• PRC still lagging in advanced chip technology but…
• Efforts to catch up with, and surpass, western technologies are accelerating
• Baidu, AI pioneer and the “Google of China”, claims to have a big stockpile of chips and decries impact of US sanctions
• New homegrown Chinese chips to come online in a year (or so)

Chinese semiconductor manufacturers have been scrabbling to build the plant and infrastructure necessary to design and fabricate their own semiconductor chips in the face of the west’s growing, concerted and determined efforts to exclude Chinese companies from access to advanced design and production technology. As a result, companies in the People’s Republic of China (PRC) have been investing heavily in new factories and it seems that such spending will continue at very high levels as the country doubles down on efforts to catch up with the US.

All indications are that Chinese chips are at least two and, in the case of some vendors, possibly even three or four years behind microchips being produced in the US, UK, Europe, Taiwan and South Korea. However, according to announcements made by the Chinese microchip manufacturer Loongson, it will be introducing some domestically designed and fabricated processors “sometime” late next year. Loongson says the next-generation of its Godson CPU, the 3A6000, will be beta-tested by selected customers “during the first half of 2023”, with a “possible commercial launch” next winter. 

Beijing-headquartered Loongson, now a private company, makes general-purpose, MIPS architecture-compatible Godson microprocessors. (In case you were wondering, MIPS stands for microprocessor without interlocked pipelined stages.) They were initially developed in 2001 at the Institute of Computing Technology, which is part of the Chinese Academy of Sciences. The project was instigated “to develop high-performance, general-purpose microprocessors in China" and for the country to become “technologically self-sufficient as part of the Made in China 2025 plan”. Funding for the development came from the Chinese state under the auspices of the PRC’s 10th and 11th Five-Year Plans.

Loongson also claims “simulation test results” show the 3A6000 “will improve single-core, fixed-point performance by 37% and single-core, floating-point performance by 68% on the previous-generation 3A5000.” The company adds that the new-generation processor will work just as well as the Ryzen 5000 CPUs from AMD (Advanced Micro Devices, the US multinational semiconductor company based in Santa Clara, California) and Intel's 11th-Gen Core CPUs. Both chips have been available since 2020. Just a couple of months ago, AMD and Intel released their latest Ryzen 7000 processors and 13th-Gen Core processors.

It’s hard to know what to believe about Loonson’s claims. It’s a vendor, and vendors in their ever-boundless enthusiasm have been known to over-egg the pudding from time to time, and “simulation test results” can be made to show anything, depending on how the test parameters are configured. 

Furthermore, Loongson says its simulation tests were conducted in accordance with the SPE CPU 2006 benchmark. The Standard Performance Evaluation Corporation is a vendor consortium that selects and standardises benchmark programs submitted by its members or other bodies for the rating of processor performance. It is true to say that a single benchmark test, while valuable, is insufficient to determine how well a chip will perform over a wide range of multiple benchmark tests and in commercial applications.

As usual, China is playing a long game

Nonetheless, Chinese companies are striving to develop and manufacture state-of-the-art homegrown chips as western-imposed export restrictions and prohibitions bite deeper, and China tends to think and plan in generational terms: A 25-to-30 years strategy is by no means unusual. However, the general scientific consensus is that China will be self-sufficient in chip development and production within the next 10 to 15 years.

As Covid-19, the Russian invasion of Ukraine and heightened geo-political strains have demonstrated, the semiconductor supply chain network is complex. For example, design companies focus on chip R&D, foundries on their manufacture, and semiconductor capital equipment vendors (semicaps) provide the machinery. It will take years before China can catch up with them, but it is determined to do so.

An indication of growing Chinese confidence came only yesterday when AI pioneer Baidu, often referred to as “the Google of China”, claimed it has such a huge stockpile of semiconductors that it can ignore western semiconductor export restrictions for years to come. It claims to be able to sit things out and wait for Chinese domestic alternatives to be developed and commercialised even as the company itself moves to develop its own chips.

The declaration came as the massive search engine company posted third-quarter figures showing that sales had risen to CYN 32.5bn ($4.6bn), well ahead of analysts forecasts of CYN 31.8bn. Baidu’s stock price rose by 3.5% as the news was released. 

In an earnings call, Dou Shen, Baidu’s executive vice president, was remarkably blunt, saying the company’s cloud computing and AI business "does not rely too much on high advanced chips.”

Rubbing it in further, Dou went so far as to claim that the actions of the US and other western companies have had “little impact” on China and have actually helped to increase market opportunities for domestic chip companies. “Our AI business will eventually benefit from these opportunities,” he added and claimed western sanctions had concentrated Chinese minds to the point that the PRC’s drive to be self-sufficient in microprocessors is accelerating very quickly.

Unfortunately, that doesn’t mean China isn’t still very interested in the facilities and capabilities located in Taiwan, currently the focus of much political and trade attention. This new battleground is likely to witness significant skirmishes in the years to come.