Mo Dakang: The chip industry cannot just be built on money

Ren Zhengfei recently said in an interview with CCTV that "the chip industry cannot just be developed by throwing money at it, it also needs to throw in mathematicians, physicists, etc." It is difficult to succeed by relying solely on China's independent innovation. Why can't we embrace the world and rely on global innovation?

Ren Zhengfei is not an expert in semiconductors, but his statement contains certain philosophical truths, which can be summarized into two aspects: 1. The chip industry cannot develop by just throwing money at it; 2. The chip industry must emphasize independent innovation, but it must go global. My understanding is that this industry chain is very long, and it is impossible to do everything by ourselves. We must achieve global resource sharing and mutual benefit.

This problem may be understood in this way: China's semiconductor industry previously invested too little and lagged behind by a large margin. Under the current conditions in China, it is unlikely that it will generate returns if it immediately adopts a market economy. The only way is to use state funds as "seeds" and take risks in advance. Only after the enterprises gradually grow and become profitable can they move towards marketization and integrate into globalization.

Investment is a business behavior with risks, and we must have awe for it. Therefore, after the development of China's semiconductor industry reaches a certain stage of investment, it is necessary to make timely summaries and timely adjust the thinking, and quickly transfer production capacity to product-centered and meet market demand as the fundamental goal.

These are two different development stages, which are inseparable, but the two must be coordinated, otherwise the production capacity may become a burden for the enterprise. The development of China's semiconductor industry is very familiar and good at relying on investment to drive the industry, and then it takes greater efforts to enter the product-centric market, because the product market is all about competition and differentiation, and correspondingly, it requires excellent talents and solid technical and management experience. And it is not our strong point at this stage.

Ren Zhengfei said that the chip industry cannot be developed by just throwing money at it. What he meant was that in the development of China's semiconductor industry, the "norms" of its investment behavior must be taken seriously by the industry.

The semiconductor industry has its particularities. Due to the long industrial chain, huge investment, and rapid technological progress, no country, including the United States, can do it all by itself without relying on others. For example, the lithography machine comes from ASML in Europe, and 60% of the materials used in the chip production line are produced in Japan. Therefore, the semiconductor industry must be globalized, and it must share resources and be mutually beneficial.

In the context of China's semiconductor industry, it has another characteristic. The United States, which controls high-tech exports to China, has the "Wassenaar Treaty" and tries to hinder the progress of China's semiconductor industry. Previously, it created the ZTE and Jinhua incidents, and recently Huawei was suppressed by the United States because of its advanced 5G technology. Obviously, the impression of the United States, which always flaunts democracy and openness, may be greatly reduced. Its purpose is very obvious, at least to slow down Huawei's pace on the road to 5G development.

Ren Zhengfei said that taking the path of globalization is actually consistent with China's emphasis on achieving "independent control" in the industry. It means that in the development of China's semiconductor industry, we must first have sufficient capabilities, such as when Huawei's situation occurs, there are sufficient "spare tires" available, and we will not necessarily stop under any difficult circumstances, and we have the confidence and courage to move forward. However, the global situation is always ups and downs, and I believe it will definitely change. Therefore, the development of China's semiconductor industry still needs to strengthen research and development and integrate into globalization with confidence. Because China has the world's largest semiconductor market, the world needs China, and the development of China's semiconductor industry is also inseparable from the global semiconductor industry. The interests of the two are closely related.

Therefore, the development of China's semiconductor industry should emphasize independent innovation and have a global vision and mind. In the future, driven by autonomous driving, the Internet of Things, artificial intelligence, and 5G, it is predicted that the global semiconductor market size may reach one trillion US dollars by 2030, so it requires the joint efforts and creativity of people all over the world. It is also believed that the development of China's semiconductor industry will definitely make due contributions to the progress of the global semiconductor industry.

At this stage, the problems faced by Changdian Technology may be more complicated. I don’t believe that the resignation of Wang Xinchao and the addition of Li Chunxing, CTO of Amkor, can solve the problems immediately. On the one hand, the current status of China’s semiconductor industry may not be able to control the top international companies, and it will take more time to digest STATS ChipPAC. But I believe that it will succeed in the end. On the other hand, it may be related to the current industrial situation. Some countries are trying their best to block any progress of China’s semiconductor industry, to a crazy degree. So we should be tolerant of the problems that Changdian Technology encounters during its development.

There must be a sense of urgency regarding the development of China's semiconductor industry. Only by rapidly strengthening itself, reducing internal friction, and gradually integrating into globalization can its own value be truly reflected. Therefore, we must move forward steadily, talk less and do more, and this requires time accumulation.

The chip industry cannot just rely on spending money, because advanced technology cannot be bought with money. What is needed is respect for intellectual property rights, sharing the fruits of human labor, and taking a global path.

The world situation is bound to have ups and downs, sometimes good and sometimes bad, and we must be full of confidence in the future prospects. Therefore, for the difficulties faced by China's semiconductor industry today, we should not complain, nor panic, but have firm confidence and believe that as long as we persist, respect the law of value, rely on China's huge market, and work hard, China's semiconductor industry will definitely have hope.

Now the United States has changed its strategy first, turning China from a competitive partner into a competitor, which has led to the inevitable result of suppressing Huawei. However, we cannot stand on a narrow nationalist standpoint, but must see it from the bottom of our hearts as an important opportunity for the development of China's semiconductor industry, which may accelerate the progress of China's semiconductor industry. In addition, from the philosophical logic of "bad things may turn into good things", Trump's suppression of Huawei has led to his "spare tire" plan entering the testing and running-in period ahead of schedule, and he will definitely accelerate the process of increasing the localization of products.

Therefore, under the new situation, we should make full use of this opportunity, inspire fighting spirit, unite as one, work hard, concentrate superior forces, and solve some deep-seated contradictions in industrial development in a planned way. I believe that the difficulties faced by China's semiconductor industry at this stage will definitely not be defeated by the Americans. The real danger may be ourselves and our determination to continue to deepen reforms.