Obstacles to the development of China's integrated circuit industry

On May 21, Beijing time, it was reported on the China Touch Screen Online that Pudong Science and Technology Investment Co., Ltd. had the "small path" of the National Development and Reform Commission - a necessary condition for domestic companies to carry out overseas mergers and acquisitions, but it was not "welcomed" by Reedike; On the other hand, the quotation of Ziguang Group is higher than that of Pudong Scientific Investment and has been approved by the Board of Directors, but it is hard to get the "small road" from the Development and Reform Commission.

In the face of two state-owned enterprises with different strengths, the privatization of Redico is doomed to be uneven.

It is interesting that since the second half of last year, the state has been brewing support policies for the integrated circuit industry and proposed to establish a hundred billion yuan support fund to make the integrated circuit industry bigger and stronger. This has also been repeatedly interpreted by the industry as a good opportunity for the development of the integrated circuit industry. Ironically, recently, it was reported that Intel planned to strategically invest in Ruixin Micro, a design enterprise with the highest annual shipment of ARM chips in China.

On the one hand, the country proposes to invest heavily; On the other hand, chip design enterprises that have made certain achievements in marketization must seek capital support from foreign enterprises. In the game of state-owned capital, Direc and Spreadtrum may also miss the best integration opportunity, which is worth rethinking in the domestic IC industry circle.

According to the statistics of China Customs, in 2013, the total import and export value of China's integrated circuits increased by 29% year on year, maintaining a rapid growth momentum. Among them, the export volume was 88 billion US dollars, up 63% year on year; The import volume was 232.2 billion US dollars, with a year-on-year growth of 20%, maintaining a high growth rate. The trade deficit was US $144.1 billion, an increase of US $5 billion compared with US $139.1 billion in the same period of last year, the fourth consecutive year. In contrast, crude oil imports were less than $220 billion.

Of course, unlike crude oil, integrated circuits are "big imports and big exports", many of which are manufactured into electronic products and then exported again. However, opportunities in the booming domestic manufacturing demand cannot be ignored.

However, Chinese enterprises are still lacking in this aspect. According to the Report on the Development of China's Semiconductor Industry (2013 Edition) released by the China Semiconductor Industry Association, the sales of the top ten chip design enterprises in China totaled 22.64 billion yuan in 2012, while Qualcomm's revenue in 2012 was 13.177 billion dollars (equivalent to 83 billion yuan). In other words, the total output value of the top ten chip design enterprises in China is less than one-third of that of Qualcomm.

The integrated circuit industry is a technology and capital intensive enterprise, and capital and scale are the two core elements of its competition. Gu Wenjun, chief analyst of iSuppli Semiconductor, who has studied the semiconductor industry for a long time, said that there are currently more than 600 chip design companies in China, which can be divided into five echelons according to annual revenue: more than $1 billion, $100 million to $1 billion, $50 million to $1 billion, $20 million to $50 million, and less than $20 million. Among them, Hisense and Spreadtrum are the only two companies whose annual revenue reaches or approaches US $1 billion. They have strong competitiveness in mobile processors, baseband chips and other fields. For other enterprises, "it is very difficult to break through upward".

Perhaps it is precisely because of the weakness in the scale of relevant domestic enterprises that the Ministry of Industry and Information Technology issued an announcement last December to establish an equity investment fund for the development of Beijing's integrated circuit industry, with a total scale of 30 billion yuan. It will focus on building the integrated circuit industry, and it is reported that the country is brewing a larger scale "100 billion yuan per year" plan; At the National "Two Sessions" held in March this year, Premier Li Keqiang proposed in the government work report that "establish an innovation platform for emerging industries, catch up with and surpass the advanced in the new generation of mobile communications, integrated circuits, big data, advanced manufacturing, new energy, new materials, etc., and lead the development of future industries". The IC industry was written into the government work report for the first time.

However, capital is on the one hand, and more importantly, whether good steel is used in the blade.

The case of Ruixin Micro can be seen. In the tablet OEM industry in Shenzhen, Quanzhi and Ruixin Micro have large market shares: according to the data of third-party institutions, Quanzhi's annual shipments reached 46 million in 2013, and Ruixin Micro's shipments reached 40 million.

However, in the domestic capital market, the conditions for IPO are relatively harsh. The revenue volume and profitability of Ruixin Micro in the first three years cannot meet the requirements of IPO, and it lacks investment capacity for further development; Even if listed, it may be another kind of pressure to face people's doubts.

In this regard, the development of LCD panel industry may be a reference. In the past 10 years, China's LCD panel has grown from scratch, gradually developing to about 10% of the global share. However, BOE, the leading enterprise of LCD panel, has been questioned for its large investment and fluctuating performance.

However, domestic integrated circuits are facing more pressure from brands, relying more on "white brand" products for shipment, and are difficult to enter the high-end market.

"Generally speaking, after the turnover of chip companies reaches 500 million dollars, if they want to continue to grow, it is difficult to rely on themselves alone, and they need to develop through mergers and acquisitions." Pan Jiutang, an analyst in the semiconductor industry, said.

In the past few years, the integration of the global communication chip market has continued to emerge. Intel acquired Infineon wireless business for $1.4 billion, Marvell acquired Intel communication processor business for $600 million, and Italian French Semiconductor acquired NXP wireless business for $1.5 billion. Qualcomm, a chip design giant, has also made frequent moves. In the past two years, it has successively acquired Atheros, a WiFi chip supplier, Duoshang Electronics, a leading supplier of power management solutions, Pixtronix, a fabless MEMS display startup, and others. A good financing platform and M&A environment may be the desire of domestic growing enterprises, which may be more attractive than the simple "100 billion fund" investment.


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