News
The wind has finally arrived, but can Chinese chips take off?
Categories:
Media reports
Author:
Origin:
2014.06.27
The long-anticipated national-level policy and implementation plan for supporting the integrated circuit industry development has finally revealed a glimpse today with the official release of the "National Integrated Circuit Industry Development Promotion Outline." The "Promotion Outline" builds on existing policies such as Document No. 18 and Document No. 4, with a focus on adding three main contents.
First, strengthen organizational leadership by establishing a national integrated circuit industry development leadership group responsible for coordinating and promoting industry development work, enhancing top-level design, integrating and mobilizing resources from all sides, solving major issues, and dynamically adjusting industry development strategies in real-time based on changes in industry development conditions. A consulting committee composed of relevant experts will also be established.
Second, establish a national integrated circuit industry investment fund. The focus is on attracting large enterprises, financial institutions, and social funds to invest in the fund. The fund will operate in a market-oriented and professional manner, reducing direct government allocation of resources, promoting resource allocation based on market rules and competition to maximize benefits and optimize efficiency. The fund supports layout around the industrial chain, with a focus on supporting the integrated circuit manufacturing sector while also considering design, packaging testing, equipment, and materials to enhance enterprise capacity levels and facilitate mergers and acquisitions as well as standardize corporate governance to form a virtuous self-development capability.
Third, increase financial support. The focus is on innovating credit products and financial services, supporting enterprises to go public and issue financing tools, developing insurance products and services, etc., to support the integrated circuit industry.
Industry rumors suggest that implementation details will only be released in September this year, while the highly anticipated national integrated circuit industry investment fund will also be listed accordingly. It is said that this integrated circuit support fund has a total amount of 120 billion yuan, covering the period from 2014 to 2017, with 30 billion yuan from fiscal allocations, 45 billion yuan from social security funds, and another 45 billion yuan from other sources. The fund company will be established under the China Development Bank's subsidiary to coordinate operations, with 40% invested in chip manufacturing, 30% in chip design, and the remainder for supporting industries such as equipment and materials. If the fund is successfully implemented, its total scale will exceed the entire domestic integrated circuit industry's investment over the past nearly ten years.
Is it a feast for state-owned enterprises or a trend of industrial integration?
The "Promotion Outline" establishes a main line of "making the market play a decisive role in resource allocation while better leveraging government functions," emphasizing the market position of enterprises as the main body of innovation and the main driving force for industrial development. There is widespread skepticism about the real implementation prospects of this statement because from the perspective of funding direction and proportion, it is expected that there will be another round of "state-owned enterprises advancing while private enterprises retreat": 40% of the industrial fund's scale is directed towards state-owned manufacturing enterprises led by SMIC, while 30% is expected to overlap significantly with enterprises in materials and equipment industries related to Special Project No. 02. The most capable of achieving "highlighting market subject status" is chip design; however, recent large-scale privatization and merger cases among domestic design companies (such as Unisoc's acquisition of Spreadtrum + RDA and Pudong Venture Capital's privatization of Lattice) indicate that acquiring mergers through capital in the design field to build a national team for integrated circuit design is a major strategy for government development in this area. China's IC design companies are characterized by being "small, weak, and scattered," with low industry concentration; thus government guidance for enterprise mergers to promote resource integration is imperative. Therefore, industrial support funds should primarily be used for mergers and acquisitions where large state-owned companies acquire smaller ones. However, unlike previous situations where small and medium-sized enterprises have not benefited from government support, it is expected that private capital driven by this support fund will become more active, further accelerating industry consolidation.
Information security is a broad concept that can encompass various chips.
The annual import value of domestic chip products exceeds that of oil, with high-end chip import rates exceeding 90%. According to data from China's General Administration of Customs, in 2013 alone, China imported 266.3 billion integrated circuits, an increase of 10.13% year-on-year, with an import value of $231.3 billion, up by 20.47% year-on-year. In comparison, during the same period, China imported 280 million tons of crude oil with a total value of $219.6 billion; thus integrated circuits are the largest consumer of foreign exchange in China. As integrated circuits are currently the physical carriers for almost all information products, they belong to a strategic industry that involves national security at its core. Therefore, this "Promotion Outline" also clearly states that "it is necessary to strengthen the application of secure and reliable software and hardware and promote the use of technologically advanced and secure integrated circuits, basic software, and complete systems." Currently it seems that almost all types of chips are closely related to information security; there are memory chips where China's chip industry has shortcomings as well as high-end processors, FPGAs (Field Programmable Gate Arrays), high-performance analog devices which are general-purpose high-end chips; there are also consumer electronic chips ubiquitous in daily life. Thus under the banner of information security it appears that all types of chips are beneficiaries of this industrial development promotion plan; however in this regard the statements in the "Promotion Outline" are overly broad without focus or emphasis.
Can full-industry linkage from design-manufacturing-complete machines be solved just by having money?
China's integrated circuit industry's value chain integration capability is weak; mechanisms linking chips with complete machines have yet to form; most independently developed chips have not entered key application areas for complete machines. Therefore, linking chips with complete machines is urgent; how to make chips and complete machines move together in sync is a hurdle that China's integrated circuit industry must overcome for future development. The "Promotion Outline" proposes to "highlight the layout across the entire industrial chain from chip design - chip manufacturing - packaging testing - equipment and materials for coordinated development; thus constructing an ecological chain comprising 'chip - software - complete machine - system - information service.'" This phrasing has repeatedly appeared in various policies related to integrated circuits from central to local governments but has yielded little effect. In fact linkage requires prerequisites; merely relying on capital is insufficient; what should truly be established is mutual trust between chip companies and complete machine manufacturers as this forms the basis for good cooperation. Therefore besides guiding through policies or requiring complete machine companies to procure domestic chips through government procurement or similar means, more should be done by leveraging third-party public service institutions to build bridges for upstream-downstream linkage; new types like IC Coffee based on chip field industrial chain clubs are actually very good as they utilize diverse forms to effectively enhance communication between upstream and downstream enterprises while increasing trust and demand matching platforms; achieving full-industry linkage requires first creating an environment conducive to cooperation between complete machine manufacturers and chip companies.
Can the IC Coffee model leverage full-industry chain linkage to help promote the construction of an industrial ecological chain?
IC Coffee is a new type of high-tech industry "chain" club. It is jointly established by senior management and enthusiastic industry veterans from upstream and downstream fields such as chips, system software and hardware, IT interconnection, media, industry analysis, and technology investment. The aim is to gather senior elite individuals in the industry, pooling everyone's wisdom and resources to create an offline social platform for the high-tech industry chain, a technology promotion and exchange platform, an innovation and entrepreneurship incubation platform, and an early-stage investment platform to promote the development of integrated circuits in China. The "Promotion Outline" emphasizes the prominent market innovation position of enterprises, highlighting the coordinated development of the entire industry chain layout of "chip design - chip manufacturing - packaging testing - equipment and materials," thereby constructing the "chip - software - complete machine - system - information service" ecological chain; this aligns closely with the principles and consistent development direction upheld by IC Coffee. Over the past two years, what IC Coffee has done, as mentioned in the outline, is to host regular small in-depth exchange meetings through a cross-regional social platform and technology exchange platform that spans the entire industry chain. IC Coffee has become a think tank platform for industry leaders. At the recent two-year anniversary celebration of IC Coffee, founder Hu Yunwang clearly proposed the concept and timeline for building incubators and entrepreneurial financing platforms, providing a beneficial option for constructing coordinated development and interactive linkage across the entire industry chain. The resource integration platform of IC Coffee is completely demand-driven, innovation-driven, and an open platform that combines software and hardware. By providing services such as technology exchange and promotion, ICT venture capital, project guidance, mentor matching, financing consulting, project consulting, and project promotion, IC Coffee is committed to bringing this wave to every practitioner in the integrated circuit industry chain, allowing China's "chip" to truly soar freely!
Key words:
×
-
-
Contact information
Service hours: 9:30 — 6:30
Contact number :
Feedback :
I will take every suggestion from you seriously and adjust it in time
-
Please let us know your contact details
Contact us
No. 159, North Pingji Avenue, Pinghu Street, Longgang District, Shenzhen
Heng Road E Times Hangshun Chip Headquarters Building 22nd Floor
