Li Xingcai

Release time: 2017-04-12

Peng Hongbing, deputy director of the Electronic Information Department of the Ministry of Industry and Information Technology, publicly stated in Shenzhen yesterday that during the "13th Five-Year Plan" period, the Ministry of Industry and Information Technology will focus on five aspects to systematically promote the development of the integrated circuit industry. Among them, it emphasizes the need to "pay more attention to resource integration, strengthen top-level design, focus on key enterprises, key nodes, and major projects, promote the coordinated development of the industrial chain, and create a manufacturing innovation center."

As the "crown jewel" of high-end manufacturing, integrated circuits are one of the important indicators of a country's comprehensive strength and the core of the information industry. "Solving China's chips and supporting China's development in the next 30 years." Ye Tianchun, director of the Institute of Microelectronics of the Chinese Academy of Sciences and leader of the 02 special expert group, once condensed and summarized the strategic significance of integrated circuit development to China's economy.

Driven by policies and capital, China has opened a major era of integrated circuit industry. "We feel that the entire industry chain is an investment opportunity." Yu Xinhua, a partner of IDG Capital, who is deeply involved in the hard technology field, said in an exclusive interview with Shanghai Securities News that IDG will increase investment in the field of integrated circuits, including equipment, materials, design, etc. M&A and investment cooperation in related fields at home and abroad.

Huge demand highlights opportunities in China

"Where the market is, the industry is there." China's huge market demand is driving the global integrated circuit industry to transfer to China. No one can ignore China's market and opportunities.

After major investment and mergers and acquisitions in recent years, China's integrated circuits have seen a lot of improvement on the surface, but their competitiveness is still relatively weak.

"At present, the product structure of my country's integrated circuit industry is single, most of which are in the low-end and middle-end. The pattern of high-end products mainly relying on imports has not fundamentally changed, and there is a serious shortage of leading talents." On the 10th, at the 5th China Electronics and Information Expo (CITE 2017) At the "First China High-end Chip Alliance Summit Forum" held at the same time, Peng Hongbing said so.

What is seriously mismatched with the relatively weak industrial base is the huge market demand. According to the latest data from CCID Industrial Research Institute, the scale of China's integrated circuit market reached RMB 1,198.59 billion in 2016, accounting for half of the global integrated circuit market, a year-on-year increase of 8.7%, and the growth rate was much higher than that of the European and American markets. However, the sales of China's integrated circuit industry in 2016 was only 433.55 billion yuan. Excluding foreign capital and double counting, the output value is less than 7% of global demand, which is far from meeting market demand.

“Where the market is, the industry is where.” Many industry insiders said in an interview with reporters that as a global industry, China’s huge market demand is driving the global integrated circuit industry to transfer to China. No one can ignore China’s market and opportunity.

"We feel that the entire industry chain is an investment opportunity." Yu Xinhua, a partner of IDG Capital, said in an exclusive interview with the Shanghai Stock Exchange that IDG will increase investment in the field of integrated circuits, including equipment, materials, and design, and promote domestic and overseas investment in related fields. Mergers and acquisitions, investment cooperation. From the perspective of industry insiders, China has made certain preparations: After years of painstaking accumulation and building, my country has an integrated circuit industry with relatively abundant funds, complete chains, and abundant talents, and it has begun to be able to participate in international competition and coordinated development.

According to the reporter's observation, with its outstanding performance in the manufacturing field and a huge consumer market, the domestic chip industry leader has become a partner of more and more multinational companies, and has improved its competitiveness through technology transfer and technology diffusion.

In terms of industrial transfer, domestic companies have gained a firm foothold in the packaging and testing field. The reporter's survey found that the major packaging and testing plants are still full of orders in the second quarter. Given that the industry has entered the traditional peak season in the second half of the year, some insiders in the packaging industry have expressed that the good prospects may continue throughout the year. At the listed company level, Changjiang Electronics Technology, which has advanced packaging technologies such as SIP, has mass-produced Fanout (fan-out packaging) after acquiring Xingke Jinpeng, and is expected to enter Apple suppliers; it has advanced packaging technologies such as SIP, TSV, and Flip-Chip Huatian Technology, whose TSV+sip packaging solution has been used for under glass fingerprint recognition of Huawei P10. "In the post-Moore era, as the packaging and testing assumes more system solution provider functions, the proportion and importance of these companies in the output value of the industry chain is also increasing."

From the perspective of a more detailed industrial chain, as the industry grows, semiconductor equipment and material manufacturers are expected to usher in a period of rapid growth. Under the "joint promotion" of capital and local governments, the Chinese market will explode "large expansion of fabs." SEMI predicts that between 2017 and 2020, 62 new fabs will be put into operation worldwide (7 of which are R&D fabs). Among them, 26 new fabs will be put into operation in the Chinese market. Correspondingly, domestic semiconductor equipment and material manufacturers will get more trial and joint research and development opportunities, and at the same time they will get more orders to increase their performance, they will also be "evolved" and enter a virtuous circle.

As the only domestic listed company with integrated circuit high-end process equipment as its main business, North China Chuangchuang recently disclosed that its wholly-owned subsidiary, North China Chuangchuang Vacuum, and Ningxia Longji have signed a single crystal furnace equipment order contract of 168 million yuan; the company is interacting Yi said that the company's orders have increased significantly year-on-year compared to last year. China Micro Semiconductor's plasma etching machine and MOCVD (Metal Organic Compound Chemical Vapor Deposition), and Jiangfeng Electronics' metal targets have successfully broken the foreign monopoly, and the latter has submitted an IPO application to the Securities Regulatory Commission at the end of last year.

Obtaining core technology requires innovation

With the achievement of the "available" goal, China's integrated circuits have entered the "innovative" era and it has gradually become a consensus in the industry. Mergers and acquisitions can help the industry quickly lay the foundation and complete the transformation; but the technology in the basic core areas can only rely on independent research and development.

"Although the integrated circuit industry has achieved certain development, the status quo that core technology is controlled by people has not fundamentally changed. The industry is still at the middle and low end, which has seriously affected industrial upgrading and national security." Peng Hongbing said that the restriction of core technology by people is our biggest hidden danger. It is necessary to accelerate the independent innovation of network information technology, and promote major breakthroughs in the research and development and application of high-performance computing, mobile communications, quantum communications, core chips, and operating systems.

"Looking at the review, all the important progress we have made is the result of independent research and development." According to Fu Cheng, vice president of Shanghai Zhaoxin, mergers and acquisitions can help the industry quickly lay the foundation and complete the transformation; but the technology in the basic core areas can only rely on independent research and development. Research and development. "Whether it is Northern Microelectronics, China Micro Semiconductors, and Jiangfeng Electronics, they are all the results of independent research and development. Mergers and acquisitions cannot buy these technologies and competitiveness. Independent research and development is the safe and controllable way out."

With the achievement of the "available" goal, China's integrated circuit entering the "innovation" era has gradually become a consensus in the industry, and innovation has become an investment outlet for the entire industry. At this summit forum, Ding Wenwu, chairman of the China High-end Chip Alliance and President of the National Integrated Circuit Industry Investment Fund, said that the high-end chip alliance focuses on processors, memories, sensors, AD/DA (analog-to-digital converters/digital-to-analog converters). ), FPGA (Field Programmable Gate Array) and other five fields, set up 5 sub-alliances to promote industrial transformation and upgrading.

On the 10th, the China Sensor and Internet of Things Industry Alliance (SIA) officially became the first sub-alliance of the China High-end Chip Alliance (CHICA), which means that the country may increase support for sensors and the Internet of Things; 5 sub-alliance areas Both will become the focus of support.

In this regard, Peng Hongbing said that in response to industry shortages, the Ministry of Industry and Information Technology will focus on five key tasks during the "13th Five-Year Plan" period. Strengthen the top-level design, focus on key enterprises, key nodes, and major projects, promote the coordinated development of the industrial chain, and create a manufacturing innovation center; third, pay more attention to the construction of the ecosystem, use application requirements as the traction, strengthen the coordination of software and hardware, and create a large ecosystem platform. This is also the purpose of the establishment of the high-end chip alliance; fourth is to pay more attention to open development, make full use of the global market, technology, talents and other factors and resources to integrate into the global integrated circuit industry system; fifth is to pay more attention to environmental construction, and continue to improve industrial policies, investment and financing Environment, etc.

In addition to macro policy support, the power of "micro-innovation" in traditional fields cannot be underestimated. Fu Cheng believes that during the 4G and 5G introduction period, smartphones are still the main driving force of the integrated circuit industry, and the increase in their functions will become a new industry. growth point.

For example, the widespread application of fingerprint recognition in smart phones not only brings new opportunities to upstream chips and modules, but also spawns chip design companies such as Goodix Technology; it also increases packaging requirements. Huawei's new under glass (hidden) fingerprint recognition for the P10 model uses Huatian Technology's TSV+sip packaging solution.

As an industry benchmark, Apple's adoption of new technologies/designs is often followed by other terminal vendors, driving the development of the entire mobile phone industry chain. Judging from the current information, iphone8 may be designed with no home button, dual batteries, OLED screen, wireless charging, and dual cameras.

According to industry insiders, in the field of innovative applications, Chinese companies have the same starting line as international advanced counterparts. For example, the establishment of 5G and NB-IoT standards has accelerated the realization of the Internet of Things, and a series of sensors, Internet of Things chips and solution providers are expected stand out.

Bigger and stronger still need capital market support

As a globally competitive industry, integrated circuits need all-round support, including more private capital, market mechanisms, and capital exit channels.

It is undeniable that, as a technology-intensive and capital-intensive industry, integrated circuits have a long investment return cycle. The reason why China has been difficult to cultivate and develop this industry is related to the small investment in this area and the small support from the capital market. .

"Recently, I am very happy. We invested in Suzhou InnoLight many years ago and have already accrued bad debts. But recently this company was acquired by Zhongji Equipment. We feel that we have'picked up' a sum of money." Ye Weigang sighed when talking to reporters about the securitization of integrated circuit assets.

In this regard, IDG partner Yu Xinhua also feels deeply, “For such a continuously high investment industry, the investment return cycle is too long. Even if it is listed on the GEM, integrated circuit companies need to struggle for many years to achieve; entrepreneurship in this field It’s not easy for both the employer and the PE organization.

Recently, Weir Semiconductor and Changchuan Technology have been approved in succession. Under the multi-factor fermentation, the IPO of integrated circuit companies has begun to accelerate. However, in Yu Xinhua's view, it is more important to increase investment and speed up the pace if you have a small success. "The industry has a certain foundation, but everything has just begun." He laughed so.

Ye Tianchun, director of the Institute of Microelectronics of the Chinese Academy of Sciences, also called for continued and vigorous investment in integrated circuits.

"The role of capital in promoting this industry is very important. We expect the A-share market to give the integrated circuit industry a more flexible IPO policy, so that companies with sustainable profit potential can grow rapidly with the help of the capital market." Yu Xinhua believes that in such a global market Competitive industries, integrated circuits need all-round support, including more private capital, market mechanisms and capital withdrawal channels.

Although it is not easy to securitize assets in the A-share market, Yu Xinhua said that IDG will continue to promote overseas mergers and acquisitions in the integrated circuit industry to help the industry upgrade. In Yu Xinhua's view, in addition to independent research and development of basic core technologies, in some "insensitive" fields such as core components, adopting "usage doctrine" can quickly build technological competitiveness and achieve industrial upgrading. "We have a certain industrial foundation, but do not yet have a complete industrial ecology. M&A can quickly achieve industrial upgrading." Prior to this, IDG privatized the US-funded MEMS company MEMSIC and helped to inject its consumer electronics and other businesses into HC Semitek.
　　
HC Semitek recently released its first-quarter performance forecast, saying that with the recovery of the LED chip industry and the company’s new production equipment, the company expects a profit of 76 million yuan to 81 million yuan in the first quarter, compared with a loss of more than 10 million yuan in the same period last year. BOE also had the best performance in the first quarter. The company expects to achieve a net profit of 2.3 billion to 2.5 billion yuan in the first quarter of this year, a year-on-year increase of 2023% to 2208%. The prosperity of the semiconductor industry can be seen from this.
　　
From policy support to the gradual release of the performance of leading companies, China's integrated circuit industry has really entered a golden age.

"Shanghai Securities News" April 12, 2017