Top 10 Keywords for the Semiconductor Industry in 2020
In 2020, the global semiconductor industry is undergoing a lot of changes. Some companies have overcome difficulties and challenges, while others have stood out in the tide of history. At the end of the year and the beginning of the next year, Xinshiye has specially launched the "2020 Chip Record". In this article, we will review the top ten keywords of the global semiconductor industry in 2020 to focus on the hot spots of the year.
Keyword 1
At the beginning of 2020, a global epidemic disrupted the original rhythm. While the virus spread relentlessly, it affected various industries. Many semiconductor companies were also affected by the epidemic, either quarantined for testing or closed factories.
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On February 20, about 800 employees of SK Hynix were ordered to self-isolate after a new employee was found to have close contact with a novel coronavirus patient at its Icheon campus, about 70 kilometers south of Seoul, South Korea.
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On March 16, the Malaysian government announced a strict "activity restriction order" across the country. Affected by this, on March 17, Infineon issued a statement saying that its factory in Malaysia had been closed. The factories of discrete device giant Nexperia in Malaysia and the Philippines were also completely closed at the request of the government.
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On March 23, Samsung Electronics and LG Electronics said they would temporarily close their factories in India due to the impact of the new coronavirus epidemic.
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On March 25, the Indian government announced a three-week lockdown starting from the early morning of March 25 to combat the COVID-19 outbreak. Following the suspension of operations at brand giants such as Samsung and Xiaomi, Foxconn and Wistron also announced the suspension of operations at their Indian factories.
Compared with many industries affected by the epidemic, the impact on the technology industry has been relatively small, and many companies have even gained more development opportunities. However, due to the epidemic prevention and control measures that restricted population mobility, employees returned late and it was difficult to recruit workers, which affected the resumption of work on product lines, resulting in a shortage of production capacity in many industrial links. For the early supply of products, it also had an impact to a certain extent.
Affected by the COVID-19 epidemic, the global electronics industry has declined , but Chinese semiconductor companies have overcome difficulties, such as resumption of work and logistics. The entire industry has achieved double-digit growth despite the severe epidemic in the first half of the year. The performance of leading companies has risen against the trend, showing the strength of the rise of domestic chips. In general, after experiencing the challenges of the epidemic, the semiconductor industry has become more resilient.
Keyword 2
Since the US government first included Huawei and its 70 branches on the "Entity List" on May 16, 2019, the US technology sanctions on China have continued to escalate in 2020.
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On May 15, the U.S. Department of Industry and Security announced new regulations requiring manufacturers to obtain an export license from the U.S. government when exporting semiconductor chips that use U.S. technology or design to Huawei, even if they are manufactured outside the U.S. This means that regardless of whether they are U.S. companies, as long as they use U.S. technology in their products, they will need a license when exporting to Huawei.
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On August 17, the U.S. Department of Commerce further upgraded its export ban on Huawei, adding 38 additional Huawei subsidiaries or branches to the Entity List. The 38 newly added Huawei subsidiaries or branches are located in 21 countries, mainly Huawei's research centers at home and abroad, many of which are research institutions related to Huawei Cloud.
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On October 7, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce added eight Chinese technology companies, including Hikvision and iFlytek, to the "Entity List." Entities on the list must obtain a license before they can purchase U.S. technology and products, but the U.S. government has the right to reject license applications.
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On December 18, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce officially announced that Chinese semiconductor manufacturer SMIC would be included in the "Entity List". According to the BIS announcement, all equipment and materials required for SMIC to produce semiconductors at advanced technology nodes (10 nanometers or below) will be banned to prevent such key technologies from supporting China's military-civilian integration efforts.
Currently, the chip production capacity of the United States is being lost significantly and is being transferred to Asian countries . According to public data from the Semiconductor Industry Association (SEMI), as of October 2020, there were only 76 chip factories in the United States, compared to 81 10 years ago (2010). According to the chip production capacity of the factories, the United States currently accounts for 12% of the world's installed wafer fab capacity, compared to 37% 30 years ago (1990). The chip production capacity of Asian countries such as China and South Korea has increased significantly, and data estimated by US semiconductor institutions show that the production capacity share of Chinese chip factories will soon surpass that of the United States.
China not only has Huawei, but also many unknown successful start-ups: for example, CloudWalk Technology is building a biometric database in Zimbabwe; Yitu Technology is equipping police in Malaysia with cameras with facial recognition capabilities... China is no longer just a workbench and contractor for the world, but is building its own brand. China's industrial base, market size and leadership ambitions are creating unlimited possibilities for China's future.
Keyword three
The COVID-19 pandemic that spread throughout the year exacerbated the capital winter in 2020, but investment in the semiconductor industry rose against the market trend.
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On July 14, U.S. chip giant Analog Devices (ADI) announced plans to acquire its competitor Maxim Integrated Products in an all-stock transaction worth $20.9 billion to enhance its capabilities in multiple industries including telecommunications.
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On September 13, Nvidia announced that it would acquire Arm Ltd., a British chip design company under SoftBank Group, for $40 billion. This will be the largest M&A transaction in the history of the chip industry. SoftBank acquired Arm for $31.4 billion in 2016, which was the largest deal in the semiconductor industry at the time. After the transaction is completed, SoftBank will own less than 10% of Nvidia's shares and become Nvidia's largest shareholder.
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On October 20, SK Hynix and Intel jointly announced the signing of an acquisition agreement. According to the agreement, SK Hynix will acquire Intel's NAND flash memory and storage business for US$9 billion. The acquisition includes Intel's NAND SSD business, NAND components and wafer business, and its NAND flash memory manufacturing plant in Dalian, China. Intel will retain its unique Intel Optane business.
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On October 27, AMD announced that it had reached a final agreement with Xilinx to acquire Xilinx by issuing shares with a total value of US$35 billion. The transaction is expected to be completed by the end of 2021. The merged company will have 13,000 engineers and an annual R&D investment of more than US$2.7 billion.
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On October 30, Marvell announced that it had reached an agreement with Inphi, a US analog chip manufacturer, to acquire Inphi for a total price of US$10 billion through a combination of stock and cash. It is reported that the transaction is expected to be completed in the second half of 2021. Marvell mainly produces storage, analog, digital signal, embedded and logic chips, while Inphi is mainly responsible for providing high-speed analog semiconductor solutions.
The frequent mergers and acquisitions of leading enterprises, in addition to the strategic development adjustments of enterprises, the huge changes in the chip industry landscape in 2020 also seem to foreshadow a leap in industrial development. There are also voices in the market that the frequent large-scale mergers and acquisitions in the chip field mean that the trend of oligopoly in the industry is becoming more and more serious. American chip giants are consolidating their "dominant" position through mergers and acquisitions, and domestic chip companies should catch up.
Keyword 4
Since the opening of the Science and Technology Innovation Board more than a year ago, semiconductor companies have shown great enthusiasm for listing on the board. As of the end of December 2020, among the 217 companies listed on the Science and Technology Innovation Board, 33 were semiconductor companies, accounting for nearly 15%, with a total market value of several hundred billion yuan. Among the top 10 companies in terms of total market value on the Science and Technology Innovation Board, semiconductor companies accounted for 5, or half.
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On April 20, Shanghai Silicon Industry was officially listed on the Science and Technology Innovation Board. Shanghai Silicon Industry is mainly engaged in the research and development, production and sales of semiconductor silicon wafers. It is one of the largest semiconductor silicon wafer manufacturers in mainland China.
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On June 29, SMIC, the leading domestic chip manufacturer and the first "A+H" red chip company listed on the Science and Technology Innovation Board, officially landed on the Science and Technology Innovation Board in just 29 days, breaking the record for the time required for listing on the Science and Technology Innovation Board.
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On July 20, Cambricon, formerly a startup company under the Chinese Academy of Sciences, officially landed on the Science and Technology Innovation Board. As the first AI chip stock, Cambricon's market value has reached over 100 billion yuan.
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On September 28, Xinhai Technology was listed on the Science and Technology Innovation Board. Xinhai Technology is engaged in the design of full signal chain chips and focuses on one-stop solutions. It can be called "the first signal chain MCU stock on the Science and Technology Innovation Board."
Compared with the previous year, semiconductor companies listed on the Science and Technology Innovation Board have formed a significant agglomeration effect in 2020, and a complete industrial cluster has gradually formed in the upstream and downstream of the industrial chain. Whether it is the upstream semiconductor materials of the semiconductor industry chain, the midstream semiconductor design, manufacturing, packaging and testing, or the downstream electronic equipment, automobiles, industry and other specific application scenarios, semiconductor-related companies on the Science and Technology Innovation Board have gradually achieved basic coverage.
Keyword five
Affected by the global COVID-19 pandemic and the rapid growth in demand for 5G applications, the semiconductor industry in 2020 has full production capacity from wafer foundry, packaging and testing to electronic components, and shortages and price increases have occurred one after another.
As early as before the Spring Festival in 2020, some MLCC manufacturers announced price increases due to tight supply and demand: Huaxin announced a price increase of 20-25%, Fenghua High-Tech announced a price increase of 20-30%, and Samsung Electro-Mechanics announced a price increase of 10-15%. MLCC suppliers were already at low inventory before the Spring Festival, and the shutdown due to the epidemic accelerated the price increase of MLCC. In February, Yageo notified customers that the prices of capacitors and other products would be officially increased from March 1st. The average increase in the first wave was as high as 30%. At the end of February, Yageo announced that its resistor products would also follow suit and increase prices by 70% to 80%.
In October, Xilinx issued a price increase notice, announcing that the prices of some of its products would increase by 25%, which will be officially implemented on April 5, 2021.
On November 20, 2020, ASE Holdings notified its customers that it would increase its packaging and testing prices by 5%-10% in the first quarter of next year to cope with rising costs and insufficient supply of production capacity. ASE said at a large-scale recruitment event held on November 22 that it estimates that the talent demand for the Kaohsiung plant will exceed 3,000 next year. Benefiting from strong demand for customer orders, the talent demand in each plant has increased significantly.
On November 26, 2020, NXP, a leading automotive chip manufacturer, issued a statement saying that due to the impact of the new crown pneumonia epidemic, the company was facing the dual impact of severe product shortages and increased raw material costs, and decided to raise product prices across the board.
On November 30, 2020, Japan's Renesas Electronics officially issued a price adjustment notice to its customers, stating that due to the increase in upstream raw material and packaging (substrate) costs, its production costs have risen, and some products will officially increase in price starting in 2021.
In July and August 2020, wafer foundry capacity became increasingly scarce. In the fourth quarter of 2020, pure foundry companies including UMC, GlobalFoundries and World Advanced increased their 8-inch wafer foundry quotes by 10%-15%. Industry insiders also said that South Korean chip foundry DB HiTek has also decided to increase its foundry prices by 20%, and SK Hynix and Samsung are also planning to increase prices. In addition, industry insiders said that wafer foundry quotes may continue to rise in 2021, with the increase possibly reaching 20%-40%.
At the same time, many companies producing MCU chips also simultaneously raised their product quotations. In early December 2020, news came from the Taiwanese industry that the five major MCU manufacturers, including Holtek, Lingtong, Songhan, Hongcom, and Nuvoton, simultaneously raised their quotations, with some products increasing by more than 10%.
Since the second half of 2020, the market has soared due to the recovery of demand, and the shortage of wafer production capacity has been transmitted step by step to multiple links in the semiconductor industry chain: wafer price increases, chip price increases, packaging and testing price increases, terminal product price increases, raw materials price increases... The final result is that no matter which link increases in price, in the ever-changing market, other parts will also increase in price. Looking forward to the year 2021, which has just begun, shortages and price increases will still be the main theme , and all links still need to actively pay attention to market dynamics, or make full use of production capacity, or actively prepare for response.
Keyword six
As the basic support for the development of information technology, the development of the chip industry has long been a global collaboration and has not been paid much attention by the public. "After the ZTE and Huawei incidents, China has become increasingly aware that it must overcome the technical difficulties that "choke" it in the field of science and technology, especially in the semiconductor field. Faced with the increasing external suppression and restrictions, more and more domestic companies have emerged in China, setting off a trend of domestic substitution.
According to Tianyancha data, as of December 2020, my country has added more than 60,000 chip-related companies this year, a year-on-year increase of 22.39%. Currently, there are about 244,000 chip-related companies in the country, and more than 20,000 chip-related companies have patents.
Faced with the shortage of integrated circuit talents, my country has set integrated circuit discipline as a first-level discipline and established Nanjing Integrated Circuit University to cultivate talents to help the development of China's chips.
In 2020, more and more industry experts have participated in the discussion of "domestic substitution". Wei Shaojun, chairman of the IC Design Branch of the China Semiconductor Industry Association and director of the Institute of Microelectronics at Tsinghua University, said: "The full domestic substitution of chips is just around the corner, which is a slogan-type development ."
Professor Wei Shaojun's words reveal the hidden problems behind the current hot chip industry. The chip industry needs to truly realize what we want to replace and what we want to control in order to be truly beneficial to the industry.
Keyword seven
During the 20 years of rapid development since 1999, China's independent chip industry has been moving forward despite wind and rain. Especially after the ZTE and Huawei incidents, supporting the chip industry has become a national strategy.
The highly anticipated Big Fund Phase II started investing for the first time in 2020, and the Unisoc project is the first investment project of the Big Fund Phase II. The National Integrated Circuit Industry Investment Fund ("Big Fund Phase I"), which was specially established to support the development of the domestic semiconductor industry, together with the Big Fund Phase II, is expected to leverage a total social capital scale of more than 1 trillion yuan, providing sufficient financial support for the development of semiconductors.
On August 4, 2020, the State Council issued the "Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Era". The new policy includes eight policy measures in the areas of finance and taxation, investment and financing, research and development, import and export, talents, intellectual property rights, market applications, and international cooperation. The core increment lies in the finance and taxation and investment and financing policies. New integrated circuit manufacturers below 28nm will be exempted from income tax for ten years, and imported equipment, materials, and spare parts will be exempted from tariffs; equipment, materials, and packaging and testing companies will clearly enjoy the "two exemptions and three reductions" in income tax, and key design companies will be upgraded to five years of tax exemption. The conditions for listing and financing will be relaxed to support the capitalization of R&D expenditures.
In November, the CPC Central Committee approved the "14th Five-Year Plan Proposal", in which "integrated circuits" were written into it as a key support direction for the 14th Five-Year Plan. The Central Economic Work Conference also mentioned the need to strengthen national strategic scientific and technological strength and enhance the independent and controllable capabilities of the industrial chain and supply chain. We must coordinate the advancement of filling in the gaps and forging the strengths, implement key core technology research projects for the weak links in the industry, and solve a number of "stuck neck" problems as soon as possible.
In terms of strategic positioning, the development of the integrated circuit industry has risen from a "strategic emerging industry" to the strategic height of a "new national system", and the importance of the industry has been further highlighted.
While policies continue to support, the capital of the Big Fund also brings strong driving force to the integrated circuit industry. In 2020, the second phase of the Big Fund mainly invested in foundry and memory manufacturing, and the investment targets in design were mainly concentrated in first-tier cities such as Shanghai and Beijing. It is expected that in 2021, it will accelerate the investment in more regions and more links of the industrial chain, increase investment in the central and western regions and the Pearl River Delta, and invest in basic support links such as semiconductor equipment, materials and EDA in the industrial chain.
Keyword eight
NASA first proposed the concept of 5G in 2008 and developed global 5G projects in 2014, which boosted the demand for 5G chips. 5G chips went through the early R&D stage before 2016, and gradually promoted trials from 2016 to 2018. They were put into commercial use in 2019 , and in 2020, 5G has entered the stage of commercial popularization. With the continuous deployment and popularization of 5G base stations and mobile devices, major chip companies have also launched 5G mobile phone chips in 2020.
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On September 16, Apple released the A14 Bionic processor at its autumn new product launch conference. The A14 Bionic processor is the first mobile device chip built using a 5-nanometer process. The number of transistors has increased by nearly 40% compared to a 7-nanometer chip. The chip uses a 6-core design, a 40% performance improvement, and a new GPU architecture, which improves performance by 30%.
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On October 30, Huawei's Mate40 series was officially released. The Mate40 series is the first to be equipped with the world's first 5nm 5G SoC Kirin 9000 series chip. Huawei Mate40 Pro and Huawei Mate40 Pro+ are equipped with Kirin 9000 5G SoC chips. Huawei Mate40 is equipped with Kirin 9000E chip, which is also a 5nm 5G SoC.
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On November 12, Samsung Exynos released the Exynos 1080 mobile processing chip with flagship performance. The Exynos 1080, which integrates the fifth-generation mobile communication technology (5G) module, is Samsung's first processor manufactured based on the 5nm extreme ultraviolet lithography technology (5nm EUV) fin field effect transistor (FinFET) process.
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On December 1, Qualcomm officially released the Snapdragon 888 flagship platform processor. The Snapdragon 888 integrates Qualcomm's third-generation 5G modem and RF system - Snapdragon X60. The modem uses a 5nm process and supports all major global millimeter wave and Sub-6GHz frequency bands, as well as 5G carrier aggregation, global multi-SIM card functions, independent (SA) and non-independent (NSA) networking modes, and dynamic spectrum sharing (DSS).
Keyword nine
Integrated circuits are the foundation of the new generation of information technology. After years of deployment, my country currently has four major industrial clusters, namely the Yangtze River Delta centered on Shanghai, the Bohai Rim centered on Beijing, the Pan-Pearl River Delta centered on Shenzhen, and the central and western regions represented by Wuhan and Chengdu.
到2020年,临港新片区已集聚集成电路亿元以上规模企业40余家,涉及总投资超1500亿元。芯片制造领域的华大、格科、新微、闻泰,设备制造领域的中微、盛美、凯世通,关键材料领域的新昇、天岳,芯片设计领域的华大九天、概伦、国微、澜起、寒武纪和地平线等一大批国内顶级集成电路企业已云集“东方芯港”,集成电路产业生态已基本形成。
After nearly 20 years of development, Beijing Yizhuang has become a shining name card for the development of the domestic integrated circuit industry. SMIC Beijing/SMIC North has become the country's largest 12-inch foundry company with a production capacity of more than 100,000 pieces per month. At the same time, a number of integrated circuit equipment companies such as North Huachuang, Yitong Semiconductor, China Electronics Technology Group, Huazhuo Precision Technology, Guowang Optics, Keyi Hongyuan, and Dongfang Jingyuan are all gathered in Yizhuang.
As the city with the largest scale of integrated circuits in the Pearl River Delta region, Shenzhen plans to build an integrated circuit industry cluster with international competitiveness by 2023, with the scale of the integrated circuit industry reaching 200 billion yuan, of which the sales revenue of the design industry will exceed 160 billion yuan.
The four major regions of China's integrated circuit industry have different development priorities . In the Yangtze River Delta region, the manufacturing link is the core. Whether it is chip manufacturing and design in Shanghai, or packaging testing and chip manufacturing in Jiangsu as a whole, these are the biggest advantages of this region. Beijing is the most prominent in the field of integrated circuit design. For example, Beijing accounts for more than half of the top ten IC design companies in the country. The Pearl River Delta is more prominent in the application field of integrated circuits, including ZTE, Huawei, and downstream complete machine manufacturers and solution providers. The central and western regions are in a state of catching up, such as Samsung in Xi'an and Yangtze Memory in Wuhan.
Keyword 10
With huge market demand and the opportunity of the times, the development of China's integrated circuit industry has entered an important strategic opportunity period and a critical stage. The central and local governments have introduced support policies one after another, and a wave of chip manufacturing fever has been set off across the country. Semiconductor projects have been deployed all over the country, especially under the driving effect of "policy subsidies" and the call for "domestic substitution", the chip industry has ushered in an unprecedented investment boom.
But at the same time, in the past year or so, six billion-level semiconductor projects in five provinces, including Jiangsu, Sichuan, Hubei, Guizhou, and Shaanxi, have been suspended one after another, causing concerns in the industry. These include Tacoma (Nanjing) Semiconductor Technology Co., Ltd., GlobalFoundries (Chengdu) Integrated Circuit Manufacturing Co., Ltd., Shaanxi Kuntong Semiconductor Technology Co., Ltd., Dehuai Semiconductor Co., Ltd., Guizhou Huaxintong Semiconductor Technology Co., Ltd., and Wuhan Hongxin Semiconductor Manufacturing Co., Ltd., involving five provinces in my country's southeast coastal, central, southwest, and northwest regions.
There are more and more reports of chip projects being left unfinished. In addition to the fermentation of public opinion within the industry, the country has also spoken out. Meng Wei, spokesperson for the National Development and Reform Commission, responded at a regular press conference on October 20, 2020, "We have also noticed that domestic enthusiasm for investing in the integrated circuit industry is constantly rising. Some "three-no" companies with no experience, no technology, and no talent have joined the integrated circuit industry. Some places do not have a sufficient understanding of the laws of integrated circuit development and blindly launch projects. The risk of low-level duplicate construction has emerged. Some projects have even stagnated and factories have been left vacant, resulting in a waste of resources."
Meng Wei said that in the future, the government will work with relevant departments to strengthen top-level design, focus on industrial planning and layout, and strive to maintain the order of industrial development. In response to the current chaos in the industry, the next step will focus on doing a good job in four aspects. First, strengthen planning and layout. Second, improve the policy system. Third, establish a prevention mechanism. Fourth, consolidate the responsibilities of all parties.
In the current domestic massive chip-making movement, well-known companies such as HiSilicon and SMIC have grown rapidly, but at the same time, the bubbles and defects after this grand "movement" have also been exposed. "Lack of cores and souls" is a "neck-stuck" problem that restricts the development of science and technology in China. The industry's enthusiasm for high-end chip projects is also very good, but those grand projects that cost tens of billions or hundreds of billions of yuan were unfinished, causing huge waste that is really regrettable, and the disappointment caused is even more heartbreaking. On the one hand, the economic losses caused by the rapid progress and the rush to rush in are one thing, and on the other hand, the unfinished chip projects are also consuming the trust of the domestic market . Avoiding campaign-style construction, seeking truth from facts, and taking steady steps are the answers that China's chips should give to society.
At the same time, the outbreak of the new coronavirus has accelerated the global digital transformation. SEMI pointed out that the driving force behind the growth of the chip industry, especially the wafer manufacturing link, is the rising demand for cloud services, servers, laptops, games and healthcare technologies. Rapidly developing technologies such as 5G, the Internet of Things (IoT), automobiles, artificial intelligence (AI) and machine learning continue to drive the demand for data connections, and large data centers and big data are also behind the growth in demand.
Gartner predicts that the global semiconductor industry will grow at a rate of 10% in 2021. However, the global semiconductor industry faces the following variables in 2021: the direction of Sino-US relations and international economic and trade policies after the US election, and the direction of the evolution of the COVID-19 pandemic. In addition, the global integrated circuit production capacity is facing a shortage of supply chain and production capacity, which is expected to continue in 2021.
The results of many large mergers and acquisitions of leading semiconductor companies announced in 2020 have attracted continuous attention, and this year has become the year with the largest transaction volume in the history of semiconductor mergers and acquisitions. Voices for domestic substitution of domestic semiconductors have also been heard one after another. Whether it is the listing on the Science and Technology Innovation Board and the country's supportive policies, or the continuous formation of large-scale industrial agglomerations, we are looking forward to future development. But at the same time, the continuous exposure of unfinished chip projects also warns us that we should not shout big and empty slogans, and we should not work behind closed doors. Only openness and tolerance can make the road wider and farther. To make a good chip, we must be down-to-earth and attentive.
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