â– "China Core" has a share of less than 10% in the local market and is basically at the low end. "China Core" should seek deep cooperation in the domestic market as far as possible to achieve a curve overtaking.
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Just as the first time that artificial intelligence was written into the “Government Work Report†and attracted great attention, the chip industry has also become the topic of the first hot debate among delegates at the 5th session of the 12th National People’s Congress, and even related to the development of domestic The chip industry’s proposal appeared in the motions of dozens of deputies. However, unlike artificial intelligence, which is still in its infancy, China's chip industry has already passed the industrial construction period. Now it has entered an important juncture that requires strength and cohesion in order to strengthen its muscles.
The world's largest chip consumer
From the perspective of subdivided industries, the chip industry includes design, manufacturing, and packaging and testing. At present, China has built a relatively complete chip industry chain, which mainly includes Huawei Hass, Ziguang Group, and Guorui Group. As a chip design company for giants, chip makers represented by SMIC, Shanghai Huali, and China Electronics, as well as chip packaging and testing companies led by Changjiang Electronics Technology, Huatian Technology, and Tongfu Microelectronics. However, in terms of innovative R&D and design capabilities, China's chip companies still lag behind leading global manufacturers. The size of chip manufacturing companies is generally small, and their production undertaking capacity is weak. At present, they can bear at most 15% of the global semiconductor industry's manufacturing volume; The upstream raw materials, such as silicon and germanium chips, account for less than 1% of China's global market, which severely restricts the capacity expansion and supply of the domestic chip industry.
However, our country is the largest country in terms of chip demand. According to the data, China manufactures 1.18 billion mobile phones, 350 million computers and 130 million color TVs a year. It firmly holds the top spot in the world, thus driving the demand of the global 1/3 chip market. At the same time, the self-sufficiency rate of domestically produced chips in China is less than 30%, and the output value of integrated circuits is also less than 7% of the global market. The market share is still less than 10%, which means that more than 90% of China's "cores" rely on imports. For this reason, only last year China’s spending on imported chips has reached US$227.1 billion, and imports for four consecutive years have exceeded US$200 billion. The chip industry has become the largest imported product tied with crude oil. In view of this, the “Outline for Promoting the Development of the National IC Industry†pointed out that by 2020, the annual growth rate of China’s semiconductor industry will not be less than 20%. Meanwhile, “Made in China 2025†clearly states that China’s chip self-sufficiency rate will reach 40% by 2020. It will reach 50% by 2025. The relevant implementation plan put forward by the Ministry of Industry and Information Technology puts forward a new goal: to strive to achieve 70% chip self-guarantee and reach international leading level within 10 years.
"China Core" Power to Win a Favorable Window Period
From a global perspective, China indeed faces an important window period for accelerating the development of the domestic chip industry. On the one hand, the international semiconductor industry has matured and the pace of international capital involvement in the semiconductor industry has slowed down significantly. At the same time, the global chip market has continued to shrink in the last two years, with the exception of the Chinese regional market. On the other hand, Moore's Law has slowed down, but The manufacturing process is still moving forward, and the investment is increasing, which is exactly in line with the ever-increasing investment and acquisition needs of the Chinese semiconductor industry. From the domestic environment analysis, in addition to the precipitated PC and the complete supply chain market, smart phones are being reshuffled, and the models are in the process of continuous upgrading. At the same time, smart homes, smart cars, intelligent robots, virtual reality, etc. On the eve of the eruption, especially the new business conditions such as the ensuing 5G, Internet of Things, artificial intelligence, and blockchain, all have formed super demand for chips.
The soft and hard environment supporting the domestic chip industry is also being significantly improved. According to the latest report issued by Questel, an internationally renowned patent search company, the number of global chip patents has increased six-fold in the past 18 years, but the number of patents for Chinese chips has increased 23 times. China has become the number of chip patent applications. A large country, and ranked first in the world for five consecutive years. At the policy level, apart from setting up a national integrated circuit industry investment fund with a total scale of nearly 140 billion yuan, Shanghai, Wuhan, Hefei, Changsha, Zhuhai, Hangzhou, and Wuxi have also successively established and established local industrial investment funds. Including the National Fund and Local Government Funds, the total domestic IC industry fund has exceeded 460 billion yuan.
Inline joints can bend overtaking
However, due to the huge investment demand for chips, the long return period, and the high technical requirements, even in terms of subdivided fields, many breakthroughs are far from being achieved by a single enterprise. This requires the strengthening of cooperation between the main companies. Integrate with the industry. Fortunately, 27 domestic chip leaders, including Huawei, ZTE, Ziguang Group, and SMIC, have formed the “China High-End Chip Alliance†and the industrial synergy effect is worth looking forward to. In addition, in the past three years, nearly 100 mergers and acquisitions have taken place in China's integrated circuit industry. Leading companies such as SMIC and Ziguang Group have already become large-scale enterprises. The potential for chip design and manufacturing that are jointly and effectively brought into full bloom remains to be highlighted.
Data show that last year the global semiconductor mergers and acquisitions amounted to 130 billion US dollars, and China-related mergers and acquisitions were 12.5 billion US dollars. However, according to a report submitted by the US President’s Technology Advisory Committee to the White House, the Chinese chip industry was identified as a force that has caused serious threats to relevant US companies and countries, and the report emphasized that although China’s chip industry is still lagging behind, it has the opportunity to pass the industry. Policies narrowed the technological gap with the United States. Therefore, the report suggests that the President of the United States conduct a more rigorous review of the Chinese chip industry. While Chinese companies continue to be cautious in seeking overseas acquisitions, the focus should shift to the domestic market to seek cooperation with international chip giants.
At present, in order to occupy more Chinese markets, international giants such as Intel, Qualcomm, and Texas Instruments have increased their investment in China’s capital and technology, and their embedded industries in China are already quite deep, and they are also engaging with Chinese companies. Demand for capital and product cooperation, and successful cases are not uncommon. For example, Qualcomm and the Guizhou provincial government have reached a strategic cooperation and set up a joint venture. Intel and Tsinghua University have jointly formed a cooperation agreement for the development of a new type of universal chip processor. SMIC and Huawei Together with Qualcomm and Belgium Microelectronics Research Center to set up a joint venture company, Spreadtrum Communications under the Ziguang Group not only received Intel's 9 billion yuan capital injection, but also with the global power management chip giant Dialog formed a cooperative alliance. At present, SMIC's manufacturing process has been increased from 40nm to 28nm, benefiting from process improvement. Last year, SMIC’s revenue increased by 30% to US$2.9 billion. Coincidentally, using Intel's architecture, Spreadtrum introduced the first 16nm 4G chip to quickly advance into the mid-to-high end market. At the same time, Spreadtrum’s 14nm chip jointly developed with Dialog will also be produced in the second half of this year. The water is near the moon and local materials are used.
As long as Chinese companies strengthen their cooperation with foreign chip giants in their home countries, they can completely bypass the technical restrictions and trade blockages of overseas markets, and then realize overtaking.
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