In the annals of the global technological power struggle, the narrative unfolds with the emergence of SEIDA, a startup led by Silicon Valley veteran Liguo “Recoo” Zhang, steering the ship towards uncharted territories in his native China. The plot thickens as SEIDA pledges to offer microchip design software, particularly the coveted OPC (Optical Proximity Correction), a tool intricately woven into the fabric of advanced chip design.
You can also read: Biden’s Support of Israel’s Gaza Genocide Trembles His Career
The battleground is set in the contentious technological face-off between the United States and China, transcending economic realms into the volatile arena of military supremacy. Washington, with a discernible intent to curb China’s access to sensitive microchip design tools, grapples with the formidable challenge posed by SEIDA’s strategic maneuvering.
Decoding the Narrative of China’s Rising Chip Contender
Zhang, a seasoned player with a Silicon Valley pedigree, charts a course that reflects a certain audacity in challenging the dominance of large Western companies. His tenure at Siemens EDA, a U.S. unit of Siemens AG, a juggernaut dominating China’s market for the very technology SEIDA seeks to sell, adds complexity to the narrative. The recruitment of three other Chinese-born colleagues from Siemens EDA into the SEIDA fold amplifies the stakes, creating ripples in an already turbulent technological landscape.
In a carefully crafted business plan presented to investors in 2022, SEIDA positions OPC as “indispensable technology,” with a promise to unveil the tool by early 2024. The audacious declaration of creating a Chinese version to “break through the foreign monopoly” echoes the broader ambition of propelling China into self-reliance in chip technology, with the ultimate goal of becoming the “OPC leader in the world.”
The allure of SEIDA’s vision doesn’t go unnoticed, drawing the attention of powerful Chinese investors. The revelation of an investment arm of Semiconductor Manufacturing International Corp (SMIC) as a backer underlines the strategic backing behind SEIDA’s ambitions. However, SMIC’s ties to China’s military raise eyebrows and place it under the watchful eye of U.S. restrictions, adding an extra layer of intrigue to the unfolding drama.
A visit to SEIDA’s headquarters in Hangzhou, China, paints a picture of secrecy and evolving objectives. The receptionist’s message, indicating Zhang’s unavailability for an interview, becomes a metaphor for the veiled nature of SEIDA’s operations. The subsequent email from Peilun “Allen” Chang, SEIDA’s chief operating officer, dismisses the prospectus as “obsolete,” hinting at a narrative shift and an evolution in the company’s objectives.
China’s Response to U.S. Export Controls and Sanctions
Email exchanges with reporters reveal that U.S. restrictions played a pivotal role in Zhang and his colleagues’ exodus from Siemens EDA to SEIDA. Chang articulates the limitations imposed by these restrictions at Siemens EDA, citing a “diminishing scope for career advancement and involvement in key projects.” This revelation adds a human dimension to the broader geopolitical dynamics at play, underscoring the personal and professional motivations that propel individuals into uncharted territories.
Chang, the vigilant chief operating officer of SEIDA, underscores the company’s commitment to an exhaustive vetting process, aiming to guarantee the absence of any infringement upon intellectual property. Yet, as the story unfolds, experts in the sector and those familiar with Beijing’s strategic maneuvers suggest a pattern—a pattern of Chinese companies building upon foreign know-how. The labyrinth of technology is so intricate that even if SEIDA’s executives did not extract property from Siemens EDA, the complexities involved speak to years of experiential mastery required to offer comparable products.
In response to U.S. concerns and export controls, China’s foreign ministry spokesperson issues a statement, denouncing the perceived abuse of export control measures and illegal unilateral sanctions. The spokesperson defends China’s technological prowess as a result of ingenuity and hard work, vehemently refuting allegations of theft or robbery.
Speed Bump or Roadblock?
Amidst this geopolitical chess game, U.S. officials express apprehension about China’s acquisition of Western technology, emphasizing the long-term threats to both the economy and national security. Aiming to curb China’s advancements, the U.S. adopts export controls as a linchpin of national security, a sentiment echoed in a Congressional hearing by Matthew Axelrod, assistant U.S. commerce secretary for export enforcement.
In response, the Chinese foreign ministry spokesperson dismisses these concerns as reflective of a “Cold War and hegemonic mentality,” setting the stage for a clash of ideologies and technological ideologies. Industry experts predict that while export rules may temporarily impede China’s progress, they are unlikely to thwart the nation’s relentless pursuit of chip technology. The metaphorical assertion that the U.S. is a mere speed bump in China’s path underscores the determination of the latter to strive for independence.
China’s strategic plans, underscored by a substantial financial commitment, highlight the centrality of advanced chip development in its vision for the future. Initiatives like the “Thousand Talents” program, though criticized by Washington, demonstrate China’s concerted efforts to attract expertise back home, regardless of the controversy surrounding alleged intellectual property acquisition.
The narrative takes a dramatic turn with the arrest of a California-based software engineer, Liming Li, accused of stealing trade secrets. The FBI alleges pilfered company files related to “Thousand Talents” contained materials concerning national security, nuclear nonproliferation, and anti-terrorism. The unfolding drama surrounding Li’s case adds a layer of intrigue, suggesting the covert nature of China’s quest for technological supremacy.
U.S. vs. China in the 21st Century
Since the 1950s, the United States’ pioneering strides in chip technology have been integral to the creation of the world’s largest economy, robust high-tech and financial sectors, and an unparalleled military force. However, the narrative is now shifting as China’s rapid economic growth and its unequivocal ambition to assert global power pose a formidable challenge to American dominance.
In the echoes of the Cold War, Washington wielded its influence by blocking exports of critical raw materials to Eastern Bloc countries, successfully impeding their weaponry development. Yet, the contemporary landscape, shaped by globalization, presents a starkly different scenario. The semiconductor industry, a colossal $600 billion juggernaut, exemplifies this interconnectedness—from raw materials to design to assembly, chips transcend national boundaries.
Despite the U.S. leading in chip design technologies, the actual printing and assembly predominantly occur in Asia, with South Korea supplying memory chips and Taiwan producing logic chips. The urgency to fortify domestic production prompted the approval of nearly $53 billion for the “CHIPS for America” program, strategically restricting technology-sharing with non-allied countries.
A 5G Smartphone, SMIC’s Chip, and U.S. National Security Concerns
China’s quest for advanced chips faces challenges, notably access to Electronic Design Automation (EDA) tools like the OPC software championed by SEIDA. The intricate process of designing and printing microchips with billions of transistors necessitates EDA’s prowess in layout verification and real-world performance simulation, demanding intense processing power.
NVIDIA Corp’s recent claim of pushing semiconductor limits through OPC advancements underscores the specialized nature of this technology, often hailed as scientific breakthroughs. However, the story takes a twist as China, despite U.S. export controls, forges ahead with technological strides.
In 2019, Huawei, blacklisted by the Commerce Department citing national security concerns, defied restrictions by introducing a 5G smartphone featuring a sophisticated seven-nanometer chip from Semiconductor Manufacturing International Corp (SMIC). The Commerce Department’s subsequent investigation probes the use of restricted U.S. technologies in the chip’s development.
Zhang’s Decade-Long Prelude to SEIDA’s Leadership
Unraveling the enigma of SEIDA involves navigating through a maze of corporate filings and interviews, supported by data from business analysis firms Datenna and Global Data Risk. The trajectory of SEIDA, etched in filings dating back to October 2021, reveals a complex ownership structure. The majority ownership lies in partnerships controlled by Zhang, the CEO, and other former Siemens EDA colleagues who embarked on this venture with him.
Zhang’s journey, steeped in a decade-long tenure at Mentor Graphics Corp, Siemens EDA’s predecessor, illustrates his deep roots in the realm of Electronic Design Automation (EDA). Mentor’s acquisition by Siemens in 2017 marked a pivotal moment, solidifying Siemens’ standing among the U.S. companies dominating the global EDA software market. Armed with a master’s degree in microelectronics from a Shanghai university, Zhang’s role as a Siemens EDA product director set the stage for his leadership at SEIDA.
At 44 years old, Zhang assumed the role of SEIDA’s chief executive in July 2022, ushering in an era of ambitious projections and strategic pursuits. Notably, three other Chinese-born colleagues, including Zhitang “Tim” Yu and Yun Fei “Jack” Deng, joined Zhang at SEIDA, all of them veterans from Siemens EDA. The academic prowess of Yu and Deng, with doctorates from U.S. universities, accentuates the wealth of experience embedded in SEIDA’s core. SEIDA’s pursuit of investors in 2022 aimed for the stars, envisioning a company valuation of up to 700 million yuan ($99 million) by the year’s end. Looking ahead to 2026, SEIDA aspired to go public, casting a wide net to secure backing. Notably, in June 2023, China Fortune-Tech Capital Co (CFTC), an investment vehicle affiliated with chipmaker SMIC, injected undisclosed funding into SEIDA.
