[The five largest semiconductor giants occupy half of the global semiconductor market, and Asia-Pacific manufacturers have a strong growth momentum.] For today's science and technology industry, the importance of chips is like the steam engine and internal combustion engine in the first and second industrial revolutions, or even worse. Whether it is people's commonly used mobile phones, computers, or enterprise application data centers, industrial robots, are inseparable from the chip support. The U.S. ban on sales of ZTE has made most people see the "soft underbelly" of China's technology industry: China's core is incapable of making ends meet, and it relies heavily on imports. There are gaps between the 2-5th generation of international head players, such as US and South Korean companies. This chip game, how can China?
On April 20, ZTE issued a statement that the US Department of Commerce’s Bureau of Industry and Security insisted on imposing the most stringent sanctions on the company before the relevant investigation was completed. ZTE’s unfairness was unacceptable to ZTE.
In recent years, the global technology industry is prosperous: 5G communications, artificial intelligence, autonomous driving, augmented reality, virtual reality and other technologies have gone from ideal to reality, and the call for the fourth industrial revolution has gradually emerged. In recent years, Chinese technology companies have also made continuous breakthroughs and have taken the lead in the international arena in some areas.
However, the lack of "core" is still the "pain point" of China's technology industry. Han Xiaomin, general manager of CCID Research Institute of Integrated Circuit Industry, recently told the media that the backwardness of China's chip industry is "omnidirectional and systematic." Even domestic leading enterprises and international mainstream manufacturers still have gaps, not to mention Say the top manufacturers.
Sravan Kundojjala, deputy director of market research organization StrategyAnalytics mobile phone component technical services, told 21st Century Business Herald in an interview that the Chinese semiconductor industry company is still “lagging behind†in most of the chip business.
Global Semiconductor Industry Geography: U.S. and South Korean Enterprises Take a Strong Position
According to the forecast of the semiconductor industry analyst firm ICInsights, which was updated in November 2017, the US and South Korean companies in the world’s top ten semiconductor companies in 2017, measured by market share, were excluded in terms of market share. In Singapore, 5 and 2 seats, and Japan, Singapore, and the Netherlands were short-listed. In 2016, the United States and South Korea each had four companies and two companies short-listed, while the remaining four were from Singapore, Japan, the Netherlands, and Taiwan.
The data for the five years 1993, 2000, 2006, 2016 and 2017 (forecast) were selected. In addition to being ranked second in 2017, Intel ranked first in the remaining years; Samsung from South Korea selected the first four years. It is located in the 7th, 4th, 2nd and 2nd place, and topped the list in 2017. The main reason for the rapid growth of Samsung in the past two years is due to the rising prices of DRAM and NAND memory chips worldwide. Also benefiting from this are South Korea’s SK Hynix and US Micron.
Overall, the advantages of semiconductor giants are also expanding. According to data updated by ICInsights in April 2018, the global IC market (excluding wafer foundry) reached US$444.7 billion in 2017, and the sales of the five head semiconductor companies accounted for the total market volume. 43%, compared with 10 years ago in 2007, when the figure was "just" 33%.
In addition, from a horizontal perspective, the top ten, top 25, and top 50 semiconductor companies in the world in 2017 accounted for 57%, 77%, and 88% respectively; in 2007, these data were also 46% and 67% respectively. 76%. In the stronger semiconductor industry, the space reserved for "new players" has become smaller and smaller. How can we achieve breakthrough in an industry that has reached maturity, and Chinese companies still face challenges.
China Enterprise IC Design Market Occupies 11%
However, semiconductor manufacturers in emerging markets are not without opportunities. ICInsights data shows that from 1990 to 2017, the market share of the Japanese integrated circuit industry (excluding wafer foundry) fell from 49% to 7%, and Japanese companies such as Hitachi Electric, Hitachi, Matsushita and Mitsubishi all withdrew.
In the same period, the growth rate of enterprises in the Asia-Pacific region was astonishing, rising from 4% to 37%. Among them, the Korean integrated circuit suppliers that came from behind, especially in the field of memory chips, played an important role in this change in the pattern. In addition, with the exception of European companies that are still standing still, the share of North American companies has increased from 37% to 49%, and they have replaced Japanese companies as the first camp.
However, it is worth noting that this growth in the Asia-Pacific region is not all due to business growth, and mergers and acquisitions under financial operations have also played a role. Take Broadcom, which was once headquartered in Singapore, as an example. Several actions of “M & A Madness†have stirred the geographical layout of the industry.
In 2016, Avago, headquartered in Singapore, completed the acquisition of the original Broadcom Corp., which is based in the United States, and subsequently integrated into Broadcom Limited. In November 2017, Broadcom made a takeover offer to Qualcomm with a combined cash and stock price of US$130 billion, and launched a hostile takeover after being rejected. Just a few days before the first quotation, Broadcom CEOHockTan expressed in the White House plans to move headquarters back to the United States.
In March 2018, on the eve of the “decisive battle†at the Qualcomm shareholders’ meeting, CFIUS urgently stepped in and asked Qualcomm to postpone the holding of the shareholders’ meeting and the deadline for the shareholder vote. A week later, US President Trump signed an executive order to stop the acquisition on the grounds of “national security†concerns. Broadcom immediately announced his formal abandonment of the acquisition of Qualcomm and said that it would continue to relocate its headquarters as originally planned. On April 4, Broadcom issued a statement saying that the US headquarters in San Jose, California, has now become Broadcom’s global headquarters and the company has once again become a US company.
A 21-century economics report by a private-equity firm investing in billions of dollars in the semiconductor industry points out that there is a smile curve in the IC industry, ie high profit margins at both ends and low intermediate profit margins. IC design is where the profit margin is at a high point. Of the ring.
The data updated by ICInsights in March this year shows that if only the IC design is a part of “multi-goldâ€, IC sales of such companies in 2017 reached US$101.4 billion, and US companies accounted for 53% of them. This has not yet accounted for 16% of Broadcom’s share of the company’s headquarters in Singapore in 2017.
However, Chinese companies have also made significant progress in IC design and have become the fastest growing global IC design market share since 2010. In 2010, the market share of China Enterprise was only 5%, but by 2017 it had grown to 11%. In 2009, the only Chinese company that entered the top 50 IC design companies was HiSilicon, and in 2017, a total of 10 Chinese companies ranked among the top 50, including Hass, ZTE, and Ziguang.
Annual Imports of about 260.1 billion U.S. Dollars for Chinese Semiconductors
Although China is the world's manufacturing plant for electronic products, in the chip sector, China’s production capacity is insufficient.
China is a major consumer of global semiconductors, but its export capacity has been low. According to data from the General Administration of Customs of China, in 2017 China's integrated circuit annual import volume was approximately US$260.1 billion, which exceeded the total amount of oil imports, but only US$66.9 billion was exported in 2017.
In contrast, in previous years, from 2014 to 2016, China's annual imports of ICs were 217.6 billion U.S. dollars, 229.9 billion U.S. dollars, and 227 billion U.S. dollars, respectively, which maintained an upward trend. The annual export volume of China's ICs was 60.9 billion U.S. dollars, 69.1 billion U.S. dollars, and 61 billion U.S. dollars in 2014-2016 respectively. The ratio of exports/imports has shown a downward trend since 2015.
In addition, according to the Datai think-tank data, China's annual semiconductor consumption accounted for approximately 33% of global shipments, of which the integrated circuit market accounted for about 81% of the total semiconductor industry, and China's integrated circuit industry probably accounts for the scale of the global integrated circuit industry 7%-10%. This set of data shows that China consumes one third of the world's semiconductors each year, but its production capacity can only provide one-tenth of the world's total.
"China's semiconductor companies have indeed made great progress over the past decade," said Sravan Kundojjala, deputy director of technical services for mobile phone components at Strategy Analytics. He told 21st Century Business Herald reporters, especially with basebands, application processors, and connection chips. Fingerprint sensors and other components related to smartphones.
However, because semiconductor companies in mainland China are mainly concentrated in high-performance, low-cost markets, these companies are unable to advance their technology roadmaps compared to other global leading semiconductor companies such as Qualcomm. Kundojjala believes that from this perspective, there is a huge technological gap between semiconductor companies in mainland China and companies such as Qualcomm and Broadcom.
For example, Kundojjala, China Semiconductor has made "limited" progress in the field of LTE mobile phone baseband. Like Hass Semiconductor Co., Ltd. (hereafter referred to as "Hai Si") has made good progress in LTE and 5G baseband, and Spreadtrum, Rockchip and RDA. However, Hass's LTE Cat7 downlink rate is up to 300Mbps, while Qualcomm's integrated baseband supports downlink speeds of up to 2Gbps.
At the same time, the integration capabilities of mainland China semiconductor companies are far less than those of Qualcomm. For example, Qualcomm's LTE baseband also integrates CPUs, GPUs, DSPs, ISPs, and more. Kundojjala said that in the baseband area, Hass is the only Chinese company that can compare with Qualcomm.
There is a gap in the overall situation and breakthroughs are achieved in some areas
Guo Gaohang, an analyst at semiconductor industry at Jibang Consulting, pointed out to 21st Century Business Herald reporter that at the design end, nearly 9 of China have become small and micro start-up companies, and there is no lack of substantial overlap in the direction of the development of these companies.
According to data from the China Semiconductor Industry Association, there were approximately 1380 integrated circuit chip design companies in China in 2017, which are generally small and have weak R&D capabilities. Among them, only 500 companies are profitable. Most of the design companies in the field of Internet of Things, automotive electronics, and consumer electronics are start-up teams with less than 10 employees. This is in marked competition with giants such as Qualcomm.
While the number of design companies in mainland China has surged, the development of international design companies has shown the trend of integration and resource redistribution. Qualcomm’s attempt to acquire the NXP case is one of them.
The report of CCID Research Institute of Integrated Circuits shows that if Qualcomm successfully acquires NXP, this will basically block China's mainland ICs in the Internet of Things, wearables, car networking, driverless, drone, industrial, embedded High-end development in the fields of consumer electronics, etc., and design companies in mainland China will only be limited to niche navigation, military, special fields, and agricultural development.
In addition, Guo Gaohang believes that although China has made significant breakthroughs in designing some end-chip products, IP cores still rely on international leaders such as ARM, and EDA tools used in designing are completely licensed by vendors such as Synopsys/Cadence/Mentor.
Guo Gaohang analyzed with reporters from the 21st Century Business Herald that although there were HiSilicon and Spreadtrum in the Chinese mainland, they were still biased toward the mobile terminal industry and Hass processor chips were not supplied externally. In the middle and low-end markets, Chinese manufacturers still have no say in terminal applications such as PCs and servers.
One visible fact is that among the top 20 semiconductor manufacturers in the world, mainland China manufacturers are still missing. Guo Gaohang believes that this is mainly because Chinese manufacturers are now lacking in innovation capacity, the technology gap is still obvious, and industry support and industrial atmosphere still need to be improved.
In the field of memory, Guo Gaohang said that Chinese companies have entered the global mainstream supplier array in the segment of NorFlash products.
According to statistics from Jibang Consulting, in 2016, Zhaoyi's innovative NorFlash global market share was approximately 7%, and it has successfully entered the Samsung smartphone supply chain. However, the mainstream memory chips DRAM and NAND are still heavily dependent on imports, and the three domestic memory wafer production line production plans are under construction. The initial mass production time is basically in the second half of 2018. The technology is whether 3D-NAND or DRAM. The gap between international leading manufacturers is about two generations.
Kundojjala also pointed out that China's foundries such as SMIC have lagged behind Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung (Samsung) in terms of cutting-edge process technology.
Kundojjala believes that there is at least a 3-5-generation gap between SMIC and TSMC in the casting technology. Casting technology is crucial for new technologies such as flagship chips such as 5G and AI.
With the manufacturing end of TSMC already trial production to 7nm, the next 5nm is about to fully open EUV era, Groovy, UMC have also mass production of 14nm, coupled with following Samsung, Intel, Hynix, etc. have plans to build OEM Business independence, Guo Gaohang pointed out that the competition in the manufacturing side of the global semiconductor industry will become more intense.
At the packaging and testing end, although manufacturers in mainland China can be said to have entered the world's leading ranks, but the future mature packaging technology on the growth of corporate revenue growth will gradually weaken.
Guo Gaohang analyzed that the heat of TSMC's InFo technology once again ignited the pursuit of high-end packaging technology by various packaging and testing companies. Changjiang Electronics has acquired the technology reserves and market of Xingke Jinpeng in the field of Fan-out by acquiring Xingke Jinpeng. Resources, "Although the gap between Taiwan and Taiwan's giants is obvious, they are among the leading companies in OSAT."
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