Unsurprisingly, the US embargo on ZTE in 2018 will surely go down in history. Some years later, historians will refer to this year as the turning point in the development of China's chip industry. Of course, this incident also fully exposed China's lack of chip design and manufacturing technology. At the same time, the industry is paying more attention to the development of the chip industry. With regard to the ban on ZTE, the people strongly urged that the enthusiasm for self-reliance on R&D and manufacturing of chips can be heard. But to calm down, we must also think about it: The entire chip industry is one or several companies, and even an area can be controlled independently? the answer is negative.
Needless to say, China is the world's largest consumer of electronic products and is also the largest consumer electronics product manufacturing base. According to data from the National Bureau of Statistics, China’s imports of integrated circuits in 2017 were 377 billion, an increase of 10.1% year-on-year, and imports were US$260.1 billion, a year-on-year increase of 14.6%. The size of the global semiconductor market in 2017 was approximately US$408.691 billion. The comparison found that the share of the Chinese market was already over half. Many semiconductor companies have taken the Chinese market as the top priority. Take ZTE for example, for some American chip suppliers, ZTE’s procurement accounted for the bulk of sales. If it is forbidden to sell to ZTE, it is simply a lifeline.
Semiconductor eco-chain game, only a win-win situation
Let's take a look at the semiconductor industry pattern. The chip design companies mostly come from the United States, Europe, and Japan. The chip production is mainly conducted in mainland China, Taiwan, Singapore, and South Korea. The high-end chip materials are controlled by Japan, and a large number of electronic products are manufactured in China. China is also the largest consumer of chips. It can be seen that almost all the semiconductor companies in the world are tied together on a rope. If there is a problem in one of the links, it will collapse.
If the US chip company prohibits selling chips to China, almost half of the market is frozen. The chain reaction of no orders is that chip foundries such as Taiwan and Singapore also need to stop work. China’s electronic products do not receive components. Apple, Millet, Huawei, OPPO, VIVO and other companies will not be able to ship properly. Global users will be unable to use smart phones and other electronic products from China. The end result of a series of chain reactions is that the entire industry chain has collapsed. Every company on the list cannot operate.
During the roundtable talks at the Songshan Lake Forum, the guests also had a lively discussion on this issue. Sun Hao, CEO of Shanghai Hao Rui Technology Co., Ltd. stated that “The ban on the sale of chips will prevent ZTE from operating normally if it occurs in the United States and Europe. The same is true for Japanese companies. For example, Japan has a lot of exclusive supply materials. If it prohibits sales to the United States, American companies will also hang down. What we need to do is: First, domestic chips cannot currently be 100%. Self-sufficient, but it can reach the top in a certain field; Second, find the focus, achieve industry-leading, squeeze out the gross profit through cost reduction. Cost reduction is easy to do, the core is the value also to sit up, so that the market exclusive It must be improved."
Where can Chinese companies break out?
Looking at the Chinese semiconductor market again, many foreign companies have almost reached the point of monopolization. In some areas, the share of domestically produced chips is only a few percent, which is an almost negligible embarrassment. So, how can domestically produced chip companies achieve breakthroughs in the situation where such giants dominate the market? How does the country support the development of domestic chip companies?
In the War of Resistance Against Japan, there was a great military strategy called "encircling the cities in the countryside." At the meeting, experts agreed that the development of domestic chips can also draw on this route. Sun Changxu, an investor in Xiaomi, pointed out that “on the system side, domestically produced ADCs and PLLs are still far from international demand, but the entire society is a division of labor, and US companies cannot use their own chips. We China has to do Good planning, which areas use foreign products, which areas of independent production, if you can use domestically produced domestically, power supply, ADC and other small chips made domestically can replace TI and other international giants' products.Although Dachang is still in the monopoly stage, but Chinese companies can decentralize and replace, starting from small to top to systems."
Da Weimin, deputy director of IC branch of the China Semiconductor Industry Association, also said, “We can develop curves. For example, we can do IP first, then design and produce chips, and slowly we have our own products.â€
Design and production is only a part of the chip industry, and domestic cores will face an unavoidable dilemma, that is, sales promotion, such as NXP, Infineon's products may not be stronger than domestic car chips, but many manufacturers dare not use domestic chips, generally Procurement personnel have no right to decide, and the leadership does not want to bear the potential risks of domestic chips. They will give priority to foreign suppliers with stable performance and low risk. This will result in those companies that have the technical ability to design and produce. Products, minimal living space, chip design entrepreneurs ended in failure. In the discussion stage, everyone also called on large companies to give certain support to domestic chips and avoid the difficulties of ZTE’s ban on sales. After the ZTE incident, major domestic companies are also reflecting on changes in procurement strategy, some areas began to boldly adopt domestic chips, which is also the opportunity for the development of domestic chips.
Of course, when a large company purchases, it not only looks at the performance and price of the chip, but also measures the service capabilities of a company. If the domestic chip company wants to serve the supplier, does it satisfy the service needs of the big manufacturers? Wang Lin, an international partner of Walden, said, “Foreign competitors have been blocking domestic companies. For example, AD, a certain product performance has just reached the standard, but domestic companies launched a single channel, foreign companies have begun to push multiple channels, and The integration speed of domestic companies can not keep pace with the integration speed of foreign companies.On the technical level, companies that have served Huawei, ZTE, and other large companies should be aware that their product delivery needs are as much as 80 pages, and companies that have not served are not aware of the complexity of delivery. However, we have seen that ZTE and Huawei are gradually adopting domestic chips, especially among mobile phone vendors, which are very large advances. This is a very big improvement in terms of technology. Domestic chips are technically one aspect, and services are one aspect. Improve your overall ability."
The chip industry does not bend overtaking
The Chinese seem to like the word “beyondâ€. For example, in the automotive industry, we cannot break through the key technology of the engine. We will vigorously develop electric vehicles because the companies in the electric vehicle market all seem to stand on the same starting line, but the battery technology’s Is it the same starting line? I consulted a senior automotive engineer in the industry on this issue. He gave me a reply that the performance of domestic batteries is worse than the performance of Japanese batteries. What is the difference? The expression of the Prime Minister's visit to Toyota should give an answer.
In the past decade, with the rapid economic development, some areas are rapidly gathering wealth, so now the Chinese people are very advocating "riches", and almost everyone is talking about the return on investment and talk about stocks and real estate. The chip industry is an industry that needs long-term accumulation. It needs to look up at the starry sky and also need to be down-to-earth. If the pursuit of “riches and plentiful wealth†is estimated, the success will be far-off. Sun Changxu, a millet investor, said: “We always want to surpass others, but people are much stronger than you. How can you overtake them in the short term? I don’t agree with cornering overtaking. We need to be down-to-earth and differentiate our products. Overtake foreign countries in new applications. As the core patent of our company, we can't exceed the foreign companies in the short term and we can hardly exceed it in 50 years.From the perspective of 5G, Huawei Hass has taken the lead and the United States is afraid of the development of China. We must consider working hard on new technologies, and in the future they will ask for them. For example, in the AI ​​field, China has a chance. In terms of algorithm, China's talent is no worse than the United States, and China has the opportunity to do it."
When it comes to down-to-earth, this time the Songshan Lake Forum has a deep impression on a company that is Ruijie Electronics, and CEO Li Mengxiong made a thoughtful statement during his speech: “China's chips have made great progress, but there are relatively few high-end fields. Doing pioneering work, Infineon and NXP are our strong opponents, but we need to calm down to segment the market and make use of the advantages of talents, local products, and products to make the industry chain for five years or longer. We're focused on doing chips and doing reference designs."
The ZTE incident has caused us to attach great importance to chip design. Many people want to understand the product performance and technical capabilities of domestic companies. I will talk about the ten domestic chip companies I have seen at the Songshan Lake Forum. They recommend products.
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