Hearty addition

Ma adds his financial firepower

It is not quite up there yet with the day that Steve Jobs met Steve Wozniak while he was out walking round his neighborhood with a school friend back in 1971. But the day that Qi Xiaoning decided to join an evening class taught by Jack Ma may turn out to be equally propitious for both men.

The year was 1994 and the two were staff members at Hangzhou’s Institute of Electronics Engineering. Qi was teaching electronics when he decided to join Ma’s English class. It is there that he first introduced a new concept to Alibaba’s founder: the internet.

Two and a half decades later, Ma returned the favour last month and just purchased the company Qi is currently CEO of: C-SKY Microsystems. The semiconductor chip designer was founded by Yan Xiaolang, the professor who ran the Hangzhou Institute, and who knew them both. Electronic Engineering Times describes C-SKY as “quite possibly China’s best kept secret”.

Ma’s cash may aid C-SKY’s ambitions in the short-term. C-SKY is one of China’s leading fabless integrated circuit (IC) designers, specialising in 32-bit low powered embedded computer processing units (CPUs) predominately used for the Internet of Things (IoT).

Alibaba’s move into this space falls into line with the strategy of US internet giants like Apple, Google and Facebook. One thing which unites them all is a desire to control the hardware and not just the software which powers their products.

C-SKY first entered into a strategic partnership with Alibaba in 2015. Its CPU cores are now aligned with Alibaba’s proprietary operating system – Yun OS IoT.

Alibaba described the decision to purchase C-SKY as an important step for China to gain “independent control” of the technology powering internet applications. At the same time, insiders told the Chinese media that the acquisition’s timing – so soon after the US slapped a seven-year export ban on the supply of US chips to telecom equipment provider ZTE – is purely coincidental.

That is not how many onlookers view it. “Ma is China’s pride and joy,” noted one internet user. “The state must support him,” added another. Most express their gratification that Ma is helping China to reduce its reliance on US chips and suggest ZTE’s export ban is a lesson which must not be lost.

And the government is clearly listening. This week Reuters reported that a new fundraising round for the National Integrated Circuitry Investment Fund has raised $18.98 billion. The news agency also says the second fund has had its remit tweaked to prioritise even more investment in homegrown chip design.

This is clearly needed if China is to wean itself off its heavy reliance on chip designers and manufacturers like Intel, Qualcomm and Nvidia. In 2017, imports totalled $260 billion.

C-SKY admits that its products don’t yet match those of competitors like ARM head-on. Qi tells Electronic Engineering Times that, “if US companies are already in graduate schools, Chinese chip companies are still at kindergarten. But we all start somewhere”.

Local companies believe their best chance to move up the value chain lies with AI chips, which are already disrupting established players. Alibaba, for example, is planning to invest $15 billion over three years through its new research institute DA-MO.

The institute has designed an AI chip which it calls Ali-NPU. It says its performance is 10 times better than mainstream CPU and GPU chips. One of the main problems besetting graphic chips, in particular, is the huge amount of power they soak up to operate at peak efficiency. One of the big challenges, but also opportunities, lies in designing chips which are more energy-efficient.

Another of the areas C-SKY wants to move into is NB-IoT, or chips for IoT applications that utilise small amounts of power over long periods of time. Alibaba’s hardware ecosystem also encompasses investment in some of China’s other leading AI chip designers including Cambricon, China’s first AI unicorn, which helps Huawei smartphones to process images and is used too by DeePhi Tech, which specialises in chips for speech recognition.

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