The Huawei-TSMC-7nm chip thing doesn't make much sense

[tonyget]

If Huawei was indeed secretively using third party companies to place order at TSMC for it's AI chip，then why did they use TSMC 7nm process？Why didn't they choose TSMC 5nm or 3nm process？Because for AI chips，the performance can boost alot by move from 7nm to 3nm.

So this whole thing doesn't make much sense.

One possible explanation I can think of，is that Huawei AI chip was designed for SMIC N+2 process. But since TSMC 7nm process and SMIC N+2 process are similar enough，Huawei can just slightly tweak the design to fit TSMC 7nm without redesign the whole thing.

 

[Daniel Nenni]

If Huawei was indeed secretively using third party companies to place order at TSMC for it's AI chip，then why did they use TSMC 7nm process？Why didn't they choose TSMC 5nm or 3nm process？Because for AI chips，the performance can boost alot by move from 7nm to 3nm.

So this whole thing doesn't make much sense.

One possible explanation I can think of，is that Huawei AI chip was designed for SMIC N+2 process. But since TSMC 7nm process and SMIC N+2 process are similar enough，Huawei can just slightly tweak the design to fit TSMC 7nm without redesign the whole thing.

Why do you say SMIC 7nm and TSMC N7 are similar? That has not been my experience, which is limited.

 

[tonyget]

Why do you say SMIC 7nm and TSMC N7 are similar? That has not been my experience, which is limited.

I'm not saying they are similar，I don't know about it. And if they are not similar as you said，then it just reaffirms my speculation that this whole thing does not make much sense

 

[MKWVentures]

If Huawei was indeed secretively using third party companies to place order at TSMC for it's AI chip，then why did they use TSMC 7nm process？Why didn't they choose TSMC 5nm or 3nm process？Because for AI chips，the performance can boost alot by move from 7nm to 3nm.

So this whole thing doesn't make much sense.

One possible explanation I can think of，is that Huawei AI chip was designed for SMIC N+2 process. But since TSMC 7nm process and SMIC N+2 process are similar enough，Huawei can just slightly tweak the design to fit TSMC 7nm without redesign the whole thing.

Simple possible explanation. It was designed for the 7nm process .... which is very mature and "sweet spot" cost performance.

Also it is possible that the company ordering the chip for Huawei was not allowed to use N3/5. There are a lot of foundry negotiations on volume that are complex due to expense of leading edge equipment.... Customers are in very different tiers and the don't all get the same support.

B100 does not use the most advanced process. AMD is not shipping products on 3nm, And sapphire rapids is still Intels volume runner for DC CPU (7nm).
In fact, it seems to be at the most advanced AI chips are never on the leading node, correct?

 

[Barnsley]

If Huawei was indeed secretively using third party companies to place order at TSMC for it's AI chip，then why did they use TSMC 7nm process？Why didn't they choose TSMC 5nm or 3nm process？Because for AI chips，the performance can boost alot by move from 7nm to 3nm.

So this whole thing doesn't make much sense.

One possible explanation I can think of，is that Huawei AI chip was designed for SMIC N+2 process. But since TSMC 7nm process and SMIC N+2 process are similar enough，Huawei can just slightly tweak the design to fit TSMC 7nm without redesign the whole thing.

Less scrutiny?

I am shocked if this even comes out as true that TSMC got hoodwinked.

Whoever in their Compliance team surely getting fired

 

[jiakun0618]

If Huawei was indeed secretively using third party companies to place order at TSMC for it's AI chip，then why did they use TSMC 7nm process？Why didn't they choose TSMC 5nm or 3nm process？Because for AI chips，the performance can boost alot by move from 7nm to 3nm.

So this whole thing doesn't make much sense.

One possible explanation I can think of，is that Huawei AI chip was designed for SMIC N+2 process. But since TSMC 7nm process and SMIC N+2 process are similar enough，Huawei can just slightly tweak the design to fit TSMC 7nm without redesign the whole thing.

I think it's the old chip. It's not a new design. China's fab is not good enough, so they had to have it manufactured in Taiwan.

 

[KevinK]

There’s a lot known about the Ascend 910A and 910B as planned. But the biggest mystery is what they are actually delivering (or not) to customers like Baidu and ByteDance..

Pushing the Limits: Huawei's AI Chip Tests U.S. Export Controls | Center for Security and Emerging Technology

Since 2019, the U.S. government has imposed restrictive export controls on Huawei—one of China’s leading tech giants—seeking, in part, to hinder the company’s AI chip development efforts. This data snapshot reveals how exactly Huawei’s latest AI chip—the Ascend 910B—improves on the prior...

cset.georgetown.edu

 

[fatfat]

I think it's the old chip. It's not a new design. China's fab is not good enough, so they had to have it manufactured in Taiwan.

Their strategy resembles an octopus, with multiple tentacles extending in different directions. SMIC is one primary tentacle, while their masquerade agent (Sophon?) might serve as a secondary one, used to circumvent potential limitations. Given SMIC's potential yield issues, other tentacles may emerge. Given the new 7nm limitation, the launch date and the delivery volume of the upcoming 910C will offer valuable insights into the status of SMIC.

 

[Daniel Nenni]

I think it's the old chip. It's not a new design. China's fab is not good enough, so they had to have it manufactured in Taiwan.

- As of the latest reports, SMIC's advanced 7nm production remains a small part of its revenue due to challenges with yield and production capacity. This node, which SMIC has been developing to support domestic clients like Huawei, is limited by significant defect rates, reportedly around 50%, which constrains its suitability for high-demand applications like mobile processors. However, the vast majority of SMIC's revenue is still derived from older, more mature nodes, such as 40nm and above. These older nodes are less affected by international restrictions, as they don't require the advanced EUV lithography that the U.S. has restricted, and still maintain strong demand in China’s consumer electronics and other domestic markets.

- Given these constraints, SMIC’s 7nm production is unlikely to form a large portion of revenue in the immediate future, and the company continues to rely on its mature node products for the bulk of its business. It’s also investing in improving yields and expanding its technological capabilities, though further advancement might be challenging under ongoing export restrictions.

 

[tonyget]

- As of the latest reports, SMIC's advanced 7nm production remains a small part of its revenue

How would you know that？SMIC's quarterly report does not provide revenue figure based on node process，no one knows the exact revenue composition of SMIC

 

[Fred Chen]

If Huawei was indeed secretively using third party companies to place order at TSMC for it's AI chip，then why did they use TSMC 7nm process？Why didn't they choose TSMC 5nm or 3nm process？

Without thinking too much about it, the cost is easily a top reason. TSMC 7nm is likely (still) cheaper than SMIC 7nm at this point, although SMIC N+2 probably is better than where it started a few years ago.

I suppose the teardowns would have to confirm it one way or the other, but the use of TSMC 7nm is easily imagined in the earlier days of stockpiling ahead of the growing sanctions.

 

[Daniel Nenni]

Without thinking too much about it, the cost is easily a top reason. TSMC 7nm is likely (still) cheaper than SMIC 7nm at this point, although SMIC N+2 probably is better than where it started a few years ago.

I suppose the teardowns would have to confirm it one way or the other, but the use of TSMC 7nm is easily imagined in the earlier days of stockpiling ahead of the growing sanctions.

From what I have heard it was stockpiling.

 

[Daniel Nenni]

How would you know that？SMIC's quarterly report does not provide revenue figure based on node process，no one knows the exact revenue composition of SMIC

I don't "know" it but I can assure you some people do know and others speculate. The semiconductor industry is not a secret society and NDAs aren't worth much these days.

 

[jiakun0618]

- As of the latest reports, SMIC's advanced 7nm production remains a small part of its revenue due to challenges with yield and production capacity. This node, which SMIC has been developing to support domestic clients like Huawei, is limited by significant defect rates, reportedly around 50%, which constrains its suitability for high-demand applications like mobile processors. However, the vast majority of SMIC's revenue is still derived from older, more mature nodes, such as 40nm and above. These older nodes are less affected by international restrictions, as they don't require the advanced EUV lithography that the U.S. has restricted, and still maintain strong demand in China’s consumer electronics and other domestic markets.

- Given these constraints, SMIC’s 7nm production is unlikely to form a large portion of revenue in the immediate future, and the company continues to rely on its mature node products for the bulk of its business. It’s also investing in improving yields and expanding its technological capabilities, though further advancement might be challenging under ongoing export restrictions.

That's what everyone believes. The thing is right now much of the investments in AI data centers in China is driven by state owned enterprises, who would choose to use domestic chips. The scale of the investment is huge. It's questionable whether all of the 7nm revenue will show up in SMIC's results.

"We learned from many supply chain insiders that, according to conservative calculations, the shipment volume of NVIDIA's H20 series chips in the Chinese market in 2024 will be about 700,000 units, and the shipment volume of a certain domestic mainstream AI chip will be about 300,000 units."

中国算力，过剩了吗？

中国算力，过剩了吗？

finance.sina.com.cn

The concern is that if the yield reaches higher levels in future, Chinese market will become closer to self-reliance. The supply/demand dynamics could be driven by factors other than market forces. Can you imagine one day China could be supplying AI chips to other countries? I think the west tends to underestimate the progress of the Chinese ecosystem.

 

[Daniel Nenni]

The concern is that if the yield reaches higher levels in future, Chinese market will become closer to self-reliance. The supply/demand dynamics could be driven by factors other than market forces. Can you imagine one day China could be supplying AI chips to other countries? I think the west tends to underestimate the progress of the Chinese ecosystem.

This will absolutely happen. AI chips will be weaponized and China will be the largest arms dealer in the world, if they are not already. The West underestimating the progress or power of the China semiconductor ecosystem is an underestimation in itself.

 

[samwilde]

This will absolutely happen. AI chips will be weaponized and China will be the largest arms dealer in the world, if they are not already. The West underestimating the progress or power of the China semiconductor ecosystem is an underestimation in itself.

The US is the world's largest arms dealer by far. The big issue is what if China switches its civilian economy to an war footing much like the US did prior to WW2. As the world's factory you can imagine the results.

China already has more wafer capacity than either the US or Japan. They are only behind Taiwan and South Korea. I think they should be surpassing South Korea this decade.

 

[KevinK]

That's what everyone believes. The thing is right now much of the investments in AI data centers in China is driven by state owned enterprises, who would choose to use domestic chips. The scale of the investment is huge. It's questionable whether all of the 7nm revenue will show up in SMIC's results.

"We learned from many supply chain insiders that, according to conservative calculations, the shipment volume of NVIDIA's H20 series chips in the Chinese market in 2024 will be about 700,000 units, and the shipment volume of a certain domestic mainstream AI chip will be about 300,000 units."

All that is only true if SMIC/Huawei can supply the chips. But it looks like they have only delivered maybe 30% of what was booked WRT to the Ascend 910B.

"The report says that ByteDance has already purchased over 100,000 Ascend 910B chips this year (2024), but due to Huawei's confined supply situation, the firm has only received 30% of the total order."

ByteDance Reportedly Acquires 100,000 of Huawei's Ascend 910B AI Chips

ByteDance, one of the largest Chinese AI firms, is now considering acquiring a huge arsenal of Huawei's AI chips to train a new model.

wccftech.com

 

[Barnsley]

The US is the world's largest arms dealer by far. The big issue is what if China switches its civilian economy to an war footing much like the US did prior to WW2. As the world's factory you can imagine the results.

China already has more wafer capacity than either the US or Japan. They are only behind Taiwan and South Korea. I think they should be surpassing South Korea this decade.

View attachment 2464

Why would China switch to a "war footing"

Nobody is physically attacking them anytime soon , unless Putin decides he wants some more China's Northeast.

 

[Barnsley]

This will absolutely happen. AI chips will be weaponized and China will be the largest arms dealer in the world, if they are not already. The West underestimating the progress or power of the China semiconductor ecosystem is an underestimation in itself.

Isnt disruption and chaos the current political mantra?

More power to China and India as they push on in the Semiconductor world. I am assuming at some point that the African nations will also want their own.

Competition is what its all about no?

 

[samwilde]

Why would China switch to a "war footing"
Nobody is physically attacking them anytime soon , unless Putin decides he wants some more China's Northeast.

The border between both countries has been delineated by treaty. A solid defensive line against a river. The Russian Far East is also sparsely populated while China's population core is nearby. It is way more likely the opposite would happen i.e. a Chinese invasion.

I doubt it would happen under the current Chinese leadership, but a future Chinese leader could want to expand their direct sphere of influence. China has historically always expanded after consolidating its power.