Last weekend, I read a long, epic piece of techlore that chronicled the fierce and bitter rivalry between TSMC and Samsung in their fight to become the world’s number 1 chip foundry, which stretched back three decades and continues today.
Among the many dramatic details was the “Nightingale program” that TSMC started in the mid-2010s to jumpstart its R&D, because it was falling behind Samsung and losing Apple’s A9 chip orders to the Korean conglomerate. TSMC conceived of a three-shift, 24-hour non-stop R&D operation, taking a page out of their fellow Taiwanese manufacturing behemoth Foxconn’s assembly operation. The “Nightingales” were engineers and researchers, who were willing to work the “graveyard shift” for a 30% increase in base salary and 50% increase in dividend payout. Due to this program, the total working hours clocked in Taiwan in 2014 was 2135, apparently the most of any economy in the world that year.
TSMC, and arguably Taiwan’s entire economy, was confronting an existential struggle at that time. SMIC (the largest chip foundry in China), and arguably China’s technological and economic future, is confronting a similarly existential struggle on a larger scale.
There are many interconnected elements that, when put together, could determine how China will come out on the other end of this struggle -- RISC-V, foundry technology, the “New Infrastructure” stimulus program, open source, and a few key TSMC personnels, who are now at the helm of China’s semiconductor industry.
Let’s take a look at each of them, sequentially and interconnectedly.
RISC-V: Strengths and Weaknesses
The conversation around China’s journey towards technological self-reliance often involves RISC-V -- an open standard Instruction Set Architecture (ISA) for hardware that’s under open source licenses, thus any one can run, change, copy, and distribute it, in accordance with the four freedoms of open source.
However, RISC-V is still young. Its user-space ISA and privileged ISA wasn’t frozen, and thus ready for large-scale software and hardware development, until June 2019. The technology and community ecosystem is maturing, and support from large Chinese organizations has a lot to do with it. Of the six Premier Members of the official RISC-V foundation, RISC-V International, four are Chinese organizations -- Alibaba, Huawei, RIOS Lab, and the Institute of Computing Technology of the Chinese Academy of Sciences.
But in the near future (say the next five years), what can RISC-V, the technology, realistically enable China to accomplish?
What is it good for? RISC-V is a very good foundation for rapidly prototyping and building special purpose chips. The development cycle and experience feels closer to software than hardware. This speed in development is partly because it’s open-sourced -- no hassle in getting a commercial license, as oppose to its proprietary counterparts like ARM -- and also partly because the ISA itself is simplified and “reduced” (i.e. the R in RISC), as opposed to CISC (the C means “complex”) which underpins more powerful, proprietary ISAs like Intel’s x86. This reduced architecture enables and optimizes simple computation instructions well, literally elementary school math: addition, subtraction, multiplication, division, etc. It’s less capable of supporting complex mathematical operations, like matrix multiplication and partial derivative (used widely in Deep Learning AI).
Thus, in reality, chips designed using RISC-V have been used most commonly in IoT and embedded systems scenarios. Because of its simplicity and malleability, RISC-V chips also tend to have low power consumption, which is a good attribute when battery life is an issue, e.g. wearable devices. This reduced simplicity also means that the compiler (the software layer that translates code, like C, into machine instructions for a chip to execute) does not need to be purposefully designed to optimize performance on RISC-V. Using some common compilers like GCC, which RISC-V supports, will do.
What does it lack? As you might’ve guessed, RISC-V’s reduced simplicity is also the source of its limitations. While many people like to pit RISC-V against a general purpose ISAs, like Intel’s, they are more compliments than competitors. In fact, special purpose RISC-V chips that accelerate certain computations for AI workloads do run side-by-side along general purpose Intel chips in the cloud. It’ll be a long time (more than five years, in my opinion) before RISC-V can enable the design of a general purpose chip that powers our iPhones, laptops, or cloud computing servers in a data center, with enough developers incentivized to both extend the ISA and the compiler and other infrastructure software on top of it.
Can RISC-V become general purpose some day? Of course. But that’s not an inevitability. It’s a strategic choice that the RISC-V community can make and work towards, with all the complexity in upstream coordination, developer community building, and open governance, not to mention the work of building the technology itself, that must be executed collectively. That possible future is perhaps the most interesting question when we think about China’s self-reliance, which I’ll discuss in more detail below in the context of fostering open source.
With the strengths and weaknesses of RISC-V in mind, let’s see where RISC-V chips could get deployed in China’s economy and infrastructure in the foreseeable future.
It’s no secret that central government industrial policy matters a lot in China, even though its market-driven economy is what materializes much of that vision. The most relevant piece of policy is the “New Infrastructure” spending plan that came out of the National Development and Reform Commission, as a response to the COVID-19 pandemic to boost the economy. This infrastructure stimulus plan sits in a larger context of two other long-term strategic plans: Made in China 2025 and China Standards 2035.
The details of this “New Infrastructure” plan have emerged in the last couple months, with major emphasis in IT and digital infrastructure, not just traditional infrastructure like highways and railroads. As it often happens in China, the signals sent from the top have already shifted private investment dollars. Nascent chip startups, all of a sudden, are enjoying investor attention and bubbly valuations.
With that said, here are some of the “New Infrastructure” sectors that I think RISC-V could play an immediate role in, given its strengths:
- Smart transportation
- New energy vehicle chargers
- Limited AI (specific workloads that need customized acceleration)
- Autonomous vehicles (limited to certain types of sensors and data collection)
And as for sectors that I don’t see RISC-V making much of a dent, given its current limitations:
- Cloud computing
- 5G (both base station construction and consumer devices)
- Data centers
- Big data
- Large-scale AI training and production deployment
As you can see, RISC-V impact would be limited, but not insignificant. The logical next step would be for China to help evolve RISC-V into a more general purpose ISA, and reduce its reliance on proprietary solutions from ARM or Intel that could always be subjected to more sanctions.
The path to that end would have to be fostering open source and doing it the right way.
Fostering Open Source, the Right Way
Open source has been popping up in a lot of discussions in various Chinese technical and R&D communities, triggered in particular by MATLAB being now off-limit to Chinese universities that are on the U.S. export control entity list. The discussion inevitably leads to open source: are there open source alternatives to MATLAB? What about CAD softwares, like EDA tools, which every chip foundry needs? Will there be an open source EDA option?
Implicit in these discussions is a predominant “takers” mentality towards open source. In China, open source solutions are mostly seen as “free stuff” that you can take and use, without any expectation or incentive to give back (or in open source parlance: “contribute upstream”).
It’s already happening in RISC-V. Alibaba sports the fastest RISC-V based processor to date, but there’s no intention to my knowledge for the design to also be open-sourced or at least publicly shared for the benefit of the ecosystem. Many small startups in China, now showered with new investments, are doing the same -- using RISC-V to make special purpose chips that are effectively proprietary.
(This is not to generalize that all Chinese organizations are bad open source players; some are contributing a lot and have open source in their DNA. I’ve profiled many of the big tech firms and some startups from the lens in Part II of my “Open Source in China” series.)
If China hopes to evolve RISC-V into a more powerful, general-purpose building block to achieve semiconductor self-reliance, Chinese organizations, both individually and collectively, would have to shift from a zero-sum “takers” mentality to a positive-sum “stakeholders” mentality. What that means in reality is absorbing and practicing the open source way of doing things -- not just contributing code upstream and being more willing to share, but also behaviors like transparent governance, open discussions with other stakeholders and developers, and clear due process for decision-making, big and small. These are both technical and human complexities.
With an existential struggle at hand, there’s reason to believe that Chinese companies may behave differently for the sake of achieving a national imperative and be less concerned about the tit-for-tat, zero-sum nature of market competition, which is quite cutthroat in China. And if done right, RISC-V could unleash massive technological innovation broadly and help China deal with its existential struggle specifically.
Foundries: SMIC, HSMC
Let’s assume that China does help foster a general purpose RISC-V in the next 10 years or so, we still need to look at its chip foundries -- tasked with the arguably harder task of churning out production-grade silicons at scale -- to close the loop on true self-reliance.
The most well-funded and relatively high-profiled domestic foundry in China is SMIC (Semiconductor Manufacturing International Corporation), who delisted from the NASDAQ last year and is about to do a “patriotic IPO” in Shanghai’s STAR market this year. Another foundry that has almost no public profile that’s noteworthy is HSMC (Wuhan Hongxin Semiconductor Manufacturing), an upstart founded in 2017.
I’m singling out these two foundries, because their top leadership has direct lineage to the early days of TSMC. SMIC’s co-CEO is Liang Mong-song, who was part of TSMC’s founding team and played a critical role in TSMC’s big technical breakthrough in the early 2000s that reduced its reliance on IBM’s technology. HSMC’s CEO is Chiang Shang-Yi, who was TSMC’s first CTO and led the R&D effort that leapfrogged IBM. Chiang did a brief stint as a board director at SMIC, and Liang was one of his top students from back in the days.
One more piece of palace intrigue that is particularly relevant to technology: Liang left TSMC for Samsung in 2011 and was apparently instrumental in helping Samsung leapfrog TSMC to first achieve the 14nm manufacturing capability, which led to TSMC’s “Nightingale program” to catch up. (Liang’s employment with Samsung was also the subject of a major non-compete and trade secret lawsuit that went all the way to Taiwan’s Supreme Court.) And after Liang joined SMIC as co-CEO in 2017, the foundry reached the 14nm level in just three quarters.
Currently, both SMIC and HSMC’s 14nm technology lags behind TSMC’s 5nm capability, though there is reporting that HSMC is attempting to produce 7nm chips. That being said, there is nothing computationally a 5nm chip can do that a 14nm chip cannot do (the nm count measures the density of transistors; lower the number, higher the density). The key difference, in plain terms, is just that the 14nm chip is bigger, thus uses up more raw material (silicon) and may consume more power relative to its performance. These factors are also affected by the chip’s design, the foundry’s own design rules, the yield rate out of each wafer, and overall manufacturing and operational quality.
So what does this technological gap mean in real life, if we consider RISC-V and “New Infrastructure” in tandem?
- SMIC or HSMC should be able to meet domestic chip demand in use cases where the form factor of the chip, aka its size, is not a major constraint, e.g. data centers, autonomous vehicles, big data and AI in cloud computing, certain IoT devices. Some of these chips could be RISC-V based, while others won’t be due to RISC-V’s technical limitations as noted above.
- For the foreseeable future, these foundries won’t be able to meet the demand for high-end, high-performance chips that will go into say, the newest 5G-enabled smartphones that can also play AR games or the sleekest smartwatch or drone.
After a fight in strategic direction with his other co-CEO, there is indication that Liang has won the argument and will focus SMIC on R&D advancement, instead of improving production efficiencies with its current technology. However, there are still immense challenges going against all Chinese foundries that are less in their control.
Will The Nightingales Return?
The forces working against Chinese foundries -- forces that did not apply to TSMC or Samsung when they were at a similar stage -- are well-documented. The United States is not only prohibiting finished semiconductor products that are touched by American technologies from being sold to China, it is also using its international sphere of influence to pressure other countries to do the same. The order cancellation on a Chinese customer (rumored to be SMIC) by the Dutch company, ASML, who has the best lithography technology, due to pressure from the Trump administration on the Dutch government, was a case in point (a topic I explored in detail in “Chips, Geopolitics, Elections”). Over-reliance on foreign-made EDA tools is a major concern: 95% of the EDA suppliers in China are foreign companies, e.g. Synopsys, Cadence, Siemens, Ansys; domestic EDA makers barely have any market share. Without a steady acquisition of quality EDA equipements, you can’t turn any chip design, RISC-V or otherwise, into working silicons at scale.
However, as many analysts in the space rightfully noted, while financial investment is important in the chip business, human talent is even more important. In this regard, there are forces working in China's favor.
If Liang decides to recreate the Nightingale program at SMIC (or Chiang at HSMC), there is little cultural or regulatory hurdle that will stand in his way. Foxconn’s factories and many others in Shenzhen have been running literal around-the-clock shifts for years.
It’s possible that China’s aggressive acquisition of engineering talent from Taiwan may hit a snag, as Taiwan’s public opinion on China turns increasingly negative. (The percentage of people in Taiwan who now self-identify as "Taiwanese" instead of “Chinese” is at 70%, an all-time high.) But the anti-immigration policy and rhetoric in America may more than fill the gap.
There’s never been more Chinese engineering talent, working in American tech companies and researching in American universities -- and also more open hostility towards them (see Trump’s ban on H1B visas and Tom Cotton’s SECURE CAMPUS Act). The semiconductor industry has always had a tight connection with patriotism. A patriotic call-to-action jumpstarted the founding of TSMC, where Taiwanese technical talent like Chiang, Liang, and others, who were working at AMD or Texas Instrument or doing research at Berkeley or Cornell, answered the call. Samsung did the same thing, calling on overseas ethnic Korean talent to help build its foundry.
With a now rich China fully committed to financing its own semiconductor industry for the long haul, I can see SMIC and HSMC making a similar call to action to recruit their own “Nightingales” from overseas, even though that human movement may not occur until the coronavirus is under control.
And that brings me to my final point: America.
America is facing its own struggle for self-reliance. The recent announcement of TSMC’s plan to build a foundry in Arizona, which I expressed ample skepticism of as naked electioneering in a 2020 swing state, painfully exposes how thin Team America’s “semiconductor bench” really is. Three Democratic Senators -- Schumer, Leahy, Reed -- later voiced their concern of TSMC on national security grounds and named Micron, GlobalFoundries, and Cree as American alternatives.
I’m not sure if the three senators or their staffers know this, but much of what became GlobalFoundries was IBM’s inferior technology, after it was defeated by TSMC (Chiang, Liang, et. al.) and exited the chip foundry business. GlobalFoundries is also owned by Mubadala Investment Company based in the UAE.
China’s existential struggle with self-reliance is in plain sight, but America has a similar challenge. Perhaps due to its strength in other areas of the semiconductor manufacturing supply chain, the American struggle is less-discussed and less-reflected on, but it’s no less existential. Congress’s intention to direct $22.8 billion in aid to help the American semiconductor industry is a welcoming step. But like we discussed just now, it’s not just about the money, it’s about the people.
In the techlore of TSMC vs. Samsung, one anecdote stood out to me. When TSMC overtook Intel in the chip business in 2017, supposedly a few Intel engineers visited TSMC to find out how they got beat. Their TSMC counterpart’s answer was: “you guys sleep too much, sleep too long.”
Any country that hopes to be self-reliant perhaps needs its own “Nightingales”.
Special thanks to Josh Su, a good friend and investor at SK Hynix America’s corporate venture arm, for helping me understand the various technical and economic tradeoffs of the chip foundry business. Shoutout to Jeff Ding and Joy Dantong Ma for their epic Chinese-to-English translation of the TSMC vs. Samsung story, so both language audiences can access this story. (If you’d like to read it, see the Chinese original and their English translation.)
Chinese Version Below
围绕中国走向科技自力更生之旅的讨论中经常涉及RISC-V，它是一种基于有开源许可的硬件指令集体系结构（Instruction Set Architecture，ISA）的一个开放标准。因为是开源的，任何人都可以根据开源理念的四大自由去运行、更改、复制和分发它。
强项：RISC-V是一个可以快速迭代和设计专用芯片的很好的技术基础。开发周期和体验更接近于软件而不是硬件。开发速度如此之快的一部分原因是开源。与ARM等专有的同类ISA相比，使用RISC-V不需要任何商业许可。另一部分原因则是RISC-V ISA本身是“简化”的（即RISC中的R是英文 “reduced”），而并不是另一种CISC（C代表“complex”，复杂）ISA可以支撑的功能更多的芯片设计，比如Intel的x86。这种简化的体系结构能够很好地实现和优化最基本的计算指令，比如小学数学：加，减、乘、除等等。它不太能支持复杂的数学运算，比如矩阵乘法和偏导数（广泛用于深度学习人工智能中）。
美国正面临着自己为科技自力更生的斗争。最近，台积电宣布计划在Arizona州建立一家铸造厂的新闻，我对此表达了满肚子的怀疑，显然是一种为了赢得2020大选的重要摇摆州而做出的赤裸裸的拉票行为。这条新闻也痛苦地暴露了美国队的“半导体板凳”有多么单薄。三位民主党参议员，Schumer，Leahy，Reed，后来以国家安全为由表达了对台积电的担忧，并将Micron, GlobalFoundries, and Cree应该被考虑的美国制造商。