British economist said, in order to get rid of the dependence on overseas enterprises, the Chinese government spent huge sums to support the development of domestic semiconductor industry, and from photovoltaic panels and LED lighting industry learned a good lesson. However, due to timing and technical barriers, the plan still faces many challenges.
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ambitious
Since the 1970 s, the Chinese government has been promoting the development of the domestic semiconductor industry by fits and starts. But their ambition never like now so high, investment budget and have never been so much. According to Morgan Stanley estimates that in the early development of the plan, the Chinese government in the second half of the 1990 s, the money is less than $1 billion. But this time, according to a 2014 of a grand plan, the government will be to the public and private funds invested $100 billion to $150 billion.
The goal is to catch up with world leading companies from the technology, 2030, including all kinds of chip design, assembly and packaging company, so as to get rid of the dependence on foreign suppliers. In 2015, the Chinese government has enacted a new goal: 10 years will increase chip domestic demand market self-making ratio to 70%.
This is clearly a huge goal. Last year, China's domestic and foreign various chip manufacturers use a total of $145 billion. But Chinese chip industry output was only about one over ten of this demand. In certain areas, high value chip almost totally dependent on imports, China - including processor, known as the computer brain, and embedded within the rugged chips.
The government realized that in order to realize this dream, must invest in buying foreign professional knowledge for their use. In recent months, state-owned companies and various government agencies are stepping up acquisitions, investment overseas chip companies, or deal with these companies. January 17, announced in guizhou and qualcomm joint venture, investment of about $280 million to set up a new company specialized development server chips. Guizhou province investment funds hold a 55% stake in the new company. After two days, engaged in chip packaging and testing of Taiwan into technology agree with purple light group paid $600 million for a 25% stake.
Chinese government officials believe that because China's chip industry excessive dependence on foreign technology, so the development of semiconductor industry is a strategic task independently. They also note that the United States, Europe and other Asian countries politicians over the past few years have invested large sums of money to their local semiconductor industry.
It is estimated that the actual chip balance of trade of China is only half of the original data, because a considerable part of Chinese factory imported chips are used in the apple iPhone and lenovo notebook, and other products, and the products eventually exported to overseas. Even so, the policy to promote the development of semiconductor industry still accord with the Chinese government's overall economic planning: gradually reduce the proportion of labor-intensive manufacturing, promote the industry development of the higher value-added, more environmental protection.
Focus fire
Morgan Stanley points out, the success of semiconductor companies can usually get 40% or higher profit margins, and computers, electronic products and other hardware margins are often less than 20%. So, if Chinese companies design and manufacture more chips, and one day also can control the underlying technical standards like Intel, China can in the global electronics industry to enjoy a greater share of the profits.
Before promoting domestic photovoltaic panels and LED lighting industry development, the Chinese government has provided a large number of local companies billions of dollars, will eventually cause the excess capacity and price plunge. This time, the Chinese government seems to be focused on one of the few state-owned enterprises. Smic, for example, Shanghai will become the key to foster the chip factories, while huawei's shenzhen haisi semiconductors will become one of the few get priority support chip design company.
But the most notable is the purple group. The separated from tsinghua university, company over the past year has been the focus of the industry, even the mighty Intel launched a challenge. The company's boss wei-guo zhao was born in xinjiang, after go to university in Beijing, he got in the field of electronics, real estate and resources of wealth, is now chairman of purple light company and the second largest shareholder (stake after tsinghua university).
In 2013, the company gradually emerged, that time, purple light group paid $2.6 billion for spreadtrum and RuiDi division. In 2014, Intel and paid $1.5 billion for a 20% stake in the future competition. As part of the plan, the two sides will jointly develop mobile device chip, this also is precisely Intel always backward areas. Last may, purple light group paid $2.3 billion for a 51% stake in China three, the Hong Kong subsidiary of HP main production data network equipment. Last November, purple light group announced a $13 billion increase plans, hope to build a large memory chip factories.
A shopping spree
Other Chinese companies are on a shopping spree. Chip packaging companies long telegram technology for $1.8 billion in 2014 won the peer enterprises Singapore STATS ChipPac control. In 2015, state-owned company similar money it cost to build wide asset management company acquired the Netherlands boon of pu, a department, which is dedicated to collecting base station chip production. The consortium led by China resources group also send a $2.5 billion offer to America fairchild semiconductor. But in the acquisition of foreign chip companies launched war, purple light group is still worthy of "captain".
"A lot of people doubt I is the government's" white gloves ", "wei-guo zhao said recently," but we're just a market-oriented company." Although he played down the official support for the purple light group, but the company is clearly won the various preferential policies: if without the support of the government, it is hard to imagine purple light group in the next five years, 300 billion yuan ($45 billion) deal.
With the acquisition of foreign consumer brand is different, China's acquisitions in the semiconductor industry is not necessarily always warmly welcomed. It is reported that purple light group had spent $23 billion last year in bidding micron technology, the latter production of DRAM memory chips are widely used and desktop computers and servers. But because of the U.S. government opposition, lead to the deal failed to deliver. The company of South Korea SK hynix bid also rejected in November last year. Last December, the purple light group acquired Taiwan chip packaging and testing company 25% stake in silicon product technology.
The resulting resistance force larger Taiwan chip packaging enterprise ase in December on silicon technology to bid.
Experience in Taiwan
As for mainland can realize this ambitious plan, or whether it can get rid of the dependence on overseas chip technology, Taiwan's experience might have guiding significance. Starting in the 1980 s, Taiwan emerging a semiconductor manufacturing and many other world-class chip foundry enterprise, and to foster the active such as mediatek processor chip design houses. But can obtain the success, because catch up with the good time: when the chip industry is to convert to the separation of design and production mode, and to grasp the trends in Taiwan. But expanding of memory chips in Taiwan recently became a disaster. Us market research firm Sanford c. Bernstein analyst Mark lee (Mark Li) think, although at the turn of the century invested $50 billion in capital (mostly by the Taiwan authorities to pay), but the Taiwan company has caught up with "memory chip industry recession".
These companies are chasing market share in the process of further losses. From 2001 to 2010, the global memory chip business profits totaled $8 billion -- but if you remove the samsung and SK hynix two successful south Korean companies, other companies combined losses of nearly $13 billion. Despite the cost, but mark lee believes that Taiwan enterprises investment or too small, can't go on the technology front, and some rush on profit.
Douglas fowler of the university of zhejiang (Douglas Fuller) believes that the global semiconductor industry in recent years gradually mature even more difficult for penetrating the Chinese market. Memory chip market established giants have established their own position, especially after the recent consolidation. And the chip itself also associated with software, is becoming more and more complex, make Chinese companies more difficult to master. Ase COO tien wu added that Taiwan enterprises to enter the chip market coincides with the field expansion; The mainland enterprises to successfully infiltrate, when growth will be more difficult.
Three big challenges
ASM Pacific Technology is a company listed in Hong Kong's chip industry equipment suppliers, the company director Lee Wai Keong, said if the chip giant in China want to succeed, first of all must be from the "cost to innovation culture".
Chip companies in mainland China in terms of innovation lags significantly global leading companies (although haisi semiconductors is an exception). McKinsey consultant Christopher Thomas (Christopher Thomas) estimates that Intel company research and development spending alone at four times that of the whole chip industry in China. Besides on research and development, Chinese companies need to attract more experienced scientists and engineers. It's not impossible. After all, gathered a lot of Chinese talents in silicon valley. But if a violet light group such enterprises want to attract the talents, we must learn how to expand innovation, globalization, for example, more than set up r&d centers around the world.
This has led to the second challenge: must be turned to international thinking. So far, Chinese companies mainly catering to the booming domestic market. But they have to prepare for demanding global market. Even Chinese companies, is also unlikely to accept poor quality because of the chip is made from domestic chip - especially those services in overseas enterprises.
Finally a challenge, and perhaps most difficult. Chinese chip companies must prepare for long and hard struggle. The McKinsey analysis shows that both memory chip processor chips, both the design, manufacturing and packing link, the global semiconductor industry almost all the profit of each area to be one or two top grab - other enterprise can only bear losses.
Follow the example of samsung
However, if you don't want to waste $150 billion billions of dollars, China still has a more positive example could follow, that is samsung. The south Korean giant, with the development of huge investment has become the industry giant, accumulated a series of technical personnel, and the elder to accept lower returns. Supporters say, because the government is the major investor, the government mainly focused on the overall strategy, rather than short-term profit, so Chinese companies can do this.
The structure of the government to deploy the latest plan, however, is likely to encounter some resistance. Because before the return on investment of pv panels and LED lighting industry, the Chinese government mainly through the few state-owned investment fund launched the initial investment of $30 billion. They hope these more market-oriented investment with the help of these middlemen, and no longer like the past comes with too many bureaucrats. Manage the funds, however, to achieve their goals but it will not be easy.
Even so, the Morgan Stanley analysts still believe that Chinese companies have the opportunity to completely in some areas among the world's highest semiconductor. Domestic chip companies may be in the field of products such as television, cell phones and computers have advantage, because in these areas of production and consumption in China are dominant. Regulators may also be given to local standard greater tilt, or localized content requirements, but the risk is that Chinese companies could end up in the local market is very strong, but still lack of international competitiveness.
In the field of DRAM and flash memory chip, if you can convince some of the largest overseas manufacturers to achieve technology alliance, help the company to overcome its host governments impose barriers to technology transfer, it will be for Chinese enterprises to promote. From this point, the abundant capital. Last September, purple light group agrees to the hard disk vendors data in western capital injection of $3.8 billion. Fleshed out due to funding source, so the western data quickly spent $19 billion for a flash memory of the world's leading manufacturers of SanDisk.
In many pillar industry in China has support domestic manufacturers, but the effect is mixed. In the field of automobile manufacture, government has been by way of joint venture to attract foreign firms and the sharing of technology, but further increased dependence on foreign partners of domestic enterprises. In the field of commercial aircraft, large aircraft state-owned company comac take years invested heavily to develop aircraft, but there is still no finished product, by the time the sale, may have been out of date.
In many areas of the chip business, Chinese enterprises could eventually achieve tremendous on technology, but it may be because of overcapacity and impact to the entire industry - as before pv panel industry. As Sanford c. Bernstein analyst mark lee said: before dominate the entire market, China will not stop. But wei-guo zhao defiant in their own ambitions, he recently said: "the chip industry is entering era giant, integration is accelerating." He made it clear that, in the hope that purple light group become one of the few giant ultimately survive. Is the mule is horse, eventually will have a conclusion.
