What does it mean to achieve enlightenment? Mahayana Buddhism claims it’s a state that already exists inside each of us. However, few have been awakened to it because our brains are clouded by the three poisons of anger, greed and ignorance.
The Sanskrit word for the kind of self-realisation that aids enlightenment is Dhyana. And this is also the branding that one of China’s chip designers has adopted for its first product line, based on the Zen computer processor microarchitecture it has licenced from US firm Advanced Micro Devices (AMD).
In doing so Tianjin Haiguang Advanced Technology Investment (THATIC) is laying claim to a term with Chinese roots. Zen is the Japanese derivation of the Chinese characters 禅定 (in Pinyin: chanding), which is itself a transliteration of Dhyana (the monk Bodhidharma took Buddha’s teachings to China from India at the end of the fifth century, from where they moved east to Japan).
THATIC is on a journey of its own with its product line-up. One thing is clear: the company is no longer the same as the joint venture set up by AMD in 2016, alongside a group of other entities from China led by Shanghai-listed server manufacturer Dawning Information (Sugon) and the Chengdu branch of Sasac (China’s state asset manager).
All the same, the Chinese press is struggling to understand the kind of company that THATIC has become and how much of its own intellectual property (IP) it has developed along the way.
Answering these questions is important because they shed light on Chinese attempts to reach the government’s goal of self-sufficiency in the semiconductor sector. Investors might also get a clearer picture as to whether to invest in the Rmb9.15 billion ($1.43 billion) IPO of THATIC’s operating unit Hygon. Its initial public offering is set to be the largest listing this year on Shanghai’s tech bourse, the STAR Market.
Ostensibly, Hygon designs the most advanced kind of semiconductors – the central processing units (CPUs), which act as the brains of computer servers. However, Hygon relies on the X86 processor architecture that AMD owns through a technology exchange agreement with Intel, the company that created it back in the late 1970s.
The JV was created with a convoluted structure designed to get around a number of issues. Firstly, AMD needed to transfer technology without breaching its cross-licencing agreement with Intel. Secondly, the Chinese government wanted the new company to focus on servers that ran on “Chinese” chips for data security reasons. As a result, the venture was structured with two subsidiaries – Haiguan Microelectronics (HMC) and Haiguan IC (Hygon). AMD licenced the technology to HMC, which in turn provided Hygon with the semiconductor IP. Hygon then amended the technology to include a domestic cryptography engine before seeking final approvals from HMC.
Out of the other side of this complicated arrangement came chips with a Chinese stamp: the first line of X86 Dhyana processors, manufactured by another US company called GlobalFoundries.
The hope was that the X86 technology would help to put the Chinese company on the road to semiconductor enlightenment. Not everyone was impressed. In 2018 the Wall Street Journal published a scathing article about the collaboration, titled: “How a big US chipmaker gave China the keys to the kingdom.”
The US government then kiboshed the plan a year later by putting Sugon (the JV’s Chinese partner) on a blacklist because of its alleged military links. This blacklisting effectively curtailed the company from securing new licence agreements.
AMD has always maintained that it has never made the underlying X86 source code available to the joint venture and that it has restricted the licencing deal to a single technological iteration – the Zen 1.
In that context, some of the Chinese media has been sceptical about THATIC’s prospects, wondering how it will ever prosper while it relies on foreign technology – especially when Washington is determined to slow China’s advances in chipmaking.
Yet perhaps a better question is whether Hygon has been getting a meaningful understanding of the source code, because it has been able to develop ever more advanced Dhyana chips.
Most of the proceeds of its IPO will also be ploughed straight back into R&D.
One of the main reasons why AMD licenced Zen to Hygon in the first place was because of a major cash crunch at the American firm. Since then AMD’s fortunes have rebounded, helped by Zen’s commercial success, which is close to entering its fourth iteration in design.
In the most recent quarter, AMD grabbed nearly a quarter of global market share in all types of X86 chips, according to Mercury Research. That’s the highest level since 2006. Intel accounted for the rest.
Together Intel and AMD also control the global server chip market, with a combined 97% market share, which is why a company like Hygon already has a readymade market of X86 customers in China.
The remaining 3% of server chips rely on UK-based Arm Holding’s instruction set architecture (ISA) as their base.
ISAs act as an interface between hardware and software, specifying both what the processor is capable of doing, as well as giving instructions on how it gets done. Historically, X86 ISA has been better suited for servers, which demand higher performance levels. That’s because it is based on the CISC (complex instruction set computer) paradigm in which single instructions can execute several operations.
Arm’s ISA deploys the RISC (reduced instruction set computer) approach. This supports instructions that are simpler but faster to execute in the kind of chips more commonly found in mobile devices.
However, Arm has issued ISA licences to a wider array of end users, who hope to challenge Intel and AMD in the server chip market by designing proprietary chips of their own.
Clients include Amazon, which has designed the Graviton server chip, and Huawei, which has created the server chip Kunpeng.
Market research company Trendforce reckons that Arm-based server chips will start to become competitive in 2023.
Chinese companies are also at the forefront of making this happen, in part thanks to Arm’s local joint venture, Arm China.
As we reported in WiC501, the Arm China JV made international headlines last year on speculation that its Chinese management had gone “rogue”. CEO Allen Wu then used legal loopholes to refuse to leave his post when the board voted him out. This summer Wu was still in defiant mood, declaring that Arm China was “independently operated and Chinese-controlled”.
Wu also announced that the company had established an Open NPU Innovation Alliance (ONIA) under his chairmanship that aims to create a new ISA. Nominally it will focus on developing an open-source format like RISC-V. But commentators also see the move as another line of attack in the bid to create a Chinese ISA, free from potential Western tech restrictions.
Another Chinese company, called Loongson Technology, says it has already achieved that goal, with a homegrown ISA called LoongArch. Critics claim that it’s a copy of an American format called MIPS. But like Hygon, Loongson is hoping to secure a Shanghai STAR listing, after filing for an Rmb3.5 billion offering in the summer.
As we’ve reported in the past, China’s greatest challenge goes beyond chip design to how to make the most advanced chips in the industry. Chinese producers have mastered the 28nm process node and are said to be close to reaching 14nm levels. But they haven’t reached the standards required to make advanced chips at 7nm, where Taiwan’s TSMC and Samsung Electronics from South Korea are the leading producers.
The situation leaves Chinese companies exposed, because exports of the highest-performing chips are subject to US export restrictions (some of the underlying technology is American).
The Chinese press hopes that this weakness could soon be remedied, with rumours that Huawei’s semiconductor arm HiSilicon may have developed 7nm technology through stacking of two 14nm chips. But in the meantime Chinese-produced semiconductors accounted for about 16% of worldwide sales last year, with IC Insights forecasting a 19% figure for market share by 2025, well below Beijing’s 70% target.
Policymakers will be hoping that further breakthroughs to more advanced manufacturing nodes – as well as progress on plans for homegrown instruction sets for processors – will see China take a major step towards achieving self-sufficiency faster than many have predicted.
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