When TSMC began producing chips with its latest 5 nanometer process in the middle of 2020,
the flagship customer who would receive the majority of those chips
was Apple. Apple was fabbing its cutting edge A14 Bionic and M1 chips.
They continue to receive shipments to this day as TSMC’s single biggest customer.
But there was another smartphone chip company utilizing TSMC's 5nm lines. Alongside the A14
Bionic was the Kirin 9000, a chip made by a fabless company known as HiSilicon (海思).
For several short months, TSMC delivered Kirin 9000 chips to HiSilicon.
But there was a looming deadline. On the 15th of September 2020, TSMC would have to apply
to the Trump Administration for licenses to use American technology to keep supplying HiSilicon.
And that is because HiSilicon is the fabless chip design arm of Huawei.
In this video, I want to talk a bit about this mysterious company.
HiSilicon had been TSMC's second biggest customer, second only to Apple, and a key
piece of Huawei's beautiful, extremely powerful cell phones. Now it is off the TSMC customer list.
Now before we get going, I first want to say the United States sanctions targeting HiSilicon,
Huawei and other parts of the Chinese technology industry are, to say the least, controversial.
Those sanctions are not going to be the central focus here, but I will touch on them.
I will attempt to do so in an objective manner.
I know a lot of you are going to have your own opinions about it. So all I ask
is that you guys leave constructive, thoughtful comments and be respectful.
We got enough flamewars out there in the internet world.
HiSilicon is China's largest fabless designer of chips with annual revenues of about $5 billion.
The company as it exists today was established in 2004,
but it has roots in the Huawei Integrated Circuit Design Center founded in 1991.
That old IC Design Center had mostly made chips for Huawei's network switches,
which is a piece of networking hardware that connects different devices on computer network.
After a 2003 lawsuit by Cisco, Huawei CEO Ren Zhengfei resolved to establish a chip
design division so to wean his company off American-designed chips. Independent foundries
were making self-designed chips more of a reality and Huawei wanted to take advantage of this trend.
Ren gave HiSilicon President He Tingbo immense resources to get started.
The company's first chip design was a 3G SIM card chip. At that time, the market was rich
for entry. But by the time the project had been completed and the product was ready, the price
of SIM card chips had fallen from 10 to just 1 RMB each. The market's profitability in turn vanished.
Undeterred, HiSilicon pivoted to building chips for set-top boxes and video surveillance
equipment. And it is in the latter that they had their first big customer. Two video surveillance
companies, Hikvision and Dahua, chose HiSilicon's H.264 video codec chip for their own products.
I previously did a video about Hikvision and their own rise to prominence.
Hikvision remains HiSilicon's single biggest outside customer,
making the latter a dominant player in the IP Camera chip market.
## Kirin
In 2009, a year before Apple launched its A4 processor, HiSilicon brought out their
first mobile phone processor: The K3. It was a low cost chip that targeted low end markets.
Stuff that MediaTek usually worked in. Nobody really bought that one.
Three years later came the second iteration of that chip, the K3V2, which was fabbed on a
40nm process. The K3V2 was a quad-core chip that implemented the ARM architecture. Like its Apple
contemporary, the A5, the chip licensed the 32-bit ARM Cortex-A9 processor core by ARM Holdings.
Do not confuse the Cortex-A9 with the Apple A9. I made that same mistake too,
not the same thing. Let me explain what this means.
Roughly speaking, the Cortex-A is like a starter set and developer kit that hardware
companies like HiSilicon can customize for their own use and resale. Kind of like how
MediaTek provides reference designs for finished hardware products, but on a more basic level.
Incredibly, Huawei announced that they would be putting the K3V2,
a second-year product, into their new flagship mobile phone: the Huawei Ascend D Quad XL.
By choosing to go with internal HiSilicon designs (again, built on top of ARM CPU intellectual
property) rather than adopting Qualcomm or MediaTek chips like the rest of the market,
Huawei sought differentiation in the same way Apple did.
It took courage, so to steal a line. But at first it did not pay off.
Buyers complained that the phone frequently overheated and consumed a lot of power.
Users nicknamed it the "warm baby". The phones as a result did not sell well at all.
But HiSilicon still had its telecoms equipment business to absorb the losses
and was determined to stay in the mobile business.
HiSilicon hired over a thousand semiconductor engineers laboring 996 to make the chips better.
In 2013, the company released a new iteration called the K3V2e, which powered the Huawei P6
mobile phone. The P6 sold well and that was the first taste of processor success for the company.
After that, HiSilicon rebranded the K3 series to Kirin (麒麟). This name
apparently is in reference to a Chinese mythical beast. The Kirin 910 was their
first "System on a Chip" design and integrated 4G baseband components. It sold a little better.
Because HiSilicon builds on top of ARM Cortex microarchitectures
and outsources the manufacturing to TSMC, Kirin chips' performance in relation to
its competitors depended on being able to use the latest versions of the two
in a given year. The chips did improve year after year, but progress was uneven and
sometimes fell behind that of competitors like the Qualcomm Snapdragon series. The
timing tended to align with when ARM released versions of its latest IP cores to licensees.
Kirin's rise coincided with the success of Huawei's smartphone line.
These high-end phablet phones compete directly with Samsung Galaxy S-series phones and are quite
competitive with them. More than a few American YouTube tech reviewers have done videos on them.
The Mate 10, for example, used the Kirin 970 and would sell over 10 million units over 10 months.
The last HiSilicon chips that TSMC could make,
the Kirin 9000 and 9000E, were fabbed on 5nm and were released in 2020. It had 8
CPU cores and integrated a gigantic 24-core GPU for image processing.
When you add to that an on-die modem, you have a large chip die counting over 15.3
billion transistors. Huawei says that this is 30% more transistors than the Apple A14,
which is technically true but leaves out the fact that it is a bigger chip
overall. Not that it should matter, 11 billion or 15 billion impresses either way.
The 9000 powered the company's Mate 40 and 40 Pro.
You can say that it was the pinnacle of HiSilicon (or TSMC's) handiwork.
## Entry into the Server Market
HiSilicon's success with the Kirin line led it to expand into other chip markets.
In 2018, the company released their first AI chip, the Shengteng series or "Ascend" in English.
These AI chips utilize a specialized structure to help speed up the training of AI models.
But something that really interests me is their entry into the profitable server market.
A year after the Shengteng launch, HiSilicon launched
a series of ARM-based chips called the Kunpeng (鯤鵬), another mythical beast.
Like with the Kirin mobile processors,
the Kunpeng chips are built on top of ARM IP. They started out as chips for server farms.
The Kunpeng 920 powers the 2,000 Huawei TaiShan servers running Beijing's e-government system.
But recently, Kunpeng chips have also started to appear in Huawei desktop PCs
sold in China. They have a 24-core Kunpeng 920
that favorably compares to Intel's chips in certain multi-threading benchmarks.
So in a way, HiSilicon is a lot like Apple, moving away from Intel.
Unlike with Apple though, this move is less tied to the desire for more
in-house control of the product line and more about splitting from American technology IP.
Another note is that the Kunpeng 920 was made with TSMC's 7nm node,
so they were no longer available after the September ban unless the US grants a license.
They might be a good candidate for that native N+1 SMIC process node
that supposedly compares favorably with the TSMC 7nm. We should stay tuned for that.
It goes without saying that the US technology ban on Huawei and HiSilicon
is crippling, but it won't kill the company. For one thing,
Huawei probably has ample resources to stay afloat including some form of state backing.
Furthermore, the company has a history of persevering in the face of difficulty.
Their founding story continually emphasizes "struggle" or 斗争. The
idea of fighting and struggling for survival despite overwhelming odds.
I am pretty sure that they are going to see this as yet another obstacle to overcome.
But will it hit their ability to release new, competitive products? Let us look at
the example of their latest mobile chip. Yes, the Kirin 9000 is a fantastic achievement,
the second 5 nanometer chip for the world market. That's amazing, but we all stand on the shoulders
of giants. And the two giants that HiSilicon are standing on are TSMC and Arm Holdings.
The Trump administration cut HiSilicon's access to TSMC and tried to cut its access to Arm. Arm
stopped for a bit but re-established a connection after it decided that its property was of United
Kingdom origin. Not sure what happens after Nvidia buys them though. Maybe China will have
something to say about that purchase like how it nixed the attempted purchase of NXP by Qualcomm.
To end, I don't really think that the Trump administration was hoping
to kill off HiSilicon. A few bans will do nothing and they know it.
Rather, I get the sense that they wanted to genuinely cut HiSilicon off from the
benefits of western technology. The history of how countries have gotten ahead in technology races
has many examples of one first learning from (or stealing from) the former leader. And yes,
that includes America too. Ending that connection was a critical aspect of the
Trump administration's China strategy. We shall see if his successor continues with that strategy
in the years to come. And what that means for HiSilicon.