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China builds advanced weapons systems using American chip technology

By ELLEN NAKASHIMA AND GERRY SHIH | The Washington Post | Published: April 7, 2021

In a secretive military facility in southwest China, supercomputers whir away, simulating the heat and drag on hypersonic vehicles speeding through the atmosphere — missiles that could one day be aimed at a U.S. aircraft carrier or Taiwan, according to former U.S. officials and Western analysts.

The computers are powered by tiny chips designed by a Chinese firm called Phytium Technology using American software and built in the world's most advanced chip factory in Taiwan, which hums with American precision machinery, say the analysts.

Phytium portrays itself as a commercial company aspiring to become a global chip giant like Intel. It does not publicize its connections to the research arms of the People's Liberation Army.

The hypersonic test facility is located at the China Aerodynamics Research and Development Center (CARDC), which also obscures its military connections though it is run by a PLA major general, according to public documents, and the former officials and analysts, many of whom spoke on the condition of anonymity to discuss a sensitive matter.

Phytium's partnership with CARDC offers a prime example of how China is quietly harnessing civilian technologies for strategic military purposes — with the help of American technology. The trade is not illegal but is a vital cog in a global high-tech supply chain that is difficult to regulate because the same computer chips that could be used for a commercial data center can power a military supercomputer.

Hypersonics refers to a range of emerging technologies that can propel missiles at greater than five times the speed of sound and potentially evade current defenses.

The Trump administration was set to place Phytium and a handful of other Chinese companies on an export blacklist late last year, but ran out of time, according to former U.S. officials. Such a listing would block technology of American origin from flowing to those firms. And, experts say, it would slow the advance of China's hypersonic weapons program, as well as other sophisticated weapons and more powerful surveillance capabilities.

The designation package now awaits Commerce Department action.

Phytium did not respond to repeated requests for comment.

American firms generally argue that export controls hurt their profits while encouraging China to send its business elsewhere and develop its own industries. But analysts note the United States' policy is that American technology should not aid the Chinese military and that curtailing future progress by the PLA is worth the cost in lost business.

The Phytium case also spotlights the dilemma for Taiwan, a self-ruled liberal democracy perched strategically between the United States and China. Taiwan relies on Washington for defense against invasion by Beijing, which U.S. officials say is a growing risk. But Taiwan's companies rely on the Chinese market, which accounts for 35 percent of Taiwan's trade.

As tensions between China and the United States deepen, so too have questions over the proper limits for American and Taiwanese firms doing business with China.

Semiconductors

Semiconductors are the brains of modern electronics, enabling advances in everything from clean energy to quantum computing. They are now China's top import, valued at more than $300 billion a year, and a major priority in China's latest Five-Year Plan for national development.

In January 2019, Chinese President Xi Jinping visited Tianjin, 70 miles from Beijing and home to Phytium, and touted the company's importance to the country's "indigenous innovation" effort. Today, Phytium boasts it is "a leading independent core chip provider in China." The company markets microprocessors for servers and video games, but its shareholders and main clients are the Chinese state and military, according to government records.

Phytium was founded in August 2014, according to business registration records in a public government database. It was created as a joint venture of the state-owned conglomerate China Electronic Corp. (CEC), the National Supercomputing Center in Tianjin, and the Tianjin municipal government, according to the records.

The national supercomputing center is a lab run by the National University of Defense Technology (NUDT), a premier military research institution whose current president and immediate past president were PLA generals.

In 2015, the Commerce Department placed both organizations on its trade blacklist list, for involvement in nuclear weapons activity, a designation that bars U.S. exports to the firms unless a waiver is obtained.

Phytium's ownership has changed hands over the years, but its shareholders often have links to the PLA, records show.

"Phytium acts like an independent commercial company," said Eric Lee, a research associate at the Project 2049 Institute, a Northern Virginia think tank focused on strategic Indo-Pacific issues. "Its executives wear civilian clothes, but they are mostly former military officers from NUDT.''

In China's rugged hinterland lies Mianyang, a city in southwest Sichuan province that is a center for research in nuclear weapons. It is also home to the country's largest aerodynamics research complex: CARDC.

CARDC, which says it has 18 wind tunnels, is heavily involved in research on hypersonic weapons, according to former U.S. officials and U.S. and Australian researchers. Its director, Fan Zhaolin, is a major general, but he is pictured in civilian clothes on the center's website.

The center has been on the U.S. trade blacklist — called the "entity list" — since 1999 for contributing to "the proliferation of missiles." In 2016 Commerce further tightened restrictions on the facility.

CARDC, said Tai Ming Cheung, director of the University of California San Diego's Institute on Global Conflict and Cooperation, is "a beating heart of Chinese hypersonic research and development."

The research center and Fan did not respond to emails seeking comment.

China's major investments in hypersonics is a major concern at the Pentagon.

"The only way to reliably see a hypersonic vehicle is from space, which makes it a challenge," said Mark J. Lewis, until recently the Pentagon's director of defense research and technology. If it is traveling at hypersonic speeds — going at least a mile per second — it gives a missile defense system very little time to figure out what it is and how to stop it, he said.

Hypersonics is a critical, emerging military technology, said Lewis, the executive director of the National Defense Industrial Association. China could target Navy ships and air bases in the Pacific, he said, adding that a conventional cruise missile would take an hour or two to reach its target while a hypersonic missile could do so in minutes.

"It is a huge concern," he said.

Hypersonics

In 2014, the U.S. Air Force released an unclassified report on the technology of air warfare that included hypersonics. "Anyone could pick up this document," Lewis said. "Then we basically took our foot off the gas. There was no sense of hurry, of alacrity."

Meanwhile, the Chinese read the American research. Their scientists began showing up at U.S. conferences. They started investing. "They saw that hypersonics could give them a military advantage," Lewis said. "And they acted."

China, unlike the United States, has fielded a hypersonic weapon: a medium-range hypersonic glide vehicle.

Hundreds to thousands of different configurations of heat, vehicle lift and atmospheric drag need to be analyzed to make a hypersonic missile work, which would be too expensive and time-consuming through physical testing alone, said Iain Boyd, Director of the Center for National Security Initiatives at the University of Colorado, Boulder. "If you didn't have supercomputers it could take a decade,'' he said.

In May 2016, CARDC unveiled a "petascale" supercomputer that would aid the aerodynamic design of hypersonic missiles and other aircraft. A petascale computer can handle one trillion calculations per second.

In 2018 and 2019, CARDC scientists published papers showcasing their supercomputer and noting their calculations were done with Phytium's 1500 and 2000 series chips, though the papers do not discuss research on hypersonic weapons.

CARDC, Phytium, the military university and the Tianjin supercomputing lab are currently developing an even faster computer — able to handle "exascale" speeds of a million trillion calculations per second. The supercomputer, dubbed Tianhe-3, is powered by Phytium's 2000 series chips, according to Chinese state media.

To produce such chips, Phytium requires the newest design tools.

Although CARDC and other PLA entities are under U.S. sanctions, the Chinese military is still able to access U.S. semiconductor technology through companies like Phytium.

One Silicon Valley company that counts Phytium as a customer is Cadence Design Systems, which gave an award to Phytium at a 2018 conference for presenting the "best paper" on how to use its software for high-performance chip applications. Another is Synopsys, headquartered eight miles from Cadence in San Jose, Calif.

"I have not in my decade in China met a chip design company that isn't using either Synopsys or Cadence," said Stewart Randall, a consultant in Shanghai who sells electronic design automation software to top Chinese chipmakers.

Synopsys declined to comment. Cadence did not respond to repeated requests for comment.

Phytium's microprocessors are produced at gleaming factories outside Taipei by the Taiwan Semiconductor Manufacturing Company, which now makes the world's most advanced chips, having surpassed the United States.

TSMC, the largest of several Taiwanese chipmakers, is in the unusual position of manufacturing chips "that end up being used for military purposes by both the United States and China," said Si-fu Ou, a fellow at the Institute for National Defense and Security Research, a think tank co-founded by Taiwan's defense ministry.

The company, for instance, makes chips used in advanced American weapons, including Lockheed-Martin's F-35 fighter jet. TSMC announced last year it would build a $12 billion factory in Arizona in response to Trump administration concerns about the security of the semiconductor supply chain.

"These private companies do business and don't consider factors like national security," Ou said, adding that Taiwan, as a small country, lacks the leverage and will to enact export bans. "The United States has a relatively complete set of export control measures and regulations, while Taiwan is relatively loose and has more loopholes," Ou said.

TSMC said in an email to The Washington Post it obeys all laws and export controls.

TSMC has a "robust assessment and review process on shipments to specific entities that are subject to export control restrictions," spokeswoman Nina Kao said. "We are not aware of a product manufactured by TSMC that was destined for military end-use as alleged in your email."

The final stage of Phytium chip design is handled by another Taiwanese company, Alchip, which deals directly with TSMC's factories on Phytium's behalf.

Alchip chief financial officer Daniel Wang said Phytium signed an agreement stipulating its chips are not for military use. Phytium has told Alchip its clients are civilians, and that the 1500 and 2000 series chips are made specifically for commercial servers and personal computers, Wang said.

However, a 2018 Alchip news release notes the firm has worked with "China's National Supercomputing Center," which had been on Commerce's blacklist for three years at that point for involvement in "nuclear explosive activities."

Mark Li, an analyst at Sanford Bernstein, said unless Phytium is placed under sanctions, TSMC is in no position to cut it off. "It's not TSMC's job to be a policeman for the United States," he said. "That's for politicians to decide. China is the biggest semiconductor market. If you give that up when the business is legally allowed, you can't explain that to shareholders."

Shih reported from Taipei, Taiwan. The Washington Post's Pei Lin Wu in Taipei contributed to this report.