Cutting supplies of American technology might temporarily undermine Chinese companies, but it’s also spurring those companies to push what can be made elsewhere. Chinese capital is being poured into developing and manufacturing semiconductors outside the US, and the results will change the world forever.
The various bans and tariffs introduced by the US (and China) were not entirely unexpected, even if the severity and celerity have been shocking. Some preparation offers only limited mitigation (Huawei might replace Android, but without Google Services the company won’t sell handsets outside China) but in semiconductors there was always a long-term plan for domestic production. Thanks to the accelerating imperative of trade war we are already starting to see that plan in action.
My colleague, Martin Reynolds, tells me that Gartner customers are already asking questions about Huawei’s heavy-duty processor – the Kunpeng 920. Huawei is migrating its networking and storage systems to home-grown designs, shifting away from US-controlled x86 processors. The Kunpeng 920 is a powerful processor, with eight DDR channels – double that of mainstream Xeon processors – and up to 64 modern ARM cores. The device appears to be a multi-chip package, with a central memory controller sporting a feast of dedicated processing engines.
Martin reckons the processor won’t match the peak performance of an Intel Xeon, but it looks like an excellent solution for bandwidth-heavy compute-light applications such as storage and networking (and it’s notable that this is the business where Huawei started out). In a general-purpose server ARM chips can deliver 50 to 70 percent of the performance of an x86, echoing the maxim that “no program completes faster than its slowest thread”.
Huawei has also been splashing the cash around third parties, to shore up supply chains outside the US. The Nikkei Asian Review tells us the company has been doing deals with companies such as RichWave (competitor to US-based Skyworks and Qorvo) and placing orders with TSMC for chips to replace both Intel and Xilinx.
China’s aspirations aren’t limited to processors, though progress in memory may be slightly slower. Another colleague – Joe Unsworth – tells me that China’s impact to the flash memory market is inevitable, but won’t have a meaningful impact until 2022. Yangtze Memory Technologies Co. (YMTC) will need to progress from its nascent 64L 3D NAND and limited manufacturing to 128L and ramp up fully its first and then second fab in parallel to building up extensive ecosystem support. This could be achievable in the next 2-3 years but still puts them a generation behind the leading vendors…assuming everything goes according to plan.
The Chinese government has been investing in domestic semiconductor production for a long time. By cutting access to US technologies the trade war has obliged Chinese companies to follow suit – money that would have been spent buying technology from the US is now being poured into local production. The American lead in semiconductor design isn’t going to disappear any time soon, but neither are things ever going back to how they were. As another of my colleagues – Roger Sheng – puts it “Even if the trade war ended tomorrow there could still be another one. Chinese companies, and the Chinese government, believe that the only defense against this kind of war is technical independence”.
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