The Wall Street Journal wrote last week that US semiconductor company AMD gave away the “keys to the kingdom” in a Chinese joint venture. The main theses of said article, which relied mostly on US Department of Defense sources, were that AMD had given away x86 architecture to China in 2015, and that this Chinese JV deal was key to the company’s revival.

It’s an exciting story of greed and recklessness—and a very hard one for an industry insider to believe. It looks like the Journal—and perhaps their US government informants—fell for the hype of a few companies hoping to pass off imports as a breakthrough in Chinese domestic production. What AMD did is far from unique in the field and doesn’t meaningfully reduce Chinese dependence on US integrated circuits.

The key accusation is that a 2015 JV between AMD and Chinese supercomputer maker Sugon gave China control of key x86 designs. In fact, the JV was nothing special.

Over the past couple of years, I have met with many Chinese chip design companies—one of which is a little-known Shanghai company called Zhaoxin. Like Intel and AMD, it has access to an x86 license. Its partner VIA Technologies, based in Taiwan, is the third company globally with an x86 IP license. VIA founded Zhaoxin as a JV with the Shanghai government all the way back in 2013.

VIA’s design team is now essentially incorporated inside Zhaoxin—a JV set up with the Shanghai government for the sole purpose of designing x86 processors two years before AMD even established its JVs. I do not know how much access Zhaoxin has to source code, but VIA will, and if having this kind of JV is giving away “the keys to the kingdom,” China had them long before its AMD deal. That it was missing from the article suggests strongly it was written without real industry understanding.

The truth is, it looks like the JV was mostly hype—its real function seems to have been letting Sugon tell the Chinese government it was buying domestic chips while continuing to use AMD products. The first thing to look at is the setup of the Haiguang Microelectronics (HMC) and Chengdu Haiguang Integrated Circuit Design Co., Ltd (Hygon) JVs, collectively known as Tianjin Haiguang Advanced Technology Investment Co., Ltd. (THATIC).

A brilliantly detailed description of the structure can be found here, but the key take away is that China wanted a chip it could call “homegrown” and AMD needed to make sure it had control of its IP at all times and nothing was given away. HMC was 51 percent AMD owned, and hence the US government had no objections. Hygon, however, was 30 percent AMD owned, and only designed top-level architecture, relying on HMC to provide the key elements associated with basic IP. This was enough to claim the chip was “Made in China,” even though no IP really changed hands.

With no IP changing hands, there is really no way China could design or manufacture these chips itself. Even with a stolen design, it would not have access to suitable foundries to fabricate the design. Local foundries might be able to produce something, but the eventual product would most likely be made on a larger process node and full of bugs because it was not fabricated on the Global Foundries process the AMD processor was designed for. So even with a stolen design China would end up with a product far behind competitors in the market and perhaps even unusable.

AMD would not even be the only US company with a similar setup. Intel works with Shanghai-based semiconductor design company Montage on a local x86 based processor and Qualcomm, until recently, had a JV with the Guizhou government called Huanxintong Semiconductor, which works on its own Centriq Arm based processors.

From a competition point of view, the x86 processor market is in a rather sorry state of affairs, and it wouldn’t be so bad if more companies, Chinese or not, could compete in the space. In the server and High-Performance Computing (HPC) markets Intel has well over 90 percent market share. Even in the laptop market, Intel has close to a 90 percent market share.

Intel is a gorilla in the room and the industry has been crying out for AMD or others to step up and compete. Using a 7nm process, AMD’s new Epyc processor “Rome” may be well placed to cut into Intel’s market share, but even then, Intel is only predicted to fall below 90 percent market share in 2020. Perhaps it is time a third player really steps up.

Until now Zhaoxin has only designed lower-end processors on a 28nm process, but its next design is said to be 16nm, with Intel not expected to move to 10nm until 2020. Having said that, Zhaoxin is still lagging behind, and it will likely continue to for some time to come. It seems to be happy maintaining a low profile focused on the Chinese government market.

I expect further government investment in companies like Zhaoxin as the JV route China has supported continues to be attacked. Having a strong third player in the x86 processor space will be a good thing, and in the short-term though we need AMD to continue its recent progress and bring some competition back into the market.

If the Journal’s sources represent the views of the Pentagon, it mostly likely reveals either the ineptitude or a lack of semiconductor knowledge on the part of the US government.

But, if somehow myself and others are wrong about the AMD JV, and it is a serious threat to national security, the US needs to improve regulations and enforcement for a lot of other technology JVs in China.