ZTE's 7nm 5G base station master chip has been handed over to TSMC

Abstract: February 10 news, according to the Nikkei news report, in the U.S. government continues to suppress Huawei, the mainland's second largest telecommunications equipment manufacturer ZTE is quietly improving its communication chip capabilities, and has entrusted TSMC to 7nm OEM its self-developed chips, while also using TSMC's advanced packaging technology, the follow-up is expected to continue to extend to more advanced processes.

On February 10, according to the Nikkei News report, at the time when the US government continues to suppress Huawei, ZTE, the second largest telecommunications equipment manufacturer in the mainland, is quietly improving its communication chip capabilities, and has entrusted TSMC to 7nm to manufacture its self-developed chips, while also using TSMC's advanced packaging technology, and the follow-up is expected to continue to extend to more advanced processes.

For the relevant report news, TSMC will not comment on yesterday (9).

According to Taiwan media estimates, as TSMC's revenue scale continues to enlarge, and ZTE is not its top ten customers, it is estimated that ZTE orders account for less than 3% of TSMC's revenue, although the proportion is not large, if the cooperation between the two sides continues and extends to more advanced processes, it will still become a new driving force for TSMC's growth.

ZTE was subject to U.S. export controls in 2018, but after paying a total of $2.29 billion in fines and promising specific improvements, and accepting U.S. supervision, the U.S. Department of Commerce lifted the ban on ZTE in July 2018.

Industry observation, with Huawei being included in the US export control list in 2019, Huawei's most profitable communication network / base station equipment has been eaten by Nokia, Ericsson, ZTE and even Samsung Group, although the total market has not changed significantly, but the market share has changed, ZTE due to business development needs, it is not surprising to place orders from TSMC, because TSMC is currently in the advanced process mass production capacity, scale and quality are the world's leading.

TSMC 7nm family is its current revenue accounted for the largest proportion of the process, accounting for 31% of the overall revenue last year, the process application areas span high-end to mid-range mobile products, consumer applications, artificial intelligence, network communications, 5G infrastructure, graphics processors, and high-performance computing, etc., the industry estimates that TSMC 7nm customer product scale has exceeded 200, the cumulative mass production of chips has exceeded 1 billion, and won the 2021 IEEE Innovation Award. The follow-up advanced 5nm family process also continues to advance into the third year of mass production this year, and 3nm is scheduled for mass production in the second half of this year.

Nikkei reported that ZTE uses TSMC's advanced 7nm technology to produce its self-developed 5G base station master control chip, and uses TSMC's packaging technology. Sources told Nikkei that ZTE is also considering adopting more advanced process technology than 7nm. People familiar with the inside situation pointed out that ZTE has quietly strengthened its self-developed chip capabilities in recent years, and although the output is not much, it has made great progress.

According to the data, as early as September 2020, Li Hui, vice president of ZTE, MKT and general manager of the government and enterprise department of the program, said that on the main control chip of 5G wireless base stations, switches and other equipment, ZTE's self-developed 7nm chip has been commercialized in the market, and 5nm has also entered the experimental stage.

The report also disclosed that ZTE has informed suppliers that the company's goal is to achieve double-digit growth in domestic server shipments in the mainland this year to expand market share, especially for servers used in base stations, and this ambitious goal will directly challenge industry leader Huawei, which still faces obstacles in obtaining key components.

Since many countries, mainly Western countries, have banned Huawei and ZTE from participating in 5G network infrastructure, the two companies have spent more time on the mainland domestic demand market. According to preliminary data from China's Ministry of Industry and Information Technology, the mainland leads the world in 5G deployment, with 1.3 million 5G base stations installed by 2021.

Stephane Teral, chief analyst at market research firm LightCounting, said Huawei remains the mainland's largest telecommunications equipment maker, but ZTE's domestic market share in the mainland is estimated to have climbed from 30 percent in 2020 to 35 percent last year.

Editor: Xin Zhixun - Lin Zi Source: Nikkei Shimbun, Economic Daily News