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20 September 2019

Chips at the heart of the US-China battle, with 5G and AI in the spotlight

Yet another flip-flop from the US president with regards to Huawei, adding to the uncertainty surrounding the future status of the Chinese giant and whether US companies will be able to supply it with components. And so the technology stand-off continues, thrown into sharp relief by a recent string of announcements of advanced chips in two of the key areas at issue in the battle for hi-tech leadership between the USA and China – 5G and artificial intelligence (AI).

Chips in general, and these two areas of technology in particular, affect every aspect of the issue. The moves to restrict Huawei’s ability to buy US products has redoubled its determination to be technologically self-sufficient, and by extension, intensified semiconductor independence as a Chinese national objective. China has specifically placed 5G and AI high on its list of priorities for its massive investment in this effort.

As Huawei builds up local supply chains and its own R&D, it will hit the fortunes of its US suppliers – and those from countries which choose to toe the US line – and the risk is that the global industry will be split into two separate trade and innovation zones, reducing scale and uniformity in the 5G and cloud platforms, and reducing the addressable markets for vendors in both geographies.

And as Huawei and other Chinese suppliers invest in building their own chips rather than buying in, the market for merchant providers will shrink further, and non-Chinese vendors will find their competitive landscape far tougher.

The hottest battlegrounds will be chips for 5G devices and base stations, and AI processors, whether targeted at mobile applications or hyperscale data centers. Huawei, Qualcomm and Samsung have all made major 5G device announcements as large-scale 5G consumer launches loom. For Qualcomm, the challenge is that both these Asian vendors aim to become more reliant on their own chips.

Huawei chip sales may be a distant hope now, and the situation with regards to IP licensing, where it has an agreement with the Chinese firm (and many others), remains unclear. Meanwhile, Samsung has had its own smartphone system-on-chip, Exynos, for some years now, but still uses Qualcomm Snapdragon in some models. However, it is adding to the capabilities and quality of Exynos all the time, which could reduce Qualcomm’s ability to address the largest vendor of 5G handsets (Samsung will have about 80% of 2019 sales in this category, says IHS, in the absence of an iPhone and given western operators’ caution to offer Huawei devices).

Qualcomm will almost certainly provide the modems for the first 5G iPhone, but that relationship may be short-lived, with Apple working to build its own 5G chipset, using the business acquired from its failed 5G modem partner, Intel.

So Qualcomm may have the same strong lead in terms of engineering and trials, as it had at the start of 4G, but it has a restricted commercial market to address and needs to ensure its offerings are irresistible to the customers that remain. It has already announced the successor to its initial 5G modem, the X50, unveiling the multimode X55. It claims the Snapdragon 855 SoC, which combines the X50 modem with an app processor, is in “almost every flagship smartphone announced in 2019”, including some Samsung models, such as the newly announced A90 5G, a midrange model which is offering Korean customers a lower entry point to the new services, at KRW900,000 ($745) – compared to about $1,000 for most flagship 5G devices so far.

The X55 will add sub-GHz and FDD band support to the unpaired millimeter wave and 3.5 GHz airwaves supported by the X50, and it will support 3G and 4G as well as 5G. It will also enable smaller and thinner handsets, said the chip vendor, and will be in time to be in some of the handsets due to be unveiled later in the year for the holiday season, according to marketing director Bassil Elkadi.

In the USA, the chipset will be important to power devices for T-Mobile’s 600 MHz 5G network, which it is rolling out from next year and potentially a 700 MHz deployment by AT&T.

Huawei’s latest 5G handset chip is the Kirin 990, though its flagship Mate 30 smartphone, due to be launched next month, will use the older Kirin 985. The 990 will be the Chinese firm’s first 5G SoC and Huawei is reportedly aiming for a commercial release before year end, which could leapfrog Qualcomm and MediaTek.

Huawei says the new chipset delivers improvements over its predecessor of 20% in overall performance and 30% in energy efficiency.

The Kirin 990 has two versions, one for 5G and another for 4G. The 5G version is produced in a 7-nanometer process and has a two-core neural processing unit, whereas the 4G version has one core. Both chips use an eight-core CPU based on a combination of ARM Cortex A76 designs with different clock speeds – two high end, two midrange and four for low power tasks.

The neural processing unit is based on Huawei’s inhouse DaVinci architecture, combining a powerful big core with an ultra-low power microcore, promising a boost in AI performance of 138% compared to the Kirin 980.

The GPU’s Mali-G76 MC16 architecture is said to improve performance by 30% and optimize energy efficiency by 46% compared to its previous chip, enabling immersive graphic experiences for gaming.

Huawei’s mobile processor integrates its Balong 5G modem directly into the SoC, supporting 5G, 4G, 3G and 2G connections with a theoretical download peak of 2.3Gbps over sub-6 GHz 5G.

Another Chinese vendor developing 5G chipsets is Unisoc Communications, which has an SoC called Makalu. It is part of state-run Tsinghua Unigroup, which also owns two Chinese modem and wireless processor providers, Spreadtrum and RDA Microelectronics (and has investment from Intel, just to complicate the picture further). Unisoc is supplying Chinese handset makers including Lenovo, Hisense and ZTE, and so could be a thorn in the side of Qualcomm, which in recent years has invested heavily in driving down the cost of its advanced handset products to attract Chinese handset makers.

In Korea, Samsung has introduced its first integrated 5G chip, the Exynos 980, with on-board support for sub-6 GHz 5G bands. It is built using 8-nanometer technology and claims to deliver up to 2.55Gbps download speeds over 5G. It looks set to be commercialized in about the same timeframe as Huawei’s integrated SoC. The 980 does not support the US operators’ mmWave bands, indicating that Samsung is likely to stick to its habit of using Qualcomm chips in US models of its smartphones, and Exynos in other markets.

The negative effect for US high-tech companies, if no compromise over the Huawei stand-off is found, appears to be lost on the current US president, who has veered between a tough line on barring trade with Huawei and the hint that he would include the issue in wider trade talks with China, which are due to restart this month.

US authorities have received more than 130 applications from companies wanting to supply Huawei since the vendor was placed on the entity list in May according to Reuters. According to its sources no licenses have yet been granted, though the ban has yet to take effect after a second extension was granted.

Meanwhile, no proof has yet been produced of the allegations that Huawei’s equipment is being used to spy on US national interests. Indeed, Microsoft’s president and chief legal officer, Brad Smith, last week challenged the US government to produce evidence of why it claims Huawei is a national security threat, saying that the approach was “un-American”. He told Bloomberg that Microsoft had requested details on the reasons for the sanctions, but complained: “Oftentimes, what we get in response is, ‘Well, if you knew what we knew, you would agree with us.’ And our answer is, ‘great, show us what you know so we can decide for ourselves. That’s the way this country works’.”

Elsewhere, the US hope that its key European allies would follow its lead have not been fulfilled. While operators, and Huawei itself, are certainly damaged by the prevailing uncertainty, as governments like the UK’s continue to debate their policy, in reality many MNOs are proceeding with Huawei deployments, at least in the RAN (some are assuming that there may be restrictions against letting Chinese vendors into the core, but not the RAN).

Germany’s Deutsche Telekom switched on its first 5G networks last week, and is working with Ericsson and Huawei. In the UK, Vodafone, BT/EE and Three all have Huawei in part of their networks (all in Three’s case), while Vodafone is also using Huawei equipment for 5G RAN in Italy, Romania and Spain. And the Chinese firm supplies Sunrise in Switzerland and Elisa in Finland.

However, the USA is reported to have signed a 5G security agreement with Poland that would likely exclude Chinese vendors from 5G, and in France, Orange has ruled out a Huawei deal while Iliad has announced Nokia as its 5G vendor.