"Strictly dependent on imports, the trade deficit widened."
According to the China Times, one of the reasons for the prominent status of chips in the Sino-US trade warfare is that China is the world's largest semiconductor chip consumer market. However, for a long time, China’s ICs have relied heavily on imports and the trade deficit has continued to widen.
China Semiconductor Industry Association (CSIA) statistics show that in 2017 China's integrated circuit product demand reached 1.40 trillion yuan (RMB, the same below), but the domestic self-sufficiency rate was only 38.7%. In the same year, China's IC imports exceeded US$260 billion. (1.63 trillion yuan), has replaced crude oil as China's largest import commodity. At the same time, the trade deficit of ICs reached a record high in 2017, reaching US$ 193.2 billion (1.2 trillion yuan).
In the strong demand for chip imports, the United States is an important chip importer in China. The “Research Report on Sino-U.S. Economic and Trade Relations” released by the Ministry of Commerce in May 2017 shows that 15% of ICs exported from the United States are sold in China.
China has long been an important market for American chip makers. The financial report shows that Qualcomm’s revenue in mainland China for fiscal year 2017 was US$14.579 billion, accounting for 65% of its total revenue. As early as 2010, Qualcomm’s operations in the Chinese mainland market The proportion reached 29%, surpassing South Korea as its largest market.
Another memory chip giant, Micron, had a revenue of US$10.4 billion in the Chinese mainland market in 2017, accounting for 51% of its total revenue. The proportion of China's mainland market in total revenue of Micron was between 2013 and 2016. Stay above 40%.
The global chip industry is currently very stable. Taking the memory chip as an example, the world’s two leading mainstream memory DRAMs and NAND Flash have formed a relatively monopolistic pattern. In 2017, Samsung, SK Hynix and Micron together accounted for 95% of the DRAM market. 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 showed that Qualcomm ranked first with more than 40% market share, Apple was ranked 2nd with 20% market share, followed by MediaTek. Samsung and China's Hass, Spreadtrum. The key point is that the market share of Q3 in 2016 is exactly the same, but only the specific figures are different.
"Internal and external attacks"
Chinese companies have long been in the mid- to low-end sector in the global chip industry. Currently, China can independently manufacture low-end chips such as analogs and separations. However, high-end chips such as logic and storage cannot be self-sufficient. In addition, Ziguang Zengrui, Huawei Hass, etc. The company is also able to produce radio frequency chips and baseband chips for mobile phones. However, Hass and Spreadtrum accounted for 8% and 5% of the market share in the third quarter of 2017 respectively. It is understood that Hass Kirin chips are used in Huawei itself and externally. Not used.
Chinese companies are also relatively weak in the global chip industry chain. 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 build factories, snatch market share. The latest news from the plant construction from South Korea's Samsung. March 28, Samsung's semiconductor factory in Xi'an, Shaanxi The second phase of the investment was announced. The cumulative investment in the first phase of the plant reached US$10 billion. Currently, the production line has been fully operational. The second-stage production line investment is about US$7 billion.
Self-sufficiency is imminent.
At a time when the targeted US trade war is on the horizon, China’s self-sufficiency in chip upgrades is imminent, and high-level attention has been given to the country’s top leaders. In terms of funding, in 2014, China established the National Integrated Circuit Industry Investment Fund to support the relevant aspects of the chip industry chain. In the first phase of the enterprise, the investment capital exceeded RMB 1387 million. In January 2018, the news indicated that the fundraising for the second phase of the fund had also been started. The estimated size of the fund reached RMB 200 billion.
Chinese companies have also tried to adopt a model of going out and acquiring. Ziguang Group once launched a series of mergers and acquisitions in the field of domestic and foreign chips. In 2016, after Ziguang Group tried to invest 24 billion yuan in the final abortion of Western Digital, the two parties announced the establishment in September of that year. The joint venture company, in which Ziguang Group's Ziguang Group holds 51% 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.
For the Chinese chip industry, manufacturing is a relatively quick step in the future. Liu Xi, general manager of CCID Consulting's IC Industry Research Center, said that the 12-inch chip production line in China is accelerating and is currently under construction or ready to be built. There are more than 20 articles. He predicted that around 2020, domestic chip companies will achieve relatively rapid development in the manufacturing sector.
Chinese chip companies have invested heavily. In the field of memory chips, the Yangtze Group’s Yangtze River Storage Group has invested USD 24 billion in 3D NAND Flash production lines, Fujian Jinhua’s first phase of 3.7 billion yuan in DRAM profitable chip production lines, and Hefei Changxin. A DRAM production line with an investment of RMB 47.4 billion was expected to be put into operation in 2018.
According to He Hui, an IHS semiconductor analyst, domestic chips can't get rid of import dependence and it's hard to surpass technology. The technology of foreign chip giants has accumulated for decades, and Chinese companies still have a long way to go. She said that the United States has its own industrial protection. , I don't want China to overtake it too soon.
Liu Ye also stated that Chinese chip companies are relatively backward in terms of technology. In addition, some chip giants have a very strong technical foundation and some intellectual property rights cannot be avoided.
However, it is worth noting that with the outbreak of artificial intelligence, start-up companies in the domestic AI chip fields such as the Cambrian, Horizon, and Shenzhen Jianpin have all got financing. Liu Ye believes that for the customized chip transformation, it is beneficial to domestic chips. Businesses occupy the area in advance.
However, he also believes that although China is relatively at the forefront 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.