U.S. Adds AMD's China Joint Venture to Entity List, Cuts Access to U.S. Technology

The United States Department of Commerce has added AMD's THATIC Joint Venture to the entity list, saying Sugon, which has an ownership stake in the venture through its subsidiaries, is "acting contrary to the national security or foreign policy interests of the United States."

AMD originally established the joint venture (JV) in China, called the Tianjin Haiguang Advanced Technology Investment Co. Ltd. (THATIC) in 2016 and agreed to license its x86 and SoC IP for chip development in a deal worth $293 million (plus royalties). The joint venture consists of a web of both public and private Chinese companies, including the Chinese Academy of Sciences that is heavily influenced by the Chinese government.

AMD CEO Lisa Su confirmed to Tom's Hardware at Computex 2019 that the company isn't licensing further chip designs to its China-backed joint venture. That means that AMD's chip-producing joint venture in China will be confined to the Zen architecture that debuted in first-gen Ryzen and EPYC Naples processors, but will not move forward with designs based on AMD's new Zen 2 microarchitecture that powers the third-gen Ryzen and EPYC Rome processors.

The Department has instituted the ban against THATIC (Tianjin Haiguang Advanced Technology Investment Co. Ltd.) because Sugon, a Chinese supercomputer vendor that is responsible for developing the country's next-gen exascale supercomputers, has "publicly acknowledged a variety of military end uses and end users of its high-performance computers."

Haiguang Microelectronics Co. Ltd. (HMC)Chengdu Haiguang Integrated Circuit Design Co., Ltd (Hygon)
AMD Ownership %
Tianjin Haiguang Holdings Ownership %

The blanket ban applies to all of Sugon's subsidiaries, which includes Chengdu Haiguang Integrated Circuit and Chengdu Haiguang Microelectronics Technology, both of which are partners in AMD's THATIC joint venture in China.

The Chinese government is known to provide preferential treatment to indigenous companies, so the partnership provided AMD with a springboard into the booming Chinese market. The deal was also thought to give China access to critical x86 technology, long an ambition of the Chinese government to help close the country's massive technology gap with the U.S., but the finer details of the technology transfer are unknown. 

The agreement allowed Hygon, a Chinese server vendor, to design specialized processors based upon AMD's Zen microarchitecture, which is the underlying design of AMD's Ryzen and EPYC processors. Many of the architectural customizations consisted of specialized cryptographic elements that meet the requirements of the Chinese government, with the first products consisting of Hygon's 'Dhyana' x86 processors that appeared to be near-replicas of AMD's EPYC data center processors. We are told there are other optimizations to the architecture that are designed specifically for the Chinese market, but we haven't been given more details.

We have reached out to AMD for comment and will update as necessary.

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