IC China 2020 is coming again, the "Zhu Rihe" of the domestic semiconductor industry

Although China has a rich history of warfare, it has often lagged behind other military powers in advanced technology. Therefore, since the late 1980s, the Zhurihe Combined Tactical Training Base has been listed as a key development target to enhance the combat capabilities of our army and strive to communicate on an equal footing with other countries in the world.

"Zhurihe" means "heart" in Mongolian, and also refers to the center. Therefore, we can't help but wonder, as the Sino-US trade war has been going on for two years, do we also have a "grindstone" and "training ground" like the Zhurihe training base to improve the economic strength and technical level of domestic semiconductors?

The Dilemma of the Domestic Semiconductor Industry

"If you fall behind, you will be beaten." This saying originated in Russia during Stalin's time. It was applicable to the Anti-Japanese War where rifles fought against tanks, and it is also applicable to domestic semiconductors that are now suppressed by the United States. Moreover, if a country's own strength is insufficient, it will be difficult to carry out equal cooperation with outstanding companies in other countries and make common progress.

Since March 2018, China's high-tech industries have been hit one after another, especially the semiconductor industry, which has been hit the hardest. Domestic companies such as ZTE and Huawei, which are leading the world in the 5G field, have become targets. Now, TSMC has cut off supply to Huawei in response to US policy, which has made the already poor domestic chip industry even worse.

In the entire semiconductor industry, the United States has an absolute advantage from underlying hardware to basic software to application software. In market segments such as materials, chip design tools (EDA), chip design, chip manufacturing and other categories, Chinese local companies have a very obvious gap with similar companies in the United States, Japan, South Korea, Europe and other countries. Even if the difference is not huge, it still requires a lot of time, money, manpower and material resources.

For a time, how to develop the local semiconductor industry became the focus of attention of the whole country.

In order to improve its combat capability, the Zhurihe training base established five major systems, and my country's semiconductor industry also quickly launched self-rescue measures.

Funding, R&D investment, policies, and talent

The first condition for developing the semiconductor industry is capital. Fortunately, in October 2014, a number of companies jointly launched the National Integrated Circuit Industry Investment Fund (hereinafter referred to as the Big Fund) to promote the development of the integrated circuit industry. In the first phase (September 2014-May 2018), the total investment amount was 138.7 billion yuan, 23 public investment companies, and the cumulative effective investment projects reached about 70. The second phase of the Big Fund was also registered and established in October last year, with a registered capital of 204.15 billion yuan. These investments effectively solved the dilemma of local companies wanting to develop but having no money.

Having funds is not enough. How to balance revenue and R&D investment is also a problem that plagues companies. The R&D of each advanced process will face the risk of too high investment and inability to recover costs. Taking chip manufacturing as an example, its capital expenditure is very staggering. At TSMC's legal conference last year, it was announced that TSMC's full-year capital expenditure for 2019 is expected to be US$14-15 billion, an increase of US$4 billion over the previous year. Of the US$4 billion, US$1.5 billion was used for 7nm production capacity and US$2.5 billion was used for 5nm production capacity. This investment of US$4 billion has exceeded the annual revenue of other chip manufacturers. However, where there are challenges, there are opportunities. There is also a benefit for the domestic chip manufacturing industry, because the US chip supply cut-off policy has enabled the domestic semiconductor industry chain to achieve closed-loop production, providing a market for upstream production equipment manufacturers.

The semiconductor industry has become part of the country's overall development strategy. To this end, the country has fought back against the Sino-US trade war by imposing tariffs, and has introduced a number of policies to support the development of the semiconductor industry. From the earlier "Several Policies to Encourage the Development of the Software Industry and the Integrated Circuit Industry" and "Several Policies to Further Encourage the Development of the Software Industry and the Integrated Circuit Industry", to the recently issued "Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Period", etc., they are all providing support for industrial development. Local governments have also introduced specific supporting measures to speed up the implementation of policies and provide convenience for enterprises.

Before the trade war began, the importance of talent had always been underestimated. Problems such as low wages, high pressure, and slow promotion led many top students to switch to other industries. In order to fill the key link of "talent" in the semiconductor industry, the country and enterprises began to vigorously promote the introduction and training of talents. Enterprises cooperate with high-end universities to promote the establishment of first-level disciplines in integrated circuits, introduce top experts and outstanding talents and teams, set up exclusive laboratories, and complete talent training. At the same time, companies solve the problem of "not being able to retain people" through a series of practical measures such as salary increases, household registration, and housing.

The "Zhu Rihe" of China's semiconductor industry

With the new "training mode" and "new weapons", we still need "real" combat exercises to judge whether we have made progress. We should be problem-oriented, just like the training objectives of the Zhurihe training base, "focusing on inspection rather than evaluation, focusing on effectiveness rather than form, and focusing on review rather than winning or losing". So, where is the "Zhurihe" of the domestic semiconductor industry? The answer is at IC China, the China International Semiconductor Expo.

IC China is an important platform for the development of the semiconductor industry, bringing together outstanding manufacturers in the national semiconductor market, as well as leading companies from the United States, Europe, Japan, South Korea and other countries to share technology and exchange experiences. Here, each manufacturer can compare themselves to the "Red Army" and the other party to the "Blue Army". Through communication and comparison, they can discover and solve problems, reach cooperation, and eventually become strong players in the international semiconductor market.

IC China is one of the grand events of the domestic semiconductor industry. Hundreds of companies come to participate in each session, including Tsinghua Unigroup, SMIC, AMEC, Horizon Robotics and other advanced technology representatives of the domestic semiconductor industry. Tens of thousands of outstanding engineers exchange industry information, display the latest products, and share technical experience. In the past two years, the "Industry Study Tour and Job Fair" held by IC China has become a link between semiconductor companies and major universities to transfer talents, contributing to the talent reserve of the semiconductor industry.

Start from here and become an IC powerhouse

The 18th China International Semiconductor Expo will be held at the Shanghai New International Expo Center from October 14 to 16. The theme of this expo is "Open Development, Cooperation and Win-win - 5G Era Core Momentum". By strengthening cooperation and exchanges, exploring new ideas, and displaying new achievements, the sustainable and high-quality development of the local integrated circuit industry will be promoted. The conference covers more than 20,000 square meters, and has set up six exhibition areas: high-end chip exhibition area, semiconductor design exhibition area, semiconductor manufacturing and packaging exhibition area, semiconductor discrete device exhibition area, semiconductor equipment and materials exhibition area, and semiconductor innovation application exhibition area. The exhibits cover all aspects of the semiconductor industry.

At the 3rd Global IC Entrepreneur Conference held concurrently with the exhibition, leaders of well-known semiconductor industry associations, well-known entrepreneurs and experts and scholars from all over the world were invited to give keynote speeches on site. These included many industry benchmarks such as the China Semiconductor Industry Association, the U.S. Semiconductor Industry Association, Unigroup Spreadtrum, Keysight Technologies, Horizon Robotics, and Huahong Semiconductor. The content covered 5G chips, semiconductor industry chain innovation, smart connected car chips, semiconductor intellectual property development, RISC-V innovative applications, etc. Through mutual communication and understanding, they learned from experience and improved their own strength.

Zhurihe training base is a "grindstone" that improves the combat capability of our army. IC China is also a "training ground" that integrates the strength of each piece of the semiconductor industry, achieving progress through comparison, achieving win-win results through cooperation, and achieving transcendence through hard work. The trade war has sounded the alarm for us, allowing us to reflect on ourselves in difficulties, learn from failures, and learn and improve through multiple exchanges. Entrepreneurs, managers, and engineers in the domestic semiconductor industry are fighting bravely with a high-spirited attitude of never admitting defeat, and will eventually push the "Chinese chip" to the forefront of the world.