[Core Vision] Will miracles favor Russian semiconductors?

Jiweiwang reported that although Russia’s semiconductor industry is struggling under Western sanctions, the confidence in technological breakthroughs seems to be stronger. The Institute of Applied Physics, a subsidiary of the Russian Academy of Sciences, has made a bold statement to develop a 7nm process lithography machine in 2028.

To the outside world, the idea of ​​spanning multiple generations in six years is naive. But for Russia, which is under heavy pressure, it seems that there is no other choice. At a time when semiconductor technology has become the backbone of the country’s hard power, Russia does not want to be permanently left behind in the competition.

In the international semiconductor market, Russia cannot be counted as a big buyer. According to some data, Russia accounts for less than 2% of global PC shipments, only 2% of mobile phone and smart phone shipments, 1% of server sales, and 2% of car shipments. Due to a lack of cutting-edge manufacturing, Russia consumes only a tiny amount of chips each year. According to the SIA, Russia will consume about 0.1% of the roughly $550 billion global chip market in 2021, or about $500 million per year.

Less imports does not mean less dependence. On the contrary, Russia’s domestic chip self-sufficiency rate is less than 10%. The chip shortage and Western sanctions in the past two years have had a serious impact on Russia.

A large portion of the chips purchased by Russia are analog chips used in industrial equipment as well as switches and motor controls. These loose chips, which are relatively inexpensive but use mature processes, are a staple of the shortage of cores that have affected the production of automobiles and hundreds of industrial products.

Figure total declared value of Russian bulk chip imports over five years, excluding memory and processors (Data source: protocol)

Top 10 suppliers of bulk chips in Russia in 5 years (Data source: protocol)

The direct reason for the low self-sufficiency rate of chips is that Russia’s domestic semiconductor industry is very weak. Mikron and Angstrem are its two main foundries, and the most advanced process is only 65nm. In terms of design companies, MCST and Baikal Electronics are the two most well-known manufacturers, relying mainly on foundries in Taiwan and Europe to produce the chips they design.

In order to achieve the balanced development of various regions, the Soviet Union allocated the industrial layout to each member country according to the upstream and downstream relationship. Among them, Ukraine is an electronic information industry base, Belarus is a semiconductor industry and a microelectronics industry base, and even some small countries in Eastern Europe have established electronic factories. When the Soviet Union collapsed, Russia inherited only a portion of the Soviet electronic heritage.

The only two remaining fabs in Russia are the products of the Soviet Union. Among them, Mikron is the largest company, formerly known as the Institute of Molecular Electronics (NIIME) established in March 1964. In the 1970s, Mikron was the first company in the Soviet Union to develop and manufacture digital and analog integrated circuits for mass use. Currently, Mikron is responsible for exporting more than 50% of chips to Russia and producing chips for Russia’s national payment card system (Mir). The company’s highest process level is 65nm, derived from multiple technology transfers from ST.

Angstrem has a longer history. It was also formerly an institute NII-336 in the former Soviet Union, and was later reorganized into the Institute of Fine Technology. Before the collapse of the Soviet Union, Mikron, Angstrem, and Integral (now a Belarusian manufacturer of integrated circuits and liquid crystal displays) together were the main manufacturers of integrated circuits in the Soviet Union.

In 2008, Angstrem and the German company Exyte jointly established a semiconductor factory in Zelenograd, Russia, which can produce chips with a 130nm process. Later, Angstrem went bankrupt and was taken over by its main creditor VEB.RF Bank in 2018 due to poor craftsmanship and economic woes caused by sanctions in 2017.

Compared with wafer manufacturing, there are some bright spots in Russian chip design. Before the sanctions began, Baikal Electronics had completed the design of the 48-core server processor S1000. According to the data released on the official website, the S1000 has the same performance as the 20-core Intel Xeon Gold 6148 and AMD 16-core Epyc 7351, and also reaches 85% of the performance of the 48-core HiSilicon Kunpeng 920.

Baikal Electronics has previously used the MIPS architecture for design, and in recent years has fully turned to the Arm architecture, including the Baikal-M, Baikal-S, and Baikal-L series, all of which are based on the Arm architecture.

In 2021, Baikal-M series processors launched by Baikal Electronics will be mass-produced and shipped. This chip uses TSMC’s 28 nm process, 8 Cortex-A57 cores, the highest operating frequency is 1.5GHz, and also integrates Mali-T628 MP8 GPU core, supports dual-channel DDR4-2400, or DDR3-1600, and consumes no more than 35W.

Another time-honored chip design company, MCST, has been working on the development of Elbrus processors, which are also the most widely used domestic processors in Russia. In 2020, MCST released the latest Elbrus-16C, built with the sixth-generation VLIW instruction set architecture, composed of 12 billion transistors, designed for 16 cores, 2GHz frequency, and the manufacturing process is 16nm.

However, both Baikal Electronics and MCST hand over the processors to TSMC. As sanctions closed the door, the two companies had to turn to Russian domestic production. The domestic fab in Russia is obviously not comparable to TSMC, so this is also the main reason for Russia to revive the semiconductor manufacturing industry.

As a world power, how can Russia not know the importance of the electronics industry. Beginning in 2006, the Russian government began to take various measures to revitalize the electronics industry. Russia has successively issued a number of federal target plans to promote the development of electronic components. These include “2007-2011 National Technology Basic Federal Target Plan”, “2007-2012 Russian Plan Consortium Preferred Direction Research and Development Plan”, “2008-2015 Electronic Components Basic and Radio Electronics Development Federal Target Plan” And “Russian Electronics Industry Development Strategy until 2025” and so on.

On January 22, 2020, the Russian government issued the “Russian Federation’s Electronics Industry Development Strategy until 2030”. The strategy aims to create a competitive electronics industry to meet Russia’s demand for modern electronics by enhancing technological and human potential, optimizing production capacity, updating equipment, developing new technologies and directions, mastering breakthrough electronics industry technologies, improving legal framework, etc. demand for electronic products. The plan proposes that by 2030, the revenue of civilian electronic products will account for no less than 87.9%, the domestic electronic products will account for 59.1% of the domestic electronic market revenue, and the export value of electronic products will reach 12.02 billion US dollars.

The first direction of the strategy is to promote technology development, master the development and production technology of digital electronics (processors, controllers, memories), system software, power electronics, radio electronics, including microwave electronics, analog electronics, optoelectronics, photonics and Microwave photonic technology.

After being sanctioned by the West, Russia has made plans specifically for the troubled semiconductor industry, striving to develop a 28nm process by the end of 2030.

For this plan, it is estimated that Russia will need to invest about 3.19 trillion rubles (about 38.43 billion U.S. dollars) by 2030, and through this capital, it will be used to develop semiconductor production technology, chip design, data center infrastructure development, and related semiconductors talent cultivation, etc. Among them, in terms of semiconductor production technology, Russia plans to spend 420 billion rubles (about 5.2 billion US dollars) for new manufacturing technology and its improvement.

In order to ease the current predicament, the Russian state-owned company VEB.RF also approved a 7 billion ruble financing for Mikron, a 10-year loan secured by Mikron’s production equipment, in order to expand the scale of production. Although Mikron’s technology is backward, there are few private semiconductor companies in Russia. Compared with other military-industrial complex companies, Mikron has more opportunities to use mature processes to produce basic semiconductor chips to meet Russia’s domestic demand.

However, industry sources pointed out that 7 billion rubles is a drop in the bucket for wafer manufacturing. While scaling up production, foundries also need to develop new technologies or they will stagnate. The problem of talent shortage is also important. The salary of such enterprises in Russia is not high, and it is difficult to retain talents. Therefore, raising the salary is also one of the top priorities.

For the goal of reaching the 28nm process in 2030, many people in the industry also regard it as an unlikely task. Arseniy Brykin, a foreign technical expert, pointed out that building a factory capable of producing 28nm chips is a very difficult task in itself.

If 28nm devices are available, mass production may be possible within 8 years. But given that Russia also has no access to Western-produced semiconductor equipment, it has to go the whole way, including the production of new materials, huge investments in mechanical engineering, optics and lasers.

Arseniy Brykin specifically stressed that the transition from 90nm to 28nm is “very ambitious”.

Another senior industry insider also told Jiwei.com that it is very difficult for Russia to develop the semiconductor front-end process because it is difficult to find the source of key technologies, and if it wants to support the defense industry, it is not something that can be done with money, and Russia’s financial capacity is also a concern.

The current situation of the Russian semiconductor industry is caused by a combination of complex factors, and if it wants to break through the ice, it may take longer time and investment. At the same time, a precious window of opportunity is also indispensable.