If “Kirin 9000 is facing out of print” is a sigh that Yu Chengdong can publicly express on the stage, then the anxiety and confusion in the channels are probably the most indescribable pain point for Huawei.
“Lack of core” has become a well-known “secret” in the security circle. No one knows where to get the goods tomorrow, HiSilicon? Or the one who replaced HiSilicon?
“Because the production capacity of China’s high-end chips has not yet come up, it is a pity that this year’s world’s leading high-end Huawei Kirin chip may become out of print.”
At the event site of a conference in August, Yu Chengdong, who was always quick to talk and was good at building momentum for Huawei, suddenly put it away, helpless beyond words. He is the Managing Director of Huawei and the CEO of Huawei Consumer Business.
As soon as the voice fell, the nervousness of Huawei chips in the secondary market was instantly ignited. A series of chain reactions such as shortages, stockpiling, roasting seeds, and out-of-stocks were rapidly fermenting in the supply chain.
The sudden escalation of the ban in the United States has hit Huawei and its supply chain. The news that the Kirin 9000 will be out of print casts a gloom on the overall supply prospects of Huawei chips.
The truth that there are no three feet under the iceberg does not need to be repeated in the interlocking upstream and downstream chains of the industry.
In September, the chip topic disappeared from Huawei’s two consecutive blockbuster events, which further exacerbated this anxiety and depression.
If “Kirin 9000 is out of print” is a sigh that Yu Chengdong can publicly express on the stage, then the anxiety and confusion in the channels are the most indescribable pain points for Huawei.
“Lack of core” has almost become a well-known “secret” in the security circle. No one knows where to get the goods tomorrow, HiSilicon? Or the one who replaced HiSilicon?
The problem is unsolved
“…Continued supply is risky…HiSilicon’s chips are uncertain…The price of the motherboard is hard to say…”
Old Li pushed back and forth again and again, went around a few turns, lost to questioning, and finally rejected the order, “The price fluctuates every day, wait for a period of time to stabilize and then report it.”
As one of the few module manufacturers who still have stock on hand, Lao Li’s WeChat and phone calls are almost never interrupted these days, “all come to inquire about camera solutions.”
In the past two months, HiSilicon’s security chip gap has gradually expanded, gradually spreading from southern China to other cities, from high-end models to mid-to-low-end models, and prices have soared, leading to the success of camera Modules using related chips. A sought-after item.
Similar to Huawei’s most dazzling mobile phone business, the logic of “the product is completely trapped due to lack of “core” is fulfilled in almost every business line.
Large and small channel dealers, agents, module manufacturers and camera companies are waiting to feed, WeChat groups have become a pit of complaints, and the security line is the hardest hit area.
Unlike Huawei’s control of the entire chain of deployment in the mobile phone market, Huawei’s more core role in the security field is that of a chip supplier and an upstream link, which is also its “most deadly” part.
Under Huawei’s huge business system, “HiSilicon” constitutes the core of Huawei’s chips, which is mainly woven by two forces: “HiSilicon” is high-profile and fierce, and is a living sign of Huawei’s products; “Little HiSilicon” is shallow and simple , but not to be underestimated.
“HiSilicon’s chips are for Huawei’s own use; Xiaohaisi’s chips are for industrial use and for manufacturers.” Shao Yang, chief strategy officer of Huawei’s consumer business, once introduced the difference between the two models.
In other words, the mobile phone Kirin chips, server Kunpeng chips, and Da Vinci-based Ascend AI chips produced by “Haisi” will not be sold separately, so the resulting shortages and out-of-stock problems can also be handled by Huawei. Leading products and channels digest themselves.
The IPC video codec chips and NVR/DVR video recording chips provided by “Xiao Haisi” are almost insoluble once they are out of stock, and they are all key chips in the security video network, affecting the entire product and downstream applications.
Although he had the goods in his hand, Lao Li was still stunned in his heart and did not dare to take action. First, his upstream HiSilicon chip supplier is out of stock, and second, he is not sure how much the current camera solution will be priced at. “What if it becomes out of print in the future?”
Lao Li’s camera solution is mainly equipped with the HiSilicon 3516 chip, which belongs to the Hi35xx series of HiSilicon AI chips. .
According to the investigation by the Heart of the Machine, HiSilicon’s video codec chips are mainly in the mid-to-high-end range, and the corresponding models range from 3516 to 3519 and 3559, using 12~28nm process technology.
Mid-range chips are currently the largest market, and once they are out of stock, the impact will be wide-ranging. And the most “ferocious” one is the high-end chip Hi3559A, which has risen from 500 yuan to 2,000 yuan. Recently, there has even been a supply of 3,000 yuan.
“You said who can afford to offer a camera at this price!” said Old Li.
Hi3559A is one of the high-end chip models launched by HiSilicon for network camera terminals in 2018. The letter “A” refers to the NNIE (Neural Network Inference Egine) with AI hardware engine function, which can perform fixed-point parallel computing and realize deep learning algorithms. Model inference.
It is the core product of Huawei’s benchmarking NVIDIA edge series Jetson TX2. Because of its powerful computing power, but the price is more affordable than the thousands of TX2, it has always been a star material in the domestic IPC field.
In fact, HiSilicon’s low-end chips are also facing some shortages, but there are always many alternatives, such as Innocent, SMIC, Rockchip, etc.; and in the mid-to-high-end segment, it can ensure stable performance and mergers. There are almost only HiSilicon brands with high cost performance.
“At least at the moment, there is no mature solution that can be used immediately on the market,” said Zhang Yi, an investor who has long been concerned about the field of AI chip companies. For this reason, he has gone deep into TSMC’s customer system to conduct research.
A complete set of security video surveillance system mainly involves four types of chips, CMOS image sensor, SoC chip of IP camera, NVR/DVR chip, ISP image processing chip.
HiSilicon’s unshakable position in the security field is also reflected in its market share.
At present, HiSilicon’s product line in this field has achieved comprehensive coverage from front-end IPC SoC to back-end DVR/NVR. Well-known security companies such as Hikvision, Dahua Technology, and Uniview Technology are all HiSilicon’s head customers. .
On the road of intelligent video surveillance, the rising star HiSilicon adopts the ARM+IVE architecture to accelerate image and video analysis and processing, and dismantle the former American security chip leader Texas Instruments (TI), and it took only one year to gain domestic market share. From 37.3% to 64%.
At present, Huawei HiSilicon has a dominant position in the terminal IPC SoC chip market, occupying more than 70% of the global market share; and its share in the video recording market has exceeded 90%, and it has an absolute right to speak.
This also means that in the security channel, agents and distributors are highly dependent on the HiSilicon chip system to survive, and the HiSilicon chip has also become the trigger that causes the entire industry to shake if it moves the whole body. Sow.
From roasted seeds and nuts to out of stock
Since TSMC’s statement at the shareholders’ meeting, the news of HiSilicon’s out of stock has been endless, but at most it is solved by raising prices or adjusting goods. More often, it seems that channel dealers do it intentionally.
On May 15, 2020, the U.S. Department of Commerce issued an announcement to upgrade its regulatory policy on Huawei: All companies that use technology from American companies must obtain the consent of the United States before they can cooperate with Huawei. TSMC can only accept production orders for Huawei chips before May 15, and production must stop on September 15.
“According to normal shipments, half a year’s worth of goods in South China is basically enough. But everyone is in danger and wants to stock up on more, and the demand is boosted,” said Lao Li, “I only needed 10K of goods, but I found them. If 10 companies come to inquire, it will become a 100K gap, and it is no wonder that no one is roasting seeds and nuts!”
In the early stage of growing demand, in addition to the high-end Hi3559A, the supply of several other mid-to-low-end models, such as Hi3519A, Hi3516D, etc., has been stable.
The large-scale shortage panic began to accumulate after August. “The price and supply before August were relatively normal. Starting in mid-August, the price suddenly skyrocketed, and it has at least tripled at present,” said a channel dealer.
Huawei Yu Chengdong officially announced that the production capacity was insufficient, and the situation took a turn for the worse. There is even news that HiSilicon has informed major customers that it will be out of stock in the near future.
On August 17, three months after the second round of U.S. sanctions, a supplementary clause was added to the Huawei ban, which completely blocked Huawei’s access to chips. 0.1% of the technology cannot be sold. This has caused a catastrophic crisis for us.” Yu Chengdong said.
MediaTek’s plan to add purchases came to an end. Japanese and Korean chip companies Samsung, Hynix, and Sony have also been rumored to cut off supply to Huawei on September 15. At this time, the subtle variables of each supplier put additional pressure on Huawei, who is walking on the tightrope.
Recently, SMIC, the last floating board of Huawei’s mid-to-high-end product line, has also fallen into suspicion of US sanctions, causing both its A+H shares to plummet. Previously, the industry had pinned their hopes on this – TSMC can no longer produce chips for Huawei, and SMIC can be used as the “last spare tire”.
However, on SMIC’s chip production line, 48% of the semiconductor equipment comes from the United States. Once the United States puts it on the trade blacklist, it will not only be unable to support Huawei, but it will also bring a fatal blow to itself. Therefore, “whether TSMC or SMIC, no one can escape.”
According to the investigation of the heart of the machine, the mainstream security chips provided by HiSilicon are currently concentrated in the 14nm and above process, while the non-US manufacturers that can provide the corresponding process capacity are only SMIC and TSMC, and SMIC’s yield and supply The stability is not as good as that of TSMC, so the loss of two production lines has been tantamount to cutting off the core source for Huawei.
In the field of 22nm and below processes, there are also Xiamen-based UMC (Taiwan-based) manufacturers that can provide production capacity, but it takes time to switch production lines, and at the same time, it is unavoidable that the United States is pressing for an upgrade. According to supplier reports, HiSilicon’s full range of video surveillance chips are currently in short supply.
Before the ban by the US Department of Commerce, the supply of HiSilicon security chips was relatively stable. After the ban was promulgated, the market began to see tight supply, and some distributors/agents began to stock up, and even roasted seeds and nuts.
Now, in addition to the head customers under Huawei’s direct supply system, there are obvious gaps in small and medium-sized enterprises. At the same time, the cameras in the downstream application market also have production capacity problems.
Of course, the main reason why leading customers can guarantee continuous supply this year is the corresponding plan made after being included in the export control entity list by the United States last year.
According to Hikvision’s 2019 financial report, in order to ensure the short-term stability of the supply chain, Hikvision had to increase the stocking of imported materials. Its inventory in 2019 reached 11.268 billion yuan, almost double that in 2018. The number of days also rose from 68 days to about 98 days.
In the medium term, considering the overall business situation of Huawei, the priority of security chips must be placed after mobile phones and 5G, and the volume ratio and importance are also lower, so the shortage of security chips may become the norm. The continuous decline in the production capacity of HiSilicon chips will inevitably lead to an overall increase in the price of SoC chips.
At present, Shenzhen, Hangzhou and Beijing in southern China are the most affected areas, which are also the most core security markets in China. Among them, Hangzhou is one of the cities with the highest spatial density of cameras in China, with 130 cameras per square kilometer, second only to Shenzhen and Shanghai in China.
The tide of supply cuts is an unprecedented crisis for Huawei, but it also gives HiSilicon’s competitors an opportunity to fight back. The vacated cake, the new window, the supply chain is being restructured, some old SoC companies and AI rookies may emerge, and a new round of snares is coming.
Compared with the design difficulty and processing volume of mobile phones and cloud chips, the threshold of the security chip market is not as high as imagined. Moreover, the slogan of localization has been shouted for a few years, and the players holding AI number plates have already lined up on Waimen Street. superior.
For example, Bitmain has launched several products for terminal and edge side by virtue of its accumulated order advantages and design experience in the mining machine chip market. The amount has been in the thousands.
In addition, Cambrian, Horizon, Yuntian Lifei, Yitu, etc., as representative companies in the field of AI chips, have already laid out early, and based on their respective advantages and foundations in the pan-security market, they have launched chip products based on terminal and edge side and their products. solution.
However, in the opinion of industry insiders, it is most likely to fill the vacancy in Shanghai in the short term, and it is the old domestic manufacturers that realize the replacement of solutions, including Fullhan Micro, Zhongxing Micro, Insignia, Allwinner, Rockchip, Spreadtrum, etc.
“Of course it’s not difficult to ship, but it is difficult to make a chip with a market share of more than 50%,” said a camera solution vendor who has been in the business for many years. What young AI chip companies are good at. You know, the mid-to-low end is the mainstream of the market.”
Looking back at Huawei’s history in the field of codec chips, it can be seen that domestic brands are the key to breaking through the loose and cumbersome AIoT market.
The high cost performance of the product itself means that it has good cost management capabilities. In addition, the absolutely leading technological advantages and the localization strategy for overseas markets are also the continuous guarantee for Huawei to emerge as a new company. Note that “technology” here is not a single dimension of AI.
Taking the new generation of international video coding standard H.266 as an example, HiSilicon has accumulated enough patents in this field to build a solid technical barrier; The processor Hi3516A, paving the way for the next generation technology market.
The past five years have been the key five years for the security industry to upgrade from video network monitoring to intelligent monitoring. HiSilicon has achieved a first-run and continued leadership with technological breakthroughs, while other domestic chip manufacturers have also been left farther and farther away. Think cost-effective, full-coverage product line and mass production capacity suppression.
However, the fragmentation of the video surveillance market also determines its infinite possibilities, rising from the low-end market, and players who are more competitive than HiSilicon in terms of price are eager to try, and are trying to make a leap from the commercial scene in the pan-security field and the civilian market.
According to the 2019 annual report, Beijing Junzheng’s smart video chips achieved operating income of 179 million yuan, a year-on-year increase of 52.61%. Its smart video chips are mainly for commercial and household consumer smart cameras and pan-video markets, including security monitoring, smart doorbells, Smart door locks, face recognition equipment and other fields.
In addition, domestic security chip companies such as Guoke Microelectronics, Zhongxing Microelectronics, and Ankai Microelectronics also have corresponding products. As the boundaries of the security market continue to widen and scenes become more and more abundant, the scale effect of stagnant water forming a river may appear.
In addition, as a leading manufacturer in the security field, looking for spare tires other than HiSilicon, it has already begun to incubate and cultivate seed players.
Fullhan Micro is a chip company with deep ties to Hikvision. It started from analog camera ISP chips in 2004. In 2015, Hikvision licensed its patent of “video intelligent analysis technology secret and face image retrieval system and method” to Fullhan Micro.
As one of the core technologies of intelligent video surveillance chips, the blessing of technology and channels has enabled Fullhan Micro to successfully obtain a few “admission tickets” for security smart chips, which were launched in 2017.
According to Fullhan Micro’s 2019 annual report, the amount of products it sold to Hikvision reached 330 million yuan, accounting for 63.2% of its total annual sales, making it its largest customer.
In the long run, domestic video surveillance manufacturing companies still have many potential alternatives, which will alleviate the upstream chip supply problem, but all of this will take time as a foundation.
“The replacement time will take at least 8-12 months, because the research and development and design based on different chip bottom layers need to be rebuilt, and the new solution requires a relatively long verification cycle.” Zhang Yi said.
Of course, for a large number of small and medium-sized enterprises that are already burning their eyebrows, a more practical solution is to find an on-site alternative. Even if there is none at the moment, it does not mean that under the crisis of life and death, it will not be forced to give birth to a mature plan.
“If you don’t change the chip, the goods will not come out, and the funds will not flow, which means you have to wait for death.” In Lao Hu’s view, finding a chip supplier other than the HiSilicon brand is no longer an option, but a way out. Although making this decision will inevitably face losses, it is better than sitting still.
Dividend, crisis, opportunity
In Hangzhou, where China’s security industry is the most dense and advanced, small and medium-sized solution providers that mainly purchased HiSilicon high-end chip manufacturers have begun to turn to Ambarella, Texas Instruments, MSTAR (Morningstar) and other brands.
It is undeniable that the mid-to-high-end alternatives are still dominated by overseas brands. Under the unstoppable direction of “localization”, it is not a long-term solution.
When I communicated privately with the heads of some domestic chip companies, I could feel everyone’s insights and expectations on market demand. But at the same time, no one is reluctant to take the lead, do not want to make a public statement, worry about being targeted by the United States, and are more willing to silently digest the dividends behind the “HiSilicon Gap”.
“Can’t we all make a fortune together?”
This may not be the weakness of a company, or even the helplessness of the security industry, but the weakness of China’s entire chip industry.
“You are not ‘targeted’, it does not mean that you are invulnerable”, perhaps just your ability, size and presence are not enough to attract “attention”. In the next ten, twenty years, Huawei’s “problem” will also be the “problem” of other Chinese companies.
Following the U.S. government’s policy crackdown on a group of Chinese pan-security companies last year, the real hammer may have started with the supply cut of HiSilicon chips. According to the latest news, this year’s Expo 2019 was officially announced to be cancelled. Before that, the specific schedule, booth and schedule for the conference have been displayed and promoted.
In front of Huawei is an unprecedented capacity crisis, and for suppliers other than Huawei, this is also a huge market gap and industrial dividend, which will inevitably stimulate the disintegration and reconstruction of the supply chain level in the pan-security industry. .
Some people in the industry have analyzed that when obtaining terminal computing power becomes a phased challenge, will it be possible to facilitate the large-scale migration of computing requirements to the cloud and edge?
Once the trend is formed, the security industry may usher in more profound changes.
This is not groundless, at least for now, Huawei has taken the lead in experimenting in the mobile phone market of mobile terminals. According to industry sources, Huawei recently launched a mobile phone called “Huawei Cloud Kunpeng Cloud”, which has already landed among enterprise customers.
This solution emphasizes the computing based on Huawei Cloud Kunpeng server and adopts the virtual native Android operating system. power gap”. This is similar to the privacy scheme introduced by BlackBerry for commercial customers in the early years.
Considering the current Hongmeng system ecosystem that Huawei is vigorously developing and overweight, it would be a good idea to form a closed loop with it. With the continuous improvement of 5G infrastructure and the abundant cloud computing resources in the hands of giants, the large-scale migration of cloud computing is in line with the interests of giants.
In addition, another problem-solving direction for Huawei’s current supply-cutting crisis is “breaking the whole into pieces”. In fact, related discussions have been endless – if HiSilicon can be separated from Huawei, when HiSilicon is no longer Huawei’s HiSilicon, but everyone’s HiSilicon, or HaiSilicon is the HiSilicon for the whole industry, and its own supply is relegated to a secondary position, and the problem may become much simpler.
Of course, there are also discussions about Huawei’s self-produced lithography machines and self-built production lines. Everything has not yet been verified.
Today is just the deadline for the US ban on Huawei to take effect. All seemingly unreachable or unimaginable changes are quietly taking place in the industrial chain. This is destined to be a year in which historical moments are condensed.
From the special window of security, we can see that the secondary crisis caused by Huawei’s “problem” has spread far and wide, and it is not just a “problem” of a company.
Once a company begins to gradually participate in determining the technological future of the industry, when it defeats its opponents and occupies the market within the industry, its fate will inevitably determine the structure and direction of the industry. Correspondingly, its turbulence will also lead to a longer-term industry level. influence and thinking.
The topic of how to deal with “the relationship between the enterprise itself and industrial globalization” will appear on the development agenda of more Chinese enterprises.
On September 17, the new ECCV 2020 issue of Heart of Machines was shared online. We invited Gao Chen, a Ph.D. student at Virginia Tech, to share the paper “Flow-edge Guided Video Completion” for us.
In this paper, researchers from Virginia Tech and Facebook propose a new method for stream-based video filling, which has excellent performance in video watermarking, object removal, and picture expansion.