Smart Move: License a second source for Kunpeng

Huawei’s Kunpeng CPU benchmarks better than Intel. It’s based on ARM RISC cores and relatively inexpensive to produce. Microsoft supports Windows on ARM, although for now the Huawei PC’s run a Chinese version of Linux. It’s a hot chip and at the heart of numerous Huawei products.

Kunpeng does not have a rich ecosystem, however. Customers are uncomfortable. The natural way to build support is to license the design to other chipmakers. That will enlarge the market and third parties will see opportunity.

In the past, no one would buy a chip that only had one source. Intel licensed the 8086 to AMD by customer demand, one reason it became dominant. A smart customer knows a monopoly manufacturer could have a plant fire, a business problem, or even a political blockade. A second source gives the buyer some insurance against a problem with a single manufacturer.

Chinese chipmakers like Ziguang Zhanrui have the design and production skills needed. ZZ is shipping the 5G Tiger T7510 chip, manufactured at SMIC’s 12 nm fab. It has strong state43 backing through Tsinghua Unigroup and is well-funded.

Huawei traditionally wants to control every stage of production. Ren is like Henry Ford, who owned stell mills and rubber plantations. In the last year, it has been forming more partnerships. The Chinese press reports it leds a group of half a dozen companies building a chip fab.

HiSilicon has a small business in supplying chips to others. Offering Kunpeng is a natural extension and a second source a promising way to enlarge the market.

The U.S. war will probably abate, but this is one way to avoid it.

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