The big picture: With the US and China in the middle of trade war, the Asian nation is trying to move away from its reliance on American companies and develop its own chips. As such, Chinese manufacturer Hygon has reportedly started production of the Chinese-designed “Dhyana” x86 processors, which are based on AMD’s Zen Microarchitecture.

Tom’s Hardware reports that the processors are the result of an x86 IP licensing deal between AMD and its Chinese partners. While the US giant said it does not sell final chip designs to these China-based firms, it allows them to design their own processors made specifically for the country’s server market.

The Dhyana chips are said to be virtually identical to AMD’s EPYC CPUs, with the only difference being the unique vendor IDs and family series numbers.

The US has introduced rules relating to company mergers and acquisitions that obstruct China from developing its own chips, yet despite these regulations, AMD announced a joint venture in China back in 2016 that would see processors based on its own CPUs developed in the country. The deal added $293 million to the US firm’s coffers, and AMD will also receive loyalties based on future unit sales.

The agreement states that the final products, which must be “specifically tailored to the needs of the Chinese server market," can only be sold inside of China. To stay within legal boundaries, an elaborate setup of multiple ownership and licensing agreements between AMD and its Chinese partners are in place.

Ultimately, Hygon’s chips are bad news for Intel. The Made In China 2025 initiative, which aims to turn the country from the world’s factory into a global technology leader, has seen investment and incentives offered to local chip producers as a way of increasing domestic production.