China Semiconductor, don’t get involved!
Latest update time：2023-02-13
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Source: The content is reproduced from the public account [Xinmou Research] by Semiconductor Industry Observer (ID: ic bank ) , thank you.
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Semiconductors have been suffering for a long time
The chairman of a domestic company once made this analogy: The global chip market is like a big theater. Those few international companies are wearing suits, drinking red wine, talking and laughing on the stage, giving advice, and the topic of discussion is how to live a better life. Good; the audience is a muddy battlefield. Thousands of domestic companies are looking up at the stars on the stage while fighting each other. One company has just found a way to the stage and is trying to pull out a foot from the mire. , and even wanted to climb on the stage, wash off the mud, put on a suit and taste red wine. But when other people heard the news, they rushed forward and imitated each other. The passage immediately became crowded, and the passage that was finally opened was blocked until he was dragged into the quagmire. Everyone could only continue to fight in the quagmire.
This is the most vivid description of the involution phenomenon of the domestic semiconductor industry.
The word involution originally refers to irrational internal competition or "voluntary" competition. It now refers to the phenomenon in which peers compete to put in more effort to compete for limited resources, resulting in a decline in the individual's "benefit-to-effort ratio." From this perspective,
involution can be said to be the "inflation" of effort
.
In recent years, the situation in the international semiconductor industry has gradually become tense, and the channels for domestic enterprises to gain a foothold have gradually tightened. The industry has predicted that some chip design companies will not survive this winter.
Involution has brought vicious competition among enterprises and ineffective low-level duplication to the industry. If the involution problem is not resolved, China's semiconductor industry will be limited to the low end.
Industry is involved in all living things
The disorder, chaos, and low-level fission games caused by involution are spread throughout the semiconductor industry, and all fields such as design, manufacturing, packaging and testing are not spared.
In recent years, under U.S. sanctions, the pace of domestic advanced process research and development and mass production has been hindered. The industry has begun to focus on mature process competition, and the involution of mature process chips has intensified.
Although the demand for mature chips is booming and there is much to be done, we have to pay attention to the chaos in the industry. For example, power semiconductors are relatively mature among semiconductor chips and are also a chip type with relatively low design and manufacturing thresholds. There have been many power semiconductor-related design and manufacturing companies in China for a long time. With the growth of the global economy and the innovation of electronic products, domestic market demand for consumer electronics, mobile phones, PCs, etc. has grown significantly. The rapid growth of the market share of domestic brands has driven strong demand for power semiconductors. Many domestic chip companies have also achieved considerable results. good achievement. However, when economic growth slowed down and market demand fell, hundreds of power semiconductor companies founded due to the national core-making boom, with both IDM and Fabless models, staged a race to the bottom game.
In addition to mature chip products, popular tracks with high R&D difficulties have also become areas that domestic companies are chasing, such as the AI chip startup track.
In recent years, there has been a boom in domestic AI chip entrepreneurship. There are hundreds of startup companies, many of which are clamoring to compete with Nvidia, which has attracted great attention from the capital market. There are often hot news of tens of millions and billions of financing. However, many entrants have not figured out the logic of chip entrepreneurship. Design capabilities and market development should go hand in hand. If they cannot develop their own hematopoietic abilities, they will not be able to survive the industrial winter.
The most direct and biggest impact of the involution is on talents.
High salary poaching, the trend of demolishing walls is serious, I chop off the knees, he chops off the ankles, you demolish the beams, I push down the walls. Previously, it was difficult to introduce domestic talents due to the epidemic, and the U.S. talent ban last year made it even more difficult. Domestic experienced semiconductor industry talents are limited and insufficient. Instigated by the capital boom, the turnover rate of talents in the semiconductor industry has increased significantly, which has the most severe impact on large enterprises. What's more, sanctions are also targeted at large companies. Small shrimps have no need for sanctions. A big wave will fall when they hit. The key talents of each new entity must be poached by mature enterprises. Before the new ones are started, the old ones are dug up and bruised. Intellectual property disputes also arise with the mass flow of personnel. As a result, we have to carry out low-level involution in all aspects of talent compensation, products and markets.
The hot industrial phenomenon brought about by involution has also led to the involution of local governments.
In the past few years,
some
local governments have been impulsive in investing. Without sufficient industry research and resource sorting, they have compared each other and invested blindly, which has led to the rapid launch of projects, resulting in a sharp increase in the risks of "unfinished projects" and "overcapacity". In addition, local government involution has also caused some trust issues. Funds are limited and good projects are scarce. A company often receives invitations from many local governments. In order to win over the company, some blind local governments offer generous conditions, but after the company lands, Promises are made but cannot be kept.
The dangers of industrial involution
In essence, the involution phenomenon is a chaos derived from the fact that there is currently no key breakthrough in domestic technology, and there is pressure from the outside to face huge market opportunities.
There is a clear difference between it and moderate overcapacity under normal market competition.
Moderate overcapacity is a manifestation of sufficient market competition and is also a necessary stage in the product life cycle of traditional industries. Most enterprises' output scale and innovation capabilities are still continuing, but it is difficult to obtain higher profits due to market demand constraints. The
situation of involution is the result of vicious competition and infighting between enterprises. Industrial scale and innovation are difficult to sustain in vicious competition.
For enterprises
, under the involution, in order to win orders and market share, enterprises compete to lower prices, vicious competition, which ultimately leads to low-price transactions, meager profits or even losses, and enterprises lose their pricing power and voice. Under low-price competition, it is difficult to effectively guarantee product quality, which seriously affects industry profits and the overall image of the industry. With profits significantly reduced, companies have insufficient investment in technology research and development and lack innovation.
From the perspective of the capital market
, competition for market and product homogeneity is fierce, and the phenomenon of "involution" of enterprises is emerging one after another, and market dividends will gradually shrink. When the primary market rises and the secondary market falls, capital dividends will gradually disappear. In the next 5 to 10 years, the industry will rely heavily on policy dividends.
From an industry perspective
, companies in low-end fields have gathered together to enter, resulting in the dispersion and great waste of industrial resources and human resources, and a significant reduction in industry production efficiency. Driven by the lack of standardized industry management and the pursuit of profit by a large amount of social capital, the industry will fall into price wars and capital wars. Internal friction in the industry will make it difficult to continue to fight against the constantly pressurizing external environment.
Countermeasures and suggestions to eliminate involution
To fundamentally eliminate obstacles to industrial involution such as price wars, infighting, group following, and overcapacity, Xinmo Research believes that we can start from the following angles:
First, we need to strengthen top-level planning and policies to guide the efficient and orderly allocation of resources.
The chip bill introduced by the United States, which has always advertised a market economy, is essentially industrial policy-oriented. To strengthen top-level design, the first thing to do is to sort out industrial resources, including talents, capital, etc., sort out the industrial chain, comprehensively grasp the difficulties, pain points and breakpoints of domestic industries, and adopt corresponding policies according to local conditions. At the same time, professional guidance should be provided to local governments, and comprehensive planning should be carried out based on local advantages and resource conditions. Each should have its own division of labor to prevent local governments from getting involved in the construction of semiconductors.
Secondly, from the perspective of chip product types, more mature processes and mid-range chip products are used.
From the perspective of equipment materials and production capacity, these two parts are relatively less affected in China. Of course, it is also the field with the best breakthroughs in China and the field with the largest market scope. Low-end products are large in volume, low in difficulty, and thin in profit. After several years of basic development, domestic companies have done relatively well. However, high-end products are difficult, the domestic industrial chain is incomplete, and production capacity depends on external factors. For the entire Chinese semiconductor system, making mid-range chips is the best choice at the moment.
Third, encourage corporate mergers, acquisitions and reorganizations, strengthen nodes and chain owners, and accelerate the structural upgrading of the industry.
Use leading enterprises and mature enterprises as the starting point for industrial improvement and increase industry integration. Promote the integration and strengthening of domestic industries through multiple means such as policies, capital, and markets. By supporting innovation, mergers and reorganizations, we will strengthen leading companies and chain-owner companies and form an industrial organization system with “moderate competition”. Among them, attention should be paid to strengthening the monitoring and coordination role of industry associations, paying equal attention to service and supervision enterprises from service enterprises, and promoting the healthy development of the industry.
Fourth, promote industrial collaboration and in-depth binding cooperation between terminal chip leaders and manufacturing leaders.
For a long time, due to the gap between chip design and production technology and the world's advanced technology, China's new design companies have chosen to tape out their products overseas, resulting in a lack of interaction between mainland chip design companies and manufacturing companies. This not only brings industrial safety risks, but also lacks coordination between upstream and downstream parties, resulting in both parties lacking a deep understanding of each other's processes. It is recommended that leading terminal chip products and manufacturing leaders be deeply bound to open up industrial links and join forces to achieve common growth and progress.
Finally, focus on the construction of intellectual property rights to prevent IP issues behind low-end duplication.
China's chip industry cannot be saved by involution like house demolition and low-level duplication of competition like division. The increase of new companies and the flow of talents have to a certain extent aggravated the duplication of low-end domestic chip products, which later hid the hidden dangers of intellectual property disputes. When the laws become more and more complete and there are limits on what can be done, the industrial environment will be more positive and the innovation atmosphere will be more active.
In the future, the external environment faced by the domestic semiconductor industry will be more difficult, and the restrictions will only become tighter. The more difficult it is to break through externally, the more actively and powerfully it should grow internally. Only by forming efficient and stable industrial chain collaboration and positive circulation can we break through layers of restrictions. Getting rid of involution is the first step for China's semiconductor industry to cultivate its internal strength and grow upward.
About Xinmo Research:
ICwise Research (ICwise, official website:
www.icwise.com.cn
) is committed to becoming an authoritative research institution in the world-class semiconductor and electronics industry rooted in China. In 2021, it won the "Special Industry Contribution" award for the 20th anniversary of the Shanghai Integrated Circuit Industry Association. prize".
Xinmo Research has many high-quality partners and has formulated targeted semiconductor industry development plans for local governments at all levels such as Guangdong Province, Chongqing City, Anhui Province, Hefei City, Shaoxing City, etc. The customer base of Xinmo Research covers leading companies in various global semiconductor industry chains, and it is an internationally influential Chinese semiconductor industry research think tank.
Currently, Xinmo Research has five major departments.
Data Research Department
: Based on the research team's in-depth understanding of the industry, through extensive contacts with the industry and comprehensive surveys, this department establishes a first-hand industry market database, releases authoritative market data, dynamic tracking and provides standard reporting products.
Corporate Services Department
: This department provides global and domestic semiconductor industry research services, mainly providing customized research services and consulting services based on customers' personalized and characteristic needs.
Government Services Department
: This department serves the central and local governments at all levels and relevant departments and committees, and helps the government and enterprises establish extensive exchanges and cooperation.
Industrial Investment Banking Department:
This department serves both investment and financing parties in the semiconductor industry, building full-cycle investment and financing service capabilities from 0 to post-IPO, and providing complete solutions for corporate equity financing, mergers, acquisitions, and reorganizations.
Research and Commentary Department
: Adhering to the tenet of "seeking stability rather than speed, seeking refinement rather than novelty, seeking depth rather than favor, and seeking quality rather than quantity", we insist on original and in-depth content, from news to opinions, from phenomena to essence, From problems to solutions.
From 2015 to 2022, Xinmo Research has held eight consecutive
Xinmo Research Integrated Circuit Industry Leaders Summit
. The leadership summit has become one of the most influential industry summits in China. In June 2022, Xinmo Research successfully held the two-day
IC Nansha International Integrated Circuit Industry Forum
in Nansha, Guangzhou
. Many provincial and municipal leaders and industry leaders gathered in Nansha to discuss the development plan of the integrated circuit industry. In 2021, Xinmo Research has created an offline salon brand,
Chip Everyone Says/I Say IC!
, committed to becoming the most influential IC salon brand.
*Disclaimer: This article is original by the author. The content of the article is the personal opinion of the author. The reprinting by Semiconductor Industry Watch is only to convey a different point of view. It does not mean that Semiconductor Industry Watch agrees or supports the view. If you have any objections, please contact Semiconductor Industry Watch.
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