Who is hindering the development of China's domestic semiconductor industry?

EEWORLD

Sharp interpretation of electronic information

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On the evening of August 7, the China Securities Regulatory Commission issued an announcement to postpone the vote on Broadcom Integrated's IPO application. A week ago, on the evening of July 31, the China Securities Regulatory Commission rejected Jingfeng Mingyuan's IPO application. In addition to the previous rejection of Mingwei Electronics' IPO, no semiconductor company has achieved IPO listing on the A-share market this year.

Broadcom Integrated is a leader in wireless RF chip design and the creator of the world's first ETC chip. It has leading technology in my country's wireless RF chip design industry. It has 26 and 39 authorized patents in mainland China and the United States, covering key areas such as energy consumption, noise reduction, filtering, wake-up in the wireless RF field, and 70 integrated circuit layout designs. It is one of the main suppliers of chips for special walkie-talkies, Bluetooth mice, etc. at home and abroad.

This is just a small microcosm of the shattered dreams of domestic semiconductor companies by the China Securities Regulatory Commission.

In the past two years, almost all of the capitalization paths of local IC companies have failed due to the China Securities Regulatory Commission:

-Beijing Ingenic's acquisition of OmniVision Technologies was rejected by the China Securities Regulatory Commission and failed!

(OmniVision Technologies has mastered the core technology of image sensor chips and ranks among the top three in the global CMOS image sensor chip industry. It has strong core competitiveness. Its main competitors are Sony of Japan and Samsung of South Korea.)

-GigaDevice’s acquisition of ISSI was rejected by the China Securities Regulatory Commission, it’s over!

(ISSI is a privatized and delisted company from the Nasdaq in the United States. Its main products are volatile memory chips such as DRAM and SRAM. ISSI's SRAM product revenue ranks second in the global SRAM market; its DRAM product revenue ranks eighth in the global DRAM market.)

-Oride's acquisition of Ampleon was rejected by the China Securities Regulatory Commission and aborted!

(Ampleon Group is the world's second largest supplier of RF power chips, with more than 50 years of operating experience. Its products are mainly used in mobile communication base stations, including 4G networks and 5G systems, and are widely used in aerospace, military, medical, lighting, energy transmission and other fields. Ampleon Group can fill the gap in domestic high-end integrated circuit technology, and is also expected to promote the overall improvement of my country's integrated circuit industry, especially the RF power chip industry chain.)

It is now impossible to buy it even if you want to, because NXP originally divested its entire RF power chip business to Ampleon and sold it to the outside world in order to prepare for the acquisition. Now that Qualcomm's acquisition of NXP has been rejected by China, NXP no longer needs to sell this business!

- Wansheng shares' acquisition of Silicon Valley Analog was rejected by the China Securities Regulatory Commission and is not allowed!

(Analogix is ​​an integrated circuit design company specializing in the design and sales of high-performance analog-digital hybrid chips. It has become one of the major international suppliers of high-performance analog-digital hybrid chips.)

-Rockchip IPO, rejected by CSRC, dream shattered!

(Rockchip RK is recognized by the industry as the best domestic tablet, audio DSP and processor chip manufacturer. HP, Asus, Dell, Samsung and Microsoft win10 tablets all use RK chips)

-Spreadtrum (Spreadtrum + RDA) IPO is full of difficulties and there is no end in sight!

(Spreadtrum and RDA were once the world's third and fourth largest communication chip suppliers. They were delisted from NASDAQ and merged into Tsinghua Unigroup. They had the opportunity to challenge Qualcomm and MediaTek. They have been working hard for IPOs for three years, but have been unable to move forward. Due to capitalization constraints, their business has also been severely affected!)

These projects are already recognized as the best companies in China's domestic semiconductor chip industry. As for the reasons for the rejection, the CSRC explained:

"If you want to go public, you still need to work hard on your own and cannot afford to be careless. The CSRC will not be lax in its review either."

What a high-sounding reason!

It's as if Jinya Technology, Wanfu Biosciences, Baofeng Video, Green Earth, Zhanzidao, and LeTV, which have passed the "strict review" of the China Securities Regulatory Commission and went public, are much better than the above-mentioned local semiconductor companies that are working hard to catch up with the national technological gap.

There are dozens of liquor companies listed on the stock market. It makes me cry when I talk about it...

Against the backdrop of the ZTE incident, China is determined to focus on the development of semiconductor chips, but the CSRC has blocked the retreat of all local semiconductor entrepreneurs and investment institutions. If someone says that there will be American backhands in the CSRC, I don't believe it. They just can't see the strategic pace of the whole country, but only care about the official positions and interests of their own small group. The most annoying thing about this department is that they have no responsibility, do nothing, are afraid of taking responsibility, but still claim to be very fair.

You know, if a company is rejected in the final stage of IPO and acquisition and reorganization, the damage to a company is much greater than that of an ordinary company. In order to meet the various requirements of the CSRC, each company has paid a huge financial and human cost. Many companies have spent tens of millions of RMB on compliance and spent several years traveling to Beijing, visiting investment banks, attending one trial after another, and going through layers of connections. If they fail in the end, it is not just a matter of losing so much money and time, but also a heavy double blow to the company's reputation and morale.

It is sad that in the end these excellent semiconductor startups did not fall under the trade war and competition of the United States, but fell under the guns of their own people.

What makes local semiconductor startups even more unconvinced is that the China Securities Regulatory Commission has a completely different attitude when it comes to the listing of IC companies from Taiwan.

Foxconn Industrial Internet first set the record for the fastest IPO approval in the A-share market (36 days), and then went public within three months. During the listing process, it almost violated all the red lines of the China Securities Regulatory Commission, but it still completed the listing smoothly, indicating that the China Securities Regulatory Commission is inclined to accelerate the policy of Taiwanese companies listing on the A-share market.

Since Foxconn Industrial Internet, a subsidiary of Hon Hai Group, was listed on the Shanghai Stock Exchange, Hejian Technology, a subsidiary of UMC, has also been actively seeking to be listed on the A-share market. Recently, news has also been reported that ASE's mainland business plans to list on the A-share market. It can be said that the A-share market's "tolerance" towards Taiwanese companies is accelerating the listing boom of Taiwanese companies.

In addition, another company under Hon Hai, Pengding Holdings, applied for listing on the Shenzhen Stock Exchange and has passed the review. It is expected to be listed this year, becoming the second Taiwanese company to be listed on the Shenzhen Stock Exchange this year. Subsequently, Hejian Technology, a subsidiary of Taiwan's UMC, announced its listing on the A-share market. Recently, there was news that Taiwan's packaging and testing giant ASE is also preparing to integrate its mainland business and list on the A-share market.

Data shows that by the end of June 2018, there were 30 Taiwanese companies listed on the mainland. Six subsidiaries of Taiwanese listed companies, including ASE's Universal Scientific Industrial Co., Ltd. and Asia Pacific Integrated Circuit Co., Ltd., have gone to the mainland to list. According to statistics, including Hejian Technology, about 18 mainland subsidiaries of Taiwanese listed companies have plans to seek listing on the mainland.

Yes, Taiwan is also Chinese, and Taiwan's semiconductors are also Chinese. Is the CSRC's subtext this:

You small local semiconductor companies are not worthy of coming to our A-share market. You should just go home and take a rest. Let Taiwan Semiconductor do everything. They have been doing it for decades and are more competitive in the global market.

So it still means that China's excellent technology companies can only go public overseas, and China's domestic capital market is not open to you.

There are more IC companies in the process of mergers and acquisitions and listings, and in the future there will be more IC companies that will need to seek growth through this approach. If this path is not feasible, how can we achieve the growth and development of my country's integrated circuit industry? !

The essence of competition in the semiconductor industry is a comprehensive competition among enterprises + countries, capital + policies. It requires the combination of national will + industrial capital. Only through the joint efforts of all parties can we achieve something.

Why doesn’t the CSRC take a look at how Taiwan’s semiconductor industry has developed through the capital market?

Dai Lining, who served as the chairman of the Taiwan Securities Regulatory Commission (equivalent to the chairman of the China Securities Regulatory Commission) in the 1980s and 1990s, once mentioned in his book "Consistent: Dai Lining's Experience and Persistence":

"The listing threshold of the centralized trading market is relatively high, so it is difficult for many companies to go public, especially many high-tech companies. For example, if a company wants to build a wafer production line, its investment may be as high as hundreds of billions of New Taiwan dollars, and it takes several years for a wafer factory to make money from production. When it is not profitable, it is very difficult for a company to go public."

After Dai Lining took office, he allowed companies to apply for the third category of listing, which means that technology companies are not required to make profits. He also opened up the over-the-counter trading market (second board market) to encourage high-tech companies to be listed on the local second board.

It is this point that created Taiwan's own "NASDAQ". 1995-2000 was the period of the fastest development of Taiwan's high-tech industry, which must be attributed in part to Dai Lining's transformation of the stock market.

"The maturity of the over-the-counter market has also promoted the development of venture capital. Taiwan's venture capital business was initially led by the government. After 10 years of exploration, with the listing of a large number of high-tech companies, the venture capital business also reached its peak."

Taiwan's semiconductor industry, including TSMC, ASE, MediaTek, and thousands of other technology companies that we are familiar with today, flourished with the support of Taiwan's local capital market at the time.

Let’s look at the Hong Kong Stock Exchange. After missing out on Alibaba’s IPO last year, it underwent a thorough reform this year and revised various listing regulations to welcome mainland technology companies to go public.

If our rigid Securities Regulatory Commission fails to adapt to the times and fails to understand and implement the country's core strategies, it will become the biggest obstacle to the rise of China's semiconductor industry and even the entire technology industry in the long run, and will sooner or later be nailed to the pillar of shame in history.

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