Trade friction between China and the United States highlights the strategic position of the chip industry.
On March 23rd, U.S. President Trump signed a memorandum of the President, planning to impose a 25% tariff on at least 50 billion U.S. dollars of Chinese imports, and will establish new investment restrictions. In addition to the desire to reduce the trade deficit by 100 billion U.S. dollars, etc. In addition, the 301 investigation report issued by the United States also criticized the way China’s chip industry acquired intellectual property rights of overseas enterprises and cross-border acquisitions.
The chip is critical to our country's information industry. China is the largest market for chips, but it has long relied on imports. In a relatively stable global chip industry, domestic companies are also in a weak position. If the Sino-US trade war happens, can the chips be able to As a chip to contain opponents, both sides have raised the chip self-sufficiency rate. Now, how will the chip giants, such as the US and South Korea, accumulate technology for many years? Perhaps the AI chip can tell a different story.
Trade battle chips?
The smoke of the trade war between China and the United States has not yet begun. How to fight has become a hot topic.
According to industry sources, in order to reduce China’s trade surplus with the United States, China may switch some of its chip orders to South Korea and Taiwan’s manufacturers to the United States. However, there are also views that if trade wars intensify, China is developing a list of follow-up trade wars. It may impose tariffs on imported chips to increase the competitiveness of local manufacturers.
One of the reasons for the prominent position of the chip in the Sino-US trade war is that China is the world's largest semiconductor chip consumer market. However, for a long time, China’s integrated circuits have relied heavily on imports and the trade deficit has continued to expand.
China Semiconductor Industry Association (CSIA) statistics show that in 2017 China's integrated circuit product demand reached 1.40 trillion yuan, but the domestic self-sufficiency rate was only 38.7%. Also from the statistics of the CISA, China's integrated circuit imports in 2017 With more than US$260 billion, it has replaced crude oil as China’s largest import commodity. At the same time, the trade deficit of ICs reached a record high in 2017, reaching US$ 193.2 billion.
In the strong demand for chip imports, the United States is an important chip importer in China. The “Research Report on China-US Economic and Trade Relations” released by the Ministry of Commerce in May 2017 shows that 15% of ICs exported by the United States are sold to China.
In fact, in the face of a huge trade deficit in the chip industry, China has already become an important market for American chip makers.
According to the financial report, Qualcomm’s revenue in mainland China in FY 2017 was US$14.579 billion, accounting for 65% of total revenue. As early as 2010, Qualcomm’s revenue share in China’s mainland market reached 29%. South Korea became its largest market. Another memory chip giant, micron, had a revenue of 10.4 billion U.S. dollars in the Chinese mainland market in 2017, accounting for 51% of its total revenue. The Chinese mainland market is in the total revenue of Micron. The proportion remained above 40% in 2013-2016.
IHS Semiconductor analyst He Hui believes that the trade war will have a greater impact on commodities or manufacturing industries, but it will not have much impact on the chip industry of both parties. She told the China Times (public number: chinatimes) reporter that China The middle and high-end chips are still mainly imported, and the domestic resources that can be replaced are limited. China is a major chip-using country, and restrictions on this block are unfavorable to both parties.
Liu Xi, general manager of CCID Consulting's IC Research Center, told reporters at the China Times (public account: chinatimes) that if the trade war starts, some chips that China can manufacture independently may raise tariffs. But he also said that at the same time At present, the domestic chip industry in the world is relatively stable, and China is less likely to fight the trade war by increasing tariffs.
The position in the industry structure
The chip industry is currently very stable.
Taking the memory chip as an example, according to the “Huaxia Times (public number: chinatimes)” reporter, the two major mainstream memory DRAMs and NAND flashes in the world have formed a relatively monopoly pattern. In 2017, Samsung, SK Hynix and Micron made up a total of 95 % of the DRAM market, while the NAND Flash market is split between Samsung, Toshiba, Western Digital, Micron, SK Hynix and Intel.
In the mobile chip field, Counterpoint's statistics for the third quarter of 2017 show that Qualcomm ranked first with more than 40% of the market share. Apple ranked second with 20%, followed by MediaTek, Samsung, and China. Hass, Spreadtrum. It is worth mentioning that Q3's market share ranking is exactly the same in 2016, but the specific figures are different.
Behind the weak market share, Chinese companies have long been in the low-end sector in the global chip industry.
According to the reporter of China Times (public account: chinatimes), China can now independently manufacture low-end chips such as analog and separation, but high-end chips such as logic and storage cannot be self-sufficient. In addition, Ziguang Zengrui, Huawei Hass and other companies It can also produce radio frequency chips and baseband chips used in mobile phones. Counterpoint pointed out in the above report that Hass and Spreadtrum each occupied 8% and 5% of the market share respectively. However, according to the reporter's understanding, Hass Kirin chips are used in Huawei itself. , External has not been used.
Chinese companies are also relatively weak in the global chip industry chain. Liu Ye told reporters that in design, manufacturing, and packaging and testing, Chinese companies are only in the first echelon of low-end packaging and testing.
There are also internal concerns at the same time. The domestic battlefield of Chinese chip companies, many international chip giants have come to set up factories to seize market share.
The latest news of the establishment came from South Korea's Samsung. On March 28th, Samsung announced the construction of its second semiconductor plant in Xi’an, Shaanxi. Samsung’s China told the “Huaxia Times (public number: chinatimes)” reporter of Xi'an Semiconductor Factory Phase I. The accumulated investment amount reached 10 billion U.S. dollars, and the production line has now been fully operational. The second-stage production line investment is about 7 billion U.S. dollars.
Samsung China also told reporters for the China Times (public account: chinatimes) that China is the largest market for flash memory chips and has gathered major mobile phones and IT manufacturers worldwide. However, current production line capacity cannot meet the needs of Samsung and its partners. Therefore, it is necessary to expand the production line.
China Chip Future
China's increasing self-sufficiency in chips is imminent.
National level has been highly valued. In this year's government work report, integrated circuits have been included in the development of the real economy. In terms of capital, in 2014, China established a national integrated circuit industry investment fund to support the related According to the reporter, the first phase of investment funds exceeded RMB 138.7 billion. In January 2018, it was reported that the second phase of the fund's fundraising had also been started, and the scale was expected to reach RMB 200 billion.
The Chinese companies also tried to take the pattern of going out of the merger.
Ziguang Group has initiated a series of mergers and acquisitions in the field of domestic and foreign chips. In foreign mergers and acquisitions, in 2016, after Ziguang Group tried to invest 24 billion yuan in the final abortion of Western Digital, the two parties announced the establishment of a joint venture company in September of that year, in which Ziguang Group Ziguang shares held 51% of the company's shares. In 2015, Ziguang Group also reported that it was trying to acquire Meiguang for US$23 billion, but it also failed because of national security issues.
Liu Ye believes that manufacturing is a relatively quick breakthrough in the future for China's chip industry. He told the Huaxia Times (public number: chinatimes) reporter that the domestic 12-inch chip production line is accelerating and is currently under construction or There are more than 20 preparations for the construction. He expects that domestic chip companies will achieve relatively rapid development in the manufacturing process around 2020.
Chinese chip companies have invested heavily in the field of storage chips. In the field of memory chips, the Yangtze Group’s Yangtze River Storage Group has invested US$24 billion in 3D NAND Flash production lines, Fujian Jinhua’s first phase of 3.7 billion yuan in investment in DRAM niche chip production lines, and Hefei Changxin. DRAM production investment of 49.4 billion yuan was expected to be put into operation in 2018.
However, China's current chip dependence on imports does not stem from the lack of money.
He Hui believes that domestic chips cannot get rid of import dependency and it is difficult to surpass the technology. The technology of foreign chip giants has accumulated for decades, and Chinese companies still have a long way to go. She told the "China Times (public number: chinatimes)" The reporter stated that the United States has its own industrial protection and does not want China to overtake it too quickly. Liu Wei also told reporters of the China Times (public account: chinatimes) that Chinese chip companies are relatively backward in terms of technology. In addition, some chips The giant's technical foundation is very strong and some intellectual property rights cannot be avoided.
However, it is worth noting that, with the outbreak of artificial intelligence, startup companies in the domestic AI chip field, such as the Cambrian, Horizon, and Shenzhen Jian Technology, have obtained financing. Liu Ye believes that for the customized chip transformation, it is beneficial to domestic chips. The enterprise occupied the special field in advance. However, he also believes that although China is relatively high in the field of AI chips, this outbreak is driven by downstream applications. If the application does not rise, it will still affect the entire market.