I’ll tell you about the war between the US and China on semiconductors
How and how much American and Chinese companies face each other in semiconductors. The in-depth study by Giuseppe Gagliano
Traditionally, microprocessor design has been dominated by a few American giants that have long been in this industry.
Intel, founded in 1968, remains the world's leading semiconductor manufacturer, but the Santa Clara, California-based company has to take notice of new competitors not necessarily American elsewhere.
IBM, historically present in the computer and semiconductor market since the 1950s, launched the Power line of processors in the 1990s. In 2021, the Power 10 will have no fewer than 48 cores for computing power adapted to the needs of big data – the mass processing of giant data generated by Internet 3.0.
Advanced Micro Devices (AMD) is another historic American manufacturer of semiconductors, microprocessors and graphics cards, as the company, also based in Santa Clara, California, was founded in 1969.
The American company Nvidia was created in 1993 and is also headquartered in Santa Clara. The company currently dominates the market for graphics card processors (graphics processing units, GPUs).
According to leading industry analysts, Nvidia accounted for no less than 69% of graphics processor demand in the fourth quarter of 2019. AMD and Intel are far behind. But these two companies compensate by competing for the machine processor (CPU) market over which they continue to have hegemony.
At least for now. In fact, the arrival of smartphones in the early 2000s revolutionized the semiconductor market.
Sure, companies like Amd and Intel have been able to position themselves very quickly in the segment, but they face competition from Qualcomm (an American company, headquartered in San Diego, California, for a change), founded in 1985.
For its part, the Apple company, which has never finished diversifying, is in the process of upsetting the hierarchy of designers of processors for mobile phones, but also laptops, since the release of the A7 processor, which equipped the iPhone 5s. Since then, the A8, 9, 10, 11, 12 and 13 series have shown that Apple now has full control of the technology associated with the design of increasingly efficient multi-core processors.
All of the above-mentioned American companies delegate a large part of their manufacturing activities to subcontractors.
Qualcomm or Nvidia are also somewhat virtual companies, that is, without factories. They subcontract their production to other industry giants, such as the European (Franco-Italian) STMicroelectronics, which employs 46,000 people worldwide, or the Taiwanese Tsmc (Taiwan Semiconductor Manufacturing Company) or UMC (United Microelectronics Corporation) which are the main suppliers of Nvidia or Qualcomm.
As for Apple, the company delegates part of its production to Foxconn Technology, officially Hon Hai Precision Industry Company Ltd., a Taiwanese industrial group specializing in the manufacture of electronic products, located mainly in the People's Republic of China, in the city of Shenzhen, which also supplies companies Sony, Motorola, Dell, Microsoft, Amazon, Nintendo, Hewlett-Packard, Samsung, LG, HTC, Acer, Asus, Lenovo and Huawei.
But China, which has long aspired to be something other than the "workshop of the world," has shifted gears in the semiconductor market. In fact, in planning its economy, China is aiming for technological autonomy.
While the microchip market grew 8% in 2020 to around $ 480 billion, the industry's R&D spending grew 5% to a record $ 68.4 billion according to leading analysts.
Intel, Samsung and TSMC emerge as the three largest investors in this sector, by contrast, no European chip maker is in the top 10. Chinese companies, on the other hand, are showing considerable technological activism.
Thus, in the field of processors, Zhaoxin or Huawei have developed their own KaiXian and Kunpeng chips, but another company is also developing their own processors: Longsoon, a young brand company, founded in April 2010, which has recently commercialized a four-core chip, the Dragon Core 3A4000, whose performance is still very far from that of the processors developed by Intel or Amd, just like those shown by Zhaoxin's KaiXian U6780A processor. Another Chinese competitor recently arrived on the market, the Phythium company is also launching itself into the production of multicore processors, with the ambition to compete within a few years with the leaders of the American market in terms of performance.
The US administration decided to respond and even hit hard in 2019, spurred on by Donald Trump who forced American giants to end its Chinese partnerships. In addition, the US government has another reason for attacking Chinese companies in terms of economic warfare: they illegally reproduce copies of the x86 processor family to release their own models.
On December 3, 2020, the US government also decided to impose sanctions on the Semiconductor Manufacturing International Corporation (Smic), which mainly supplies the Chinese company Huawei, and which the Americans accuse of being a military entity disguised as a private company. The objective stated by the Pentagon is clear and that is to counter China's civil-military development strategy, which supports the modernization objectives of its army by ensuring it has access to advanced technologies and skills acquired and developed by companies, universities and programs. of Amaricane research.
The United States is therefore using bottlenecks in international electronic component production lines as a weapon. One such hotspot is in the Netherlands, where the Asml company designs and manufactures the most efficient chip making machines. Asml masters EUV (extreme ultraviolet) technology which allows it to engrave silicon wafers with maximum precision. Asml's main customers are the Taiwanese giant Tsmc and the Korean giant Samsung. The latter uses the high-performance chips thus produced for its own needs, while Tsmc supplies the international electronics giants, including Chinese.
In 2020, the United States implemented a technology embargo against China. Huawei has seen the hit coming and has built a stock of essential chips for these 5G antennas and its high-end smartphones, but faces a shortage as it is unable, for the time being, to produce equivalent chips. Especially since intellectual property theft has been in the American spotlight since the Trump administration. Interdependence within production chains has the effect of a formidable pull.
Now the question is whether the Biden administration will be able to keep the pressure on China.
But the game is complex and has different aspects. Thus, in its race for technological superiority in the field of computer hardware and semiconductors, China has a broad leadership in the field of the production of "rare earths", these metals that are found in electric car batteries, in computer components. , in x-ray machines or smartphone chips. We are once again talking about rare earths.
However, the extraction of these mineral commodities existing in very limited quantities in the terrestrial layer (which, besides being rare, are not renewable, their formation takes billions of years) is almost entirely the prerogative of the People's Republic of China: this produces 67 % germanium, an essential component for solar panels, 55% vanadium (widely used in the space industry) and… 95% rare earths.
The paradox is that these rare earths are at the center of the energy transition, but that their industrial exploitation generates very strong pollution (release of heavy metals, including radioactive elements, during processes that involve the reprocessing of tens of tons). A true industrial innovation project is therefore emerging both to develop the semiconductor industry and to integrate it into energy renovation projects and ambitious high-tech development programs while reducing the ecological footprint of this sector.
But what role has Europe played up to now?
This has an evident dependence on technology more than worrying in terms of semiconductors and information technology, even if, in recent years, the German company Infineon, very active in automotive chips, has strengthened its European presence in the production chains alongside STMicroelectronics and Asml. .
Europeans are struggling to develop a clear strategy at the heart of the technological cold war between Beijing and Washington.
The Americans are accelerating and strengthening their ties with the two Asian players at the forefront of the semiconductor sector: Taiwan and South Korea. After last year's Tsmc, it is Samsung's turn to announce a plan for a semiconductor manufacturing plant. in the United States in January 2021, a very clear way to get closer to the American military-industrial complex.
The Chinese dream of a digital feudalism of which their companies would be the masters: the bet is partly successful with the internet giants (Alibaba and Tencent). On the hardware side, the blow to Huawei by the Americans is forcing the Chinese to work harder to achieve technological independence.
Their bet is therefore far from won.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/vi-racconto-la-guerra-tra-usa-e-cina-sui-semiconduttori/ on Fri, 19 Mar 2021 07:25:22 +0000.