Chinese semiconductor industry

AWS is a beast in the cloud sector by far the most advanced in services they offer, then comes Microsoft with Azure(I work with Azure). A couple of years ago you had google at a very distanced 3rd place, seems like Alibaba has beaten google recently to claim the 3rd place.

Kind of funny how isolated Asia success stories are from the west because I don't know anyone professionally who has ever worked with Alibaba or Huawei cloud, it also tells you how big the Chinese market really is.

I think with the current development of Semi conductor capabilities in China they might offer cheaper prices for the Asian market. But I also know that Amazon is also designing custom ARM silicon with their Graviton series of chips offering cheaper prices on their services compared to their Intel/AMD offering of the same services. Same with Microsoft and ARM designs the coming decade will be really interesting, I wouldn't be surprised that top management at intel are shitting their pants right now.

@krautmeister bro more detail regarding 14nm localized production (with English caption), as you correctly said China is sand bagging and they are further along than we realized. Aside from SMEE 28 DUVL all equipment related for 14nm chip production are performing well.

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krautmeister said:

It's not griping. China had no choice because they were being targeted, unlike countries like India and Japan, who play by the rules set by the master. So, for China to sit by waiting for inevitable sanctions was negligent. It was very predictable what would happen, and it's very predictable now what will happen in the next few years. I'll state that I did believe China was in a very tough situation 3 years ago and I never expected them to advance the comprehensive way they did. Still, despite what I believe back then, I would still say they had to invest more energy years ago in semiconductor equipment and materials, and engines, and this and that, etc. because they simply have no choice.

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Money is finite, invest in semi-conductors at the expense of what, poverty alleviation, green energy, NEVs? saying I Advocating within the prism of a narrow interest group is basically lobbying! Despite the lack of western liberal democratic credentials, the government of China still proclaims it acts 'for the people' the people have clearly indicated that clean air and living above the poverty line is far more important than playing geopolitical games with a bunch of imperialist assholes!

Semiconductor ban here, equipment ban there I don't see the sky falling in but I do see 100 million people living above absolute poverty under clearer skies in the last few years! Sacrificing some near term profits for longer term term gains is leadership, sitting from afar pontificating on what should have been is not! Mao famously sacrificed a generation, how many more should be placed on that altar to satisfy the should have, could have, would have, brigade!

hkbc said:

Money is finite, invest in semi-conductors at the expense of what, poverty alleviation, green energy, NEVs? saying I Advocating within the prism of a narrow interest group is basically lobbying! Despite the lack of western liberal democratic credentials, the government of China still proclaims it acts 'for the people' the people have clearly indicated that clean air and living above the poverty line is far more important than playing geopolitical games with a bunch of imperialist assholes!

Semiconductor ban here, equipment ban there I don't see the sky falling in but I do see 100 million people living above absolute poverty under clearer skies in the last few years! Sacrificing some near term profits for longer term term gains is leadership, sitting from afar pontificating on what should have been is not! Mao famously sacrificed a generation, how many more should be placed on that altar to satisfy the should have, could have, would have, brigade!

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This isn't a binary choice where you need to sacrifice here to gain something there. This is not a choice, China has no choice, it is being forced on China. Without a domestic semiconductor supply chain, China is going to lose the high-end semiconductor industry and get stuck as an assembler of these high tech products. We are talking about China's largest import item with around ~$380 billion USD$ imported in 2020. Semiconductors are the essential ingredient of almost every modern device today and the Americans are weaponizing it to try stopping China's ascendance. Aside from this being forced on China, if or should I say when China succeeds with indigenizing the semiconductor supply chain, it will effectively save hundreds of billions annually in those imports. Maybe we should be thanking Ron Vara for being such a knucklehead. LOL

Besides, your multiple examples make it seem like China needs to sacrifice in those areas by placing more resources in other areas. When did we see any of that happening? These are strawman arguments that are more applicable to countries like India that have much more limited resources. China's budget is almost 20 trillion RMB. That's why China is able to undertake so many crazy endeavors simultaneously and still succeed with most of them.

MERICS report on Chinese IC industry development

(.pdf file download)

High level analysis of the entire Chinese IC industry with not too many details, and (IMO) very pessimistic look on how fast the Chinese industry will develop. Also the report pays too much attention on market-share, and too little attention on specific technological developments.

Nevertheless, it is a very interesting report if anyone is willing to spend 30 minutes on reading it. Recommended

krautmeister said:

This isn't a binary choice where you need to sacrifice here to gain something there. This is not a choice, China has no choice, it is being forced on China. Without a domestic semiconductor supply chain, China is going to lose the high-end semiconductor industry and get stuck as an assembler of these high tech products. We are talking about China's largest import item with around ~$380 billion USD$ imported in 2020. Semiconductors are the essential ingredient of almost every modern device today and the Americans are weaponizing it to try stopping China's ascendance. Aside from this being forced on China, if or should I say when China succeeds with indigenizing the semiconductor supply chain, it will effectively save hundreds of billions annually in those imports. Maybe we should be thanking Ron Vara for being such a knucklehead. LOL

Besides, your multiple examples make it seem like China needs to sacrifice in those areas by placing more resources in other areas. When did we see any of that happening? These are strawman arguments that are more applicable to countries like India that have much more limited resources. China's budget is almost 20 trillion RMB. That's why China is able to undertake so many crazy endeavors simultaneously and still succeed with most of them.

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No its not a binary choice its a spectrum, its not like they didn't expend any resources, just not enough in your opinion, where China is today is the result of the sum of ALL its past decisions, in its ENTIRETY, good and bad!

The fact that you disagree with where things in one narrow sector are as opposed to where you think they should be is just your opinion, someone else will argue healthcare needs more investment, the space program needs more investment, the military and so on and so on special interest groups pitching their wares lobbying for what they think is the most important!

When Obama banned the export of CPUs for China's supercomputers there were choruses of they should have done this or that, different, faster, its all going to end, today are China's supercomputer centres rotting away?

As I've said the sky's not fallen in, all that has happened is some companies aren't able to make as much profit as they would otherwise have made. Which is just blown up into if we only did this or that! Its just as much if not more of a strawman to promote an extrapolation of what would happen if something was done earlier or faster.

Imperialist assholes will be imperialist assholes if the semi-conductor sector didn't look like a weak link held up they would just find something else to ban and make mischief and then they'll be some other talking head proclaiming I had visions of this or that and if China only did......

There's a Chinese idiom 留得青山在，不怕没柴烧 from where I sit the the mountains are still there and the firewood is still available just because you don't like the density of the trees on the mountain doesn't change that fact!

hkbc said:

No its not a binary choice its a spectrum, its not like they didn't expend any resources, just not enough in your opinion, where China is today is the result of the sum of ALL its past decisions, in its ENTIRETY, good and bad!

The fact that you disagree with where things in one narrow sector are as opposed to where you think they should be is just your opinion, someone else will argue healthcare needs more investment, the space program needs more investment, the military and so on and so on special interest groups pitching their wares lobbying for what they think is the most important!

When Obama banned the export of CPUs for China's supercomputers there were choruses of they should have done this or that, different, faster, its all going to end, today are China's supercomputer centres rotting away?

As I've said the sky's not fallen in, all that has happened is some companies aren't able to make as much profit as they would otherwise have made. Which is just blown up into if we only did this or that! Its just as much if not more of a strawman to promote an extrapolation of what would happen if something was done earlier or faster.

Imperialist assholes will be imperialist assholes if the semi-conductor sector didn't look like a weak link held up they would just find something else to ban and make mischief and then they'll be some other talking head proclaiming I had visions of this or that and if China only did......

There's a Chinese idiom 留得青山在，不怕没柴烧 from where I sit the the mountains are still there and the firewood is still available just because you don't like the density of the trees on the mountain doesn't change that fact!

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My focus is very specific, it's nuanced specifically to the semiconductor industry which is as important to China as the oil industry. It's not random, it's targeted and it was this vulnerability that the Americans saw and why they exploited it. I see the point you're making. I don't agree with it because I think China could have and should have definitely focused more on this earlier because the threat was already long obvious and the China government waited until that threat actually manifested. In the grand scheme of things, or spectrum as you describe it, there are more and less critical areas. Things that need priority should be given the resources and attention needed to ensure their success. This is where leadership comes in to properly guide and safeguard the more important, as they relate to the success of a country.

In most cases, China usually does actively prepare for various scenarios for their backup plans. These normally exist as scientific technological research in uneconomic, non-commercial or loss leader areas as potential fall back plans. China overall is very good at this. However, in the case of semiconductor equipment, they really dropped the ball by subsidizing foreign companies against the interests of their own companies in the same industry. That was a clear policy failure. China sometimes allows too much leeway with their local governments, when doling out funding. Right now, there is another fiasco brewing with many local governments giving out subsidies to any and all semiconductor related companies. This isn't targeting relevant parts of the semiconductor industry. It's more of a blunt force approach where non-experts are providing the means for a lot of criminal shenanigans to happen. It's not after the fact whining. Some things are obvious and in plain sight. They just become more obvious in the future.

In case you have the wrong impression, I am extremely impressed by China's semiconductor industry as a whole.

ansy1968 said:

@krautmeister bro question are they using Intel chips, if yes then it doesn't matter cause a replacement is just around the corner with a localized 14nm chips next year or maybe under the table supply from SMIC .

from CnTechPost

Huawei enters top five in global public cloud market for first time, report shows​

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June 30, 2021
Huawei has achieved more than 200 percent growth in the infrastructure-as-a-service (IaaS) public cloud market for the second consecutive year and entered the top five for the first time in 2020 with $2.7 billion in revenue, according to research firm Gartner.
The results show that more than 90 percent of Huawei's revenue from this business comes from Greater China, where the cloud market continues to grow rapidly.
Huawei began shifting from selling equipment to investing heavily in its cloud services business after 2019, and that difficult transition is already bearing fruit, said Sid Nag, research vice president at Gartner.
The global IaaS market reaches $64.3 billion in 2020, up 40.7 percent from $45.7 billion in 2019, according to Gartner.
The top five IaaS providers account for 80 percent of the market share in 2020, with nearly 90 percent of IaaS providers experiencing growth.

Amazon remains number one in the IaaS market in 2020, followed by Microsoft, Alibaba, Google and Huawei, respectively.
Amazon continues to lead the global IaaS market with revenues of $26.2 billion in 2020 and a 41 percent market share. Amazon's growth rate of 28.7 percent is slightly below the market average, with its sales growth primarily coming from increased customer usage.

Microsoft continues to rank second in Gartner's IaaS market share with nearly 60 percent growth and $12.7 billion in revenue in 2020.
Alibaba, the dominant IaaS provider in China, has revenues of more than $6 billion in 2020, up 52.8 percent from $4 billion in 2019. Alibaba has the highest growth rate in the education vertical at 105 percent in 2020.
Google's IaaS revenue grows 66 percent to nearly $4 billion in 2020.

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Huawei has been pivoting to the cloud services and autonomous car strategically both to enter into high-growth areas and to compensate the loss of revenue from smartphones. They're doing very well in both areas out of the gate with very promising future. Chinese cloud market is at least five years behind the US, so its size now is much smaller. But it's growth rate is higher and like everything else, its size will eventually catch up. The electric auto + autonomous driving + intelligent car revolution is real and unfolding now, particularly in China. The challenge is that the Chinese market is very fragmented and there are still quite a bit of uncertainties in terms of how it will evolve and consolidate. But Huawei is a strong player with unique offerings and staying power. We'll just have to see.

The biggest challenges for Huawei now is that the revenue from the above two new markets are still very small, compared to the revenue that Huawei got from the smartphone, which has been falling precipitously. This threatens Huawei's capability to fund its R&D and investments into the new growth areas. The second, slight longer term challenge, is obviously the availability of semiconductor chips. Huawei is probably OK in the next two years, but if the indigenous fab capability (28nm & 14nm) can not materialize in next 2-3 years, Huawei's situation will significantly deteriorate. After all is said and done, semiconductor chip is the very foundation of Huawei, now and in the future.

krautmeister said:

It's not griping. China had no choice because they were being targeted, unlike countries like India and Japan, who play by the rules set by the master. So, for China to sit by waiting for inevitable sanctions was negligent. It was very predictable what would happen, and it's very predictable now what will happen in the next few years. I'll state that I did believe China was in a very tough situation 3 years ago and I never expected them to advance the comprehensive way they did. Still, despite what I believe back then, I would still say they had to invest more energy years ago in semiconductor equipment and materials, and engines, and this and that, etc. because they simply have no choice.

Click to expand...

So which high growth investments do you propose China cut 3 years ago to reallocate to semiconductors? Eg: not building that dam and get rid of it's electricity generation to save $1 billion to reallocate to semiconductors? Not alleviating poverty to save another $1 billion to reallocate to semiconductors?