The ZTE embargo has impacted the communications industry and has even sounded the alarm bell for the semiconductor industry.
As the largest telecommunications equipment provider in China, ZTE's three major application areas are the RRU base stations with the highest chip threshold. It takes a long time to achieve domestic substitution in this area. The threshold for optical communication and mobile phone industry links is relatively low. China has formed a basic industrial chain, but it is still more low-end applications.
ZTE's affairs have made the whole nation go through an 'anything in the tube'. The development history and problems of the semiconductor industry and the semiconductor industry in recent years have been exposed to people's eyes by the media. This has to be paid attention. As a result, the slogan "The National Core is self-reliant" has been shouted out, and the chip matter has been widely discussed.
Some media also criticize the United States for treating ZTE this way, and they will also ask questions about the development of China's chip industry. But here we must also thank Trump. The embargo in this era is precisely a reminder. The rapid development of the Internet in China, China, need to really pay attention to the underlying technology such as semiconductors, integrated circuits, otherwise it will certainly eat more in the future, even if China has a big market.
After reading various news, many kinds of arguments have been made. The mainstream commentary is nothing but two: First, China's chip manufacturing capacity is far from the gap between foreign countries, China’s chips are self-reliant, and secondly, the US, Japan, and Europe’s chip production capacity is stronger. However, there is no Chinese chip application market.
These two viewpoints seem counter-productive, but they can't tell whether they are right or wrong. They all reflect the current status of China's current chip market. Expressed in one sentence: Big chip country, but not a chip power. On this view, I think China needs In order to become a chip power in the future, first of all, we should face up to the problems faced by the Chinese chip industry, and then we must be able to prescribe the right medicine. However, no matter what kind of medicine, it will certainly be a long course of treatment.
Face up to the status quo and problems faced by the Chinese chip industry
According to observations and related data, the Chinese chip industry is currently facing the following major problems:
Question 1: Market demand accounts for 50% of the world's total, and 90% depends on imports. China's chips are heavily dependent on imports. Chinese chip demand accounts for 50% of the world's total (more than 70-80% of chips for some applications), but domestic brand chips can only be self-sufficient. In 8% or so, China imported US$230 billion worth of chips in 2016, which is more than double the amount of imported crude oil than in second place. According to research firm International Business Strategies Inc., China’s total value of US$190 billion in chips Nearly 90% of them are imported or produced in China.
Question 2: The chip price is not high, but the patent fees are high. From the chip point of view, whether Chinese chip manufacturers adopt ARM architecture or use Intel's X86 price, they need to deliver certain patent purchase costs to these two manufacturers.
From the perspective of consumer electronics, domestic mobile phones use Huawei’s own Hass chips in addition to Huawei’s. As long as other Android phones are medium and high-end models are equipped with Qualcomm CPUs, in addition to the cost of purchasing chips, Qualcomm also charges royalties for each mobile phone. Previously, Meizu and Qualcomm filed a lawsuit, Li Nan, vice president of Meizu said, there are more than 100 mobile phone manufacturers have signed an agreement to purchase patents with Qualcomm. In addition to mobile phones, there are more intelligent terminals using Qualcomm CPU and Intel CPU, need patents Authorization.
Question 3: The chip self-sufficiency rate is insufficient, and domestic chips are at the low end. Taking ZTE as an example, the self-sufficiency rate of the base station chip is almost 0. In the field of optical communication, the self-sufficiency rate is still acceptable, and high-end chips still need to be broken; in the intelligent machine industry, The self-sufficiency rate is relatively high, and the domestic industry chain is basically perfect, but the components required for high-end models still need to be imported. The situation faced by ZTE is a common experience of domestic electronics industry manufacturers.
Question 4: The gap with the chip giant is getting smaller, but design, manufacturing and other aspects are still short. Ye Tianchun, director of the Institute of Microelectronics of the Chinese Academy of Sciences, said: 'We do have shortcomings in chip design, manufacturing, etc., especially in the manufacturing sector. Weak, some core technologies and key equipments are not fully mastered, but we have layouts for these technologies, and the gap with foreign countries is continuously narrowing. ' Although the gap is narrowing, some key technologies and production equipment are short-circuited and it is difficult to complete them in a short time. .
Question 5: There is a serious shortage of employees, and the talent gap is as high as 400,000. The development of the chip industry cannot be separated from the corresponding professional talents. However, all enterprises in China are now focusing on Internet applications based on model innovation, with high returns and better results. The development of Qianjiang has led to a large number of talents flowing into this field. There are few people interested in chip-related integrated circuits, new materials, etc. According to data released in the “China's Integrated Circuit Industry Talent White Paper (2016-2017)” in May 2017, China’s integrated circuits The total number of employees is less than 300,000, but according to the total output value of the chip industry, it needs at least 700,000 people.
No one can ignore China's huge chip market and future opportunities
How many chips China imports each year? At this year's two sessions, Min Xiaowu, chairman of China Electronic Information Industry Group, stated that China will spend only US$240 billion (about 1.58 trillion yuan) on chips each year; integrated circuits include other parts, and One hundred million U.S. dollars.
According to information released by the General Administration of Customs, China’s IC imports reached 377 billion pieces in 2017, an increase of 10.1% year-on-year; import value was US$260.1 billion (approximately 1766.1 million yuan), an increase of 14.6% year-on-year. 14.1% of imports. In other words, China is not only a large chip importer, but also a large market with more than double digits.
Below, we experience experiencing the huge Chinese chip market from the consumer electronics field.
How many mobile phone users in China? According to the latest US Zenith research report, the number of smart phone users in China will reach 1.3 billion in 2018, ranking first in the world. According to the statistics of the Ministry of Industry and Information, as of the end of November 2017, the mobile phones of three basic telecommunications companies The total number of users totaled 1.41 billion. Each mobile phone has at least about 20 chips. The baseband, high-performance CPU, and some chips that cannot be made locally need to be imported.
How many base stations do China have? In 2017, the total number of national mobile communication base stations reached 6.19 million, of which a net increase of 652,000 4G base stations totaled 3.28 million. There are hundreds of chips in one communication base station to implement different functions. The base station core is similar to the computer. To realize various functions and support more mobile phones, it needs to be faster, and the chip is more complicated. What is the amount of the chip used by the base station alone?
The number of sensors and related chips used in a driverless car is much larger than that of a mobile phone. A smart building project is expected to use sensors in the range of a dozen to hundreds of thousands. Related data agencies predict that the 2019 China smart hardware ( Including smart homes, the market size will reach 400 billion yuan. The number of smart hardware can be imagined. The number of sensor chips used in each smart hardware will be at least 1-3.
China is promoting smart homes, smart transportation, digital China, and China Made 2025. These will provide more application scenarios for smart hardware. At the same time, there are a large number of companies using cloud computing, big data, artificial intelligence, Internet of Things, etc. The technology provides services for the majority of enterprises, and promotes the transformation and upgrading of the entire industry in the fields of production and manufacturing of agriculture, forestry, animal husbandry, fishery, and energy, chemicals, and construction.
All Internet/Internet of Things technologies are inseparable from the cloud, network, and end-to-end support. All these require the support of the underlying hardware. All of them are inseparable from the chip.
As listed above, the stock market is a large share, but the incremental market will have a larger share. It is because of the vast market in the future that a large number of foreign companies, such as cloud computing, will compete in China. They seized the market. However, the current U.S. government practice is to prevent these companies from making a fortune.
Looking at Chinese manufacturers' right to speak in the chip market from Qualcomm
From Qualcomm, Intel, Microsoft, ARM, to Apple, Amazon, Cisco, Oracle, no enterprise is not actively arranging in China, with countless strategic cooperation and project investment. The reason is not his. First, these businesses have seen the Chinese market. The second is that the Chinese market has become an important part of its profit source.
Without the Chinese market, the losses of American chip companies and even more technology companies are at least billions. In terms of Qualcomm, Qualcomm is the most important chip supplier for ZTE mobile phones. According to IHSMarkit data from research institutes, last year, ZTE mobile phones worldwide. Shipments of 46.4 million units, more than half of the mobile phone products used are Qualcomm chips Opteron chips. If the price of each chip is calculated at 25 U.S. dollars, Qualcomm’s income from ZTE’s revenue is close to 500 million U.S. dollars. If this year, Qualcomm cannot continue The supply for ZTE is obviously a loss of 500 million U.S. dollars.
Compared with processor sales profits, patent authorization is the main source of profit for Qualcomm. The financial report shows that in 2017, the profit rate of Qualcomm processor sales was 17%, and the profit rate of patented licenses was 80%. It was only in the second half of 2017, Xiaomi. , OPPO, Vivo and Qualcomm signed a $ 12 billion chip purchase contract, not to mention, there are more domestic mobile phone manufacturers to purchase chips from Qualcomm and pay royalties.
Qualcomm’s new CEO Ameng recently even visited OPPO’s headquarters in Shenzhen. It shows the impact of OPPO on Qualcomm. Among existing models, only millet, OPPO, and vivo equipped with Qualcomm CPU models, as many as 295 models. , Mainstream domestic mobile phones equipped with Qualcomm models have more than 1,100 models.
From the perspective of the industry chain, currently Qualcomm's CPUs mainly supply more than 100 mobile phone manufacturers and more mobile device manufacturers in the Chinese market. Samsung itself has full industry chain capabilities. Because of the high patented cost of Qualcomm, more Samsung models have begun to adopt. Self-developed Exynos chips, Samsung's semiconductor production R & D capability has been very strong, and later do not need to pay more to Qualcomm. The current Chinese market has become an indispensable place for profit distribution of Qualcomm.
For a long period of time before, there were cases of domestically produced mobile phones degrading domestically produced chips, including Taiwan’s MediaTek chips. The fact is that Qualcomm’s CPU will not be too strong and MediaTek will not be bad enough to drop dross. The news came out, oppo R17 will use MediaTek P65 chip.
If China’s mobile phone manufacturers’ influence on the ZTE incident hinders the adoption of Qualcomm’s CPU under relevant regulations, Qualcomm will most likely be unable to do so. Qualcomm’s recent cash flow is not good, and large layoffs will be made in June this year. Since the last trade war, there have been many uncertainties in the Chinese market, and its share price has fallen by nearly 25% since January this year. It can be said that the Chinese market can largely determine Qualcomm’s future destiny.
Inspiration to China's chip and electronic consumer industry
In fact, China’s terminal manufacturers are not as weak as everyone thinks. Even if they lack the core technology, they are still the object of major upstream suppliers. Because there is no China’s global TOP10 Android mobile phone manufacturers and communications equipment manufacturers, In the entire industry chain, the middle and lower reaches of the manufacturers will be implicated, and even serious ones will fail. Apple’s suppliers will close down because of Apple’s own supply.
This should have been a win-win situation for various manufacturers in the industry chain. However, because the US embargo on ZTE has caused a crisis in the global supply chain, there is a sense of crisis in cooperation. Although the global supply chain trend is irreversible, it has advanced technology capabilities. Manufacturers can find a reason to refuse supply at any time, or because of geopolitical and other reasons, they cannot supply it. Therefore, it is still necessary to fight for iron, or to maximize the supply chain's localization, so as to fundamentally eliminate such risks.
In front of the ZTE, even if relations between China and the United States are eased, it is necessary to consider whether to withdraw from the U.S. market in the future and how to continue development after quitting. This is not a purely political risk. It has an absolute relationship with its own business and business model. Similarly, what is facing all Chinese consumer electronics companies is how to take advantage of the size of the Chinese market to further extend the industry’s horizontal and vertical extension. It can not only make excellent downstream products, but also further participate in it. , The middle part of the journey, in order to improve the ability to resist risks.
This is not just in the electronics industry, but also in other industries.