
How AMD Gave China the ‘Keys to the Kingdom’ - walterbell
https://www.wsj.com/articles/u-s-tried-to-stop-china-acquiring-world-class-chips-china-got-them-anyway-11561646798?mod=rsswn
======
intheknow12
I have worked for certain major semiconductor companies. At least two of them.

The question is not “Why did AMD hand over all its IP to China,” the question
is “Why did our incompetent government allow this to happen and why did they
turn a blind eye to the strong arming that was going on?”

A further question is: “Why did only some (always smaller) tech companies fork
over the IP while very large ones did not?”

Let me tell you a story about a fab in a distant country that begins with a C.
The rumor was that it was a very expensive server fab. One day, the wafer (the
thing that the server chip is produced with and is extremely valuable, multi
billions in the case of a server chip) went missing. They locked down the
factory for 48 hours and brought in a search team, scoured the building from
bottom to top and then found nothing.

Then, as if by magic, the wafer appeared three feet away from where it went
missing. Industrial espionage. And that is what you get when you are big.

What happens when you are small? They put a gun to your head (metaphorically)
and say “Split off a company and hand it over to entities controlled by the
Chinese government. All your IP will be shared with them. They will own the
market in China and send you a royalty check and have the ability to modify
your IP to build custom products. If you don’t like it, fuck off, no China for
you.”

What lazy, incompetent and useless western journalists have been shockingly
non curious about is why certain companies like Microsoft and Apple magically
don’t seem to get this treatment.

It is almost as though....some other arrangement was getting made. No lazy
western journalists to my knowledge have yet bothered to investigate why it is
that Intel, Microsoft etc have not been forced to do these IP sharing
agreements while AMD and others have.

One day, Lazy western journalists might be curious and get off their asses
from Covering trump but somehow I doubt it.

Blaming AMD for “handing over the keys” is fucking stupid. It is the United
States government’s lack of a spinal cord that is the problem. These companies
had no choice. Either play the game or get shut out of the market.

Bad journalism, everywhere along with a lack of curiosity.

~~~
mappu
_> Microsoft etc have not been forced to do these IP sharing agreements_

Microsoft regularly shares Windows source code with foreign governments for
them to inspect.

From 2003 [https://www.infoworld.com/article/2681548/china-gets-
access-...](https://www.infoworld.com/article/2681548/china-gets-access-to-
microsoft-source-code.html)

~~~
helloindia
Perhaps Apple too.

"Apple hasn’t provided any information on the matter and did not respond to
requests for comment. But analysts said the most likely interpretation is that
the company is giving Beijing access to its operating system source code in
return for being able to continue to do business in China—arguably Apple’s
most important market, but one that has been imperiled by regulatory
obstacles"

[https://qz.com/332059/apple-is-reportedly-giving-the-
chinese...](https://qz.com/332059/apple-is-reportedly-giving-the-chinese-
government-access-to-its-devices-for-a-security-assessment/)

~~~
metildaa
Darwin is already open source, albeit Apple does a code dump every few years
iirc:
[https://en.m.wikipedia.org/wiki/Darwin_(operating_system)](https://en.m.wikipedia.org/wiki/Darwin_\(operating_system\))

~~~
module0000
Darwin doesn't even remotely resemble MacOS. It's the kernel and open-sourced
user-land components. It resembles(but is not at all) a very old FreeBSD-ish
system if loaded.

~~~
hiram112
Just out of curiosity, what else if not the kernel would be interesting to
copy from MacOS? I use a Mac but just don't have the inclination to learn
about it under the hood (unlike Linux). Besides the various apps they include
and the graphical / window system, I can think of LaunchD, drivers, but not
much more that would be worth a lot to China.

~~~
floatboth
The Darwin kernel is worthless because any free Unix is better. The graphical
stuff is the whole reason macOS exists.

------
mappu
_> The partnership with the Santa Clara, Calif.-based chip maker was a game
changer for China, which has long been unable to match the U.S.’s
supercomputing power because of its inferior chips, one product the country
has so far struggled to master._

Author forgot about Sunway TaihuLight, the top supercomputer in the TOP500 at
the time the transfer happened, using a completely domestic CPU architecture.

 _> The AMD deal gave China access to state-of-the-art x86chips, which are
made by only two companies in the world: AMD and Intel Corp._

Author forgot about Zhaoxin. The new LuJiaZui in particular is really
interesting.

~~~
est
> Sunway TaihuLight, the top supercomputer in the TOP500

It can be traced back to DEC's ALPHA chips.

~~~
fps_doug
I wouldn't say that invalidates their achievements though. It's not like they
took a 20+ year old architecture, built it on 14nm to bump up clock speed and
were done. Improving something existing still requires you to thoroughly
understand the technology. There wouldn't really have been a point in starting
completely from scratch (why not even reinvent electricity while you're at
it), other than some additional street cred.

------
metildaa
The author also omitted that China has no bleeding edge foundries (like TSMC &
Samsung's 7nm fabs) and it is unlikely they will be able to build one any time
soon.

Both Intel and Global Foundries are trapped on older nodes, and China is in a
slightly worse position (with their most advanced node being 14nm).

All of AMD's new cores are built on TSMC 7nm, and with outdated nodes & 3
revision old designs, China is unlikely to be able to significantly improve on
the designs they licensed from AMD.

Arguably, China doesn't have the homegrown talent to do chip design. Allwinner
yeets barely altered SOC designs from ARM into existence, and Hygon's chip
design talent is in large part not China based.

~~~
rwmj
The Chinese govt is pouring huge amounts of resources into training homegrown
chip designers. They're doing it based on RISC-V.

~~~
metildaa
China can train chip designers just like Israel does, but they are on a path
to end up in Intel's predicament, where they don't have the ability to
fabricate competitive chips as their foundries are one to two generations
outdated.

~~~
andy_ppp
I actually occationally worry about them invading Taiwan...

~~~
noir_lord
You and several major governments.

Not a coincidence the US usually has a carrier battle group somewhere between
the two.

Cross straight relations is a definite hotspot, China (PRC) maintain Taiwan is
still their territory.

The US has traditionally sat as a buffer to prevent China asserting that
militarily but with the US becoming more isolationist and the Chinese rapid
expanding their blue fleet capabilities it's only a matter of time until
things get...tense.

~~~
sho
> Not a coincidence the US usually has a carrier battle group somewhere
> between the two.

The USA hasn't sent an aircraft carrier through the Taiwan Strait since 2007.
Barring some major geopolitical shakeup, it is fairly likely it will never do
so again.

------
greatpatton
Given the number of bad articles regarding China lately (NYT,Bloomberg,WSJ),
It seems that the journalists of the land of freedom have the same level of
integrity than the Chinese journalist.

Simple question: Chinese money saved AMD in 2013 when the stock was less than
2.5$ and the company almost dead. Why did the USA not pay for their own
technology, rather than complaining 6 years later when this investment is now
becoming fruitful?

~~~
sct202
I remember wondering if AMD was about to die back then from Intel strangling
it to death. They totally did this out of desperation, and I'd imagine they
were not the only Western company that were faced with choosing between
impending doom or fire sale to China.

~~~
dbancajas
qualcomm also did this recently (search for qualcomm HXT). A lot of companies
prolly do this to get access to china.

------
jpmattia
It's probably worth remembering that WSJ is a Murdoch property.

> _Three weeks after getting the top job, Ms. Su, a Taiwan-born New Yorker,
> jetted to Beijing to meet officials at China’s Ministry of Industry and
> Information Technology. A Chinese vice minister urged her to partner with
> China “to achieve mutual benefits based on AMD’s technological strength,”
> according to a ministry press release at the time._

I assume the message is: ZOMG, foreigners are giving away US technology!

~~~
azinman2
Which is true. These dual venture deals are very stupid to make long term.
China is being very smart here, while the groupthink towards outsourcing and
the stock market demanding Chinese access has created their own doom.

~~~
rchaud
A good subset of HN commenters defend union-busting ("right-to-work" laws),
outright regulation breaking (Uber's "greyball", Airbnb) and poor domestic
working conditions (Amazon fulfillment centers), if it results in "value for
the shareholders" and "frees companies to innovate".

Of course, since this involves selling chips to a CCP-adjacent entity, it's no
longer a story about how AMD saw a 10x boost in its stock and brought
competitive new products to the market.

~~~
tracker1
I'm in favor of right to work, only because I don't want to be required to
join a union. Of course, I'm also in favor of much greater restrictions on
Corporation "Freedom" and bringing IP legislation back to something
reasonable.

------
lambdasquirrel
China made investments in AMD when they weren’t doing well. If they wanted to,
they could have hired away AMD’s team instead. Maybe people miss the notion
that this particular strategy had likely kept jobs in the US in the longer
term. It is a similar strategy to Geely’s ownership of Volvo.

But of course you can expect the WSJ to spin it this way.

~~~
azinman2
Perhaps some might have gone, but the majority in Silicon Valley would have
just stayed there, going to Intel, IBM, Apple, and other ARM makers. People
don’t change countries randomly (and so drastically) because they lost their
jobs.

~~~
harry8
and they don't need to if they don't want to but switch employers, branch
offices are a thing.

------
est
> How AMD Gave China the ‘Keys to the Kingdom’

Or: how China invested in AMD when its stock price was at historical low, so
in return AMD gave China its x86 secrets and Zen architecture.

~~~
AareyBaba
AMD was about to go bankcrupt in 2012-13. CEO Rory Read laid off a large
number of non-engineering staff and sold off real estate to stabilize the
financial situation and managed to stave off imminent bankruptcy. When Dr Lisa
Su took over in 2014, AMD was desperate for a cash infusion to plow into R&D
for the Zen architecture.

There was no U.S. investor willing to make a $300 million investment in a
company that held key CPU and GPU technology and world-class engineering
expertise. Apple, Google, Microsoft could have benefited from AMD's CPU/GPU
tech but they would rather make multi-billion dollar offers for companies like
Groupon and Snapchat or Dr Dre's Beats.

An American company was saved by this joint venture with China while Wall
Street was gleefully shorting AMD.

~~~
adventured
Abu Dhabi did more to keep AMD alive than China. They ploughed $600 million
into AMD in 2007. Mubadala had built up a 13% stake in the company.

~~~
AareyBaba
Yes that is correct. Abu Dhabi investment kept AMD alive for a while but by
2012-13 AMD was at rock bottom and needed more cash to implement a turn-
around. There was a lot more financial jugglery going on but to go into detail
would be off context to the discussion.

------
tmd83
This just smells like a rat like some others said. It's probably true that the
deal while might not be essential probably did help Chinese cpu development.
But it's unlikely that US govt. at the time didn't understand the implication
or couldn't have stopped it if they really wanted it. And it's not like
reporters are finding out about this just now.

I don't know the financial situation for AMD was at 2014 and they might have
ceased to exists for all I know. But the article writes as if the money itself
turned the company around. It's the R&D and design of a new chip that heralded
a new era for AMD. And if I'm reading correctly the deal actually ended up
being done in 2016 by which time most of the work on Zen was already done I
presume.

As someone else said in another comment it is kind of shameful how investment
works. Forget about China/US thing, chip development is important work and no
one invested in it properly. For big cloud companies simply the pressure over
intel (with a competitive AMD) should have been worth it by itself.

------
izacus
The fact that this submarine hatemongering keeps surfacing to the top of this
site is rather concering.

If only this article had substantial content... but, as other commenters
pointed out, it doesn't even pass the basic smell test.

~~~
rwmj
I'm also confused why it's even a problem if China has top class fabs.
There'll be more competition, so it's better for us. Are we worried about
Intel's profit margins?

~~~
oblio
A decent chunk of US's success in the past 70 years has been reliant on the US
having no real competition.

By real competition I mean someone with both the same skill level and the same
heft/weight.

If you look at how the US reacted when Japan was rising, it wasn't a pretty
view. It only died down because Japan stagnated 2 decades ago.

China's kind of the same story, but if it stagnates at about the same level at
Japan, the Chinese economy will be 2-3x the US economy.

That's super scary if you haven't competed on equal footing for more than half
a century.

Obviously, China being an autocratic regime doesn't help either, or that
China's national interests in the region directly conflict with the US
interests there (Taiwan, South Korea, etc.).

I'd bet dollars to cents that even if China had the most pristine Swiss
democracy, the US reaction would be 99% the same.

------
runciblespoon
Was this written by the advertising department of Intel?

~~~
craftinator
That was my first thought, along with Nvidia.

~~~
notacoward
I'm sure it's just a coincidence that this is being published in multiple
outlets now, when AMD is kicking Intel's butt, instead of when it was
originally known. Why would anyone suspect otherwise?

------
dmix
> That technology is helping China in its race with the U.S. to build the
> first next-generation supercomputer—an essential tool for advanced civilian
> and military applications.

Are we entering a space-race with China for supercomputers or something? Did I
miss the memo?

~~~
GordonS
"Red danger" does indeed seem to be the narrative that western politicians,
the US in particular, are pushing today.

There always has to be _some_ fear-based narrative involving the boogeyman de
jour - the Russians, the Chinese, Islamic extremists, cyberwar whatever. Any
one will do, anything to deflect from real problems at home.

God I _detest_ the politics of today :(

~~~
throw0101a
The fear of Islamic terrorism is mostly BS, and the cyberwar stuff is a
manageable risk.

However, the "red danger" of the Soviets was (IMHO) an existential risk to
freedom--just as the Poles why they fought for free multi-party elections. The
rising influence of China, a totalitarian state, is a cause for concern. Why
would you think a dictatorship growing more powerful is a good thing?

> _Any one will do, anything to deflect from real problems at home._

As a society/civilization, I would think it would be possible to walk and chew
gum at the same time: raise concerns about bad actors abroad _and_ try to
solve domestic problems.

~~~
futureastronaut
China is neither totalitarian nor is it a dictatorship. It _is_ an
authoritarian single-party state, but let's not play fast and loose with
classification here.

~~~
henryfjordan
Single party state == Totalitarian

From
[https://en.wikipedia.org/wiki/Totalitarianism](https://en.wikipedia.org/wiki/Totalitarianism):
> Totalitarianism is a political concept of a mode of government that
prohibits opposition parties, restricts individual opposition to the state and
its claims, and exercises an extremely high degree of control over public and
private life

------
xvilka
This whole story of later years, maybe it will bring more attention to the
lack of progress in commercial hardware design tools, their ridiculous price,
and existing efforts to create modern open source alternatives, like SymbiFlow
[1], Chisel3 [2]/FIRRTL[3], The Open ROAD[4] project, etc.

[1] [https://symbiflow.githib.io](https://symbiflow.githib.io)

[2]
[https://github.com/freechipsproject/chisel3](https://github.com/freechipsproject/chisel3)

[3]
[https://github.com/freechipsproject/firrtl](https://github.com/freechipsproject/firrtl)

[4] [https://theopenroadproject.org/](https://theopenroadproject.org/)

~~~
Topgamer7
You spelled github wrong in your first link.

------
vectorEQ
:') oh noes, china also has business men and women with money who want to
invest in things. lets find any reason to be negative about it and try to get
it back in our western hands

------
chao-
The strategy summarized as "introduce a foreign technology to the market,
absorb it, and then innovate to make China a leader" is doubtlessly true, and
I am for re-leveling the economic playing field (so-called) between the US and
China as much as the next person, but this article over-sells and under-
informs in a few ways.

For starters, there is a throwaway graph (in that it is not directly addressed
in the article) of the Top500 over time. As Patrick Kennedy at STH has rightly
complained on over recent years [0], there is a rising issue with taking the
lower-to-mid ranks of Top500 to mean anything at all. A lot of the systems are
actually web hosting platforms, being temporarily leveraged to run an HPC
benchmark for marketing purposes. Most recently he called out two Chinese
companies (Lenovo and Sugon) as among the largest offenders.

My other nitpick is more core to the article: it is not as if no one in China
knew anything about x86 chip design before talking to AMD. Though I will admit
I am underinformed on the NatSec legalities, to my knowledge there has a
similar x86 license-and-joint-venture structure between Zhaoxin and VIA for
many years.

The article goes on to say:

> _Chinese versions of AMD chips already have been rolling off production
> lines._

Which brings up some ominous analogues to displacement of other American
products by Chinese manufacturing. That may be inaccurate imagery, though, as
it isn't clear which manufacturer's fabs are being used for the Dhyana chips.
I am no industry insider but from what I can tell Hygon is fabless (as is
Huawei's HiSilicon, for that matter) and I could not find any clear
information as to who is actually manufacturing the chips [1]. Does anyone
here know?

I'll keep my uninformed speculation to myself, but knowing whose fabs and
whose process technology actually led to working Hygon designs being realized
in silicon is an important detail to fully tell this tale.

Now I have no doubt China is working to catch up in this area as well, but it
seems that the entire fabrication ecosystem (including companies like ASML,
not just Taiwanese and American fabs) represent technology gaps equal to x86
chip design. It takes many actors to put on this play, and laying it all at
AMD's feet, or using phrasing like "gave away the keys to the kingdom" feels
like a solid overstatement.

[0] [https://www.servethehome.com/top500-june-2019-our-new-
system...](https://www.servethehome.com/top500-june-2019-our-new-systems-
analysis/)

[1] [https://en.wikichip.org/wiki/hygon](https://en.wikichip.org/wiki/hygon)

------
DevKoala
People with Intel stock are not happy.

~~~
robotron
Yeah I can't decouple articles like this from the market.

------
ulzeraj
Why do I think this is FUD?

~~~
fwip
One clue might be the scaremongering about "this might help China develop
nuclear weapons," as if

A) they didn't already have nukes

B) making your own x86 processors were a prerequisite to nuclear technology

~~~
sinuhe69
They already have low yield nukes but to develop high yield, compact warheads
without much nuclear testing (which can be easily detected and would
undoubtedly draw critics from other countries) precise simulation on super
computer is necessary. Also to solve fluid dynamics problems (for example to
develop advanced jet engines or silent submarine propeller, which the Chinese
desperately need), detailed simulation on super computer is absolutely a must.
Now running LinPack to show off some nice PR numbers is one thing but actually
writing an own efficient (and correct) simulation) on massive parallel systems
is a thing of another level. It surely helps if one can draw on the massive
highly optimized numerical libraries built for the x86/64 instruction set. It
certainly will not hinder either in case one has stolen properties software
and code from western companies!

~~~
khuey
China demonstrated a 4 megaton explosion in 1976. Tsar Bomba was in 1961. You
really don't need modern computers for this.

~~~
sinuhe69
But you can not put a tzar bomb on a rocket, that can be fired from a silo or
even from a submarine. And to threat America and Europe your rocket need to
flight 10000 miles or more and reach Mach 5 or even faster. All possible only
with high yield, compact warheads and advanced rocketry, which the Chinese do
not have yet.

~~~
khuey
The DF-5 can carry those 4Mt warheads, has a 12k+ km range, and has been
around since 1981.

------
fuzzyset
The focus on supercomputing seems odd. x86 is not nearly as dominant in
supercomputing as it is in servers. A quick look at the TOP500 shows many
other architectures (top 3 aren't x86). Is there something a homegrown x86
chip would give China over top of the line Intel silicon? Does Intel have
secret IP on the die that only the US govt can access?

------
codedokode
If Chinese manufacturers infringe on patented technologies, then it will be
easy to ban import of their products. If they don't infringe and make
something innovative then there is no problem. Having more competition is
better for consumers.

Also, as AMD entered the deal voluntarily, it means that it was considered
profitable despite the risks.

And I don't see the problem with building a supercomputer. Is it a privilege
that shouldn't be available to developing countries?

------
grwthckrmstr
Feel like there is excessive scaremongering about "China" from US based media
publications off late, with a "and this is how China ffukkd us" twists.

Perhaps it would be wise for people to keep that filter in mind (as this is
how mass manipulation works folks).

------
0x262d
there is a flood of anti-china articles because china threatens the US'
monopoly on high-tech profitmaking, and the US companies and rich people are
laying the basis to protect their profits with war.

------
pcr910303
Maybe this is because I’m not a US citizen, but why do Americans dislike China
so much?̊̈

I just cannot understand why China building it’s own jets is a problem. US
already builds it’s own jets and nobody hates that to the point ‘Let’s not
partnership with US to not leak any info’.

Why is this particular dislike to China?̊̈ Is it just the ‘Communism is
bad...’ thing?̊̈ Or is it something much more?̊̈

~~~
threezero
I dislike China for running concentration camps for Muslims, organ harvesting,
social scores, no free speech, and having made Xi a dictator for life. I’m
pretty sure Americans have a lot of other reasons like job losses, real estate
money laundering, etc.

~~~
rchaud
The US supports numerous regimes guilty of the exact things you're describing,
with financial aid, military security guarantees and arms sales. What's your
stance on those?

~~~
threezero
I wish we’d cut support for all of them, but none of those countries are the
economic threat that China is.

~~~
rchaud
China's economic threat has magnified several fold because the US has spent
the past 2 decades mired in conflicts that have been stoked by its allies in
Saudi Arabia. Meanwhile, China has had a free hand in developing trade
relations with its neighbouring states and African countries, further
weakening the US' position there.

Whatever billions the US has earned selling weapons to KSA are a drop in the
bucket compared to what it's spent in Iraq, Afghanistan, Yemen, Libya and
Pakistan. These are all countries where KSA has funded extremist political
movements that continue to destabilize the region.

------
zelon88
Tl;dr: AMD turned itself from a domestic $5b company with 2,000 employees and
no capital into a global leader in semiconductors while simultaneously
enduring 30 years of crushing (and illegal) anti-competitive practices by it's
primary competitor of 25 times its net worth and 50 times it's workforce
strength. Now that AMD has managed to take those 2,000 American workers and
push back against 80k American Intel workers + 20k Israeli Intel workers the
US has decided it's not fair for "AMD to license it's highly proprietary,
highly impressive, highly competitive products to undemocratic nations."

 _cough-Israel-Wintel-lobbyists-cough_

------
Nerada
Seems strange to me that China was able to manufacture processors but they
couldn't manufacture ballpoint pens domestically until 2017.

~~~
mappu
_> China was able to manufacture processors_

The actual manufacturing is done in Taiwan (TSMC) and South Korea (Samsung).
USA can do it too (Intel, Global Foundries) but these are either not leading
edge or only for private use.

SMIC in China are up to 14nm:
[https://www.anandtech.com/show/13941/smics-14-nm-mass-
produc...](https://www.anandtech.com/show/13941/smics-14-nm-mass-production-
in-1h-2019)

Everyone uses equipment from the Netherlands (ASML).

 _> they couldn't manufacture ballpoint pens domestically until 2017_

They were already producing 38 billion ballpoint pens a year. Just the tips
had to be imported because domestic steel was too low-grade.

Since they weren't given assistance in learning steel production techniques it
had to be rediscovered. Chinese steel is now high-quality enough to produce
the ballpoint tips, but building up R&D is important for reasons beyond pens;
the responsible state-owned-enterprise developed several new techniques, and
is (apparently) the only company in the world able to produce e.g.
[http://www.chinadaily.com.cn/a/201904/24/WS5cbfc4a9a31048422...](http://www.chinadaily.com.cn/a/201904/24/WS5cbfc4a9a3104842260b7fc5.html)

~~~
skrebbel
> Everyone uses equipment from the Netherlands (ASML).

This is funny, because besides ASML, Europe is very light on the chip
manufacturing. Sure, there's ARM, but they don't have foundries. All this talk
about geopolitics and computing, chips, foundries, and every single company
and thus country is dependent on this one equipment vendor from a tiny and
otherwise unimportant country, and nobody seems to bat an eye.

It makes me wonder whether maybe all this geopolitical scheming and
fearmongering is way overblown. Why does it matter if country Y can make chips
themselves or buy them from country X? What is this, a world full of little
soviet unions? I mean, we have trade, and trade works! I think in the long run
trade will always win over protectionism.

