According to the economist went to press, China wants to become the superpower of the semiconductor, and plans to invest a lot of money to realize this goal. Since the 1970 s, the Chinese government has been trying to build domestic semiconductor industry, although has twists and turns in the middle. But China's ambitions have never like this big, and the budget is so high. In the mid - 1990 - s, China has carried on the push of the early, the us investment bank Morgan Stanley, said the Chinese government cast into a nearly $1 billion. But this time, according to the grand plan announced in 2014, the Chinese government will through public offering and private fund raising $1000 and $150 billion.
China's goal is to catch up with world leading companies from the technology, 2030 have ability to design, production and packaging of all types of chip, no longer dependent on foreign imports. In 2015 the Chinese government put forward a new goal: meet the demand of Chinese industry chip of 70% within the next 10 years. But it has a long way to go. Last year, China's manufacturers, including domestic and foreign enterprises, spending the $145 billion worth of chips. But China's domestic industry output account for only 1/10 of the chip.
Some high value-added semiconductor models - computer CPU and auto chip - basically rely on imports. To help them to realize the dream, the authorities realise that they must find as many foreign experts. Each state-owned enterprises and government departments in recent months has been busy acquisition, investment overseas chip companies or cooperation agreement with them. On January 17, southwestern province of guizhou announced a joint venture with qualcomm, has established a new server chip manufacturers invest about $280 million.
Guizhou investment funds will hold a 55% stake in the joint venture company. In this two days ago, Taiwan chip packaging and testing force into the shareholders of science and technology, chip companies approved the violet light group for $600 million to buy a 25% stake in the agreement. Officials say the development of domestic semiconductor industry strategic urgency, because the country relies heavily on foreign technology. Some estimates, China's chip trade deficit was about half of that of the original data suggest, because much of imported chips into the iPhone and a laptop computer, and then export.
Even so, the policy in line with the Chinese government to promote the development of semiconductor industry from labor-intensive manufacturing to high value-added, more environmental protection industry transformation of a broader policy requirements. Morgan Stanley, points out that successful semiconductor company profit margins are generally more than 40%, in contrast, computer, electronics and other hardware is usually less than 20%. If the Chinese company design and produce more chips, one day will control part of the basic technology standards, such as Intel on the PC and server chips, to gain a larger share of global electronics industry profits.
The Chinese government to support domestic original solar panels and LED lighting manufacturers make a mistake, for many companies to provide a large amount of subsidies, leads to overcapacity and prices to plunge. The government seems to have learned the lesson, concentrated support part of the large enterprises. For example, the Shanghai smic is China's biggest foundry. Shenzhen haisi semiconductors (huawei) become one of the supported a chip design company. Most interested in is, purple light group sudden rise last year, a challenge to the power of Intel.
Purple light group boss wei-guo zhao started in pigs and sheep in xinjiang, because his parents down there in the 1950 s. Later he to go to university in Beijing, after the graduation engaged in electronics, real estate industry and the accumulation of wealth and resources, now he is the purple light group chairman and the second largest shareholder (the first big shareholders of tsinghua university). The company since 2013, spending $2.6 billion acquisition chip design companies shows XunTong sino RuiDi microelectronics.
Intel 2014 paid $1.5 billion for a 20% stake in violet light, purple light last may to spend $2.3 billion to buy a 51% stake, both for the company in November and a rights issue to raise $13 billion to build memory chip plants. Other Chinese companies are also action, chip packaging company long telegram, jiangsu science and technology in 2014 to pay $1.8 billion holdings of Singapore chippac company. 2015 state-owned enterprises to build broad asset management companies pay money almost bought Dutch mobile base station chip business of pu.
Another state-owned enterprises led by China resources consortium bid $2.5 billion for quick (Fairchild Semiconductor) Semiconductor companies in the United States. But the acquisition of foreign chip technology leader is purple light group. Wei-guo zhao said: "a lot of people doubt me is the government's 'white gloves, but we are actually market-oriented company." But it seems to be some official support cover background, it is hard to imagine the next five years without government support, purple light how to invest 300 billion yuan ($45 billion) takeover.
Approach of a foreign semiconductor company, China - unlike acquisition of foreign consumer brand - is not always welcome. Purple light last year offered $23 billion acquisition of micron technology, but hampered by political factors. The company turned to South Korea hynix, but rejected again in November. December purple light group acquired a 25% stake in silicon product technology, lead to ASE (ASE) also bid for semiconductor. Whether can achieve the goal for China, or will continue to rely on foreign chip technology, Taiwan's experience is worth using for reference.
Since the 1980 s, Taiwan in the development of world-class factories such as TSMC and chip design companies such as mediatek was very successful. But Taiwan's success partly because seize the development opportunity: to design and produce separation chip industry. But without memory chip success in Taiwan. Sanford c. Bernstein mark lee thinks, although the early 1990 s - 21, invested $50 billion in Taiwan, "shellacking in memory".
In the pursuit of market share, the company further loss of wealth, from 2001 to 2010, the global memory chip business profit of $8 billion, but the profits deducted from samsung and hynix, other companies lost nearly $13 billion. Li believes that despite the huge investment, but Taiwan companies spend too little on cutting-edge technologies, and eager to make a profit.
Douglas Fuller of zhejiang university (Douglas Fuller) argues that in recent years, the global semiconductor industry matures, China is difficult to make a breakthrough. Memory chips established companies established early advantage, especially after the recent consolidation, chips and related software becomes more complex, more difficult for Chinese companies to grasp. Ase's chief operating officer, tien wu said, the Taiwan company at the time into the chip market industry expansion, development slow, and now Chinese companies are difficult to success.
If the future of China chip leader to succeed, must complete three tasks. Hong Kong chip equipment company ASM Pacific Technology director Lee Wai Keong, argues that Chinese companies must first from the "cost to innovation culture". When asked about the purple light group company whether through acquisition so as to obtain advanced r&d technology, he laughed and said "there is no shortcut in semiconductor. His question is reasonable: Taiwan, South Korea and the U.S. export controls and other policies, to prevent the latest technology to Chinese companies.
On technical invention, largely behind the global leader in chip companies in China, McKinsey's Christopher Thomas said, Intel's r&d is about China's chip industry all in 4 times. In addition to more r&d investment in Chinese companies need to attract more experienced scientists and engineers. It is not impossible, because the valley has a lot of outstanding talents of Chinese descent. But if a violet light group and other companies to attract them, must learn how to innovation in the whole world, such as more than set up r&d centers around the world.
This leads to the second challenge: the need to shift to the global state of mind, so far the Chinese company has been to meet local consumer demand growth, but they must be prepared to enter the global market. Even Chinese companies, especially in service of foreign markets, domestic product chip can't meet the below standard. The most terrible is that investors need to suffer chronic loss chip companies in China. McKinsey & company, according to the analysis of the global semiconductor industry, from memory to the processor, from design, production and packaging, only have 1, 2, companies of all profits, other companies are at a loss.
If China wants to avoid the waste of investment of $150 billion, samsung may be worth using for reference. Samsung on r&d investment, to attract a large number of technical personnel and endure years of low returns, became the giant of the semiconductor. Proponents argue that Chinese companies can get rid of this kind of circumstance, because the government is the main investor, semiconductor become a national priority development strategy, can endure low profits. The government, however, is the latest plan of potential conflict.
Due to promote original microchip, solar panels and LED on very few results, government officials will be raised through state-owned investment funds most of the initial investment, about $30 billion. They hope these middlemen to do more market investment of the mind, and is not affected by bureaucracy. Management, however, these funds in order to achieve this goal is meaningless action, even if the external investors want a profitable exit before the government goal in 2030.
Morgan Stanley analysts believe, however, a Chinese company in some areas may have a chance to become a world-class enterprises, in the field of products such as television, cell phones and computers, Chinese companies dominate the market and consumption. Regulators may by performing local standards or local content requirements favour domestic companies, but the risk is the weak become strong domestic Chinese firms abroad. In memory chips, both in DRAM and flash memory, Chinese companies have the opportunity to, as long as convince some large foreign companies to establish technical cooperation alliance, help them to bypass the government's technology transfer limit.
In this regard, the Chinese company capital will play a role. Purple light group branch agreed to last September data to invest $3.8 billion in the west and then western digital cost $19 billion for Sandisk (Sandisk). China's efforts to cultivate pillar industries of large national enterprises of record is not good. In car manufacturing, joint venture with domestic enterprises in China are requiring foreign companies and share technology, but only for local companies to rely on foreign joint venture partners.
On commercial aircraft, the COMAC (COMAC) in time and a lot of money for many years, the development of aircraft still unlisted, even listed may also be behind The Times. In virtually every sector of the chip industry, Chinese companies may eventually catch up in technology, but may affect the global industry, like the solar panel industry, causing excess production. Bernstein, Mr Li says that China "will not stop until the dominate the market, but destroyed value and economy".
Purple light group wei-guo zhao made no secret of his ambition, he recently claimed that "chip industry into the era of the giant, is accelerating integration", apparently with giant company intends to become one of the few survive. The shock will lead to the evolution of the future, and this is the place of zhao state experience.
