Chip made is king

The chip design is generally regarded as a leader, because to form a Chinese product, the product reflects the final result. However, industrial support funds must focus on supporting chip manufacturing, and must increase manufacturing capabilities.

There is a "core" disease in the development of China's manufacturing industry. In 2013, China’s chip imports reached US$230 billion, and the nation’s chip revenue only reached US$40 billion. In China, more than 90% of chips rely on imports, and the amount of imports has exceeded oil.

The most critical point is that more than 95% of the core high-level chips are imported. The core chips of mobile phones, computers, and TVs are now only the mobile phone chips. In recent years, Hass and Spreadtrum have provided them to foreign countries, but this proportion is extremely small. 77% of the world's manufacturing of mobile phones in China uses less than 3% of domestic "cores."

The chip industry has a huge market space, but money has been earned by foreign companies. The gross margin of advanced chips is generally 60% to 70%, and even ordinary chips that are not too high have a 50% gross profit margin. Although China is known as a manufacturing powerhouse, exporting whole machines can make very little money, because they all have a foreign “core”.

Face the gap

Chinese chip design companies have grown and have grown in recent years. Taking the development of the Shanghai chip design company as an example, the entire industry sales in Shanghai last year was 73 billion yuan, a year-on-year increase of 9.3%. The sales revenue of the design company was 21 billion yuan, an increase of 22% year-on-year and an annual increase. The previous year’s profit was 4.2 billion yuan, and it was 5.6 billion yuan last year, an increase of 30% year-on-year.

The integrated circuit industry is continuous, stable, and healthy. Unlike other industries, it has not experienced great ups and downs and has achieved steady development. Our current chip industry has actually been internationalized. Many companies are international companies. Domestic products, on the one hand, are heavily imported, and on the other hand, they are exported in large quantities and face direct competition with foreign companies.

In fact, long ago, China had begun to pay attention to the development of the chip industry. Among the 16 major projects established by the country, the first three special projects are related to chips. With the attention of the country, China's chip industry has developed rapidly over the past few years, but there is still a wide gap compared with the international level.

This gap is reflected in two aspects. First, from the scale, the scale of China's chip industry is very different from that of international chip companies, such as Qualcomm and MediaTek. From the product line, most high-end products are still very small.

Second, from the perspective of technology, China's chip industry is still far from catching up with international giants. IBM has just invested 3 billion U.S. dollars to make 7nm chip production technology. Intel has now achieved mass production of 20nm chips and trial production of 16nm chips. However, in 2013, China just reached the mass production of the 40nm process, and this year it is doing trial production of the 28nm process.

The reason for such a large gap is that although the country attaches importance to the development of the chip industry, since the reform and opening up, the country’s strategic analysis of the industry has not been sufficient. In the past, the chip was regarded as a market-oriented industry. Through market-oriented operation, it did not notice the basic and strategic role of the chip industry. This industry is truly strategic.

Use a good fund

The “Prism Door” incident exposed the major problem of information security and made China see the significance of the chip industry. Its importance is equal to the significance of missiles and atomic bombs to China. And if it is operated purely on the market, China's atomic bomb cannot be created. The state should really concentrate its manpower and financial resources, and combine the strategic of the integrated circuit industry with the leading government regulation and marketability.

In addition, the government's past investment in the industry is not strong, Intel, Samsung [microblogging] companies have 8 billion to 10 billion US dollars each year to invest in the chip field, and China's annual investment of less than 5 billion US dollars.

Indeed, as far as the world is concerned, no single chip company is relying on the profit of its own company to expand. It must all rely on financing, and the financing channels of big chip companies such as Intel and Qualcomm all depend on the market and stocks. In China, the financing environment is not very good. So far, China's key chip companies have basically not listed in the country. For example, SMIC, listed in Hong Kong, China and the United States, but the stock has long been suppressed, in addition to just 1.8 billion US dollars in financing when it was listed, there is no other financing capacity. The road to listing is unreasonable and the country’s investment is not enough. This is a bottleneck for the development of the chip industry.

The national launch of integrated circuit support funds totaled 120 billion yuan and the introduction of the "National Outline for the Development of the Integrated Circuit Industry", which is very beneficial to the chip industry and has a very large role. The three major highlights of the recent support to the industry are: first, the state has established a leading group; secondly, an industrial investment fund has been established; and third, the policy of supporting financial securities. If it can really be implemented, it will be very effective. Compared with the specific amount of 120 billion yuan in industrial funds, what is more important is the matching of financial measures. This part is more important than the industry fund.

The fund is invested in the industry in the form of investment. For many domestic companies, how to enter the support range is difficult. It is a good thing to promote the development of enterprises, but companies must also take care of their own interests. For example, SMIC has a market value of US$3 billion and industry funds invested US$1 billion. Equity dilution is very severe. If 3 billion U.S. dollars were invested in a new 12-nm plant, the output did not change significantly, and the share price was diluted by half. Old shareholders certainly did not agree.

Some people have analyzed that the amount of industrial funds is too low, and I do not agree. There are fewer and more, the key is whether it can develop well or not. After the start of the industry fund, it has a leading role in the market. As long as it is done well, the investment in the funds behind will increase, and it can drive local governments and non-governmental investment companies, including private enterprises, and may be more enthusiastic in this regard.

Violet's acquisition of Spreadtrum is an exciting event not because of the acquisition itself, but because someone is willing to take large sums of money to do it. People who are willing to invest surely have ways to make money. One person can invest more people, and the same applies to national support funds.

Ziguang acquisition of Spreadtrum, Pudong Branch voted very sensitive response to the proposed acquisition of Rui Dike. These funds are not within the national funds. Once the national fund comes out, there will be more funds going in and we must have confidence.

Design and manufacture

How can you withdraw after the National Industry Fund is put into the industry? The problem of the withdrawal mechanism of the chip industry has not been completely solved, and the domestic listing is too complicated. Design companies are listed in the United States. The situation of each company is different. As a whole, the stock value is not high. In addition, the chip design company's funding issues are not very prominent. For example, Spreadtrum is not very short of money. The problem lies in chip manufacturing companies. These companies need to develop. For example, adding a production line requires billions of dollars. In this case, listing in the United States can't get so much money. Mainland companies now do a good job of OEM, but it is impossible to compare with an international company like TSMC. On the one hand, the level is not enough. On the other hand, the production capacity, especially the high-end production capacity, is not enough. In the future, for the manufacturing process, whoever has the production capacity will be the boss. High-end production capacity will be concentrated in a few companies that control the processing. ?

Chip design investment is small, the key depends on people, it is easier to flush out. There must be a large amount of investment in chip manufacturing, there is no investment, and it cannot be built at all. Design is relatively easy to grasp. In a certain sense, this is the core of the industry. However, chip manufacturing must not be ignored. Only when the two are combined can the industry be developed.

We generally regard design as a leader, because to form their own products, the product reflects the final results. However, industrial support funds must focus on supporting chip manufacturing, and must increase manufacturing capabilities. Intel and Samsung are both design and manufacturing. Taiwan Semiconductor Manufacturing Co., Ltd. has developed rapidly over the past few years. It is purely relying on continuous expansion of investment. It is now technically equal to Samsung and Intel.