What China lacks in chip design is not technology, but PM

According to reports, in 2018, China imported a total of US$312.058 billion (about RMB 2.1 trillion), a year-on-year increase of 19.8%, accounting for about 14% of my country's total imports. In 2018, the total sales of chip design companies in mainland China were about RMB 200 billion, accounting for about 10% of mainland China's chip demand.

At present, the self-sufficiency rate of chips in mainland China is very low. Previously, the State Council of China launched the "Made in China 2025" (MIC 2025) plan in March 2015, with the goal of reaching a chip self-sufficiency rate of 40% by 2020 and 70% by 2025. The facts are cruel. The author believes that to achieve this goal, the technological gap is superficial, and PM professional talents are the key factor in the development of China's semiconductor chip design industry.

PM can be divided into three positions:

1. Product Manager

Job responsibilities: Understand market conditions, competitive environment, and customer needs, collect relevant information, discover market opportunities and seize opportunities, understand production processes and be familiar with supply chain resources, position the market and direction based on the company's own capabilities, and accurately define products.

2. Project Manager

Job responsibilities: Be familiar with the chip development process, optimize the product development process, master each node in the entire process from design to wafer, from wafer to packaging and testing, grasp the overall project progress, do a good job of problem tracking and feedback, summarize the project's problems and solve them in a timely manner to ensure smooth mass production of products.

3. Marketing Promotion Manager

Job responsibilities: Learn and master product knowledge, make market layout according to company products, formulate corresponding strategies through 4Ps, feedback market information and customer needs to product managers, make demand forecasts and safety inventory, provide pre-sales and after-sales services, and enhance company image and brand value.

A big PM is someone whose job includes product manager, project manager, and marketing manager. The big PM position is usually held concurrently by the CEO or founder of a chip design company. Big PM and PMs in different positions are all referred to as PM.

Through the guidance and management of professional PMs, the gap in chip design technology can be resolved.

Moore's Law is a cruel existence for China's semiconductor chip industry. In 1965, Intel co-founder Gordon Moore proposed "Moore's Law" named after himself, which means that the number of components that can be accommodated on an integrated circuit will double every 18 to 24 months, and the performance will also double. Moore's Law used to grow 10 times every 5 years and 100 times every 10 years. Today, Moore's Law can only grow by a few percentage points each year, and may only double every 10 years. Therefore, Moore's Law is over, and the opportunity for the development of China's chip design industry has really arrived.

There is indeed a gap between China's chip design technology and that of foreign countries, but this is not the key issue hindering the development of China's semiconductor chip design industry. After years of development, China already has a certain foundation in chip design technology. Under the guidance and management of professional PMs, through technology accumulation and focus, this technology gap can be narrowed or even surpassed. The current situation is that everyone makes easy chips, but few people make difficult chips. All opportunities that can be seen in front of them are taken, and few people take opportunities that cannot be seen in front of them. Therefore, due to the lack of PM planning and management, chip R&D resources are seriously wasted, and existing technical talents are not effectively utilized and improved.

Chip design is different from wafer foundry, and is subject to a series of equipment such as lithography machines and related production auxiliary materials. What does chip design rely on? It relies on people. At present, there are about 160,000 design practitioners. Under the influence of policies and financial support, more and more outstanding professionals will join the chip design industry, and there are enough technical industry talents to support this industry. If there is professional PM management and technical segmentation, coupled with the spirit of hard work and overtime, the technology gap can be basically caught up within 5 years. Huawei HiSilicon's chip technology development has set a good example for us.

In the long run, we win with technology; in the short run, we win with products. An excellent professional PM can make a company successful, and a group of excellent professional PMs can make an industry successful. Only by winning now with products can we have the opportunity to accumulate and improve technology to win in the future.

The concentration of talents, funds and industrial policies has provided a guarantee for the development of China's semiconductor chip design technology. For the industry to develop, technology alone is not enough. Technology must eventually be implemented through products, and technology can only be continuously improved through product research and development. Therefore, professional PM is the premise and key to improving the level of chip technology.

Talent gathering:

The top 10 universities in chip design are: Fudan University Microelectronics Department, Tsinghua University Microelectronics Department, Peking University Microelectronics Department, Shanghai Jiaotong University Microelectronics Department, Xi'an Jiaotong University Microelectronics Department, Huazhong University of Science and Technology, Zhejiang University, Southeast University, Chengdu University of Electronic Science and Technology, and Xi'an University of Electronic Science and Technology. Among these 10 schools, Fudan and Tsinghua should be in the first tier; Peking University, Shanghai Jiaotong University, and Xi'an Jiaotong University belong to the second tier.

Every year, 20,000 students majoring in microelectronics graduate from universities, and there are also graduates from electronics-related majors who switch to chip design. Judging from the campus recruitment salaries of chip design companies in 2018, it is enough to attract college talents to gather in the semiconductor chip design industry.

The annual salary of a fresh graduate doing chip design is 200,000 to 300,000 RMB, and after 3 years the salary will reach 400,000 to 500,000 RMB. The salary of an excellent chip designer with 5 to 10 years of work experience will reach 600,000 to 1 million RMB (management salaries are not discussed here). Professionals who have worked in Silicon Valley for many years pointed out that the salary in the domestic chip design industry is too high. The salary of designers in some positions is 70% of that in the United States, but the design ability level is only 50% of that in the United States.

Funding Aggregation:

According to reports, the first phase of the National Integrated Circuit Industry Investment Fund raised RMB 138.7 billion, about 20% of which was invested in the chip design industry. The second phase of the National Integrated Circuit Industry Investment Fund will raise RMB 150 billion. Semiconductor hubs such as Beijing, Shanghai, Wuhan, Shenzhen, Gansu, Anhui, Jiangsu, Shandong, Tianjin, and Jinjiang all established local promotion funds around the time of the National Integrated Circuit Industry Investment Fund, with a fund size of up to RMB 200 billion.

Industrial policy focus:

Since 2015, China's integrated circuit industry has grown rapidly. The Chinese government has vigorously led the development of the overall industry and issued policies such as the "Notice of the State Council on Issuing Several Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry" (Guofa [2011] No. 4) and the "National Integrated Circuit Industry Development Promotion Outline". In order to upgrade the industry and develop hard-core technology, local governments are actively competing for the new round of development opportunities for integrated circuits. In order to promote the development of the regional integrated circuit industry, they have continuously issued relevant policies to support the integrated circuit industry.

In 2018, there were 18 companies with more than 1,000 employees in the mainland chip design industry, an increase of 2 over the previous year; there were 21 companies with 500-1,000 employees, one more than the previous year; there were 126 companies with 100-500 employees, an increase of 5 over the previous year, but 90.28% of the total number of companies had less than 100 employees, totaling 1,533, an increase of 310 over the previous year. The per capita output value has increased significantly, reaching RMB 1.611 million in 2018.

Data source: ICCAD Annual Meeting

Among the 1,698 chip design companies, the largest number had annual sales of less than RMB 10 million, reaching 843; there were also a large number of companies with annual sales of RMB 10-50 million, totaling 406; and companies with annual sales of RMB 50-100 million accounted for only 14.19%, or 241 companies; in addition, companies with revenue of more than RMB 100 million accounted for 12.25%, totaling 208 companies.

Data source: ICCAD Annual Meeting

With the substantial increase in salaries in the mainland chip design industry, companies are under increasing cost pressure. According to industry statistics, chip design companies with 10-50 employees have annual fixed expenses of RMB 10-30 million; design companies with 50-100 employees have annual fixed expenses of RMB 30-50 million; design companies with 100-500 employees have annual fixed expenses of RMB 50-250 million; and design companies with 500-1,000 employees have annual fixed expenses of RMB 250-500 million. The average human capital + amortized operating costs + amortized R&D costs of design companies is > RMB 400,000 per year.

On average, the gross profit margin of European and American chip design companies is 40-60%, the gross profit margin of Japanese, Korean and Taiwanese design companies is 30-40%, and the gross profit margin of mainland China chip design companies is 20-30%. Therefore, companies with annual sales of less than 30 million are generally loss-making. That is to say, among the 1,698 design companies, at least 1,000 chip design companies are not profitable. In fact, many design companies with 100 people have annual sales of 100-200 million yuan, but due to fierce competition in the industry, the gross profit is very low or even no profit. These companies have been losing money and rely on financing and government subsidies to survive. If the prediction is bolder, no more than 200 mainland chip design companies are truly profitable.

In the semiconductor chip design industry, only the best companies in various fields or directions have a chance to survive. In general, the chip design capabilities of chip design companies in mainland China are not much different, and their respective financial capabilities are also good. They have mature foundries and packaging and testing plants, and are supported by industrial policies. So what is the difference between companies? The difference lies in PM. Excellent professional PM is the guarantee and key to the success of chip design companies.

From the PM's perspective, at least half of the more than 1,600 chip design companies in mainland China will be acquired or eliminated. No company fails because of marketing or technology failure; the essence of a company's failure is the failure of its product or the failure of the timing of product export. The product is planned and defined by the PM, who will match the market demand and create customer value based on the chip design company's own R&D capabilities, financial status, and supply chain resources.

Products are the carriers of technology, and products and technology complement each other. With technology, you can plan and design corresponding products; with product planning, you can look for technology or technology research and development. Technological leadership is often driven by products, and products are king. Therefore, whether it comes first, technology or products, PM is indispensable.

How PM helps chip design companies succeed:

1. Position the correct product direction, establish target markets and market segments, accurately define products, form focus, grasp the market demand curve and market entry opportunities.

   
   

2. Establish differentiated technologies and products, establish the ability to quickly stock inventory, and establish flexible market response capabilities.

   
   

3. The biggest mission of a chip design company is to optimize the product development process and achieve fast and low-cost output, rather than being proud of having any special technology.

   
   

4. Develop the right competitive marketing strategy to optimize the relationship between the company, agents and customers and maximize the value of all parties.

How to become a professional PM:

In addition to mastering the methodology, three prerequisites are required to form a PM mindset.

1. Rich experience in sales and marketing

2. Have a solid foundation in marketing theory

3. Have professional technical background and knowledge of the entire industry chain

PM thinking of chip design companies:

1. System thinking: PM should not only think about problems from a single point, but also from a system perspective.

1) Big marketing concept: Marketing is not just about facing the market and customers, but also facing suppliers, agents, competitors, government agencies, and even within the company.

2) Concept of the entire industry chain: When planning products, one should not only consider R&D and the market, but also the coordination and development trend of the entire industry chain.

3) The concept of big cost: Product cost involves production cost, R&D cost, sales cost, inventory cost and inventory risk cost.

2. Logical thinking: includes the logic of expression, the logic of thinking, and the logic of problem solving. Logical thinking will help in the analysis and judgment of problems.

3. Data thinking: learn and get used to speaking with numbers, use numbers to describe and diagnose problems, make predictions through numbers to guide work.

4. Dynamic thinking: refers to a kind of thinking activity that is dynamic, adjustable, and constantly optimized. Information is time-sensitive, and the entire industrial chain is in a dynamic process of change.

What kind of personality is suitable for being a PM in a chip design company? In the work of a PM, communication is always involved, from the client to R&D, from production operations to marketing. Therefore, people think that people with extroverted and smooth personalities are more suitable for being PMs. Communication skills are indeed related to personality, but the strength of communication skills has nothing to do with personality attributes such as introversion or extroversion, or whether one is good at dealing with people.

PMs ultimately face products, and products face customers and markets. Only with real experience can there be real cognition. Once a smooth way of doing things is developed, it is difficult to truly perceive and recognize product and market needs. An excellent PM should be authentic, sincere, and simple. PMs with simple personalities generally have better logical thinking and are more likely to cultivate and form PM thinking. In fact, the cause of communication barriers is not personality but communication skills. PMs need to constantly summarize and improve their communication skills, and need to express their ideas to different people through different communication methods.

China's "pain of no core" has touched everyone. Whether it is the government, schools, or companies, they have all paid attention to chip technology and design talents, and provided financial investment and policy support, but have neglected the training and attention of PM talents. In addition, the threshold for PM is relatively high, and professional PM talents are extremely scarce in Chinese chip design companies, making the chip design industry lose its soul and direction. As a result, China's semiconductor chip design industry has reached:

Low-end: A life-and-death struggle, extreme costs, and no ability to develop further.

Mid-range: Everyone is competing with each other, iterations are frequent, and we are always on the road.

High-end: He has what I don’t, he is devoted to idealism, but never sees the product.

Looking ahead, to realize the "Made in China 2025" (MIC 2025) plan, it is impossible to achieve the goal of 40% chip self-sufficiency rate in 2020, and it is also very difficult to reach 70% by 2025. Chinese people should be self-reliant, believe in the future, and believe in themselves. In order to better develop China's semiconductor chip design industry, we call on all parties to pay attention to PM talents, and cultivate PM professionals through continuing education in colleges and universities and in cooperation with enterprises. With more and better PM professionals, China's semiconductor chip design industry can enter healthy competition, grasp the direction and form focus, effectively accumulate technology, and achieve leapfrog development of the chip design industry.

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Moore Elite is a leading chip design accelerator with the mission of "making chips easier to make in China". Its business includes "chip design services, supply chain management, talent services, and incubation services", and its customers cover 1,500 chip companies and 500,000 engineers. We are committed to providing ASIC design and Turnkey solutions, from Spec/FPGA/algorithms to chip delivery, including: chip architecture planning, IP selection, front-end design, DFT, verification, physical design, layout, tape-out, packaging and testing services. Since 2012, our team has been focusing on accumulating technical capabilities to help customers achieve optimal chip performance, and support flexible service models such as Turnkey, NRE, professional consulting and on-site. Moore Elite currently has 250 employees worldwide, with its headquarters in Shanghai and branches in Beijing, Shenzhen, Hefei, Chongqing, Suzhou, Guangzhou, Chengdu, Xi'an, Nanjing, Xiamen, Hsinchu and Silicon Valley.