Could Huawei founder Ren Zhengfei give up on 5G to keep the company alive?

[Hamartia Antidote]

https://www.scmp.com/tech/big-tech/...under-ren-zhengfei-give-5g-keep-company-alive

Huawei founder Ren Zhengfei speaks during an interview at the company’s campus in Shenzhen in this file photo dated Aug. 20, 2019. Photo: AP

Huawei Technologies founder Ren Zhengfei told the Post earlier this year that he
hopes to be forgotten after retiring from the company.

But standing between Ren and those anonymous visits to coffee shops is probably the biggest decision of his career.

In May, the Trump Administration announced a new direct product rule (DPR) that effectively blocks Huawei's access to advanced semiconductors – the brains inside all of its products. While Huawei was able to survive Washington’s first attempt to deny it access to US core tech in May last year, this time it has no wriggle room left.

Huawei’s short term strategy has been to take advantage of a two month grace period to stockpile chips from its key silicon supplier TSMC. After September, TSMC and other companies that use US chipmaking equipment (including China’s SMIC) will need a waiver from Washington to supply Huawei.



A Jefferies report earlier this week said Huawei has enough inventory of 5G base station chips to last until the end of next year, but after that the situation was “highly uncertain”.

If Huawei is hiring lawyers and consultants to find loopholes in the new ruling it is very likely wasting money. “We reaffirm that we will implement the rule aggressively and pursue any attempt to evade its intent,” US Commerce Secretary Wilbur Ross was quoted as saying by Reuters last month.


So what is the long term solution for Huawei? There has been speculation that it could find an alternative wafer fabrication partner to TSMC – one that can supply chips made using equipment from Europe and Japan instead

Even if that were feasible, it is unlikely Japan, The Netherlands and Germany – the main suppliers of non-US chip making gear – would openly defy Washington by making it possible for Huawei to continue buying 5G chips.

Earlier this year Dutch company ASML was blocked from shipping the latest generation EUV lithography machine to Chinese foundry SMIC under pressure from Washington.

With its 5G chip stockpile set to run out sooner or later, Huawei doesn’t have many options. It could take a decade or more to come up with a viable alternative to US chipmaking technology, and the billions of dollars Beijing has vowed to spend to upgrade China’s domestic chip industry may not help either because in many instances that needs US equipment, so is still subject to the new ban.

But there is one way Ren might be able to save his company.


Although Huawei’s relationship with the US has soured over a host of issues dating back many years, 5G is at the core of the current confrontation. And Trump is winning.

The tide has turned against Huawei in the international 5G markets, especially after Boris Johnson’s decision earlier this month to ban the company from Britain’s 5G roll out. However, this is all moot because when its stockpile of 5G base station chips runs out, Huawei won’t be able to provide the same products anyway – including to its domestic Chinese telco customers.

By that stage, Huawei's other products would also be starved of semiconductors. That is, unless Ren cuts 5G loose and refocuses on his other businesses, such as smartphones, where it is No 2 behind Samsung Electronics.

Huawei’s carrier business, which includes 5G, is about one third of total company revenue. Walking away from 5G would be a bitter pill to swallow – not just for the loss of revenue. Huawei is viewed by the Chinese government as a global tech champion and bulwark against US dominance in tech.


Amid deteriorating relations with Washington last year, Ren himself offered to share Huawei’s 5G technology with a major western company for a one-time fee. His motive seemed to reflect a preference to battle a US competitor in the market than fight the US government.

If US-China relations were not so toxic, such an offer might have helped, but not now. In the current geopolitical environment, any Chinese tech company with perceived links to Beijing is a target, with ByteDance’s TikTok short video app also in the Trump Administration’s cross hairs. There has been media speculation that ByteDance could sell TikTok to a buyer to head off its problems.


If Huawei withdrew from the 5G business altogether it would still earn royalties from its patents. Or the company could consider selling its 5G patent portfolio outright, which might provide a face saving exit for Ren.

This is, assuming Washington hardliners don't want to kill Huawei outright – regardless of what business it operates in.

Since he founded Huawei more than 30 years ago, Ren has fought many battles in the marketplace. The former PLA engineer likes to invoke military slogans to motivate the company troops, especially during difficult times.


That mindset has alarmed some in Washington, including FBI director Christopher Wray. In a widely reported speech on China to the Hudson Institute on July 7, Wray was perturbed after reading the military language used by Ren in a speech to employees, as reported in The Wall Street Journal last month.

“He reportedly told employees that to ensure the company’s survival, they need to – and I quote – ‘surge forward, killing as you go, to blaze us a trail of blood’,” Wray said. “He’s also reportedly told employees that Huawei has entered, to quote, ‘a state of war’.”

It doesn't sound like Ren intends to mount a tactical retreat on 5G so he can live to fight another day. But Huawei will soon run out of “ammunition” in the form of 5G chips. And that could mean the loss of thousands of highly skilled jobs.

After this battle is over, Ren may find it even harder to go unnoticed in coffee shops in retirement.

 

[JustAnotherPerson]

Never, that Ren Zhengfei is a damn warrior, in fact with China 5G implementation being the faster in the world, they already winning. What Hauwei will do is what the Chinese government fail to do in decades, boost China semiconductor capabilities and make China a powerhouse in semiconductors. We will see what will happen after that when those governments fail to implement their 5G networks and prices skyrocket.

 

[8888888888888]

Maybe the bureaucrats and those cheap bastards will finally invest in 100% Chinese R&D, thinking that China doesn't need 3mm chips because it's too advance is what cause this issue. China did it with weapons why can't they do it for civilian unless they are cheap and conservatives.

 

[Figaro]

Maybe the bureaucrats and those cheap bastards will finally invest in 100% Chinese R&D, thinking that China doesn't need 3mm chips because it's too advance is what cause this issue. China did it with weapons why can't they do it for civilian unless they are cheap and conservatives.

Because weapons require much less advanced chips than civilian applications ... you really don't need a 5 nm chip for weapons at all. Something like 70 nm could easily suffice.

 

[8888888888888]

Breakingviews - China's Huawei holds a 5G trump card

HONG KONG (Reuters Breakingviews) - Huawei is not so easy for Western countries to rip out. The Chinese telecommunications-equipment giant founded by Ren Zhengfei owns a huge trove of next-generation wireless patents. As a global standard for 5G emerges, Huawei technology may become essential to carriers.

For years, the Shenzhen-based company has dominated the mobile infrastructure market, outselling rivals Nokia and Ericsson by offering cheaper alternatives. But U.S. concerns that Huawei equipment could be used by Beijing for espionage has gained traction: officials in the UK and France are purging their own networks of Chinese-made kit. A similar reaction elsewhere will seriously dent a business that generated nearly $43 billion in revenue for Huawei last year, roughly a third of the company’s total.

Replacing antennas and mast towers is one thing, though. Even if the likes of Britain’s Vodafone and BT remove all existing Huawei equipment - a move the UK government conservatively estimates will cost 2 billion pounds - global carriers will still be dependent on technology from Huawei to roll out next generation networks. Research firm IPlytics has found that the Chinese outfit owns the most 5G-related patents, and of that, roughly 15% of the essential ones.

Simply put, these are technical specifications global carriers can build to in order to ensure different networks are compatible with each other. Having one unified standard will be vital for 5G, which is meant to seamlessly link up billions of machines, cars, and gadgets around the world.

The spoils of Huawei’s patents are mostly in technology for mobile base stations - meaning even if Nokia and Ericsson rebuild Huawei’s infrastructure across Europe, they will still have to use expertise from the Chinese group. For now, Huawei doesn’t financially benefit much from its intellectual property. It prefers to “cross-license” by exchanging access to its own patent portfolios with those of rivals.

Huawei can stop cross-licensing in markets that it has been banned from, leaving mobile carriers on the hook to pay royalties and fees, which can be a lucrative business. Qualcomm, for instance, which owns the bulk of critical mobile chip technologies, has collected over $17 billion in licensing payments since 2017.

Already this year, the Chinese company has sued Verizon in the United States for patent infringement, and is seeking more than $1 billion, Reuters reports. There’s a risk that Huawei’s technological advantage could be turned into political leverage by Beijing.

https://www.reuters.com/article/us-...as-huawei-holds-a-5g-trump-card-idUSKCN24S09Y

Because weapons require much less advanced chips than civilian applications ... you really don't need a 5 nm chip for weapons at all. Something like 70 nm could easily suffice.

Smart missiles don't need small chips ???? Weapons are always evolving hope an idiot isn't in charge of the military.

 

[Figaro]

Breakingviews - China's Huawei holds a 5G trump card

HONG KONG (Reuters Breakingviews) - Huawei is not so easy for Western countries to rip out. The Chinese telecommunications-equipment giant founded by Ren Zhengfei owns a huge trove of next-generation wireless patents. As a global standard for 5G emerges, Huawei technology may become essential to carriers.

For years, the Shenzhen-based company has dominated the mobile infrastructure market, outselling rivals Nokia and Ericsson by offering cheaper alternatives. But U.S. concerns that Huawei equipment could be used by Beijing for espionage has gained traction: officials in the UK and France are purging their own networks of Chinese-made kit. A similar reaction elsewhere will seriously dent a business that generated nearly $43 billion in revenue for Huawei last year, roughly a third of the company’s total.

Replacing antennas and mast towers is one thing, though. Even if the likes of Britain’s Vodafone and BT remove all existing Huawei equipment - a move the UK government conservatively estimates will cost 2 billion pounds - global carriers will still be dependent on technology from Huawei to roll out next generation networks. Research firm IPlytics has found that the Chinese outfit owns the most 5G-related patents, and of that, roughly 15% of the essential ones.

Simply put, these are technical specifications global carriers can build to in order to ensure different networks are compatible with each other. Having one unified standard will be vital for 5G, which is meant to seamlessly link up billions of machines, cars, and gadgets around the world.

The spoils of Huawei’s patents are mostly in technology for mobile base stations - meaning even if Nokia and Ericsson rebuild Huawei’s infrastructure across Europe, they will still have to use expertise from the Chinese group. For now, Huawei doesn’t financially benefit much from its intellectual property. It prefers to “cross-license” by exchanging access to its own patent portfolios with those of rivals.

Huawei can stop cross-licensing in markets that it has been banned from, leaving mobile carriers on the hook to pay royalties and fees, which can be a lucrative business. Qualcomm, for instance, which owns the bulk of critical mobile chip technologies, has collected over $17 billion in licensing payments since 2017.

Already this year, the Chinese company has sued Verizon in the United States for patent infringement, and is seeking more than $1 billion, Reuters reports. There’s a risk that Huawei’s technological advantage could be turned into political leverage by Beijing.

https://www.reuters.com/article/us-...as-huawei-holds-a-5g-trump-card-idUSKCN24S09Y


Smart missiles don't need small chips ????

No ... anything like 14 nm or below chips are mainly for consumer products since they are much cheaper (you can pack a lot more transistors into a chip of the same time so you can manufacturer less chips). To weapons (or even infrastructure), this cost difference doesn't matter as much. That is why Russia still produces weapons even though it uses I believe 70 nm chips.

 

[8888888888888]

No ... anything like 14 nm or below chips are mainly for consumer products since they are much cheaper (you can pack a lot more transistors into a chip of the same time so you can manufacturer less chips). To weapons (or even infrastructure), this cost difference doesn't matter as much. That is why Russia still produces weapons even though it uses I believe 70 nm chips.

And that's why they lost the cold war. Those chips could have been use for civilian as well so their economy was backward. Luckily China isn't making the same mistake looking at the drones.

 

[zectech]

Western thugs, terrorists and bullies are trying to provoke China into a conflict. Simply make China even better, build more carriers, buy more metals, grow China even more with a war economy and eventually a consumer economy, with no war.

Getting angry at terrorists is the goal of the terrorists, don't get provoked into a war. Bury the Washington thugs in a better Chinese economy and for every yuan the Chinese spend on the military, that is three times more than what is spent by Washington.

 

[Beast]

Huawei still has a massive China market for support, no worry. The west and the hker are too desperate to come out with stupid theory.

 

[FairAndUnbiased]

No ... anything like 14 nm or below chips are mainly for consumer products since they are much cheaper (you can pack a lot more transistors into a chip of the same time so you can manufacturer less chips). To weapons (or even infrastructure), this cost difference doesn't matter as much. That is why Russia still produces weapons even though it uses I believe 70 nm chips.

For an article purporting to talk about what Ren Zhengfei is thinking, there is not a single quote from Ren Zhengfei himself on here.

Whoever wrote this article shows a profound lack of understanding of what semiconductors are used for and what parts of the business are profitable.

Huawei makes little from its smartphone business AND its smartphone business is the one primarily impacted by the TSMC restrictions. Its 5G business is both more profitable and less impacted by TSMC restrictions.

7 nm is not cheaper than 65+ nm. It is much cheaper to implement a 65 nm process because even though you need more chips and power for equivalent performance, each chip requires less processing steps and/or less expensive equipment.

For 65 nm chips for instance you can get away with single patterning dry DUV lithography, but for 7 nm you either need EUV lithography (10x higher price per machine, lower yield, need to completely change process chemistry) or immersion DUV lithography with double patterning (half the yield, much higher defect rates, double or more price per machine). 65 nm chips can use cheaper processes like silicon dioxide gate dielectric with polysilicon gate (very cheap, requires only silicon and oxygen), but lower processes requires exotic materials like hi-K dielectrics and tungsten gates (which must be deposited by highly specialized ALD/CVD processes).

The advantage of 7 nm comes from lower power consumption and higher computational speed - good for mobile processor applications (phones/tablets/laptops), but 5G base stations don't need that - they're plugged into the grid. Most 5G modems are on 14-28 nm processes, some are on 40 nm processes. Only ZTE is using a 7 nm process modem right now I believe.

 

[antonius123]

What Huawei lack, to supply 5G equipment, at least for China market?

 

[FairAndUnbiased]

What Huawei lack, to supply 5G equipment, at least for China market?

Design: nothing. Huawei has proprietary modem and mobile processor chip designs. It controls the full intellectual property ecosystem.

Fabrication: Balong 5000 modem is fabbed on 7 nm TSMC. It may be switched to Samsung (which has a fully non-American production line) 7 nm or SMIC 7 nm. Or, they'll tape out a 14 nm version. I don't think modems are tied to 7 nm process since power efficiency is not critical for them.

Kirin 910 mobile processor is fabbed on 7 nm TSMC, but they've already taped out Kirin 710A on 14 nm SMIC.

 

[Figaro]

Design: nothing. Huawei has proprietary modem and mobile processor chip designs. It controls the full intellectual property ecosystem.

Fabrication: Balong 5000 modem is fabbed on 7 nm TSMC. It may be switched to Samsung (which has a fully non-American production line) 7 nm or SMIC 7 nm. Or, they'll tape out a 14 nm version. I don't think modems are tied to 7 nm process since power efficiency is not critical for them.

Kirin 910 mobile processor is fabbed on 7 nm TSMC, but they've already taped out Kirin 710A on 14 nm SMIC.

When is SMIC 7nm going to start? Also, how is China going to progress below 7nm if it does not have ASML's EUV tech?

 

[FairAndUnbiased]

When is SMIC 7nm going to start? Also, how is China going to progress below 7nm if it does not have ASML's EUV tech?

it probably can't until China developts its own lithography system. 7 nm is about the limit for immersion lithography. but neither can the US semiconductor flagships Intel and Global Foundries. What's worse, they didn't fail for not having EUV, but because they just can't get it to work with high enough yield and with a substantial enough advantage over 10/14 nm.

Intel is now thinking of outsourcing next generation CPUs to TSMC or maybe even going full fabless, while Global Foundries used to be AMD's premier fab but now decided to shift towards automotive and RF applications because those don't require sub 14 nm. GloFo sold its EUV instrument and laid off/reassigned the EUV staff.

Right now, even Samsung is struggling with EUV, since their yields are not good and they have trouble getting customers. TSMC has basically completely dominated the foundry market.

 

[Figaro]

it probably can't until China developts its own lithography system. 7 nm is about the limit for immersion lithography. but neither can the US semiconductor flagships Intel and Global Foundries. What's worse, they didn't fail for not having EUV, but because they just can't get it to work with high enough yield and with a substantial enough advantage over 10/14 nm.

Intel is now thinking of outsourcing next generation CPUs to TSMC or maybe even going full fabless, while Global Foundries used to be AMD's premier fab but now decided to shift towards automotive and RF applications because those don't require sub 14 nm. GloFo sold its EUV instrument and laid off/reassigned the EUV staff.

Right now, even Samsung is struggling with EUV, since their yields are not good and they have trouble getting customers. TSMC has basically completely dominated the foundry market.

Interesting ... so China (and everyone else besides TSMC) will be stuck on the 7nm for the foreseeable future.