Huawei’s new chip not real breakthrough

Everybody Peters on here coming to you from Phoenix where it’s 180 bajillion degrees outside. So we’re gonna do this one from inside, a lot of you have written in, and honestly, I was pretty curious myself about something that’s going on in China, with the telecommunications firm Huawei. Now that is a firm that has stands accused or guilty early of trying to modify wireless equipment and cellular equipment for the wider world, so that the Chinese government can have a cheap and easy insight into everyone’s communications, they got discovered by the Australians, the Australians basically learned everybody else. And now we’re dealing with widespread sanctions by led by the Americans by participating by every major country in the world, that does the production of cellular equipment. And it’s kind of crushed our business model. Now, in the last month, they have released a new phone, which is the first in a while because it took them a while to do anything without the ability to import equipment from anywhere else. And it has a seven nanometre chip in it. And for those of you have been watching me for a while, I’ve said that there’s not a lot that the Chinese can do that better than 90 nanometers, that’s what they can do themselves without external help. And 28 nanometers, because of sanctions is about the best they can hope for. So seven, obviously, potentially a very big deal. So we took a little bit of time, we dug into the details. And the short version is I’m not as worried as I was when this first came out. And it has to do with what the Chinese have access to. There are two types of chipmaking styles. The first use is something called Deep ultraviolet. And that’s what was used for this chip. Now, this is an older technology that has a number of drawbacks. You basically have to customize your equipment and modify your equipment for each individual chip design. So every time you have a new design, you have to kind of overhaul your factory and your lithography system from the ground up. And the way that the Chinese have done this is basically pirating design details from TSMC in Taiwan, and then hiring just a huge number of people to do some technology transfer. They basically, especially when sanctions kicked in, just basically they were told they have a bottomless budget to go out and build a sub 10 nanometer chip. And they did and it cost them five times as much as it should have. And the chip that they end up making wasn’t that great because they couldn’t do the design. That information those people they weren’t able to hire away. So it’s basically a crypto mining chip made with a little bit smaller etching, which means that for a phone, it’s really not a great option. More importantly, probably from the Dutch point of view, they’re the ones who make this equipment is this theft started well, before the sanctions were imposed, sanctions have only been in place for two, maybe three years now, this started five years ago. So it is the penultimate expression of what the Chinese can do with a bottomless supply of money, and absolutely no business ethics and the ability to hire anyone they want, all of which is, you know, an under threat in the sanctions regime now. So you know, kudos for being able to get something sub seven, but it’s only about as good as your average smartphone from maybe 2017, which, which is not nothing, but it’s certainly not the breakthrough that some people seem to think it is. The second sort of technology is called Extreme Ultraviolet. And that is the what you do to do all the good chips and the leading edge chips now, especially the three and the five nanometers that most smartphone folks are wanting to put in their machines. This system is much more modular, and you don’t have to redesign everything from the ground up. So when it finally did come online, which which is just like four, or maybe about four years ago, everyone was really excited because all of a sudden, the time to target for bringing a design to production could be shrunk, and still talking months to years. But you don’t have to refabricate everything within your facility every time you have a new chip design. And so far, it seems to be performing to snuff. And it’s this sort of equipment that the Chinese can’t get at all, in fact, don’t have any of at all in the country. So the D UV, they were able to use the stuff that they had and buy stuff that was no longer restricted or that wasn’t restricted yet, combined with a huge amount of subsidies combined with a lot of poaching, and they were able to cobble together a phone that does use something that is technically the sub 10 nanometer even though it doesn’t perform anywhere like that for a phone. The EU v is simply off the market for them, and everyone else is moving forward. So from my point of view, this is really instructive. Think of it this way think of it like I had said that the Chinese couldn’t build a television and I’m thinking of like those Oh LEDs that you hang on the wall that way like 20 pounds have a slight curve and the deep black and blah blah blah blah, and the changes that go until the Bella TV and they came out with like a 48 inch tube TV it’s technically a TV technically I was wrong but I’m in terms of the technology that is not something that really takes them forward. If anything, this is a one off because they can’t use the stuff to advance because they don’t know how to make the better chips. And the reason that d u v was ultimately abandoned is by the time we got to about 15 nanometers. It was really skirting the edge of what you can do with physics because The wavelength for the light is wider than what you need to etch on the chip. And they basically had to tweak the laws of physics to get down to seven. And that’s the upper threshold. But even doing something a little bit dumber than that, it’s not clear that the Chinese have the ability because they no longer have access to the expertise of the Dutch. So this is really, really illuminating to me for how far the Chinese are willing to go in order to say that they broke the sanctions, but they really didn’t. There’s nothing about this that is homegrown. There’s nothing about this that is replicable. In fact, there’s a possibility that may kind of fall into that category of stupid things that they’ve been doing lately. In that you’ve got a number of people in the American Congress who are not interested in doing a week of research to figure out the details. He was just like, Oh, he’s breaking sanctions, but we’ll show them. We’ll just put it in front of the President a bill that says that all technological transfers and sales to Huawei are now illegal. So not just the top stuff, everything. It’s Congress who knows how that’s ultimately going to shake out. But the Chinese are finding more and more ways to sacrifice their position on the altar of ego and it looks like this might be one more. All right, everyone, take care.