August 30, 2020: Open Source, Zhang Yiming, TSMC, Loongson, XPeng, MediaTek

This issue covers the period between August 24 - 30, 2020 with six news stories – three from English language sources, three from Chinese language sources. Disclaimer: all translated article titles are done by me, not official translations from the media outlets.

Before you go on, please check out my latest deep dive post: "Can You 'Nationalize' Open Source?"

“The Future of American Industry Depends on Open Source Tech” (English Source: Wired)

My Thoughts: This is an opinion piece I wrote with Jordan Schneider, host of the ChinaTalk podcast and newsletter, that was published last week in Wired magazine. I’m highlighting it here again not (just) to self-promote, but because I really care about fostering and growing open source technologies to help all countries and all people innovate and adapt to an increasingly tech-driven world. Open source technologies are already permeating our daily lives whether we know it or not. How America sees open source in its industrial future, if at all, will be an important topic to watch. I noted emphatically in my deep-dive post last week that “China’s posture towards open source is perhaps the most important thing that no one is paying attention to right now.” We can easily extend this thinking to other countries and major regional economies -- all trying to figure out their place in a 21st century, where code and geopolitics are interconnected.

“TikTok’s Founder Wonders What Hit Him” (English Source: Wall Street Journal)

My Thoughts: I always enjoy reading lengthy profiles of entrepreneurs, political figures, inventors, artists, and anyone who’s doing extraordinary things. Zhang Yiming, regardless of your feelings or opinions of TikTok or ByteDance, is doing extraordinary things, and thus receiving some equally extraordinary treatments from U.S. regulators. Much of this profile repackages the course of events that unfolded around TikTok in the last few months. But there are tidbits about Zhang’s life that are worth noting. He’s 37 (four years older than me) and represents a new generation of tech entrepreneurs in China, who “skews more California than Great Hall of the People.” He openly pushed back against a wave of censorship that happened in 2009, writing a since-deleted blog post calling on others to “Go out and wear a T-shirt supporting Google. If you block the internet, I’ll write what I want to say on my clothes.” He was of course a much smaller fish back then. This ethos is consistent with many of the entrepreneurs from China of his/mine generation, whom I got to know and work with over the last few years. Their values are more “western” and “free” in their hearts. Consequently, they are also less politically burdened than the previous generation of Chinese tech entrepreneurs, like Jack Ma, Pony Ma, Robin Li, and others, who have had to navigate a much different China to succeed. We will no doubt experience more twists and turns with TikTok’s future in the next few months, the latest being China’s own regulators throwing their hats in the ring. But if you want to take a longer view, it’s always valuable to keep in mind the entrepreneurs’ own history, where they came, when/how they grew up, and what motivates them to do what they do.

“‘Better Yield on 5nm than 7nm’: TSMC Update on Defect Rates for N5” (English Source: AnandTech)

My Thoughts: TSMC’s industry-leading 5nm semiconductor manufacturing process is reaching volume production and appears to have a higher yield rate (aka less defects) than its 7nm process, when it was at the same point in its development cycle. In short: TSMC is crushing it. Chips produced using the 5nm technology supposedly provides a 15% speed increase, while using 30% less power and packs 1.8-times more logic density than its 7nm counterpart. These high-end chips will be in smartphones later this year. TSMC also plans to build a fab in Arizona that has this 5nm process, due to cost $12 billion USD and be completed in 2024, an important development I missed until now. American foundries are currently stuck at the 10nm level with Intel failing to reach 7nm. So America is at least 5-7 years behind Taiwan. Ouch!

“Firm Conviction! China’s Loongson decides to give up all American technology and make a pure, domestic instruction set” (Chinese Source: InfoQ)

My thoughts: If America is struggling with semiconductor manufacturing, China is struggling even more, with US sanctions choking off almost all the intellectual property and equipment it needs to make more advanced chips. One of the core pieces of IP is the Instruction Set Architecture (ISA), the specs that tell chips how to do computations, from basic ones like addition and subtraction, to complex ones like matrix multiplication. Looks like China will increase its commitment and investment in a pure, domestic ISA, Loongson, that was first developed by the Institute of Computing Technology as part of the Chinese Academy of Sciences. If successful, the Loongson ISA dubbed “LoongArch” will play a pivotal role in weaving the country off of its reliance on the duopoly of the ISA licensing market dominated by Intel and ARM, with some challenge from the open source option, RISC-V. (For a deep dive on RISC-V, I recommend you read a previous post “RISC-V, China, Nightingales”). There is one twist: the Loongson ISA derives heavily from the MIPS architecture, which is American technology. Neither the Commerce Department nor CFIUS has said anything about MIPS...yet.

“XPeng IPO pops 66% on opening day: Surpassing Tesla to become the next Toyota” (Chinese Source: 36Kr)

My thoughts: XPeng’s IPO on the NASDAQ (ticker: XPEV) is the latest of a string of Chinese tech company IPOs in New York that continue to counter the narrative that American capital markets are wary or hostile towards companies from China. Other examples are: Agora, Beke, Dada, Blue, and Li Auto. Of course, the IPO market in general is red hot; a slew of American tech firms, many in the enterprise SaaS space filed their S1 last week: Snowflake, Palantir, Asana, JFrog, etc. Tesla’s ballooning market cap, buoyed by real success in its manufacturing productivity and improved profitability, is lifting all companies in the electric vehicle space. This 36Kr piece has some interesting anecdotes about Li Xiaopeng, XPeng’s CEO (yes the company’s name is the CEO’s name), as a second-time entrepreneur, who is already financially secure, has a Godfather-like reputation as a product genius similar to Elon Musk, and is calm, steady, and has a long-term vision. XPeng is also most closely compared to Tesla in China’s EV market, even though its market share is much smaller than Tesla’s. XPeng clearly has big ambitions to fulfill, so it’ll be interesting to watch whether its status as a NASDAQ-listed company will help or hurt its potential in the long run. The headline of this article is a bit strange though: Tesla’s market cap is already twice as big as Toyota’s.

“Taiwan’s mobile chip maker, MediaTek, submits license application to the US government, hoping to continue supplying Huawei” (Chinese Source: Tencent Tech News)

My thoughts: This news cites reporting from Taiwan’s “Economic Daily”, who originally reported MediaTek’s application to the US government, seeking licensing approval to sell to Huawei. MediaTek is a Taiwanese fabless semiconductor company that provides chips for wireless communications -- a major player in the mobile chip space with a market cap of roughly $30 billion USD. The result of this application will be the first concrete example of whether American regulators will apply any nuance to the series of sanctions being placed on Huawei, who is a large customer to not just Taiwanese companies but many American ones too. If you watched the Republican National Convention last week like I did, you would notice that “nuance” isn’t America’s forte right now.

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