The chip industry is on the road to breakthrough

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The chip industry is on the road to breakthrough

2006-7-18

Recently, there has been a lot of news in the chip industry: First, the northern chip town Fangzhou was hit by a dark curtain, and the myth of China's first chip was shattered. Then, the lawsuit against Zhuhai Actions Technology Co., Ltd. in the south was revived. Recently, news came from the other side of the ocean that the US International Trade Commission (ITC) will make a final ruling on the infringement case that has lasted for a year on September 15 this year.

The chip industry, which once caused us great pain, reached a turning point in 2005. Where will our chip industry go today?

Talent breakthrough

"The difficulty in chip development is first of all the insufficient training and reserve of talents. However, judging from the situation in recent years, the intensity and scale of our domestic training are obviously increasing." At the Institute of Microelectronics of Tsinghua University, Professor Ren Tianling told reporters that there is a clear growth trend in the training of talents in this area at Tsinghua University. The success of returnees in the chip field after returning to China has also provided a new perspective for the domestic talent training. Professional talents that are scarce in the market are the next growth point of human resources.

In the north, a group of colleges and institutes centered around Peking University, Tsinghua University, and the Chinese Academy of Sciences have expanded the cultivation and training of such talents. In particular, Tsinghua University has cooperated with the Beijing Municipal Government to cultivate chip talents, with very good results. In the south, the chip industry bases centered around Zhejiang and Shanghai have their own characteristics in cultivating professional talents. Various professional training and vocational education in China are conveying a message: the development of China's chip industry has reached a stage of scale, and has also received attention from the government. The talent value of this industry has been recognized and respected by the market.

Zhao Lei, deputy general manager of Beijing Huaheng Zhixin Human Resources Consulting Company, felt deeply about this. He said: "In the past, relatively few companies of this type came to us for consultation, but in recent years, the number has increased. They are all new and cutting-edge companies in the chip industry who are doing well. Their distress before was that they could not find talents, but now they have to solve the problem of finding very suitable talents. Because our companies are catching up in certain areas or links of chips, and have begun to have representative breakthroughs in consumer electronics, the demand for human resources in these companies is increasing, and the standards for talent quality are also improving." He told reporters that in the past few years, returnees dominated many companies, but now the number of local talents is increasing rapidly.

"Graduates from Peking University, Tsinghua University and Beijing University of Posts and Telecommunications have solid foundations and have played an important role in tackling technical problems in our company after training." During an interview in Zhongguancun, several vice presidents in charge of technology at consumer electronics companies told reporters that talent training and human resource development in this field are becoming increasingly mature.

In the past, the biggest problem for domestic chip companies was the lack of human resources, and there was nowhere to recruit people. Now, not only has there been progress in quantity, but also in the development of training models. "Especially in talent training and cultivation, there have been breakthroughs. We now have our own characteristics in the training of chip design talents: first, our outstanding individuals lead a group to form a powerful group. Our group is led by an obvious technical elite, which is different from India or European and American countries. Second, our technology research and development is mostly customized according to customer needs, which is different from the modular design of European and American countries. The originality and pioneering spirit of talents in certain links or projects in our chip field have been trained. In certain links or projects, our human resources are not weaker than others." Zhao Lei, deputy general manager of Beijing Huaheng Zhixin Human Resources Company, analyzed.

However, we still have a gap with the electronics giants and powers in terms of talent training. Ren Tianling, a professor at the Institute of Microelectronics at Tsinghua University, reminded with some concern: "Bases such as Beijing and Shanghai have a large number of colleges and universities, and they also have certain potential in terms of talent supply, but overall there is still a shortage of talent supply."

Zhao Lei also agrees with this view, "We must also face up to the structural characteristics of human resources. The current talent supply is mostly low- and medium-end, while the shortage of high-end talent needs to be improved, and the introduction or training of high-end talent needs to be strengthened." Compared with major electronic powers, high-end human resources are still a bottleneck. The result of such a human resource structure is that we now have fewer talents who can do large-scale integration, and most of them start with smaller projects.

Three-way split

"There are nearly 500 chip design companies in China, but most of them are state-owned enterprises, and most of them are engaged in smart card design. They will not survive for long." A US research institute asserted. Looking back at our design companies, are they really on the road to disappearance?

"In the first half of this year, China's integrated circuit industry showed a growth of 54.8%, nearly double the average growth rate of 30% in the electronics industry. Last year, China's integrated circuit growth was only 30%. "The figures from the Semiconductor Association are exciting.

"We used to enter many companies, but the elimination rate was not low. However, the overall trend is still booming. Statistics show that in the 1990s, there were only a dozen chip companies, but in 2004, the number reached several hundred." Yue Ting from CCID Consulting Semiconductor Department said. According to statistics, about 20 semiconductor companies are established in Beijing every year, and less than 10 change their business, which is also an increasing trend in terms of quantity.

Not only has the number of companies increased, but a new competitive situation has also emerged among companies of different natures. The industry characteristics of chips, which are known for their innovation, have destined the industry's companies to compete for development: foreign-funded, private, and state-owned enterprises are each striving to be "pioneers" in China's IC industry chain.

Yu Zhongyu, chairman of the China Semiconductor Industry Association, summarized the new characteristics of China's integrated circuit industry: three types of IC companies, state-owned enterprises, private enterprises and foreign-funded enterprises, are competing for development.

According to statistics from the National Integrated Circuit Design Shenzhen Industrialization Base, there are currently about 130 IC design companies in Shenzhen, and the types of companies are mainly state-owned, private, overseas returnees, and foreign-funded. Each type of company has its own strengths: 10 state-owned enterprises have rich project sources and undertake major national projects; the number of overseas returnee companies has reached more than 20, and their advantages are technology and R&D concepts; the number of local private enterprises is the largest, with deep market accumulation and market innovation capabilities that no one can ignore.

Hao Weiya, general manager of Beijing Integrated Circuit Design Park Co., Ltd., recently said: "At present, Beijing's IC design industry has formed a pattern of state-owned enterprises, foreign enterprises and private enterprises. "According to reports, there are about 100 IC design companies in Beijing, and more than 20 overseas companies have set up IC design centers in Beijing. New IC design companies, mainly "returnees", are established every year.

As of the end of August 2005, among the enterprises in the National IC Design Industrialization Base in Shenzhen, eight enterprises, including SMIC, Xinwei, and Aike, have received international venture capital, with the largest amount exceeding 30 million US dollars. Statistics show that many similar enterprises in IC design industrialization bases in Beijing, Shanghai and other places have also received the favor of various venture capitals. "No one can guess whether the next chip hero will come from a private or overseas returnee enterprise, because the growth rate of these chip enterprises is really difficult to predict." Yue Ting said.

What makes us optimistic about these enterprises is that, in addition to their average annual growth rate of 30%, these less well-known companies have a good mentality: calm and solid. This is a sign of the maturity of small companies. During the interview, the reporter also found that IC design companies in Shenzhen are relatively low-key and do not advertise.

The numerous small chip design companies are strengthening the chip breakthrough force. "It is also very important to be able to calm down and do research and development," said Ren Tianling. "The IC industry is a technologically innovative industry, and companies need to do research and development in a down-to-earth manner."

Accurate positioning

"After several years of development, we have made significant progress. However, the role of the market cannot be ignored," said Professor Ren Tianling. We expect our own national enterprises to focus on technological progress, but in fact, the innovation of enterprises cannot be separated from the market environment.

The focus on the market will bring new horizons to small and medium-sized chip companies. Yu Zhongyu emphasized the new thinking of China's integrated circuit design industry: "Chinese IC design companies should not emphasize high-tech products too much, but should emphasize products with independent intellectual property rights, core technologies, brands and market competitiveness."

"Having market competitiveness is the most important thing. Only in this way can an enterprise survive." Zhao Lei suggested that enterprises should pay attention to market competitiveness.

The increasingly mature medium-sized semiconductor companies are beginning to find their own way to survive and succeed. A large number of emerging chip design companies are segmenting the technology and market of the industry to prepare for their next expansion. In the field of USB flash disk chips, Xinbang Microelectronics has created a miracle in the chip design industry and market sales in three years. Since its listing in March 2005, it has occupied 35% of the global market in April this year. An important factor in Xinbang's success is accurate positioning. Three years ago, Zhang Hualong, who returned from studying in the United States, and his colleagues at Xinbang focused the company's operations on the core components of USB flash disks - the control chip field. The successful case of Beijing Bio Biochip Co., Ltd. focusing on biochips has also brought new ideas to Chinese chip companies.

"Deng Zhonghan may not be easy to imitate, but Vimicro's success has given us hope." Zhang Jun, the founder of a phone chip design company, told reporters during an interview in Zhongguancun. Yue Ting from CCID Consulting's semiconductor department also agreed with this view. "2005 can be said to be a milestone for the chip industry. Two companies have made great progress. One is Vimicro's listing, and the other is Zhuhai Juli has become the world's number one. What they have in common is that they have a main product. Vimicro has made a breakthrough in camera chips, and Zhuhai Juli has an absolute advantage in MP3."

"Product positioning is related to the fundamental development of a company. A key factor for Zhuhai Actions to maintain rapid development is that it has an accurate product positioning." Yue Ting said: "Zhuhai Actions has focused on MP3 audio and video chips in the past few years, which is in line with the market trend." More than 130 design companies active in the Shenzhen market are targeting more than 1,600 programmable switching systems, color TVs, and mobile phone manufacturers in Shenzhen. Many products come directly from the market, so they have received considerable orders in recent years.

Zhao Lei believes that if small and medium-sized IC companies want to survive for a long time, they must first clarify what they can do and start from their own resources. Some companies pursue advanced technology from the beginning, but their capital chain is broken before the product comes out. This is also a factor that our companies need to consider.

Companies focusing on the market does not mean giving up the pursuit of core technologies and independent intellectual property rights. "One of the criteria for measuring the advancement of semiconductors is the width of the circuits distributed on the chip. The circuit width of the most advanced semiconductors is only 90 nanometers, and many Chinese semiconductor companies have designs that are only one or two generations behind the most advanced products," said Professor Ren Tianling.

In fact, the industrial value chain of many enterprises is moving upward, and the design is moving towards the high end. The IC design departments of Huawei, ZTE, Skyworth and other companies have made considerable achievements in the development of mid-to-high-end IC products based on their rich system design experience. Yu Zhongyu, chairman of the China Semiconductor Industry Association, also mentioned that the rapid improvement of technology level is a feature when summarizing the new characteristics of China's integrated circuit industry.