According to the latest data, there are 2,218 chip design companies in China in 2020, 438 more than the 1,780 in 2019, a 24.6% increase in number. In 2020, the sales of China’s entire chip design industry are expected to be 381.94 billion yuan (RMB. The same below), an increase of 23.8% compared with 308.49 billion yuan in 2019, and the growth rate is 4.1 percentage points higher than 19.7% in 2019. From the data point of view, the companies and sales that invest in “Chinese cores” have an increasing trend.
In addition, according to the “Several Policies for Promoting the High-quality Development of the Integrated Circuit Industry and Software Industry in the New Era” issued by the State Council in August 2020, integrated circuits are supported. It is worth noting that the “ten-year tax exemption policy” is given to qualified companies in some sub-sectors. For example, the chip foundry SMIC is eligible for this qualification. People in the integrated circuit industry say this is a major policy benefit, while The high subsidies of the Chinese government are obviously of great help in shaping the industrial ecology of “China Core”.
In fact, as early as 2014, with the promulgation of the “National Integrated Circuit Industry Development Promotion Outline” and the launch of the National Integrated Circuit Industry Investment Fund, a boom in the development of the chip industry has been set off in various parts of China. Yuan.
However, “China Core” is not as smooth as it seems on the surface, there are many “unfinished” situations, and the artificial layout of the industry has formed a situation of “pulling the seedlings and helping them grow”. At the 2nd China Development Planning Forum held on November 28, 2020, Wang Zhijun, Vice Minister of the Ministry of Industry and Information Technology, said, “Blind investment and unfinished projects have appeared in the chip industry, and the investment in integrated circuit manufacturing in the previous stage has also been exposed, causing huge losses. Losses require planning and enhanced oversight.” The most well-known is Wuhan Hongxin, which was founded in 2017. Although it was selected as a major project in Hubei Province for two consecutive years in 2018 and 2019, it was reported in July 2020 that it faced the risk of project stagnation due to a broken capital chain.
In addition, whether the “Chinese chip” can stand on the international stage has always been questioned by the outside world, and under the context of the Sino-US technology war, how to improve the international competitiveness of the “Chinese chip” is regarded as a difficult task. For example, the two leading companies in the “China chip” industry, including the chip design company Huawei HiSilicon, and the chip foundry SMIC have been severely tested recently, which can indicate that the “China chip” is facing a situation of life after death.
Huawei HiSilicon and SMIC under pressure from the United States
TrendForce, a world-renowned provider of market intelligence for the electronics industry, released the “World’s Top 10 IC Design Companies by Revenue in the Third Quarter” on December 19, 2020. Qualcomm ranked first, while China’s Huawei HiSilicon dropped out of the top ten. Because Huawei’s supply chain was cut off by the U.S. government, chips could not continue to be manufactured, and the revenue ranking declined accordingly. This situation shows that “Chinese chips” are bound to go to the road of independent research and development under the blockade situation in the United States, but it is by no means easy. .
In the list, in addition to occupying six companies, the United States occupied the top three, with the top three being Qualcomm, Broadcom and Nvidia. The fourth to tenth companies in the list are: MediaTek, AMD, Xilinx, Realtek, Novatek, Marvell, Dai Luo Dialog (Dialog).
In chip manufacturing, in addition to design, chip foundry is also an important key technology, even more important than the former. China’s leading chip foundry company, SMIC, naturally cannot escape the suppression of the US government, which also indicates that “China’s chips” will face the hardships of independent research and development.
The U.S. Department of Commerce announced on December 18, 2020, that more than 60 Chinese companies and institutions, including SMIC, were included in the “entity list” of export controls to protect U.S. national security. These companies will join regulated companies such as Huawei, which the United States refuses to export technology.
In this regard, SMIC issued a public announcement on December 20, stating, “After the company is listed on the Entity List, the U.S. Department of Commerce will presume that products or technologies used in 10nm and below technology nodes (including extreme ultraviolet technology) will be presumed. At the same time, the company’s provision of foundry services for some special customers may also be subject to certain restrictions. According to the company’s preliminary assessment, the matter has no significant adverse impact on the company’s short-term operation and financial status, and it has no significant adverse impact on the company’s 10nm and below advanced processes. R&D and capacity building have a material adverse impact.” However, the news is regarded by the outside world as a measure to appease the confidence of investors, and the “precise strike” of the US government has also cast a shadow over the research and development of “Chinese core”. More importantly, it may affect the sales of ASML. Ultraviolet lithography (EUV lithography) equipment is provided by SMIC.
Although China’s chip manufacturing industry has the macro policy support of the Chinese government and the efforts of the leading enterprise “SMIC” to catch up, it has indeed completely exposed the shortcomings of the industry under the supply cut. However, the “China Core” is still in an embarrassing situation in the face of the reality that there are external containment and “unfinished ends” inside. With all these, it is difficult for China’s chip manufacturing to develop jumpers.
How “China Chip” can get out of the predicament
Zhang Rujing, the founder of SMIC, once said in August 2020, “If domestic chips want to overtake in corners, the biggest shortcoming is not lack of money, but lack of talents.” Data shows that by 2020, the total demand for the integrated circuit industry is 720,000, but the current total number of talents is more than 400,000. According to the analysis of employment situation, the main reasons for this phenomenon are the lack of salary and room for improvement, and the lack of education. The investment and competition for talents will obviously be an important key to the sustainable development of “China Chip” in the future.
“Since Pangu broke Hongmeng, the development has been distinguished from the turbid.” Hongmeng in China represents the “chaos” before Pangu created the world. This may be Huawei’s original intention to name the spare tire of its mobile phone system “Hongmeng”. As for whether the “Chinese chip” can embark on the road of independent research and development in chip design and foundry technology and make breakthroughs under the pressure of the United States, in addition to the strong support of the Chinese government, it obviously needs more investment in talents, and This is bound to be the biggest challenge China will face in the high-tech field in the future, and it will always be the main concern of the outside world.