The road to innovation for China's integrated circuit design industry under the new international environment

On October 30, the 2020 China (Shenzhen) Integrated Circuit Summit was held in Nanshan District, Shenzhen. At the Integrated Circuit Design Innovation Forum held in the afternoon of the conference, Chen Yuenan, senior analyst of Xiamen Jiwei Information Technology Co., Ltd., delivered a keynote speech entitled "The Innovative Path of China's Integrated Circuit Design Industry under the New International Environment".

5G and AI provide development momentum for the semiconductor industry

In the first half of 2020, China's integrated circuit industry sales revenue was 353.9 billion yuan, a year-on-year increase of 16.1%, a slight increase from the first quarter.

According to Jiwei Consulting's analysis, there are two main reasons for the counter-cyclical growth of the integrated circuit industry in the first half of the year. On the one hand, under the influence of the epidemic, the demand for network communications has exploded, which has a significant driving effect on servers and data centers. Dell, Inspur, Intel and other companies with data center and server businesses have considerable revenue, driving the counter-cyclical growth of the integrated circuit industry. On the other hand, affected by the international environment, some domestic companies have prepared a large amount of inventory in advance due to the ban, driving the growth of the integrated circuit industry.

China's rapidly developing emerging application markets have provided sufficient growth space and development momentum for the semiconductor industry. New industry directions such as the Internet of Things, automotive electronics, Industry 4.0, cloud servers, and storage devices have become the driving force for the growth of the integrated circuit industry.

With the development of 5G technology, it will first drive the application fields related to enhanced mobile bandwidth. The industry content includes high-speed communications, ultra-high-definition video, cloud gaming/office, etc.

Chen Yuenan pointed out that judging from the development of the domestic 5G industry, the development of the 5G industry has become a national strategy of our country. Operators are actively promoting the construction of 5G base stations to provide support for the implementation of 5G downstream applications.

Judging from the development of the international 5G industry, global 5G construction has entered a stage of rapid advancement. China occupies a high market share in the main equipment market and optical device market, but it is still relatively weak in the basic core links represented by optical chips and radio frequency chips.

At a time when my country's 5G industry market size, number of companies, and application market have entered a stage of rapid growth, we will focus on core cities such as Xi'an, Chengdu, Guangzhou, and Suzhou, where companies have a strong desire to locate and where there are fewer parks. At the same time, the three major operators are also important partners in the construction of 5G industrial parks.

The downstream of the 5G industry chain mainly combines new technologies such as edge computing and artificial intelligence with other vertical scenarios to meet the empowerment needs of various vertical fields. The market size will exceed one hundred trillion yuan and should be the focus of attention.

Presenting the trend of localization of supply chain

Chen Yuenan believes that in order to maintain its technological leadership, the United States has launched a technological blockade against high-tech companies such as ZTE, Huawei, and SMIC, which has hit the development of China's 5G industry and also prompted China's integrated circuit industry to show a trend of localization of the supply chain.

In terms of policies, in August this year, in order to further optimize the development environment of the integrated circuit industry and the software industry and enhance the industry's innovation capabilities and development quality, the State Council issued the "Notice on Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and the Software Industry in the New Era", and made relevant instructions in terms of fiscal and taxation policies, investment and financing policies, research and development policies, import and export policies, talent policies, intellectual property policies, market application policies, and international cooperation policies to promote the rapid development of the domestic integrated circuit industry.

In terms of capital, the listing threshold for semiconductor companies has been lowered, and capital circulation has accelerated, helping companies grow.

Chen Yuenan said that there are 1,780 design companies in China, of which 238 have revenues of over 100 million yuan, 58 are manufacturing companies, 89 are packaging and testing companies (above scale), 30 have revenues of over 500 million yuan, and there are more than 100 materials and equipment companies.

As it becomes easier for semiconductor companies to enter the secondary market, they will be more favored by the primary market, have better liquidity, and higher valuations and premiums.

On October 22, 2019, the second phase of the Big Fund was launched to accelerate the creation of an independent and controllable industrial chain, focusing on supporting key projects in the first phase, major projects such as storage, and domestic equipment and materials companies.

Chen Yuenan believes that China's semiconductor industry can be divided into four stages. The period from 1993 to 2010 was a learning period mainly based on self-reliance and introduction and learning. The period from 2010 to 2020 was a growth period mainly based on cheap substitution. The period from 2020 to 2025 was a growth period with the focus on increasing added value. In 2025, China will enter an independent period that leads the market. The new era of China's semiconductor industry will leverage the power of capital to promote industrial upgrading!

Finally, Chen Yuenan introduced Jiwei.com’s industry consulting services. He said that Jiwei Consulting will rely on the corporate resources of the entire integrated circuit and electronic industry chain, combined with the park-government relationship, to provide comprehensive integrated circuit services.

Jiwei's consulting system covers semiconductor products, semiconductor industry chain, and terminal applications, providing three regular products: annual reports, monthly and quarterly monitoring, and publications, as well as seven customized services: market analysis and forecasting, corporate brand promotion, industrial policy interpretation, and investment decision support.

Jiwei Consulting’s main service types include government planning and industrial research projects, investment and financing support projects, corporate development strategy projects, market research and data monitoring projects, and conference and forum projects.