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  • Kyle Chua

Tencent, Alibaba Launch Chips As China Looks To Build a Homegrown Silicon Industry

The last several months have seen major players in China’s tech scene launch their own semiconductors as the country looks to lessen dependence on foreign suppliers and become self-sufficient in the silicon industry.

Credit: Michaela Rehle via Reuters

The latest firm to launch chips is Tencent, the owner of Chinese super-app WeChat. The firm last Wednesday, 3 November, unveiled three custom-built chips, each for a different purpose. One is for artificial intelligence processing, one for video compression, and another for network interfaces, as reported by TechCrunch.

Just a couple of weeks prior, online commerce giant Alibaba similarly announced that it had developed its own chip – one that’s based on advanced 5-nanometer technology. Called the Yitian 710, the chip was designed to boost the cloud computing capabilities of the firm’s servers.

By upgrading its cloud services, Alibaba could put itself in better competition with its Western cloud rivals, which include the likes of Amazon, Microsoft and Google, among others. These U.S. companies have already started designing their own chips instead of buying them from suppliers in a move to customize performance and lower expenses. Now, Alibaba is doing the same.

In August of this year, Chinese search engine firm Baidu launched the Kunlun 2, an artificial intelligence chip that will be used for autonomous driving applications. Huawei has also been making its own chips to power its mobile offerings.

This new trend seems to align with Beijing’s goal of improving China’s technological capabilities and fostering a homegrown silicon industry, amid the ongoing geopolitical spat with the U.S. and Taiwan. Experts, however, point out that the Asian superpower is not quite ready for self-sufficiency in this sector yet.

Alibaba's Yitian 710 server chip. / Credit: Getty Images

For example, according to Paul Triolo of SupChina, while Alibaba’s Yitian 710 was entirely designed by Chinese chipmakers, the intellectual property used to build the chip comes from the U.S. and the United Kingdom. Some of the key technologies used also come from other European and Asian sources.

Triolo adds that despite the Yitian 710 being one of the most advanced Chinese chips yet, reportedly touting world-class performance, it’s not entirely Chinese-made. He goes on to say that it’s improbable that such a chip could be manufactured in China, pointing out that it was actually produced in Taiwan by Taiwan Semiconductor Manufacturing Corporation (TSMC).

China’s biggest chipmaker, Semiconductor Manufacturing International Corp (SMIC) is years behind the likes of Intel, Samsung, and TSMC, as CNBC points out. The firm produces 28-nanometer chips rather than the 5-nanometer process that the Yitian 710 is based on. Baidu’s Kunlun 2 chip is based on a 7-nanometer architecture and is also being made by Samsung.

Triolo also noted his concern that Alibaba’s new chip could be used to support military applications. He said recent reports are claiming that Beijing is set to hold another hypersonic weapon test, opening the possibility that Alibaba could follow in Phytium’s footsteps.

Phytium is a Chinese chipmaker that was added to the U.S. Commerce Department Entity list in April for allegedly supplying the chips powering high-performance computers (HPC) used by Beijing to design and test missiles. TSMC suspended its new orders from Phytium after it was blacklisted.

Alibaba, however, said that the Yitian 710 will not be sold to consumers and will only be deployed in its own data centres.


Written by Kyle Chua


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