Which suppliers benefit from the US supercomputer “blacklist”?

On the evening of April 8, Beijing time, the U.S. Department of Commerce’s official website showed that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) added seven Chinese supercomputer entities to the Entity List. This is the third time the United States has blacklisted Chinese supercomputer entities after 2015 and 2019. The three lists include:

National University of Defense Technology, National Supercomputing Center Changsha, National Supercomputing Center Guangzhou (NSCC-GZ), and National Supercomputing Center Tianjin in 2015.

In 2019, Inspur, Haiguang, Chengdu Haiguang, Chengdu Haiguang Microelectronics Technology and Jiangnan Institute of Computing Technology; in 2021, Tianjin Feiteng Information Technology Co., Ltd., Shanghai High Performance Integrated Circuit Technology Center, Chengdu Shenwei Technology Co., Ltd., National Supercomputing Jinan Center, National Supercomputing Shenzhen Center, National Supercomputing Wuxi Center, and National Supercomputing Zhengzhou Center.

Being included in the Entity List means that the above-mentioned companies must obtain permission from the US government before doing business with US companies. The US intends to fundamentally prohibit these companies from obtaining almost all advanced technologies developed in the United States. Subsequently, many companies in the supercomputing industry chain issued responses to this matter and related impacts.

So, how many companies will be forced to change suppliers as a result of this move or what are the ways to deal with the restrictions?

Gartner VP analyst Chirag Dekate told Jiwei.com that HPC (high performance computing) is a very complex market with a small supplier base. According to Gartner's survey, companies in Europe, the Middle East, South Asia and Southeast Asia have mentioned concerns about the entity list affecting their technology decisions. Companies that work with suppliers such as Huawei and Sugon are highly satisfied with the technical capabilities of the solutions. Their focus is not on technology or functionality, but more on the risks associated with blacklisted suppliers and entities.

There is no known solution at this time. Gartner's recommendations to vendors affected by the blacklist include:

Clearly communicate with the relevant companies that the seller will continue to provide long-term service and support for the products sold (before the blacklist);

Plan a product portfolio that is not affected by the blacklist. For example, ARM V9 and whether it is subject to the US export list is still uncertain.

At the end of March, when Arm launched its next-generation instruction set architecture Armv9, it said that after a comprehensive review, Arm determined that its Armv9 architecture was not subject to the US Export Administration Regulations (EAR), which means it can be supplied to Huawei. Whether the newly blacklisted supercomputer companies will also be exempt from export restrictions requires further investigation.

In the field of supercomputers, China is in the absolute first echelon. "Tianhe-2" once topped the list for many years from 2013 to 2015, and now "Taihu Light" temporarily ranks fourth in the world. The top three are taken by supercomputers from Japan and the United States. Among the top 500 supercomputers in the world, more than 200 are from China.

Today, the international supercomputing community has turned its attention to the next frontier: exascale computers, also known as E-class computers. China, the United States, and Japan are all sprinting towards this goal, which will also change the existing landscape of global supercomputers. How will the supercomputing market change due to the Entity List?

Chirag Dekate said that there are few full-stack suppliers operating in the HPC/supercomputing field, including HPE, Dell, Lenovo, Inspur, IBM, Sugon, ATOS, Fujitsu, Penguin, NEC, etc. Among them, Huawei, Sugon, and Inspur have a relatively small market share in the entire supercomputing market.

"They are mainly limited to China, Asia Pacific, the Middle East and Africa, and Eastern Europe, most of which are cost-sensitive and value-oriented markets. The possible impact of the blacklist is that enterprises and supercomputer buyers may turn to other low-cost system providers, allowing manufacturers such as Lenovo to gain a larger share." Chirag Dekate pointed out, "Among them, suppliers such as Dell, HPE, IBM, Fujitsu, ATOS, Penguin, NEC, etc. do not have the supply chain and customer support system, nor the cost advantage to win the above-mentioned regional markets. Therefore, other suppliers such as Lenovo may benefit from it."

According to public data, in the TOP500 list of global supercomputers released on November 16, 2020, China's Lenovo, Sugon and Inspur are the top three supercomputer suppliers in the world, with a total delivery of 312 units, accounting for 62% of the TOP500 share. Lenovo manufactured 180 supercomputers, accounting for 36% of the TOP500 supercomputers, and retained the top spot in the global high-performance computing provider share. In the TOP100 list of Chinese supercomputers announced at the Second China Super Computing Conference (China SC 2020), Lenovo alone accounted for six of the 10 most powerful supercomputers in China, and ranked first with a total score of 35 units, winning the annual TOP100 supercomputer total share championship.

Chirag Dekate also made a brief comparison of the technology, market, government subsidies, etc. of supercomputing companies in China and the United States.

On the technology side, both companies have essentially the same technology. HPC is a highly commoditized industry with standardization of compute, network, and storage technologies. There are a few exceptions. For example, HPE has differentiated technology around its network stack (sling shot) through its acquisition of Cray. Dell is undifferentiated and leverages a commodity stack consisting of off-the-shelf technology components. Penguin is similar, mostly a commodity stack with important technology differentiation.

In terms of market share, Gartner estimates that HPE is currently the market leader, followed by Dell, then Lenovo, followed by Inspur, Atos, Fujitsu, Penguin, Sugon, NEC and the rest.

In terms of subsidies, HPE, Dell, Penguin, IBM are independently operated entities and do not receive government subsidies as far as Chirag Dekate knows. However, entities (governments and businesses) in the US, UK, EU, and EMEA regions tend to choose to work with US vendors, mainly because of their value, supply chain security, and capabilities.