ZTE develops 5g chips by itself, but its OEM production still relies on TSMC and Samsung

category:Finance
 ZTE develops 5g chips by itself, but its OEM production still relies on TSMC and Samsung


According to time finance, the news that ZTEs 5nm chip is being imported has been disclosed in the 2019 annual report released in March this year. But for 5g technology, ZTE detonated the capital market when it released the news on the interactive platform of Shenzhen Stock Exchange on June 17.

Since June 15, ZTEs A-shares and H-shares have risen at the same time. At the end of the 18th, ZTEs a shares closed at 42.38 yuan, up 6.62%, and H shares closed at HK $27.75, up 21.98%. At the end of the day, ZTEs shares finally calmed down. A shares closed at 42.87 yuan, up 1.16%, and H shares closed at 27.05 Hong Kong dollars, down 2.52%.

Since 2018, the US has imposed sanctions on Chinese science and technology enterprises, as well as the popularization of 5g network technology, and domestic chips have accelerated the process of self-study. However, although ZTEs ability to develop and design chips has been first-class in China, the whole process of the chip industry is not only design, but also manufacturing and sealing test. If we want to produce chips in mass production, we still have to rely on the foundry.

According to industry analysis, only TSMC and Samsung can match ZTEs 7Nm and 5nm chip foundry, and TSMC is more likely.

US sanctions speed up chip self research

Although not as well-known as Huawei Hisilicon, ZTE has been keeping a low profile in chip design.

ZTE set up the IC design department in 1996. The original intention is to replace the imported chips through the independently developed chips, so as to reduce the cost of chip procurement. In 2003, the Department was independent of ZTE microelectronics company, focusing on the development of communication chips such as communication networks, smart homes and industrial applications. More than 100 kinds of chips were independently developed and successfully commercialized, covering the field of bearer, access and terminal of communication networks, serving more than 160 countries and regions around the world.

In April 2018, the US Department of Commerce issued a ban on ZTE, prohibiting US companies from selling parts, goods, software and technology to ZTE for 7 years, until March 13, 2025. This has hit ZTE hard and made Chinese technology companies realize the importance of independent research and development. However, three months later, because ZTE paid a $1.4 billion fine, the U.S. Department of Commerce temporarily and partially lifted its ban on sales. ZTE can buy key parts from U.S. companies and resume operations.

Sun Yanbiao, President of the first mobile industry research institute, told time finance that the US sanctions actually accelerated the research and development of domestic chips. He pointed out to times finance and economics, ZTE certainly has this kind of economic strength. Chips cant be developed in a day or two. From this point of view, ZTE has been preparing for this thing for many years, especially the U.S. attack has played a crucial role in ZTEs chips, not only Huawei, but also ZTE.

At the same time, the popularity of 5g technology has accelerated ZTEs R & D speed and increased the investment in chip R & D.

At the extraordinary general meeting of shareholders in 2019, Xu Ziyang once stated that in the future, he would increase ZTE microelectronics investment in chip research and development, and focus on mainly cooperating with ZTEs main equipment chip research and development business, such as baseband chip, 5g transmission switching chip, IP chip, etc.

Xu Ziyang explained the advantages of the new generation of chips, compared with the previous generations, the current 7Nm chip directly improves performance and reduces power consumption. Specifically, the baseband computing power is increased by three times, and the processing capacity of digital IF bandwidth is increased by four times. In addition, the RF full link efficiency has been improved by about 20%, the integration has been improved by more than 40%, and the power consumption and weight have been reduced by about 30%.

At that time, Xu Ziyang revealed that ZTE was developing 5g chips with 5nm technology. With the introduction of 5nm chips and continuous technological progress, power consumption and weight will continue to be reduced by more than 20% every year in the future.

At this years general meeting of shareholders, Xu Ziyang said that ZTEs new generation 5g wireless series chips and bearer switching network chips are flexible and efficient, with significant advantages in 5g feature support. 7Nm chips are mass-produced and commercially available in 5g scale deployment around the world. It is expected that the 5nm based chip released next year will bring higher performance and lower energy consumption. In addition, Xu Ziyang said that in terms of chips, the company will still focus on communication proprietary chips. Of course, on general chips, ZTE also welcomes partners to join the supply chain.

Among the chip R & D enterprises in China, Huawei Hisilicon ranks first, and ZTE microelectronics is generally considered to be the third largest mobile communication chip design company after Huawei Hisilicon and Ziguang zhanrui.

Some analysts believe that ZTE and Huawei have similar chip design and development. However, Huawei relies on its mobile phone to promote its chip business, while ZTEs chip business has not been assisted by the mobile phone business.

In terms of chip R & D and design alone, according to the report of the securities times, the 5nm technology has become the most advanced technology in the chip manufacturing process. At present, among the domestic companies, only Huaweis Hisilicon has developed 5g chip with 5nm technology, namely Qilin 1020.

However, because Huawei is still sanctioned by the US Department of Commerce, TSMC may cut off its power supply to Huawei in the future, while Huaweis alternative core international said in the statement of operational risk in the latest prospectus, it may not be able to manufacture products for several users before obtaining the administrative license from the US Department of Commerce. This means that SMIC may not be able to manufacture chips for Huawei. It is also reported that Huawei and Samsung are discussing the cooperation of chip foundry.

However, according to some market opinions, even if the two sides cooperate, it is almost impossible to build a production line that can produce 7Nm and 5nm advanced processes without American semiconductor equipment in a short time.

Now it has made a breakthrough in the advanced manufacturing process. At least in the field of 5g base station chips, ZTE has caught up with Huawei.

TSMC is more likely to manufacture on behalf of others

The difficulty of chip research and development lies in the continuous investment of high capital, but it is not necessarily successful. From 7Nm to 5nm, the chip space is smaller and smaller, but the function is more and more powerful. Chang Junfeng, Secretary General of Shenzhen Semiconductor Industry Association, told time finance that the difficulty of chip design mainly lies in the difficulty of implementation and the understanding of technology.

When ZTE Q1 financial report was released in April this year, Xie Junshi, executive vice president and chief operating officer of ZTE, said that in the past three years, ZTE has spent 12.1 billion yuan per year on R & D, but it has not been transformed into profit quickly. ZTE needs to transform technology leadership into market leadership more quickly, so as to improve the profit level. In the important chip supply, ZTE said that the R & D and design capability of chips is covered by the whole process. Whether it is the earliest architecture design, simulation, front-end design, back-end physical implementation, package test design, packaging test and future failure analysis of corresponding chips, R & D and design can be realized in the whole life cycle. This is the absolute leading position in the industry.

According to the financial report, by the end of 2019, ZTE has invested 12.548 billion yuan in R & D, accounting for 14% of the total revenue, while ZTEs R & D accounted for 15% in the first quarter of 2020, which is in line with Huawei (15%).

Before that, ZTE has never disclosed who is responsible for the mass production of 7Nm chips. At present, advanced manufacturing only has TSMC, so we cant rule out looking for other generation factories, but its more difficult, Chang told time finance

According to the analysis of 7Nm and 5nm chips by semiconductor new media core master, in 2020, the semiconductor process technology has realized a technical leap, from 7Nm to 5nm, and only TSMC and Samsung can play the same PK.

According to the global IC Wafer Factory technology evolution route, only TSMC and Samsung will achieve 5nm mass production at this time node in 2020, the article said. Among them, grofangde and liandian have basically abandoned the research and development of 7Nm process; Intel is still developing 7Nm process; the 7Nm process of SMIC will achieve mass production by the end of 2020. As for the comparison between TSMC and Samsung, from the perspective of process data, Scott Jones, an internationally recognized semiconductor expert and the founder of icknowledge, based on the data, concluded that the two 7Nm processes are very similar in transistor density, but TSMCs capacity will be higher than three stars. In addition, the 5nm technology of Samsung and TSMC has a big gap in transistor density, performance improvement, power consumption, mass production time and scale. This means that ZTE is more likely to choose TSMC as its OEM. Related recommendation: 15 billion dragon! 5g giant clarifies: its not that chip shareholder, ZTE responds to the 5nm chip report: it doesnt have chip production capacity. Source: time finance editor: Zhang Mei_ NF2100

According to the global IC Wafer Factory technology evolution route, only TSMC and Samsung will achieve 5nm mass production at this time node in 2020, the article said. Among them, grofangde and liandian have basically abandoned the research and development of 7Nm process; Intel is still developing 7Nm process; the 7Nm process of SMIC will achieve mass production by the end of 2020.

As for the comparison between TSMC and Samsung, from the perspective of process data, Scott Jones, an internationally recognized semiconductor expert and the founder of icknowledge, based on the data, concluded that the two 7Nm processes are very similar in transistor density, but TSMCs capacity will be higher than three stars.

In addition, the 5nm technology of Samsung and TSMC has a big gap in transistor density, performance improvement, power consumption, mass production time and scale. This means that ZTE is more likely to choose TSMC as its OEM.