The Trump administration’s latest assault on China is aimed at forestalling advances in super-computing: a sector with profound military and technology implications – and one where the world’s No. 2 economy poses a credible threat to U.S. dominance.

 Washington’s campaign to contain the ascendancy of a potential global rival has expanded beyond telecom giant Huawei Technologies Co. to a quintet of Chinese enterprises that embody a nation’s effort to build ever-faster computers. Those ultra-powerful machines, which process calculations on an unimaginable scale, support critical fields from massive data-crunching to artificial intelligence.

On Friday, five Chinese entities joined Huawei on a blacklist that bars them from buying American technology, just days ahead of an important summit between President Donald Trump and Chinese leader Xi Jinping. Washington raised national security concerns because their computers were developed for military uses or in cooperation with the Chinese military. At the same time, U.S. pressure could have the effect of crimping China’s high-performance computing effort, which has produced some of the world’s fastest machines.

China’s HPC business development will slow down for sure for both technology and business. However, there are other vendors that will narrow the gap as long as they are not put onto the list,” said Charlie Dai, a principal analyst with Forrester Research.

 Among the five was government-backed Sugon, which claims to be the country’s leader in supercomputer sales. It’s one of a coterie of increasingly aggressive supercomputer projects backed by Beijing that are winning credibility in a field pioneered by American names that have fallen on hard times. The storied but money-losing Cray Inc., for example, agreed this year to be acquired by Hewlett-Packard Enterprise Co.

There’s a broader concern about what China is going to do with supercomputers, particularly when it comes to military applications,” said Paul Triolo, head of global technology policy at the Eurasia Group.

Another addition to Washington’s blacklist is Higon, which Commerce identified as a Sugon subsidiary and partners with the U.S. chip maker Advanced Micro Device Inc. in a Chinese joint venture. AMD uses that venture — Tianjin Haiguang Advanced Technology Investment Co. – to license microprocessor technology to clients such as Higon in the world’s biggest PC market. Lisa Su, AMD’s chief executive officer, told a recent conference in Taiwan that AMD would not license newer technologies to Chinese clients. The company said Friday it will comply with the order.

Higon in turn part-owns another two on Trump’s list: Chengdu Haiguang Integrated Circuit and Chengdu Haiguang Microelectronics Technology. The fifth entity is the Wuxi Jiangnan Institute of Computing Technology, which Commerce said was owned by the People’s Liberation Army’s 56th Research Institute. That agency’s mission was “to support China’s military modernization,” according to Commerce.

Sugon itself is open about working with the Chinese government and hopes to “build a cloud data service network covering hundreds of cities and sectors to provide a wealth of intelligent applications and services for the government, industry and the general population,” according to its website. The U.S. however accused the company on Friday of being “involved in activities determined to be contrary to the national security and foreign policy interests of the United States.”

Sugon is pretty small, but it’s symbolic,” said Triolo. “You can argue there’s a clearer national security case with Sugon than with Huawei.

Taking Sugon out of the equation will hamper but not kill Beijing’s supercomputing endeavors. While the company and its units claim to be the volume leader, there are other outfits considered more advanced technically. They include Inspur Ltd., a computer and cloud services provider with government ties, and a plethora of projects backed by prestigious institutions. Those include an advanced earth ecosystem simulator inside Tsinghua University capable of processing 100 tera-floating-point operations a second.

If “chipset makers in the U.S. stop the supply of product that Sugon has been largely relying on for its high performance computing business, the impact on Sugon’s HPC business will be fatal,” Dai said.


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