Then, if this trade friction is not a matter of course, what will be the impact on the semiconductor industry?
Nearly 200 billion U.S. dollars in trade deficit and the increasingly heavy Chinese market in U.S. semiconductor companies
Although the Sino-U.S. trade war has been in rapid swing, it seems that there is a turning point today. Reuters and other foreign media disclosed today that China and the United States are holding consultations. During the negotiations, senior Trump administration officials demanded that China lower the tariffs on imported cars and allow foreign investors to hold The financial services company holds a majority stake and buys more semiconductor products produced in the United States.
According to reports, China is willing to increase US semiconductor imports. However, it is not known how US chips will replace South Korean and Taiwan chips. There are few overlaps between US chips and chips. In terms of amount, Reuters calculated according to China Customs data. It was concluded that last year the United States accounted for only 1% of China's total semiconductor imports.
Some analysts believe that the Sino-U.S. trade friction is aimed at “Made in China 2025” and aims to limit the development of high-tech and high value-added areas in China. As a strategic industry that affects the country’s overall competitiveness, the level of integrated circuit technology and industry scale It has become an important indicator of a country’s industrial competitiveness and comprehensive national strength. The IC industry in this trade dispute has also attracted much attention. However, since 2013, the annual import volume of China’s integrated circuits has reached more than US$200 billion, and the 2016 China crude oil The import amount was US$115.308 billion. More importantly, the import amount in 2017 increased by a large margin of 14.6% year-on-year, and the overall deficit was close to US$200 billion.
This analyst believes that there is less impact on the continued import-oriented domestic semiconductor industry.
Looking at the development of U.S. semiconductor companies in China, the following are some of the major U.S. semiconductor companies in China that have a higher percentage of U.S. revenue. In addition, more than 40% of Texas Instruments (TI) Xilinx (Xilinx) ), Intel (Intel) and other large factories rely on the Chinese market more than 20%.
It is worth noting that the semiconductor market in China and the rest of the world is actually becoming more and more important in the Chinese market. It is also basically doing localization in China, such as Qualcomm, TI, etc. Obviously. For example, when Trump visited China at the end of 2017, Qualcomm signed a memorandum of understanding with Xiaomi, Oppo and vivo. The three companies will purchase high-pass chips worth no less than US$12 billion over the next three years.
It can be said that Sino-U.S. trade and semiconductor play a very important role in it. Although the United States accounts for a small amount of Chinese semiconductor imports, China is highly dependent on importing semiconductor chip products and related equipment from the United States. Similarly, many semiconductor companies in the US The dependence on the Chinese market has also been too large to get out.
The following is an example of the two areas, the situation between China and the United States.
Comparison of smart phone chips in China and the United States
A smart phone contains a variety of chips, such as baseband, application processing, RF front-end, wireless communication, power management, memory, touch screen and fingerprint identification chips. Currently, U.S. manufacturers are mainly in baseband, application processors, and radio frequency. The front-end and power management chips have great advantages. The 95% market for RF chips is occupied by European and American manufacturers, and the localization process in China is slow. Basebands and application processing chips are on the mainland and are being pursued by manufacturers. Currently, there are separate high-end and low-end chip markets. Hass and Spreadtrum’s two major SoC design houses accounted for 5% and 7% market share of chip shipments. On the touchscreen and fingerprint recognition chips, mainland manufacturers have basically achieved domestic substitution.
Memory chip comparison between the United States and the United States
In many other areas of semiconductors, the mainland self-sufficiency rate is still relatively low, such as storage (mainstream memory DRAM and NAND Flash mainland self-sufficiency ratio is currently about 0%), semiconductor equipment (sole 2016 self-sufficiency rate is 11.5%) and some semiconductor material fields. (Self-adjustment rate in the field of photoresists is 0%) etc. Once the self-sufficiency rate is too low, and foreign suppliers are too concentrated, it will easily cause Chinese downstream manufacturers to get caught in the neck, causing the government's countermeasures to be restricted by multiple factors.
As the third DRAM, NAND Flash’s fourth-largest giant Micron’s reliance on the Chinese market is increasing. In 2009, China’s mainland surpassed the United States as Micron’s largest source of revenue, after which the continent’s share continued to grow. Revenue in mainland China reached 10.4 billion U.S. dollars, a growth rate of 96%, accounting for 50% of Micron's total revenue.
At present, there are more restrictions on the taxation of American commercial memory products. In the case that there is no substantial capacity release in mainland storage, the two memories are expected to maintain the supply shortage. Take DRAM as an example, if it is on the DRAM products of Micron. Taxes, on the one hand, may exacerbate the shortage of storage supply on the mainland and harm the interests of China's downstream end-use manufacturers; on the other hand, it may increase the monopoly of Samsung and SK Hynix in the Chinese DRAM market, which is not conducive to the Chinese semiconductor industry in the long run. The benign development.
China's storage started late, and there are many technical backwardness. Although we are currently trying our best to catch up with the strong support of the state and the capital, and we have also seen the establishment of three major bases for mainland storage, it takes more time to actually achieve domestic storage and replacement. And more energy.
What aspects of China's semiconductor industry were addressed in the 301 survey?
In the first chapter, the 301 survey focused on the process of the introduction, absorption, and re-innovation of foreign intellectual property and technology in China. One of the most important examples is the integrated circuit, and many Chinese integrated circuits are mentioned. Industrial policies such as '12th Five-Year Development Plan for Integrated Circuit Industry', 'National Outline for the Development of Integrated Circuit Industry', etc.
Second, Section 301 of the Investigative Report 'China's Unfair Technology Transfer System for US Companies in China' section cited the US Department of Commerce and Homeland Security's investigation report on the US integrated circuit industry, saying '25 US ICs. The company stated that they had to form joint ventures with Chinese entities to develop the Chinese market and transfer intellectual property rights. In 2017, the total sales of these companies exceeded 25 billion US dollars.'
Third, chapter 301 of the “Investment Outward” section of the 301 survey report listed China’s “Going Global” strategy. Among them, it focused on overseas acquisitions and the strategy of going abroad in the integrated circuit sector supported by a number of national policies. It also focused on the analysis of Beijing, Tsinghua University (Ziguang Group), and participated in several acquisition cases, such as Micron, Western Digital, etc. Meanwhile, in the report this chapter proposed that the emergence of 'national support funds and investment companies is the Chinese financial industry's An important new feature', and the national integrated circuit industry fund as a typical case. Finally, the report listed several Chinese investments in U.S. integrated circuits, such as the acquisition of iML by Chictronics North, the acquisition of Mattson by U.S. Capital, and the acquisition of ISSI by Zhuang Guotou. Case and so on.
Chen Ping, chief analyst of Haitong Securities, pointed out that the main areas of the United States for China's strategic emerging industries represented by the semiconductor industry can be summarized as follows: 1. The introduction of foreign intellectual property and technology, absorption and re-creation through the encouragement policies implemented by the government 2. Take market entry conditions as a key requirement and require foreign-invested enterprises to transfer intellectual property rights; 3. Conduct cross-border acquisitions with the support of state-led industry funds.
These accusations are obviously irrational. Chen Ping stressed that the Sino-US trade frictions have made it difficult for the external environment of China's semiconductor industry to deteriorate further, highlighting the importance of establishing a complete independent industrial chain.
If trade frictions deteriorate, how can China counter it?
Analysts pointed out that if the trade war intensifies, both parties will inevitably take further sanctions and countermeasures. From the aspect of countermeasures, on the one hand, China can strengthen its taxation quota and increase the scope of taxation. In the semiconductor field, Domestic products with alternative capabilities such as NOR, mid-to-low-end chips, etc., may cancel tax cuts or additional tax increases, thereby strengthening the price competitiveness of domestic products in the market.
In addition to tax countermeasures, China’s biggest advantage lies in its market advantages. It can adopt various means. For example, in response to the United States’ M&A restriction policy on China, the Ministry of Commerce of China can reasonably reject the mergers and acquisitions of some American-funded enterprises, especially some or will. After the arrival of a new monopoly, such as the acquisition of NXP by Qualcomm.
In addition, it can also increase the penalties for the investigation of monopoly companies, such as Qualcomm, Intel and other US-funded enterprises. If you take the opportunity to request the merger party to provide considerable compensation and preferential measures, to a certain extent, to the benefit of domestic related industries development of.
It is worth noting that currently in the field of semiconductors, there is still a large gap between China and the mainland to achieve domestic substitution. It is difficult to counterattack through the tax rate policy. Trade friction is not a long-term behavior in any case. In terms of long-term development, only more attention is paid to self-development. Accumulation of industry, increase the support of policies and capital, improve internal strength to be in a favorable position for competition, counterattack from the inside out.