Global Competition

China: Dawning's Plans for Its Loongson Chip


Dawning Information Industry in Beijing drew a lot of attention on May 31 when its Nebulae supercomputer clocked in at 1.271 petaflops, making it the second-fastest computer in the world. (A petaflop is a quadrillion calculations per second.) While the Chinese government-backed company's next computing stunt is likely to be less heralded, it may be more significant. It plans to use a Chinese-made processor in a supercomputer expected to go on line next year.

The Loongson, as the chip is called, would replace at least some of the chips made by U.S. makers Nvidia (NVDA) and Intel (INTC) that were used in the Nebulae. For China, it would be a small victory on the way to reaching its goal of using more Chinese-made parts in supercomputers and ultimately selling them to other companies.

If a significant player like Dawning can trust Chinese chips like Loongson, makers of less complicated computers "can have a new option," says Sha Chaoqun, manager of the product division at Dawning. The Loongson chip was developed by a government institute.

As Dawning's Loongson project demonstrates, Beijing's supercomputer push isn't only about building hyperfast machines used for quantum chemistry, climate modeling, and other tasks that require a lot of power. China aims to use its supercomputers to nurture less sophisticated and more commercially lucrative products. "The government wants to encourage the development of local technology through the buildup of these supercomputer centers," says Uko Tian, an analyst in Beijing with market research group Gartner (IT). China, which used to concentrate its supercomputing in Shanghai, has opened 10 such facilities nationwide over the past year.

"When they find the right technology, they go full in," says Andy Keane, Nvidia's general manager in charge of the company's supercomputing business. "This isn't just building computers. It's building one of the largest computers in the world very, very quickly."

Why the rush? Beyond their use by scientists and weather forecasters, the computers are used by the People's Liberation Army for weapons research and are too sensitive to entrust to foreign vendors, says Michael Clendenin, managing director of RedTech Advisors in Shanghai.

Dawning hopes its supercomputing success will cross over into the server market: Until now it has lagged behind the international competition. Although China is the world's third- largest server market, behind the U.S. and Japan, Dawning's share of the market was just 5.7 percent last year, well below Hewlett-Packard's (HPQ) 25 percent, Dell's (DELL) 24 percent, and IBM's (IBM) 21 percent, according to International Data. Dawning "doesn't have the scale, it doesn't have the business relationships," says Clendenin. "There's a lot of competition that is very low-cost."

The bottom line: Dawning's Nebulae supercomputer was built with chips from Intel and Nvidia. Its next supercomputer will showcase Chinese chips.

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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