• Sunday, May 31, 2020

SMIC to the rescue? Huawei shouldn’t hold its breath: experts

Discussion in 'China & Far East' started by F-22Raptor, May 22, 2020.

  1. F-22Raptor

    F-22Raptor SENIOR MEMBER

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    As the US moves to cut Huawei off from global chip manufacturing, experts say the domestic market doesn’t offer a replacement. Flagship domestic semiconductor fabrication company SMIC can’t handle state of the art products, and itself is vulnerable to being disrupted by a US export ban.

    The Chinese telecommunications equipment manufacturer and handset maker could be cut off from global chip manufacturing by a new regulation announced by the US Department of Commerce May 15. The regulation requires companies around the world to obtain licenses for sales to Huawei of semiconductors made with US technology.

    Affected Huawei suppliers include Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker that produces high-end chip design for Huawei; Taiwan’s Win Semiconductors, which makes Huawei’s radio frequency chip designs; and South Korea’s Samsung Electronics, which ships memory and storage to the Chinese company.


    Guo Ping, the rotating chairman of Huawei, told reporters Monday that the rule would “inevitably harm Huawei’s business to a great extent” and that the company is confident that it would find a solution soon.

    “If Huawei finds no way around this and TSMC closely follows the US ban, this would be a severe blow to Huawei’s business—which is exactly what the US administration is aiming for,” Jan-Peter Kleinhans, director of the project IT Security in the Internet of Things at the Stiftung Neue Verantwortung, told TechNode.


    An onshore option
    On the same day the Commerce Department rule was made public, two Chinese state-backed funds announcedthey would inject a total of $2.2 billion into a domestic chipmaker, Shanghai-based Semiconductor Manufacturing International Corp. (SMIC). The investment is seen as China’s measure to foster chip-making capacity at home amid international supply chain uncertainty faced by Chinese companies. Experts say the company is the only domestic supplier comparable to TSMC.

    SMIC also uses US-made equipment, but it is unlikely to cut ties with Huawei at Washington’s behest.


    Huawei reportedly had started shiftingsome production of its chip designs from TSMC to SMIC by April, but the new export ban may drive Huawei to accelerate the transfer. The Nikkei Asian Review reported Monday that TSMC, a key manufacturer of chips designed by Huawei’s Hisilicon, has halted new orders from Huawei in response to Washington’s new rule change.

    Generations behind
    However, experts said SMIC may not have the capacity or capability to produce chips Huawei needs, including its 5-nanometer Kirin 1100 processor for servers and 7-nanometer Kirin 810 chip for smartphones. Hisilicon, a subsidiary of Huawei, designs those chips.


    “SMIC has no production capabilities for anything close to 7-nanometer,” said Kleinhans.

    SMIC has the capability to produce 14-nanometer wafers and the company has already started producing the Kirin 710 chipset for Huawei’s low-end Honor smartphones, according to Kleinhans. However, the company currently only has a production capacity of 6,000 14-nanometer wafers per month, which, according to an expert cited by Chinese media The Paper, is nowhere near enough for Huawei.

    Losing access to higher-end chips produced by TSMC, such as Kirin 1100 and Tiangang, a 7-nanometer chipset designed for 5G base stations, would leave Huawei unable to make its flagship smartphones and 5G towers.


    The $2.2 billion injections from state-based funds will go to a SMIC wafer plant. The company said the investment would help the plant to increase capacity of 14-nanometer wafers to 35,000 per month.

    Nomura Holdings, a Japanese securities firm, said in a report recently the defect rate of 14-nanometer chips made by SMIC was around 70% and it would take the company one to two years to demonstrate proficiency, according to Chinese media Caixin.

    “SMIC can’t produce anything smaller than 10-nanometer and the cutting edge chips that Hisilicon needs for the Kirin chips is 5nm…It’s generations behind,” said Alex Capri, visiting senior fellow at the National University of Singapore Business School.


    Trendforce, a Taiwan-based semiconductor research firm, said in an investment note that the defect rate of 14-nanometer chips produced by SMIC is so high that Huawei will have no choice but to rely on TSMC to produce wafers under 16nm.

    Another Huawei?
    SMIC is also vulnerable to pressure from Washington, because the Chinese company also uses US technologies to produce chips. American authorities will likely claim it is a violation of the new rules if it continues to supply Huawei.

    “About 50% of all the microchips that are made anywhere by anyone involve US manufacturing equipment,” said Capri. An even higher percentage of chips have use American-made design software, he added.


    The US hasn’t targeted the Shanghai-based contract chipmaker yet, but a deeper collaboration with Huawei would potentially enrage the US government.

    “The US could just put SMIC on a restricted entity list. In which case, you would have the same situation,” said Capri.

    https://technode.com/2020/05/22/smic-to-the-rescue-huawei-shouldnt-hold-its-breath-experts/
     
    Last edited: May 22, 2020
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  2. Naram_Sin

    Naram_Sin FULL MEMBER

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    Their phone business can survive on low and mid-range devices, they'l lose market share but the reward is complete independence in the medium-term.

    On the other hand, who is going to buy TSMC's production capacity with China no longer a buyer ?
     
    Last edited: May 23, 2020
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  3. gambit

    gambit PROFESSIONAL

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    It is going to be entertaining reading the Chinese responses to this. The responses will be positive for China -- and all wrong. :enjoy:
     
  4. Menthol

    Menthol FULL MEMBER

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    It's time for Huawei to lower its smartphone price.

    Offering world best phone camera at the steep price.

    It will disturb the whole market, but Huawei's smartphone business will survive.
     
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  5. FairAndUnbiased

    FairAndUnbiased SENIOR MEMBER

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    No, **** that. This is not a market action. Huawei didn't lose on the free market, it took government action. The only correction is through government action.

    HIT QUALCOMM.
     
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  6. Bilal.

    Bilal. SENIOR MEMBER

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    Let’s be honest, at best what will be achieved is a delay of the inevitable. The process shrink is slowing down. Chinese are willing to achieve the capability by hook or by crook and have the financial and other means to follow through on it. Already they seem to be preempting the next stage of the assault and starting to focus on fab equipment and software.

    So if one removes oneself from all the noise and take a step back and see the trend that has been going on irreversibly then the avenues in which China can be cornered are shrinking and shrinking fast and seem to be at a stage where as I said the best that can be hoped for is to delay the inevitable juggernaut, which after all this may come with a sense of vengeance. Wise move? Remains to be seen.

    or go by indirect approach and hit the memory and storage sector from supply side. Make it costly to be supporting this embargo, make the players squeal and then revolt.
     
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  7. somsak

    somsak FULL MEMBER

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  8. Beast

    Beast ELITE MEMBER

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    Indeed! SMIC indeed now uses some US tech but since US/China have face off. SMIC will forfeit all support for US machine in their plan and goes domestic. Homegrown EUV are on the rise. ASML do know that and is the reason why they take note of China market. Currently, with domestic EUV support, they are able to support Huawei for 7nm chipset by 2020 Q4.
     
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  9. Song Hong

    Song Hong FULL MEMBER

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    The nuclear option is cutting off SMIC. Current China lithography capability is 90nm. This will push China back 10 years.

    The reason not doing so is because China will certainly cut US off rare earth.

    This will shut entire US semi-conductor industry down on immediate effect.
     
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  10. FairAndUnbiased

    FairAndUnbiased SENIOR MEMBER

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    To do that they need to have ASML, Canon and Nikon all stop shipping immersion lithography tools to all of China.

    That is much more difficult than stopping TSMC from shipping to Huawei.
     
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  11. gambit

    gambit PROFESSIONAL

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    You did exactly what predicted and %100 wrong. I posted explanations why it would take at least 12-18 months for any new equipment qualification and it was not disputed.

    Here they are...

    https://defence.pk/pdf/threads/excl...al-chip-suppliers.666451/page-6#post-12331330

    https://defence.pk/pdf/threads/excl...al-chip-suppliers.666451/page-8#post-12333562

    Divestiture of established hardware is not as simple as ignorant and non-experience people like you think it is.

    When I say 'new', it is not meant to be literally new on the market, never seen before. The word 'new' mean: Never used in production capacity in the company current process before. But I will use a smaller example to primarily inform the silent readers out there and less to educate resistant fools like you.

    Take this USED semicon related component selling on ebay...

    https://www.ebay.com/itm/93k-Verigy-Probe-Card-Stiffener-12-WPI-E7018LA-/323567626612

    If I buy this for my own site and to modify it to suit my own needs, at that time, the tester, or the word 'tool' as some company would say, would be immediately disqualified from Production use. This item stabilizes the probe card against seismic (vibration) influences and secure card planarity during operation. We are dealing with atomic scaling so even footsteps one meter away can knock the probe card out of alignment, losing (failure to test) some dies or even zero yield the entire wafer.

    To re-qualify the tester, I would have to first run engineering wafers then normal Production wafers thru the tester. I have to review the data with the Equipment Support Engineer. If no deviations from normal Production wafers are found, the tester is released to Production use. The entire re-qualification process, assuming no major issues are found, will have the tester at least one day out of capacity. In that time, Planning/Shipping will adjust their capacity projections at least 30 days into the future. For one tester, it will be a minor adjustment. If the tester was running DRAM, another tester that was used to run NAND or wafer level reliability (WLR) testing can take its place. One day out of Production use affected 30 days of capacity projection.

    Even ONE modification rendered the current tester as figuratively 'NEW' or 'SUSPECT' hardware. Think about that.

    The (re)qualification and/or correlation process is completely transparent to the clients. Generally, the clients (plural) will inquire the company as to what involves suspect hardware and the company will say 'We do A, B, C, and so on'. If one client reject, the company can either create a custom process for that client, or create a new process that will affect all clients, or tell that one client that nothing can be done. The company can also do nothing and lie to the clients.

    At my company, I designed the Probe hardware qualification/correlation process. The Equipment group can make any modification or bring in any suspect hardware, but the moment they are ready, the suspect hardware falls to me and my group. We keep 10 yrs documentation on everything as to what happened and what was done to be in ISO compliance and we are ISO audited twice per yr.

    Just in case you think I made up the 'WLR' bit...

    https://www.mpi-corporation.com/ast/applications/wlr/
    http://www.lricks.com/wlrt.htm
    https://www.tek.com/document/brochure/wafer-level-reliability-systems

    At the Production level, anything that can affect wafer yield will require WLR testing. It means: Does that item, hardware or software, affects the die over its projected lifespan? For this particular probe card item, WLR testing is not required. But if the item is an entire tester or a new test program revision, we will take some Production wafers that tested under the new item and run those wafers thru WLR regimes. It means higher amplitude, voltage, and temperatures. We will stress test literally to die structures destruction. If the test data is within statistical parameters, the new item, suspect hardware or software, is released to Production use.

    There are three PDF Chinese members who claimed to have semicon experience. Most likely they will remain silent on what I said, or they will make some minor comments but not really make any correction. So if they keep silent, either everything I said is true in principles and that they could not find anything wrong, or they are frauds. We know of at least one fraud among the Chinese supporters who claimed to have 'aviation experience'.

    Now here you are telling the world that it is simple for SMIC to switch over to new hardware in the entire fab processes, from wafer start to Probe (my dept)? Without NEGATIVELY affecting their output and their customers demands? :lol:

    Ultimately, SMIC can do whatever it want to support Huawei, but I will not allow liars and propagandists (like you) to mislead the silent readers out there as to the technical truths and their consequences.
     
    Last edited: May 24, 2020
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  12. Globenim

    Globenim FULL MEMBER

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    We all know they are just desperate to delay the inevitable.

    Trolls and mouthbreathers will repeat the same script about Chinese tech firms they have been japping on every in every sector for decades only to turn out 100% wrong and China emerging as a peer contender or leader already chipping away significant and huge chunks of marketshare in a matter of years beause these goofy ignorants have no clue about most basic market dynamics and economic decission making, the same problem they always run their snotty noses wound when cheering for another vapid contemporary career politician campaign only for domestic companies going on baricades, blocking them in their tracks, and just jump to their naive and ignorant, wish fullfilling "thruts" and selfserving "predictions" that they dont even bother how many times got wrong because its just selfmasturbation for the moment.

    Attacking Mainland China at cost of Taiwan is a Win-Win for America. They do not consider Taiwan an ally but as a 3rd rate disposeable pawn. TSMC laying off one or ten thousand Taiwanese? Its not just that they dont care, America is trying to chip away TSMC's local business for themself.
     
    Last edited: May 24, 2020
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  13. riscol

    riscol FULL MEMBER

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    The one that suffers the most is TSMC. If lay off workers unavoidable they can always think about moving to China for job opportunities.
     
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  14. letsrock

    letsrock FULL MEMBER

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    Nobody including chinese govt is denying that sanctions will hurt huawei in short term. What is unclear is how it ends up for everyone in the world. what will be consequences to all those companies forced suddenly to stop take orders from huawei. what are consequences to american companies if china cuts off accesses.

    Also these technology edges tend to be vastly exaggerated. In beginning of second world war Stalin himself said Nazi germany has 40 year lead in tech over soviets. But the determined soviets not only eliminated the lead but imposed a crushing defeat on nazis all within span of 5 years.
     
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  15. FairAndUnbiased

    FairAndUnbiased SENIOR MEMBER

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    The evaluation process for new equipment had already started years ago. AMEC (Shanghai) already had their ICP etch systems verified by TSMC in 2018. If TSMC was evaluating their tools years ago, you can bet that SMIC was too. AMEC isn't some no name company either, they were on the VLSI list of top 10 suppliers.
     
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