC and Samsung. (A more realistic timeline would be to start with 65nm chips, move to 40nm, and then progressively to denser chips; a process that could take at least a decade.) Cao knew nothing about semiconductor production, but he did know that the smaller the chip, the more advanced it is, and the more investment he could scam by promising it.

Herein lies a more vexing problem.

The same reasons that make semiconductor manufacturing hard also make it easy to scam. Few people have the knowledge to oversee and pinpoint why a project failed, which party should be responsible, and how to prevent similar failures. This ignorance extends all the way to the top. When the National Development and Reform Commission, the central government regulator, learned of HSMC’s failing, its official response was “谁支持,谁负责” (whoever supported the project is responsible). There’s not much more it could do.

Furthermore, such a failure in the high-profiled semiconductor space is so embarrassing publicly for the local government that there’s no incentive to litigate the truth, because an honest investigation would inevitably uncover gross incompetence by local officials. As a case in point, according to 36Kr’s report (now deleted), after the district government took over ownership of HSMC, it did not spend time inspecting wrongdoings, but instead traveled to Shanghai and other places to try to sell what remains of HSMC to salvage this failed investment (so far without any success).

For professional scammers like Cao, Long, and Li, semiconductor projects are ripe targets -- low risk, high reward, too complicated for most people to understand, and too embarrassing to investigate if projects fail.

That’s why Cao, instead of sitting in jail, has formed several other “semiconductor factory projects” in cities like Jinan and Zhuhai. He is still out there, trying to replicate other HSMC’s.

Shooting Yourself in the Foot
Last October, I wrote a column “What Can $1.4 Trillion Buy” for The Wire China, where I identified the two main chokepoints to China’s semiconductor ambition: access to advanced equipment, hiring technical talent. The greed of the “HSMC trio” has managed to shoot China in the foot in both areas, permanently damaging the prospect of other semiconductor upstarts that may actually be trying to make chips.

Regarding advanced equipment access, by luring Chiang and using his reputation to buy ASML’s DUV equipment (only to loan it off for more cash), ASML may never sell to another Chinese semiconductor startup, with or without sanctions. ASML’s reputation is damaged by this transaction. It doesn’t sell to any company that has the money to buy; it evaluates the buyer’s technical capabilities first to make sure the buyer can make proper use of its product. ASML toured HSMC prior to agreeing to sell its equipment, and lauded HSMC’s team as the best it has seen in Mainland China, mostly on the strength of Chiang’s reputation and the engineers he was able to attract. ASML now must feel like a fool. But the bigger fool here is China. ASML had a record 2020, selling 258 lithography equipment, primarily to TSMC. ASML doesn’t need the Mainland China market; China urgently needs ASML’s products.

Regarding hiring technical talent, a chilling effect will permeate the industry, where experienced engineers from Taiwan will think twice about joining a mainland startup, since even the reputation and judgment of Chiang cannot protect you from scam artists. This situation cuts off the best and most obvious source of talent, given the cultural and language similarities between Mainland China and Taiwan. Poaching talent from South Korea and the United States would be much harder. And training domestic talent will take much (much) longer.

HSMC isn’t the only semiconductor startup that failed in 2020. Last May, a startup in Chengdu failed after two years of operation and supposedly attracted $10 billion USD in investment. Last July, another startup based in Nanjing filed for bankruptcy after four years of operation, with a supposed investment size of $3 billion USD. We don’t know yet why these startups failed.

And that’s the key question: why?

According to a report from Caixin (in Chinese), in just the last three years, the number of semiconductor startups in China have increased by more than 50%. Moreover, the amount of investment has increased 6-times, from $946 million USD in 2018 to $6.16 billion USD in 2019. For the first half of 2020, investment has reached $8.46 billion USD.

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Source: https://finance.sina.com.cn/tech/2021-01-04/doc-iiznezxt0546437.shtml
Undoubtedly, not all of these investors know what they are investing in; most of them don’t. Similarly, not all of these startups will succeed; most of them won’t.

Failures are inevitable for something as hard as semiconductor manufacturing. Learning about why failures happen is an important necessity to a new industry’s growth and maturity. But what did China’s fledgling semiconductor industry learn from the HSMC experience?

Based on 36Kr’s calculation, the “HSMC trio” stole in total 12.4 billion RMB (~$2 billion USD) in three years from the three-course meal of district government investment, contractor deposits, and bank loans. (In comparison, Theranos evaporated roughly $1.4 billion USD of its gullible investors’ money in about 15 years.)

The HSMC heist has managed to make Theranos look somewhat benign. If HSMC isn’t treated as a criminal act (like Theranos) but as just another failed startup in a frothy market, it will likely not be China’s only “semiconductor Theranos.”

 


China's leading contract chipmaker SMIC's 14nm process yields have reached 90-95 percent, tying TSMC's equivalent process, according to a March 10 report by financial website Xuangubao.cn.

SMIC is at full capacity for all processes, with orders for some mature processes already scheduled for 2022, the report said.

SMIC said on March 3 that it had reached a $1.2 billion product purchase order with ASML of the Netherlands.

On March 4, ASML said the agreement related only to DUV lithography. The agreement was signed on Jan. 1, 2018, and runs initially through Dec. 31, 2020, and was extended on Feb. 1, 2021, to the end of December 2021.

SMIC's equipment supply for mature processes such as 14nm and 28nm has already been licensed by the US, as previously reported.


SMIC co-CEO Liang Mong Song previously said the company's 28nm, 14nm, 12nm, and N+1 technologies have entered volume production at scale, and 7nm technology development has been completed and can enter risky volume production in April this year.

Liang said the most critical and also the most daunting 8 technologies of 5nm and 3nm have been launched and can enter the development stage when the EUV extreme ultraviolet lithography arrives.

SMIC went public in China in July last year, and 40% of the listed proceeds were used for the 12-inch chip SN1 project, 20% as reserve funds for advanced and mature process R&D projects, and 40% as supplementary working capital.

SMIC owns or holds several 300mm and 200mm wafer fabs in Shanghai, Beijing, Tianjin, Shenzhen, and Jiangyin.



SMIC's product yields using 14nm process said to have reached TSMC's level-CnTechPost's product yields using 14nm process said to have reached TSMC's level-CnTechPost



(Source: SMIC)
SMIC 7nm coming soon.....
 

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