CPU is the core of computing and control of electronic devices. It has a long design and R&D cycle and great uncertainty in success. It has high capital scale and technical barriers, and has significant leading effect. The software and hardware ecosystem is the key to industrialization. An independent ecological system is formed between the operating systems and application software of different CPU instruction systems. The number and types of software ecosystems carried by different ecological systems vary greatly, thus building a stronger ecological barrier. Since domestic CPUs started late and lag behind overseas manufacturers in ecological construction, we believe that government affairs and key industries, which have high requirements for software and hardware security performance and have a large demand for personalized customization, are more in line with the current technology and ecological construction level of domestic CPUs, and are expected to be the first to make breakthroughs.
Summary
CPU's software and hardware ecosystem builds industry barriers, and market concentration is high. CPU and operating system jointly complete the scheduling of electronic device hardware and software. The ecological system composed of CPU and the corresponding software can quickly occupy the market with its first-mover advantage or cost advantage, and ultimately form a virtuous cycle of ecological richness and user scale. Intel and Windows dominates the PC and server markets with its first-mover advantage, while the AA alliance composed of ARM and Android occupies the mobile market with high cost performance.
computing power demand promotes the update of server CPU , and the application scenarios for expanding CPU intelligence development. The main downstream market demand of CPUs is differentiated, and the rapid development of the data economy has led to the increase in volume and price of server CPUs: in terms of quantity, with the increase in computing power demand, the number of CPUs carried by a single server increases; in terms of price, the performance of server CPUs has improved, driving the growth of CPU unit price. In the automotive field, heterogeneous SoCs including CPU, GPU and other devices provide computing power support for automotive intelligence, and autonomous driving and smart cockpits have become new application scenarios for CPUs.
government affairs and key industries may be expected to make breakthroughs first. Domestic CPU manufacturers have conducted CPU research and development through three major channels: self-developed instruction set architecture, obtaining ARM instruction set authorization and obtaining x86 kernel authorization. The construction of the CPU software and hardware ecosystem started late. In the short term, we believe that government affairs and key industries, which require high security performance and high demand for personalized customization, are more in line with the current technology and ecological construction level of domestic CPUs; in the long term, as the development of CPU technology in the post-Moore era slows down and the domestic technology and talent reserves are becoming increasingly improved, we expect domestic CPUs to compete with international manufacturers in the consumer field.
risk
downstream demand is lower than expected; domestic manufacturers' design/process progress is lower than expected.
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CPU is the core of electronic device computing and control
Multi-type instruction set adapts to different downstream applications
CPU has two mainstream classification basis: 1) According to the instruction set architecture: CPU can be divided into CISC and RISC according to the instruction set. Among them, CISC instruction set mainly includes x86 instruction set, and RISC instruction set mainly includes ARM, MIPS, PowerPC, RISC-V, Alpha and other instruction sets. 2) According to the word length of the processable information: The CPU can be divided into four, eight, sixteen, thirty-two, and sixty-four according to the word length of the processable information. The current mainstream is sixty-four. The number of bits is positively correlated with the amount of data processed each time, that is, the larger the number of bits, the faster the information is processed. The
instruction set is the basis of CPU core . It can be divided into two categories: CISC and RISC. The basis of the
CPU core is the instruction set and micro architecture. The instruction set determines the working mode of the CPU and the corresponding hardware architecture (micro architecture). The instruction set consists of a string of binary codes, corresponding to the specific structure in the circuit hardware. It is a set of specifications that translate program language into machine language. It is an interface for software and hardware collaboration. It not only carries the entire software ecosystem upwards, but also specifies the entire hardware ecosystem represented by processor chips downwards. It can be divided into two categories: complex instruction set (CISC) and streamlined instruction set (RISC). A microarchitecture is a hardware implementation of an instruction set, that is, a method of execution of a given instruction set architecture in a processor.
Figure 1: CPU is classified by instruction set
Source: CICC Research Department
x86 occupies the computer and server market, ARM occupies the mobile market
x86 is currently the mainstream complex instruction set. The IP of x86 is mainly mastered by Intel and AMD, and almost occupies the entire computer and server processor market, with high performance and high power consumption. Since Intel launched the first central processor
ARM instruction set architecture is one of the largest RISC architectures in the market and is widely used in mobile terminals and the Internet of Things. Although ARM is not as good as x86 processor in terms of comprehensive performance, the advantages of high concurrency, low power consumption and high integration make ARM dominate the mobile and IoT markets. According to ARM announcement, as of 3Q21, a total of 200 billion chips based on ARM architecture have been shipped, accounting for more than 90% of the market share in smartphone chips, in-car information chips, wearable devices, Internet of Things microcontroller and other fields, and its AA system formed with Android also occupies a wide mobile phone ecosystem. The main features of ARM instruction sets are: 1) Small size, low power consumption, low cost, and high performance; 2) Higher register usage, instruction operations are completed in registers, and the execution speed is fast; 3) Flexible and variable addressing methods; 4) The length of the processable instruction can be fixed, and the "pipelined" operation improves processing efficiency.
RISC-V instructions are streamlined, modular and scalable, and have obvious advantages in free and open source, and are expected to seize part of the market share of x86 and ARM instruction sets. Faced with the difficulties of the existing x86 and ARM instruction sets such as intellectual property restrictions, high R&D thresholds and complex customer needs, the University of California, Berkeley released the RISC-V instruction set with open source streamlining as its main feature in 2010. RISC-V is created for a short time and does not need to consider backward compatibility, so the instructions are short and streamlined (the RISC-V instruction set document is only more than 200 pages, which is more than 90% less than ARM's more than 2700 pages and more than 5000 pages of x86 instruction set), and it has obvious advantages in reducing system power consumption and improving operational efficiency; there are only 47 basic instruction set modules, and the form of basic + standard extension (1+N) lays the foundation for providing flexible customized services to customers, which is more conducive to differentiated competition among manufacturers; in terms of intellectual property rights, RISC-V adopts the BSD License open source protocol, providing three intellectual property modes: open, free, authorized, and closed design, and has a full set of open source free compilers, development tools and software development environment (IDE), allowing users to modify and re-release open source code.
Figure 2: RISC-V Advantages
Source: CITI think tank Integrated Circuit Research Institute, "A Golden Age for Computer Architecture", John L. Hennessy, David A. Patterson, 2019, "A Review of RISC-V Instruction Set Architecture Research", Liu Chang, Wu Yanjun, Wu Jingzheng, Zhao Chen, 2021, "A Review of RISC-V Microprocessors and Commercial IP", Pan Shupeng, Liu Youyao, 2020, CICC Research Department
meets high computing power, low cost, and customizable needs, and RISC-V is adapted to the downstream IoT market. faces the fragmented demand of the Internet of Things, general-purpose chips that adapt to larger application scenarios in the market have too high design and manufacturing costs and low utilization rates for some advanced applications. Special chips take a long time from design to mass production and are mostly stored in the device market with strong demand, which cannot meet niche needs and take into account commercial interests. The advantages of RISC-V's low cost and customized approach are more suitable for the Internet of Things scenarios from low to high coverage.
Figure 3: RISC instruction set comparison
Source: CSDN, Architect Technology Alliance, CICC Research Department
CPU market: The main demand for downstream construction, the trend of automotive intelligence is expected to become a new growth driver
Global MPU nearly 100 billion US dollars in market size, broad growth space
Global MPU market size is US$87.7 billion, and it is expected that CAGR from 2021 to 2025 will reach 5.36% . microprocessor (MPU) is an important part of integrated circuits, including computer CPUs (CPUs used in desktop, notebook, server and other scenarios), embedded processors and mobile phone application processors. According to IC Insights data, the global MPU market size in 2020 is US$87.7 billion. Benefiting from the development of the online economy and the increasing dependence on the Internet under the epidemic, the global MPU market has developed rapidly. IC Insights expects the market size to be US$103.7 billion in 2021, and will increase
Figure 4: The main applications, types and major competitors of global microprocessor chips
Source: IC Insights, CICC Research Department
Servers, PCs and smartphones are the main downstream application areas of CPUs. The trend of automotive intelligence has driven SoC heterogeneous solutions to become the mainstream computing power in the automotive market. CPU is the computer's computing and control core and is widely used in different devices such as servers, PCs, and mobile phones. According to different application fields, there are certain differences in its architecture, functions, performance, reliability, and technical indicators such as energy efficiency than . Each desktop usually has only one CPU, and the number of CPUs per server varies. As the development of automobile electrification begins to show, we expect intelligence to replace electrification as the next outlet for the transformation of the automobile industry, thus bringing incremental application scenarios to the CPU.
Figure 5: Comparison of performance and technical characteristics of CPU in three traditional application scenarios
Note: * The quantity represents the relative size of the characteristics. The more quantity, the more significant the characteristics
Source: Haiguang Information Prospectus, CICC Research Department
Server Market: Computing power demand drives technology upgrade
The rapid development of digital economy and the implementation of new technologies drive server market growth with strong certainty. According to IDCh data, global server shipments in 2020 and 2021 reached 12.2 million units and 13.54 million units, respectively, an increase of 3.9% and 6.9% year-on-year respectively. BMC (Baseboard Management Controller , Baseboard Management Controller) is a chip integrated on the server motherboard, used to collect component temperature, voltage and other information on the server and provide it to the upper-level operation and maintenance network management software. As one of the world's largest BMC manufacturers, Xinhua's business situation has guidance on the server market. Since 2H21, Xinhua's monthly revenue has increased year-on-year . According to IDC's forecast, the global server market size is expected to grow significantly year-on-year in 2022.
Chart 6: Global server shipments from 2015 to 2021
Source: IDC, CICC Research Department
Chart 7: Xinhua monthly revenue year-on-year growth rate
Source: Company announcement, CICC Research Department
CPU upgrades generate demand for existing server updates, and the high prosperity of the server market has driven the increase in CPU volume and price. The hardware architecture of the server mainly includes CPU, memory, hard disk, network card , GPU and other components. The chipset composed of communication coordination chips such as memory control chips, PCIe control chips, and various different buses (PCIe bus, USB bus, etc.) are jointly responsible for the communication coordination of these components. "CPU+chipset+bus" forms the CPU platform. According to Omdia data, Intel CPUs occupy a vast majority of the market share in the server market, so the update of Intel CPU platform is closely related to the server market.
Chart 8: Global server shipments, classified by CPU
Source: Omdia, CICC Research Department
Chart 9: Server motherboard architecture diagram
Source: Intel, CICC Research Department
►CPU upgrade and replacement generate server update requirements: Xeon is Intel's server CPU brand. It has undergone many updates since its release in 1998. Grantley, Purley, Whitey, and Eagle were launched in 2013-2022. For CPU platforms such as Stream, each generation of products will be upgraded in terms of core number, process process, PCIe standard, memory type, etc. to meet the growing server market demand. At the same time, each generation of platform will have multiple descendants, which are used to achieve small technical updates and meet the needs of different market segments. For example, the Whitley platform has successively released 14nm Cooper Lake and 10nm Ice Lake descendants. Intel's latest generation CPU platform SAPphire Rapids is equipped with 8-channel DDR5 memory, supports PCIe5.0 standard, and adopts a 7nm process.
►The server market is booming to drive both CPU volume and price increase: volume, with the popularity of cloud computing and big data, computing demand continues to increase, and multiple servers are expected to gradually become the mainstream of the market. When the server is running, multiple CPUs run a single copy of the operating system at the same time. The system symmetrically distributes the task queues on each CPU, thereby greatly improving the data processing capabilities of the entire system; in terms of price, in the process of replacing and updating the CPU platform, the performance of a single CPU is improved, and the cost and price of driving the CPU are shown in an upward trend.
Chart 10: Intel server CPU platform replacement and update process
Source: Wande Information, Intel official website, CICC Research Department
PC market: A new round of software and hardware platform upgrades kick off
After years of stock consolidation of period, the PC market has recovered its growth trend since 2019. In 2019, global desktop shipments recovered due to strong market demand for the upgrade of Windows 10. IDC data shows that under the supply chain challenges such as global shortage of chips and other important components, global PC shipments in 2021 still increased by 14.8% year-on-year to 349 million units, a record high since 2012.
A new round of software and hardware innovation has begun, which is expected to promote the replacement demand of the downstream PC consumer market. 1) Hardware side, 2021 is the first year when a new round of competitive landscape in the PC processor market begins. Traditional processor manufacturer Intel has launched 12th Core processors to better support AI, WiFi6, XE display and other functions to consolidate its own share in the computer market; AMD has released Ryzen 6000 series mobile processors to seize market share; Apple has launched an M1 processor by itself, and the ARM architecture PC market is expected to usher in new products. As a core component in a computer, CPU route selection will affect the design and manufacturing of the overall architecture of the computer. Upstream CPU competition will be transmitted to the downstream computer manufacturing industry, promoting the iteration and performance improvement of downstream products, and driving market replacement demand. 2) Software side, Windows 11 is officially released. 3) Product side, at the CES 2022 conference, leading manufacturers such as Lenovo, HP, and Dell have released products with outstanding highlights in design and performance.
smartphone market: CPUs mainly appear in the form of SoC chips
is expected to increase global smartphone shipments by 5.6% year-on-year in 2022, still lower than the overall shipment level before the epidemic. As the smartphone market gradually saturates, the global smartphone shipment growth rate has slowed down in recent years. According to Statista data, global smartphone shipments in 2021 were 1.38 billion units, a year-on-year increase of 7.8%. It is expected that the smartphone market will ship 1.43 billion units in 2022, a year-on-year increase of 3.6%. Mobile SoC chips integrate one of the most critical components on mobile phones such as CPU, GPU and memory. Mobile platform manufacturers such as Qualcomm and MediaTek provide mobile phone brand manufacturers with highly integrated SoC solutions, effectively reducing the difficulty of product development for mobile phone brand manufacturers.
Smart Cars: Autonomous driving and smart cockpits are developing rapidly, heterogeneous SoCs have become the mainstream market
Autonomous driving and smart cockpits are the key to automotive intelligence, and SoC heterogeneous solutions have become the mainstream choice for main control chip . Under the trend of the "new four modernizations" of the global automobile industry, the results of the electrification battle have begun to emerge and have become an inevitable trend. Intelligent acceptance of electrification has become a new direction for industrial transformation. According to the forecast of CICC's automobile team, autonomous driving and smart cockpits will become important manifestations of automobile intelligence, and there is broad room for growth in the future. Due to the limited computing power of a single CPU chip, SoC heterogeneous solutions have become the mainstream choice for autonomous driving and smart cockpit master control chips.
►Automatic driving: L2 level autonomous driving has low requirements for computing power. The on-board chip only needs to process the amount of data generated by 1-3 720P on-board cameras and 1-2 radars, and there is no need to conduct real-time analysis of all data; as the level of unmanned driving increases, the on-board chips of L5 level driverless cars will face the demand for harsh identification from non-standard roads and mountain roads, and their computing power needs to increase by dozens of times to match.
►Smart cockpit: multi-screen linkage and other complex functions require the use of a domain controller to break through the distributed architecture limitations of the original hardware, and provide computing power support for the operation of the entire software and hardware with a single SoC. Currently, the smart cockpit chips on the market are mainly SoC heterogeneous fusion solutions of "CPU+function module". Currently, smart cockpit chips and autonomous driving chips are in an independent development stage. We judge that when hardware computing power, architecture design, and software development capabilities are further improved, and the vehicle architecture enters the central computing stage, cockpit chips are expected to achieve integrated development with autonomous driving chips.
Figure 11: SoC heterogeneous solution for autonomous driving and smart cockpit
Source: Nvidia official website, NXP official website, "Universal computing power, the cornerstone of an intelligent society", Huawei, 2020, "Smart cockpit development trend white paper", Roland Berger, 2019, CICC Research Department
CPU competition pattern: the leading effect is significant, the ecological barrier is high
Wintel and AA are the CPU software and hardware ecosystems that dominate PC, server and mobile Internet respectively
Software and hardware ecosystems are the key to CPU industrialization. CPU ecosystem is a collaborative, compatible and standardized collaboration relationship formed between enterprises in the CPU industry chain and between enterprises and users. It can be understood specifically as related software and hardware applications running on the CPU and the entire CPU-based machine. The CPU ecosystem includes two aspects: software and hardware. Starting from the instruction system, the chip is formed through the IP core in the hardware, and it is finally used for application terminals in different fields such as board and machine manufacturers; basic software including operating systems, compilers, Java, .NET, etc. are formed on the software, and finally the application software applied to different fields such as government and enterprises, education, energy, and transportation.
Wintel and AA systems have solid CPU ecological barriers. Currently, the CPU industry is dominated by two major ecological systems: one is the Wintel system based on the x86 instruction system and the Windows operating system ; the other is the AA system based on the ARM instruction system and the Android operating system. Intel developed its own x86 instruction system architecture in the 1980s. With its first-mover advantage, it quickly expanded its market share and built an ecological advantage. By forming a "Wintel" alliance with Windows, it gradually occupied the desktop and server CPU market; with the efforts of Apple, Qualcomm, , Samsung , , Huawei , Nvidia, etc., relying on its series of advantages in open source, heterogeneous computing, customization, etc., it is based on the low-power mobile Internet market. With its dominance over the operating system and CPU chips, the Wintel system and AA system have set a series of technical specifications and standards, built a huge software ecosystem, forming a virtuous cycle of leading hardware technology, rich software functions, and large number of customers, thus building a long-term, stable and solid ecological barrier.
Chart 12: CPU software and hardware ecosystem
Source: Yiou Think Tank, CICC Research Department
Wintel: With the first-mover advantage and Matthew effect to form a desktop and server ecosystem that integrates software and hardware
Wintel is a CPU ecosystem based on x86 instruction system and Windows operating system, dominating the desktop and server markets.x86 is the main instruction set architecture in the global server and PC fields. Mercury Research data shows that Intel's share of x86 servers and PC CPUs has reached 90%; according to Statcounter data, Windows' global desktop operating system market share in 2020 was 76.8%.
►The PC field has first-mover advantages: 1981, IBM company officially launched the world's first personal computer, IBM 5150. In order to accelerate the development progress, IBM opened up all technical data except BIOS when conducting the development of IBM 5150, and adopted general standard components. Finally, it decided to use Microsoft disk operating system DOS1.0 and configure Intel x86 architecture 16-bit processor 8088. Since then, Intel and Microsoft have quickly occupied the market in the fields of CPU and operating systems, respectively, and Intel CPU and Microsoft operating systems have become common configurations for PCs.
►The server field has come from behind: In 1995, Intel launched the first processor product for servers and workstations, marking Intel's official entry into the server chip field; in 2001, Intel released the Xeon series processors, aiming at high performance, balancing load, high-intensity scientific computing, multi-channel symmetric processing and other features. Through architectural innovation and process progress, it continues to seize the market share of RISC architecture manufacturers with its cost-effectiveness and ecological advantages, and ultimately achieves the dominance of the x86 architecture in the server market.
Chart 13: Changes in global x86 server and PC CPU market share
Source: Mercury Research, CICC Research Department
Chart 14: Changes in global PC operating system market share
Source: Statcounter, CICC Research Department
Intel and Microsoft cooperate in software and hardware research and development and sales to jointly build a Wintel system ecosystem. 1) Coordinated development of software and hardware: In terms of hardware, Intel firmly grasps control over upstream and downstream manufacturers of the industry through bundled sales. At the same time, Intel, as a chip IDM manufacturer, occupies the market voice; in terms of software, in addition to almost synchronizing with Intel CPU in operating system updates, Microsoft also launched products of different levels such as Dynamic, SQL Server, Skype and other application software developers in professional-level application software and games to compete with Adobe, SAP, Oracle, SAS and other application software developers. 2) In-depth cooperation between software and hardware to achieve energy efficiency optimization: Intel and Microsoft optimize software and hardware performance through huge R&D investment in underlying software, gaining competitive advantages in the market. 3) Make it convenient for brand manufacturers to develop products: Under the industrial division of labor of the Wintel system, downstream machine manufacturers obtain high-performance chips and the latest operating systems from upstream suppliers, and obtain profits by assembling sales terminal products, and the overall R&D difficulty is reduced. At this point, the Wintel ecosystem has formed a positive cycle of leading hardware technology, rich software functions and improved user scale.
Chart 15: Wintel ecosystem map
Source: Yiou Think Tank, CICC Research Department
Improve product performance with the Zen architecture and advanced processes, AMD has become another important participant in the x86 ecosystem.
Chart 16: Global x86 Changes in the competition pattern of the CPU market
Source: Cpubenchmark, CICC Research Department
Figure 17: Intel Tick-Tock diagram
Source: Company official website, CICC Research Department
Figure 18: Intel and AMD's competition process in the server field
Source: Xinzhixun, CICC Research Department
AA: Adapt to the development of the mobile Internet with low power consumption and open source advantages
AA is a CPU ecosystem based on ARM instruction system and Android operating system, dominating the mobile Internet market. , ARM Holdings , jointly invested by companies such as Apple and Acorn RISC Machine in 1990, innovated business model. It does not directly manufacture and sell any physical chips. It charges authorized customers the preliminary authorization fee through processor architecture , which is independently designed, and charges a royalty of 1%-2% based on the selling price of each chip.
Chart 19: ARM business model
Source: Company official website, CICC Research Department
Chart 20: Changes in market share of Android and IOS operating systems
Source: iMedia Consulting, CICC Research Department
We believe that the success of the AA alliance comes from the core strategies adopted by ARM and Android meet the needs of the mobile Internet era. In the AA alliance, Google is responsible for the maintenance and update of the Android system and the construction of the software ecosystem; ARM company masters the expansion and update of the ARM instruction set, the micro-architecture design and the development of compilers, and authorizes the processor core architecture of the IC design units and companies that depend on the AA system. The high-performance path of
ARM is developing in twists and turns, and the layout of PC and data centers has begun to show results. ARM launched its first Server Basic System Architecture (SBSA) specification in 2014 to seize the server market, but there was no strongly competitive server processor based on the ARM architecture at that time. Taking Qualcomm as an example, Qualcomm launched a data center-oriented CPU chip Centriq 2400 based on the Armv8-A architecture in 2017, but for some reasons, the product cycle of the Centriq 2400 is less than one year. Starting from 2018, ARM has re-launched its product layout in the PC field and data center field. The high-performance road of
ARM architecture is promising in the future. We believe that benefiting from 1) ARM architecture processors continue to make breakthroughs in performance through optimization of process processes, microarchitecture, etc., and the ecosystem continues to improve; 2) As the scale of data centers increases, their power consumption will attract the attention of cloud service providers. ARM architecture has rich technical accumulation in cost and energy consumption, and ARM architecture processors are expected to continue to make breakthroughs in the PC and server fields.
Figure 21: M1 chip based on ARM architecture has high performance
Source: Company official website, CICC Research Department
Figure 22: Neoverse series processor architecture performance comparison
Source: Company official website, CICC Research Department
Domestic market: Government affairs and key industries help CPU domesticization
The current domestic CPU market is still dominated by overseas manufacturers, and mainland manufacturers are in the catching-up stage. my country's demographic dividend is rich, the downstream market space is large, and it also has a favorable industrial policy environment, making mainland China one of the main markets for the growth of the CPU industry. However, the dominant position of the domestic server and desktop CPU market is still dominated by x86, representing manufacturers are Intel and AMD, and the mobile SoC market is dominated by Qualcomm, MediaTek, Apple, etc. IDC data shows that China's x86 server shipments in 2020 were 3.439 million units, accounting for 98.26% of the total domestic server shipments. In the process of constantly catching up with advanced CPU technologies from abroad, a number of excellent CPU design companies such as Loongson , Haiguang, Kunpeng, Shenwei, Feiteng, and Zhaoxin have emerged in my country.
Chart 23: 2016-2025E Domestic x86 server chip shipment and forecast
Source: IDC, CICC Research Department
Chart 24: Sales scale in the sub-sectors of China's integrated circuit industry from 2013 to 2020 (billion yuan)
Source: China Semiconductor Association, Foresight Industry Research Institute, CICC Research Institute
In the short term, the core market of domestic CPUs will be mainly government affairs and key industries, and will gradually expand to the enterprise and consumer markets in the future. The downstream application scenarios of domestic CPUs are mainly divided into three categories: government affairs and key industry applications, enterprise-level applications and consumer-level applications. Since domestic CPUs started late and lag behind overseas manufacturers in ecological construction, we believe that government affairs and key industry applications, which have high requirements for software and hardware security performance and have a large demand for personalized customization, are more in line with the current technology and ecological construction level of domestic CPUs. Therefore, this is also the core market that domestic CPUs need to seize if they want to develop rapidly in the short term. The enterprise-level application direction has higher requirements for the ecological environment than for government affairs and key industries, and in the medium term, it is also an incremental market for the future development of domestic CPUs.The current weaker direction of domestic CPUs is the consumer-grade application market. This direction has a high degree of marketization, is sensitive to price and cost-effectiveness, and has a short update cycle. Therefore, it requires relatively long-term technology and market accumulation. It is more appropriate to use it as the long-term target market for the development of domestic CPUs, especially in the desktop CPU ecosystem, where the gap between domestic and foreign manufacturers is still relatively large.
Figure 25: Requirements for security, customization and industrial ecology of the three major domestic application scenarios
Source: CICC Research Department
Under the background of developing a domestic ecological system, domestic CPUs have broad room for development. In the domestic ecological system, the CPU is the "heart" and the operating system is the "soul". The domestic ecological system with CPU and operating system as the core can systematically ensure that the entire domestic information technology system can be produced, available and secure. The current construction of the domestic ecological system is mainly aimed at government affairs and key industries.
Although there is still a certain gap between my country's CPU manufacturers' technology and overseas, there is an opportunity for the industry to catch up. The importance of localization and independent innovation and development of key technologies promotes the accelerated development and application of the domestic ecological system.
►China may be one of the largest CPU consumer markets in the long run, with strong downstream demand. All domestic computer users are huge, and they can effectively increase CPU demand for the iteration and upgrading of server platforms; in government affairs and key industries, government, finance, telecommunications and other industries will drive the national CPU replacement wave; the scale of the domestic cloud computing market continues to grow, and server CPUs will achieve demand increase in cloud computing and enterprise digitalization; in the field of industrial control, the intelligent transformation from a manufacturing power to a manufacturing power will also drive the expansion of the CPU market.
► Domestic knowledge and technology and talent reserves are becoming more and more perfect. Domestic CPU design companies represented by LoongArch and Shenwei have accumulated rich experience in CPU instruction system architecture and microstructure. The success of self-developed instruction sets such as loongArch and SW-64 is a historic breakthrough in China's chips. With the continuous expansion of the domestic chip design market, a group of technical talents have been accumulated in the industry, and leading design companies have all had stable core design teams.
►The development speed of CPUs slowed down in the post-Moore’s Law era, and domestic CPUs may have more time to narrow the gap in advanced technology. takes Intel as an example. In 2010, it launched the 32nm Core i series processor based on Westmere microarchitecture, and in the following four years, it ushered in the 22nm process Ivy Bridge, Haswell, and the 14nm process Broadwell and Skylake. However, Intel did not release the 10nm process processor chip Ice Lake until 2021. At present, the process technology of most domestic CPUs is relatively low, and continuous high R&D investment is expected to maintain the rapid development of process technology and performance levels, gradually narrowing the gap with the international mainstream level.
►RISC-V may become a new track in the industry. open source RISC-V instruction set architecture has the characteristics of concise and modular instruction set, and the processor adapts to the application requirements of different IoT scenarios. From a business perspective, RISC-V and its open source ecosystem can reduce the capital investment, technical threshold and development cycle of chip development, improve product development reusability, and at the same time it is expected to attract a large number of enterprises to participate in their ecological construction, helping the processor industry to form a new ecosystem based on this open source instruction set architecture.
►National policy guidance and support. The government's support for the CPU industry is gradually increasing, and policies and regulations are becoming increasingly perfect. In the context of building a strong country in science and technology, the country's support for domestic CPU manufacturers mainly includes 1) increasing R&D funds investment and tax exemption; 2) supporting enterprises to improve their domestic capabilities through cooperation, mergers and other means; 3) promoting domestic procurement, including complete machine products that use domestic CPU chips on the government procurement list, and encouraging software and peripheral equipment to optimize and adapt domestic CPUs; 4) attach importance to talent training and encourage universities to establish first-level disciplines for integrated circuits.
Domestic manufacturers innovate through multiple channels to accelerate technology catching up with
Domestic CPU design manufacturers can be divided into three categories according to the instruction set: first category is Loongson and Shenwei, which have self-developed instruction sets, the second category is domestic manufacturers represented by Feiteng and Huawei Kunpeng, which are authorized based on ARM instruction sets, and the third category is manufacturers such as Haiguang and Zhaoxin, which rely on x86 instruction sets.
Chart 26: Introduction to the six major domestic CPU manufacturers
Source: Huajing Intelligence Network, official websites of various companies, CICC Research Department
►Loongson has a new completely independent instruction set LoongArch and a leading domestic ecological construction process. In 2020, the company launched the independent instruction system LoongArch. In addition to being independent, advanced and modular, the instruction system also fully considers compatibility needs and can efficiently run binary applications on MIPS, x86, and ARM platforms. The Loongson 3A5000 released in 2021 is the first processor chip to switch from MIPS to LoongArch. It is designed independently from the top-level architecture to instruction functions and ABI standards, etc., without requiring foreign authorization. In terms of ecosystem construction, Loongson is establishing a security information technology system and software ecosystem independent of Wintel and AA systems, forming a basic version operating system for information applications, and a basic version operating system for industrial control applications, and is one of the few CPU companies in the world to establish a complete basic software ecosystem.
►Shenwei has advantages in supercomputing and other fields. Shenwei processor initially adopted the Alpha instruction set architecture of the US DEC company and developed the "Shenwei 64" instruction set architecture to replace the original Alpha architecture. Shenwei CPU has obvious advantages in the field of supercomputers. The "Shenwei Taihu Light" equipped with SW26010 chip and domestic operating system Shenwei Ruisi once topped the "Global Supercomputer Top 500" list at the Frankfurt World Supercomputer Conference (ISC), becoming the world's leading supercomputer with a computing speed of more than one billion times.
Chart 27: Loongson Ecological System
Source: Loongson Ecological White Paper 2021, CICC Research Department
Chart 28: Issue 50th "Top 500 Global Supercomputing" List (2017)
Source: Official website of the International 500 Organization, CICC Research Department
►Feet: Form a "PK" system with the Kirin operating system to create an ecosystem with "PK" as the core. Feiteng, developed based on the ARM instruction set, is one of the most complete CPU manufacturers in China. Its products cover high-performance servers, desktops, and embedded CPUs, and can provide core computing power support for all devices from the cloud to the end. Taking advantage of Great Wall's advantages in the manufacturing field, we will create a "CPU + complete machine" product system, accurately grasp users' real domestic needs, and improve the design quality of our own chips. As of 2020, Feiteng currently has about 1,600 partners in the cloud, terminal and embedded, and has completed adaptation optimization and certification with 2,557 software from 851 manufacturers, covering industries such as telecommunications, finance, energy, transportation, medical care, digital cities, and industrial manufacturing.
►Kunpeng has been authorized by ARMv8 to create the Kunpeng computing industry with full-stack IT infrastructure, industry applications and services. Huawei is one of the leading companies in the international ARM server manufacturers. The Kunpeng 920 designed for data centers has low power consumption and high performance characteristics. The integer computing capability is rated by more than 930 in the industry standard SPECint Benchmark. During the ecological system construction stage, actively adapt to other operating systems and build the Kunpeng ecosystem from the bottom layer. Currently, there are more than 1,000 models of complete machines, applications and peripherals based on UOS and Huawei Kunpeng platforms.
Chart 29: PK ecosystem diagram
Source: China Electronic Information Industry Group, CICC Research Department
Chart 30: Kunpeng computing industry development stage
Source: "Kunpeng computing industry development white paper", Green computing industry alliance, 2020, CICC Research Department
►Haiguang obtained the IP authorization of the x86 instruction set and Zen 1 architecture by establishing a joint venture with AMD, and has the advantages of the rich application ecosystem of x86 as the mainstream market. According to the prospectus of Haiguang Information, in 2016, Haiguang and AMD established Haiguang Microelectronics Technology Research and Development (AMD holds 51% of the shares) and Haiguang Integrated Circuit responsible for product sales (Haiguang holds 70% of the shares). Haiguang Integrated Circuit's authorization to purchase Haiguang Microelectronics and develop CPUs based on this. At present, Haiguang chip developed based on x86 has excellent performance and rich ecosystem, and can provide products for enterprise computing, cloud data centers, big data analysis, AI and other fields to meet the application needs of domestic governments, Internet, telecommunications, finance, transportation, energy, small and medium-sized enterprises and other industries.
►Zhuangxin obtained x86 IP authorization through Taiwan VIA, and its business mainly covers Shanghai. megacore is based on the x86 technology introduced by VIA, and takes into account technological innovation and ecological compatibility. It currently masters three core technologies: central processor, graphics processor, and chipset, forming two product series: server CPU "Kaisheng" and PC/embedded CPU "Kaisheng". The company's products are compatible with the x86 instruction set, which can quickly enter the government market, consumer market, as well as core fields and key industries such as finance, transportation, education, energy, and network communication, and achieve rapid and smooth migration of applications.
Chart 31: Haiguang Information obtains x86 IP authorization path
Source: Haiguang Information prospectus, CICC Research Department
Chart 32: Zhaoxin Product Framework
Source: Company official website, CICC Research Department
Lanqi Technology's Jinji® CPU continues to iterate and upgrade, and new products are expected to increase in volume. Jinji® CPU is an x86 architecture processor launched by Lanqi Technology. It integrates Tsinghua University's DSC technology based on Intel's x86 processor. It can be combined with Lanqi Technology's hybrid secure memory module (HSDIMM®) to form the Jinji® server platform, providing chip-level hardware security protection for cloud computing servers. In April 2021, the company launched the third generation of Jinji® CPU, which adopts advanced 10nm process technology, supports 64 channels of PCIe 4.0, supports up to 8 channels of DDR4-3200 memory, has a maximum number of cores of 28 cores, and a maximum base frequency of 3.1GHz, achieving a significant performance improvement. According to the company's 2021 annual report, server models equipped with Jinji® CPUs have been widely used in downstream industries such as finance, energy, government affairs, transportation, data centers and smart cities. The Jinji® server platform product line achieved operating income of 845 million yuan in 2021, an increase of 27.5 times over the previous year.
risk warning
downstream demand is lower than expected. The downstream application fields of the CPU industry include PCs, smartphones, servers, automotive electronics, etc. If the future market demand for PCs, smartphones and other markets is lower than expected, it will have an adverse impact on the industry's prosperity and the performance of CPU manufacturers.
Domestic manufacturers' design/process progress was lower than expected. If the product design and process breakthroughs of domestic CPU manufacturers are slower and the product iteration and update time is longer, it may lead to the domestic production rate of the CPU industry being lower than expected and the commercial promotion of domestic CPUs will be hindered.
Article source
This article is excerpted from: "Semiconductor Computing Power Series III: High technical ecological barriers, domestic CPU manufacturers seek opportunities in segmented tracks"
Peng Hu SAC Practice Certificate No.: S0080521020001 SFC CE Ref: BRE806
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