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Chip Wars and China’s Tech Strategy

The sale of struggling Silicon Valley startup zGlue’s patents in 2021 was unremarkable except for one detail: The technology it owned, designed to cut the time and cost of making chips, showed up 13 months later in the patent portfolio of Chipuller, a startup in China’s southern tech hub Shenzhen.

Chipuller purchased chipset technology, a cost-efficient way to package groups of small semiconductors to form one powerful brain capable of powering everything from data movers and sensors in automobiles to artificial intelligence processors in self-driving machines. This modular design approach, vital in keeping Moore’s Law going, requires fewer manufacturing steps and can be done on cheaper equipment than a traditional monolithic processor made from a single piece of silicon.

It’s a common strategy being used by the likes of AMD, Intel, TSMC, Marvell, and Cadence to try and push back the seeming end of Moore’s Law as chip production costs rise due to rising R&D and production costs and physical bottlenecks slow down the advancement of the semiconductor manufacturing process. A standardization effort called UCIe is working on setting rules for how these chipsets can be connected in a single integrated circuit (IC) and then incorporated into larger multichip SoCs or 2.5D ICs.

Using this approach, manufacturers can build processors out of different cores, GPUs, or security engines for faster processing and accelerating memory and IoT controllers in any combination. They can also use multiple types of memory, enabling them to build out multi-core systems on relatively inexpensive hardware.

China is racing to become a leader in chipset technology, with officials promoting the development of the capability in policy documents from local to the central government and entities from tech giant Huawei Technologies to military institutions pursuing it. Beijing is deploying the technology to help in its battle against Washington to gain control of the global supply chain for key and cutting-edge technologies.

Economic historian Chris Miller, who wrote “Chip War,” the saga of how U.S. chipmaking helped defeat the Soviet Union, concludes that the fight to control the chip industry will define our future. “It’s not just a tech industry struggle; it’s about how we control the world,” he says.

In the meantime, the sale of zGlue’s patents shows that, even though the United States has stepped up enforcement of export controls to prevent companies such as zGlue from stealing IP, it’s still possible for Chinese companies to circumvent those laws. According to lawyers Laura Black at Akin Gump, Melissa Mannino at BakerHostetler, and Perry Bechky at Berliner Corcoran & Rowe, the purchase by Chipuller wouldn’t trigger a review by the Committee on Foreign Investment in the United States, or CFIUS, because it didn’t involve a U.S. company. But the CFIUS could still take action to keep zGlue’s technology from entering the hands of the PRC if it sees fit. That would highlight a need for the Trump administration to reform CFIUS.

Claire Jimmy

She is a part-time digital marketing consultant, part-time travel blogger, and full-time dreamer. He has three passions in life: Social Media, Travel and blogging. She has won many more blog awards and received many nominations as well. The creative blog writer with many years of experience.

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