Chips fight back, Intel and AMD are miserable! Domestic telecom operators are phasing out foreign chips

Domestic chips are about to usher in a golden age.

Telecom operators in China

Foreign chips will be phased out

According to foreign media reports, mainland regulators have put forward clear requirements to telecom operators, requiring large domestic telecom operators to phase out foreign chips by 2027, aiming to get rid of dependence on foreign chips. It is reported that this decision covers all telecom operators such as China Telecom, Mobile, Unicom, Netcom, Tietong, and Satcom.

According to people familiar with the matter, the regulator has ordered state-owned mobile operators to conduct a comprehensive check of whether "non-Chinese" semiconductors are commonly used in their networks and asked them to draw up a replacement schedule to ensure the phase-out of foreign chips is on schedule.

The Wall Street Journal notes that this policy will be a huge blow to AMD and Intel. In 2023, China accounted for 27% of Intel's revenue, making it the company's largest market. At the same time, 15% of AMD's sales came from China (including Hong Kong) last year. Despite U.S. regulations aimed at restricting chip exports to China and China struggling to reduce its reliance on foreign technology, the two tech giants' reliance on China still highlights the continued importance of the world's second-largest economy.

Semiconductors, which are key components in everything from smartphones to medical devices, have been at the heart of the technology war between China and the United States.

As reported by the Financial Times last month, Continental had already set new guidelines in December aimed at removing American chips from government computers and servers, thereby blocking the use of AMD and Intel processors.

Previously, in October 2022, the U.S. instituted rules restricting China's access to advanced U.S. chips, especially those that are critical to AI technology. At the end of last year, the United States announced new restrictions, intending to close loopholes in the previous order by blocking the sale of more AI chips to China. In addition, as reported by Bloomberg last month, AMD's AI chips designed for China failed to receive U.S. approval and required an export license.

The procurement situation of Chinese telecom operators shows that they are increasingly switching to domestic products. According to the Wall Street Journal, this is partly due to the improvement in the quality and stability of domestic chips.

Domestic chips break through

For a long time, the mainland chip industry has been facing the dual dilemma of foreign technology blockade and market monopoly. Due to its late start, the domestic chip industry has been in a state of catching up with the world's leading technology, and for the same reason, China's chips are mainly relying on imports for supply.

According to public information, chips have always been the largest commodity imported by China. According to public customs data, in 2019, China's chip imports amounted to US$304 billion, exceeding the combined value of crude oil, iron ore, and grain by US$301.6 billion. According to the statistics of the General Administration of Customs, from January to December 2021, the number of integrated circuits imported by the mainland reached 635.5 billion, a year-on-year increase of 16.9%, and the amount was 2,793.48 billion yuan, a year-on-year increase of 15.4%. From January to December 2021, the mainland imported 749.7 billion diodes and similar semiconductor devices, up 38% year-on-year, to RMB191.8 billion, up 18.2% year-on-year.

In addition, there is a large talent gap in the chip industry in the mainland, and it is difficult to form a talent team in the chip industry. According to the White Paper on Talents in China's Integrated Circuit Industry (2019-2020), there will still be a gap of nearly 250,000 chip professionals in mainland China by 2022. In addition, according to the "National Integrated Circuit Industry Recommended Outline", the integrated circuit industry will expand to more than 5 times in 2030, and the demand for talents will increase exponentially. The white paper also mentions that 700,000 people are currently needed to commit to the industry. Miao Xiangshui, deputy dean of the School of Microelectronics of Huazhong University of Science and Technology and a distinguished professor of "Changjiang Scholars" of the Ministry of Education, said that if the state invests in all integrated circuit projects, China needs 700,000 people, and at present, only about half of China's employees, about 300,000. This also means that there is a talent gap of 400,000 in the mainland chip industry.

In recent years, the mainland has been vigorously developing the domestic semiconductor industry to reduce its dependence on foreign technology. A number of chip products with independent intellectual property rights have come out one after another, which not only gradually approaching the international advanced level in terms of performance, but also showing broad prospects in the application field.

In October last year, a major breakthrough came to the domestic chip, and the team of Professor Wu Huaqiang and Associate Professor Gao Bin of the School of Integrated Circuits of Tsinghua University developed the world's first memristor storage and computing integrated chip that supports efficient on-chip learning (machine learning can be directly completed on the hardware side) based on the integrated computing paradigm of storage and computing, and has made a major breakthrough in the field of memristor storage and computing integrated chips that support on-chip learning, which is expected to promote the development of artificial intelligence, autonomous driving wearable devices and other fields.

The chip contains all the circuit modules necessary to support complete on-chip learning, and successfully completes a variety of on-chip incremental learning functions such as image classification, speech recognition, and control tasks, demonstrating the characteristics of high adaptability, high energy efficiency, high versatility, and high accuracy, and effectively strengthening the learning and adaptability of smart devices in practical application scenarios. Under the same task, the energy consumption of the chip to achieve on-chip learning is only 1/35 of that of the application-specific integrated circuit (ASIC) system under the advanced process, and it is expected to achieve a 75-fold energy efficiency improvement, showing excellent energy efficiency advantages, and has great application potential to meet the high computing power requirements in the artificial intelligence era, providing an innovative development path for breaking through the energy efficiency bottleneck under von Neumann's traditional computing architecture.

In November last year, the first self-developed and mass-produced LPDDR5 product in China was born. On November 28, Changxin Storage officially launched the LPDDR5 series products, including 12Gb LPDDR5 particles, 12GB LPDDR5 chips in POP package and 6GB LPDDR5 chips in DSC package. The 12GB LPDDR5 chip has been verified on models of mainstream domestic mobile phone manufacturers such as Xiaomi and Transsion. LPDDR5 is a product launched by Changxin Storage for the mid-to-high-end mobile device market, and its marketization will further improve the product layout of Changxin Storage's DRAM chips.

According to reports, the self-sufficiency rate of local chips in mainland China has increased year by year in recent years. According to IC Insights statistics, in 2020, the chip market size in Chinese mainland was about 146 billion US dollars, while the scale of chips produced in China was about 24.2 billion US dollars, and the chip self-sufficiency rate was about 16.6%, about 17.6% in 2021, and about 18.3% in 2022.

Previously, a report by the Global Times on the self-sufficiency rate of domestic chips pointed out that referring to the development momentum of the past few years, as well as the impact of domestic and foreign industrial policies, in 2024, China's local chip manufacturers will accelerate production, and China's chip self-sufficiency rate may increase to 30%-35%.

Looking forward to the future, although the road to the breakthrough of domestic chips is full of challenges, it also contains opportunities. It has been pointed out that the key to the breakthrough of domestic chips lies in technological innovation and industrial upgrading. On the one hand, we must strengthen the research and development of core technologies, break through the bottlenecks in key areas, and form an independent and controllable technical system. On the other hand, we must promote the deep integration of the chip industry and upstream and downstream industries, form a complete industrial chain and ecosystem, and enhance the overall competitiveness.

Reference Links:

https://www.cnbc.com/2024/04/12/amd-intel-dip-on-report-china-told-telecoms-to-remove-foreign-chips.html