Weak country has no diplomacy, weak core has no foundation
Nomura analyst Joel Ying said that as of fiscal year 2017, US-produced parts and components are estimated to account for 10% -15% of the total cost of raw materials for ZTE Corporation. And since it is difficult to find alternative spare parts supply in the short term, if the ban is implemented for the entire seven years, The company's supply chain may be interrupted.
After the U.S. Department of Commerce’s ZTE activation refusal order, ZTE Corporation issued an internal letter saying that the company has attached great importance to the establishment of a crisis response working group at the earliest time. Currently, various areas are analyzing and formulating countermeasures and working hard to face the crisis. Any road leading to a bright future is not straightforward, and the internationalization of the company is also accompanied by twists and turns.
According to a ZTE employee, the incident has already surpassed the business rules. The development of the situation is not something the company can influence. Especially during the Sino-US trade war, the incident was even more thought-provoking. CITIC Securities believes that ZTE Corporation The embargo on the US chip is not an isolated event, but a microcosm of the Sino-US trade war. The long-term impact on ZTE needs to see the results of the subsequent negotiations between the two countries, as well as the development process of self-controllable substitution.
The Ministry of Commerce of the People's Republic of China also issued a public notice on the morning of the 17th that the Chinese Ministry of Commerce will pay close attention to the progress of the situation and are ready to take necessary measures to safeguard the legitimate rights and interests of Chinese companies.
Wang Yanhui, the secretary general of China Mobile, pointed out that high-tech companies such as Huawei, ZTE, Lenovo, Xiaomi, and ov are undoubtedly banned if they are banned from U.S. chips or parts. The U.S. is now issuing a ban on a Chinese company. Not only ZTE, but also because simply because ZTE violated the ban before, the real goal of the United States must have been the Sino-U.S. negotiations for the trade war. ZTE was banned by the U.S. to sell chips for seven years. It is essentially a Sino-U.S. trade war. In part, the real solution needs the negotiation between the Chinese and U.S. governments.
The CCTV report pointed out that the United States once again focused its efforts on ZTE and explained at least three things:
First, the sincerity of the United States to reduce its surplus is not enough. Nowadays, one of the reasons that Trump has repeatedly mentioned the trade friction between China and the United States is that the United States has had a large deficit with China. The Chinese side has repeatedly stated that it hopes that the United States will open up its technology to China. Product Exports. The United States blocked ZTE for this reason and refused to export telecom parts and components to ZTE. It shows that the United States still does not have much intention to reduce its deficit by expanding its export of technology products to China.
Second, the U.S. side blocked ZTE and suppressed China’s high-tech companies. It once again confirmed that the United States had provoked trade frictions with China and its goal was directed at China’s manufacturing of 2025. The first of 20 manufacturing fields in China is the next generation of information. Technology industry. In the field of information and communication equipment, we must master core technologies such as new types of computing, high-speed interconnection, advanced storage, and systematic security assurance, and fully break through the fifth-generation mobile communication (5G) technology, core routing and switching technologies, and ultra-high-speed and high-capacity intelligence. Optical transmission technology and other technologies. ZTE is one of China's leading companies in this area.
Third, China's manufacturing of 2025 should be pushed even harder. The reason why the US Department of Commerce has blocked ZTE's influence is that an important reason is that the components needed by ZTE cannot completely find alternatives to American companies. To be frank, some products In addition to American companies, other companies can't produce. At this time, it is difficult to fight back when they are smashed. In some key areas, domestic technology research and development should be more forceful to change the passive situation.
Academician Deng Zhonghan of the Chinese Academy of Engineering said in an interview with the media: “We must learn from such lessons from ZTE. In the future, we must pay more attention to the information industry. We must not only be big, but must be strong, so that our core technology can be controlled by people. Their own chips, heavily dependent on foreign countries, will encounter many problems.
China Merchants Electronics analysts believe that this embargo occurred in the special context of the trade war. The U.S. move was intended to increase its bargaining power at the negotiating table. In addition, the Chinese Ministry of Commerce is still reviewing Qualcomm’s review of NXP. In the case of M&A, the M&A case took a long time. It was the first time that the Ministry of Commerce had used two cases that had not been reviewed and completed within 180 days in recent years. China Merchants Electronics believes that Miki’s move may be partly intended to exert pressure on the Chinese side and thus promote mergers and acquisitions. Progress.
Guoxin Electronic analyst pointed out that purely global free trade does not exist, and the friction between big countries is all about profit and interest. Under the law of the jungle, the strong man is king. US sanctions will accelerate China's integrated circuit industry from rapid optimization. Development. Chips as the core components, the entire machine manufacturer in the process of product design and manufacturing to the supplier's choice of the most cautious.
Professor of the Institute of Microelectronics of Tsinghua University, IEEE fellow Wang Zhihua, expressed his strong opinions on ZTE's new round of trade sanctions against the United States through the communications world's full media platform. Professor Wang said that US companies in China have been in recent years. The repeated actions of initiating trade sanctions show that China’s path from a manufacturing power to a manufacturing power is no easy way, a weak country has no diplomacy, a weak core has no roots, and in the course of technological development, we not only have to take off the crown jewel. We need to build a complete crown manufacturing system in order to develop a technological development path with the characteristics of China's great powers. Do not underestimate the development of system technology, even if one of them is the technology that everyone believes is 'not high gold', as long as the core is not yet mastered, All of them may affect the iterative development of the entire industry chain. Therefore, they should all be regarded as the core technology and put into full force. Comprehensive, systematic development, we can be called science and technology power in the future.
Market research firm TrendForce analysts believe that the Sino-US trade war reflects the concern of the United States about the rapid rise of China's science and technology industry, especially concerns about the rise of China's integrated circuit industry. Although there is still a big gap between China and the US’s IC industry at this stage. However, China’s long-term sustained investment in the development of the integrated circuit industry, with its strong will, a large number of policies, and government funds, is gradually accelerating the rapid progress of China’s integrated circuit industry and striving to achieve domestic alternative imports. This is just the beginning of the U.S. trade war with China. As a first-round bargaining chip, we hope to take the initiative in the next dialogue. However, no matter what the ultimate trade war is, China’s national development will be undoubted. To realize the autonomous and controllable IC industry is also a goal that must be accomplished.
Huawei’s rotation chairman Xu Zhijun said on the matter that Huawei’s position and attitude in the United States are very clear. No matter what happens, Huawei will focus on doing its own thing and serving its customers well to survive and develop for the long term. 'Some things are not ours The will is shifting, but it is easier to lay down. There is more energy and time to build better products and serve our customers well. '
In addition, ZTE’s ban on the purchase of products by the United States involves chip products. When asked whether there are plans for external sales of Huawei's Kirin chips, Xu Zhijun said that Kylin chips will not be positioned as a revenue-generating business. In order to realize the differentiation in Huawei hardware, there is no plan to sell Kirin chips externally.
Hu Houkun, chairman of Huawei’s rotating team, said: “Huawei is a commercial company and wants to do business anywhere in the world to make money. But now there are various reasons why we cannot go there to do business and make money. We are also very helpless. . '
On the afternoon of the 17th, when the Chinese Ministry of Foreign Affairs spoke about Sino-US economic and trade frictions, the spokesperson of the Ministry of Foreign Affairs Hua Chunying pointed out that the U.S. behavior is typical of unilateralism and naked economic hegemony. If the U.S. side will behave arrogantly, it will continue to move against the tide. Will fight hard, resolutely shine sword, to win this multilateralism and free trade defense.
Lack of Core Pain: A U.S. Precise Strike Against China
The blockade may bring a heavy blow to ZTE, and it also shocked the Chinese semiconductor industry. Because the United States has seized China's lack of key technologies such as core chips and parts and components, it has captured the vitality of China.
According to the IHS data, ZTE's smart phone share is about 3%, and its shipment volume is about 10.6 million units per quarter. Most of them are exported. They use chips from companies such as Qualcomm and MediaTek. In the optical network market, Ovum report shows that , ZTE’s share in the global market ranked second, and the major suppliers of optical components were Acacia, Oclaro and Finisar.
According to the report of China Merchants Electronics, ZTE's main businesses are base stations, optical communications and mobile phones. Among them, some RF components in base stations such as cavity filters (Vancouver Wuhan, Dafu Technology), optical module manufacturers (Xinxun Technology, Asahi Chuang Technology), the structural module inside the mobile phone and so on can basically meet the self-sufficiency demand. Only the chip, in the three major application areas, a certain degree of self-sufficiency rate is insufficient.
(1) RRU base stations: Rapid technological change, high threshold, and self-sufficiency rate.
RRU base station products, we have to be divided into two cases to discuss the transmitter and receiver.
The block diagram of the transmitting section is as follows. Its main function is to convert the baseband signal (BB) into intermediate frequency (IF), further modulate to high frequency (RF), and transmit it. Currently, it can realize domestic substitution and large-scale commercial use, only the main The processor, ie, the FPGA in the block diagram, DSP. The main ASIC is Hass.
In addition, among domestic chip manufacturers, Nanjing Meichen Microelectronics has mass production solutions for quadrature modulators, DPD receivers, ADCs, and other chip products. It also participated in the national major special project "TD based on SiP RF technology. -The LTE TD-LTE-Advanced TD-SCDMA base station radio frequency unit R&D, currently in the ZTE in small batch verification.
The receiver's block diagram is as follows. Similar to the transmitter, only HiSilicon's main processor can be used for large-scale commercial replacement. The Nanjing Micron's mixer, VGA, phase-locked loop, and ADC are in small batch verification.
By communicating with the industry's first time, we learned that 'base station chip maturity and high reliability and consumer-grade chips can not be the same, from the beginning of the trial to the use of bulk at least takes more than two years'. At present In the mid-frequency field, the main players are TI, ADI, IDT, etc.; and in the RF field, mainly Qorvo et al.
At the same time, TI and ADI are also promoting single-chip solutions to achieve the micro-base station RRU size requirements. Such as TI AFE75XX series, and ADI's AD936X, etc. The single-chip Transceiver solution has further raised the threshold for base station chips, making domestic manufacturers It is even more difficult to enter. The self-sufficiency rate of the base station chip is almost 0, which has become the most thorny issue in ZTE's embargo.
(2) Optical communications: Self-sufficiency is still acceptable, and high-end chips still need to be broken.
Optical modules are divided into two types: access network (PON) and data transmission network (DT). The two chip solutions are different and the encapsulation is very different. The following takes the access network optical module as an example to discuss the chip solution. The main chips used in the module are MCU, TIA (transimpedance amplifier), APD (avalanche photodiode), LA (Limiting Amplifier), LD (Laser Driver), laser chip (Vcsel, DFB, EML), DWDM, etc.
At present, the optical communication chip products of Ascension Technology mainly include DFB, Vcsel, APD, etc.; Percussion Technology is the leader of PLC optical splitters and DWDM devices; and Nanjing Meichen Microelectronics and Xiamen Youxun are in TIA, LA, LD. Field products have achieved mass production.
This embargo is a big positive for the above-mentioned manufacturers with mature chip solutions. International competitors in this field include Semtech, Micrel (acquired by Microchip), Mindspeed (acquired by Marcom), etc.
Although the self-sufficient rate of optical communication chips is still acceptable, in some high-end products, such as digital optical network 100G and above optical modules, the domestic chip plan is still to be broken. It is recommended to pay attention to the non-listed companies, which are expected to complete the 100G chip by 2019. Program development.
In addition, the optical module will also use 256m and 128m high-capacity Nor Flash. The related products launched by Mega Innovation in late 2017 have already formed sales in major optical module manufacturers.
(3) Intelligent machine industry chain: The self-sufficiency rate is high, and there are no lack of bright spots in major areas.
Finally, let's return to the field of mobile phones most familiar to electronic researchers. Referring to TI's data chart, we can see that the smart phone chip solution is extremely complicated. In addition to the main processor, there are dozens of analog/digital analog hybrid chips. There are fingerprint identification chips and radio frequency chips in the picture that have not yet been marked (TI does not develop related products, so the picture does not).
Such a complicated chip solution can't be taken at first sight. Let us sort out the order of main processor, power management, wireless chip, audio, display, sensor, camera, and fingerprint one by one:
• The main processor chip, the main domestic Huawei Hass and Spreadtrum technology. Millet also successfully launched in 2017 pine fruit processor series.
• The power management chip, St. State shares and Weil Co., Ltd. have strong competitiveness, among which the backlight driver chip of Shengbang shares is leading in the industry, and Weidang shares DCDC, LDO and other chips have obvious advantages. In addition, There are Taiwanese listed companies Silicon Li Jie also quite accomplished in this area.
• In terms of wireless chips, there are three major RF PA companies in the country, namely, China Han Tianxia, only Czech Innovation, and Nationals. The RF switches are mainly IPO's Zhuo Shengwei. The RF chip is the fastest growing segment. One of the areas, 2016-2022 compound growth rate of up to 14%. However, if domestic companies want to achieve high-end mobile phones, it will take some time.
• In the audio chip field, the main player in China is a three-board listed company, Aiwei Electronics.
• Among display-related chips, Taiwan-based manufacturers such as Silicon Force, Siliconc, Wonderscape, and Co., Ltd. are leading players in the field of display driver ICs. At present, there are also many domestic manufacturers in this field.
• Sensors: Silan Micro's accelerometer has now entered the reference design of Spreadtrum, and has accelerated the expansion of other sensors in mobile phones in 18 years.
• Camera CMOS Chip: Howe Technology has a market share of about 12% in the global CMOS chip market in 2015, ranking third in the world. It is estimated that revenue for 2017 will be between USD 8-10 billion.
• Fingerprint chip: Mainly for Huiding Technology and Silimicro (Yiyi Innovation Subsidiary), Huiding's fingerprint identification chip surpassed FPC at the end of 2017, becoming the world's market share leader. Sinai Micro also implemented it in 2017. The market share doubled.
Based on the above analysis, in the three major application areas of ZTE, the block with the highest chip threshold is the RRU base station. It takes a long time to realize domestic substitution in this field. The threshold for optical communication and mobile phone industry links is relatively low, and some segments are relatively low. The domestic chip program in the field has even become an international leader, but overall it is still a low-end application.
China Merchants Electronics analysts pointed out that the ZTE embargo has a greater impact on the communications industry and has also sounded the alarm bell of the semiconductor industry. Self-control is not just a slogan. It is related to national security and national economy and people's livelihood. We not only need to set up a long-term plan to build fabs with great fanfare, but also to keep a low profile and support the local chip design company.
Although the current domestic chip design industry is still weak, we believe that among the 1,380 chip design companies in the country, they will eventually go out of the giant manufacturers. Whether it is the merger and acquisition integration of the TI model or the linear academic research school, it is worth our local chip. Design company draws on. We sincerely hope that we can solve the core of the Chinese electronics industry as soon as possible in the future.
The follow-up solution to this embargo may refer to the 2016 embargo review. In 2016, after the embargo broke out, under the coordination of the governments of both countries, the U.S. Department of Commerce issued a Temporary General License to ZTE. ZTE can guarantee the normal components and software purchase uS embargo lifted the spear again this year, we expect to reach a settlement through good offices between the second and the subsequent resurgence uS Department of Commerce (quoted from China Merchants Securities, author: Yan Fan, Fang Jing)
The U.S. killed 1,000 enemy units and lost 800 U.S. dollars.
On the 17th, ZTE officially stated that it has been informed of the US Department of Commerce’s refusal to activate the company. The company is fully assessing the possible impact of this incident on the company and actively communicating with and responding to various aspects. As a result, ZTE H-shares have suspended the company's emergency suspension. Announcement It is stated that the H shares of ZTE Corporation will be temporarily suspended from trading at 9:00 this morning. Therefore, all structural products related to the company will also be temporarily suspended.
CICC issued a report saying that the U.S. Department of Commerce imposes a prohibition on the export of ZTE. If it fails to reach a settlement within 1-2 months, it will affect the normal production and sales of communications equipment and mobile phones, as well as the current global and Chinese The construction of operators' networks will have a certain impact, and it may affect the promotion of future 5G networks. Currently, ZTE has a market share of about 10% of the global telecommunications equipment market and approximately 30% of the market share of China's telecommunications equipment market. ZTE has 1-2 months. The inventory of parts and components, if not reached as soon as possible, will affect the relevant business.
Industry sources pointed out that there are many components involved in a communications equipment company. One base station has one chip that is embargoed, and the entire base station cannot be delivered. At present, the circuit board on the base station is produced in addition to several digital baseband chips. On the link, RF, PLL, ADC/DAC, and even externally measured power supply voltage chips cannot be found in domestic suppliers. Although the entire plant masters the core algorithm through self-produced baseband chips, it cannot be solved by foreign chip suppliers. Problems with 'cock neck'.
The key components of ZTE's telecommunications equipment, such as transmitters and receivers for optical transmission, are still supplied by international companies as the main source of parts supply. Parts in telecommunications equipment also have many suppliers from the United States. Look, foreign parts account for at least 60% of its material parts, while materials from U.S. suppliers account for at least more than half of the 60%. Qualcomm is currently one of ZTE’s largest sources of application processors for mobile phone products. , which accounted for about 60% of its mobile phone products, and MediaTek is ranked second, close to 30%, while the main memory and storage providers are mainly Korean Samsung and Hynix.
On the software side, mobile phones will not be able to get Android licenses from Google. Even if they completely replace the Qualcomm project with MediaTek's (United States non-intervention) program that may be able to get the goods smoothly, the operating system will be less or not available. To GMS (Google Mobile Service) certification from Google, basically can not get market recognition, which involves not only can not enter the US market, but will allow ZTE even other markets can not get in. ZTE current mobile phone export ratio as high More than 80%.
On the other hand, as these US suppliers are prohibited from trading with ZTE, revenue will also be affected. If the ban comes into force, there will undoubtedly be a major blow to U.S. companies, such as U.S. optical component manufacturers. The stock price generally fell in Monday's trading.
The most affected were Acacia (ACIA, -35.5%) and Oclaro (OCLR, -14.9%). Acacia generated 30% of its sales revenue in fiscal year 2017 from ZTE. After the stock price fell, the company responded positively and issued a statement. Said that it has realized this and took steps to suspend the affected transactions and assess the impact of these moves on Acacia. Oclaro has not made any comments at present and announced that Lumentum, which acquired Oclaro, was also affected. The stock price fell 8.9%. Other affected The smaller optical device vendors also include: Finisar (FNSR) - 3.8%, NeoPhotonics (NPTN) - 3.4%, II-VI (IIVI) - 4%, and AOI (AAOI) - 1.3%.
On the other hand, analysts believe that there are also optical device vendors and optical network equipment vendors that will benefit from the ban, such as NeoPhotonics, which is not a major supplier of ZTE. As ZTE cannot obtain cutting-edge components, its rivals Huawei and Nokia will be at 100+G. Winning market share in optical systems. Ovum report shows that in terms of high-speed optical interfaces, in 2017, ZTE's 100G WDM port shipments increased by 3.46 percentage points from 2016, the fastest growth rate in the world, and 100G WDM market share ranked the first in the world. two.
There are many US companies that cooperate with ZTE, including well-known companies such as Microsoft, Intel, and IBM. ZTE has announced that it will purchase at least US$5 billion from Qualcomm and Broadcom in the US from 2012 to 2015. In recent years, ZTE has been U.S. chips and U.S. equipment invested US$14 billion and created 20,000 jobs directly and indirectly for the U.S. market. In the United States, ZTE’s mobile phone business has squeezed into the top five.
In the 5G research and development, Qualcomm and Intel are important cooperative partners of ZTE. On February 27, ZTE announced cooperation with Intel at the Mobile World Congress in Barcelona, officially publishing next-generation IT baseband products for 5G (IT BBU), and collaborated with Qualcomm and others to conduct interoperability tests based on the 5G NR specification and OTA outfield trials.
It is reported that U.S. manufacturers account for as much as 30% to 40% of ZTE's purchases. This is only registered in the United States. For some companies, they are not registered in the U.S., but at the business sites, the technical service sites are also the same for U.S. companies. In the scope of the United States Department of Commerce’s ban, it is also not possible to sell products and services to ZTE. As a result, the actual number of US companies that may be implicated or foreign companies that have established strongholds in the United States is far more than imagined. The impact level is also greater.
ZTE was punished
In March 2016, the U.S. government, on the grounds of ZTE's alleged sale of embargo technology to Iran, notified U.S. component manufacturers that it was forbidden to contact ZTE without application, and it was forbidden to sell or technically support ZTE. Equivalent to directly cut off the supply of ZTE to U.S. manufacturers.
Afterwards, ZTE pleaded guilty in the Federal Court of Texas last year and filed an application for removal from the special review list with the US government. The U.S. Department of Commerce agreed to grant ZTE a temporary permit for three months to temporarily lift its export restrictions. The U.S. Department of Commerce has repeatedly extended its temporary license to ZTE, but ZTE has also paid a heavy price. Three senior executives including Shi Lirong, the then CEO, were forced to resign.
Shi Lirong, who was then president of ZTE, once sent a letter to the staff, stating that the U.S. Department of Commerce’s restriction on the export of ZTE Corporation was a crisis. He also believed that ZTE should establish a senior management team to handle the matter. This follow-up has also led to the management of ZTE. After the resurgence, ZTE actively negotiated with the U.S. side and the U.S. government announced that it “temporarily” suspended the sanctions on ZTE and granted ZTE a temporary export license for three months. Afterwards, it was extended many times and the final extension was to 2017. On the 27th.
In March 2017, the U.S. Department of Commerce decided to impose heavy fines on ZTE because the U.S. claimed that ZTE had violated the U.S. export ban imposed on Iran. Subsequently, ZTE and the U.S. government reached an agreement and agreed to pay a total fine of 892 million U.S. dollars and 300 million U.S. dollars. The suspension of fines. According to this agreement, if the content of the agreement is not violated within 7 years after the agreement is signed, the suspension of the fine will be exempted from payment.
According to Reuters, as part of the agreement, ZTE also promised to dismiss 4 senior employees and punish 35 other employees, either to reduce bonuses or to rebuke. However, ZTE admitted in March that although four senior employees were dismissed, No 35 employees were disciplined or reduced in bonuses. US Department of Commerce Secretary Wilbur Ross stated in a statement: “When ZTE was initially captured and included in the list of entities, it made a false statement to the U.S. government. Making false statements during probation and making false statements again during probation period, ZTE misled the Ministry of Commerce. ZTE did not rebuke the employees and senior management of ZTE, but rewarded them. This bad behavior cannot be ignored. ' Representing ZTE's suppliers The export control lawyer Douglas Jacobson said that the ban was very unusual and said it would have a serious impact on the company. 'This will have a devastating effect on the company because they rely on American products and software,' he said, ' This will certainly make it difficult for them to produce, and it will have a potentially significant short-term and long-term negative impact on the company. 4. The leaked to the U.S. government is the former U.S. financial controller.
In addition, after the U.S. Department of Commerce issued a blockade order, the United Kingdom’s UK network security regulator warned that the British telecommunications sector should not use ZTE’s network equipment or services because this would have a long-term negative impact on the security of the United Kingdom.
The British National Cyber Security Center (a network security supervisory agency) sent a letter to the telecommunications industry on the 16th, warning against using the equipment or services provided by ZTE, so as not to pose a national security risk. According to a report in the Financial Times, the letter points out that due to the UK Already using Huawei equipment, adding additional Chinese suppliers will increase the difficulty of 'reducing the risk of external interference.' The National Cyber Security Center also pointed out that ZTE’s violation of the US’s sanctions against Iran and North Korea in 2017 was determined by ZTE. The agency issued this warning letter.
The United Kingdom and the United States have imposed restrictions on one of China's largest telecommunications equipment manufacturers, making the list of Chinese government restrictions imposed by Chinese governments on the grounds of national security longer.