Chip imports spike oil! Investors: Only true AI chips have the opportunity

The chip is considered to be a symbol of manufacturing and technological strength. The chip has already surpassed oil and has become China's largest import material every year. The annual import value exceeds 200 billion US dollars. It is reported that Qualcomm’s chip sales and patent license fee income in China account for Its global total revenue is nearly 60%.

For a long time, in the primary market, investment in the chip industry has been tepid because of high input costs, high thresholds, and long periods.

However, according to the incomplete statistics of the investment community, at least 9 chip companies have obtained financing since April this year. Even if traced back, there are many VC/PE supporting chip companies. There is no shortage of deep VCs behind them. The National IC Industrial Investment Fund , State-funded venture, Chenhui Capital and other first-line agencies.

China has a great market

According to Mr. Liu Qin, founding partner of Morningside Capital, the former China used the market for technology, and missed the development of the chip in the 1970s. The development of the PC in the 1990s was only catching up with the Internet model in 2000. The window.

However, in his view, the time has come for China today, and talents and capital have the opportunity to create original technologies on the same starting line, relying on China’s strong market size. Today, as investors, we must pay close attention to the underlying technological innovation. .

China Speed ​​Light China founding partner Han Yan shared his own story of investing in chip companies. He invested in China Microelectronics in 2004, and he did equipment in semiconductors. Today, the founder is 70 years old. He has been investing for 14 years since then. Just exposed the water, only the media reported how the Chinese resisted all kinds of pressure to return home business.

He said that in fact, the chip industry in China is a great opportunity. The cost of Chinese tapeout (trial production) is half that of the United States. Many opportunities will be left to China.

And Zhou Zhixiong, an executive partner of Triumph Ventures who studies semiconductors, may be more persuasive. He said bluntly, after entering 2001, the United States will basically not vote in this industry, and the entire capital market will not support the high-tech chip industry. In China, the chip Industry investment returns have long been at the bottom of all categories, and capital markets also do not support the development of high-tech chip industries.

However, he said that recently the industry has made great progress. There are many large funds in China that want to invest in important and strategic industries such as semiconductors. But there will also be many problems, that is, investment in state-owned assets cannot lose money. , so they took the foreign mature company back, and then get the Chinese capital market circle once.

“The chances of achieving this in the Chinese market are very high, because the chip applications are all in China, but the challenge is even greater. How to be practical, build your own capabilities, and patiently invest in a technology company that has an impact on the industry, which still has today Certain challenges and difficulties. 'Zhou Zhixiong said.

The difficulty of chip investment

Some investors also shouted that they did not cast chips, but they let them 'dethrow all'.

Zhu Xiaohu, managing director of venture capital Jinsha Jiang, said in an open forum that it was not that they did not cast chips, but that companies that had previously invested in several chips had lost everything.

In his view, China's chip technology has several difficulties. First of all, China's chip companies are mostly single-product companies. Single-product companies have problems in the long-term, because the life cycle is very short and they quickly drop to Average.

Because of the large initial investment, R&D personnel and tapeout are high costs, and the valuation of the company is not high. Unlike Tencent, Alibaba has a market value of US$450 billion. The most successful listed company is 10-20. Billion U.S. dollars. For VCs, investment and return are disproportionate.

Secondly, from a medium-term perspective, any large industry has a cyclical nature. The first to come out is definitely to be a hardware company. For example, in the PC era, Intel, IBM, Cisco, and NVIDIA come out first in artificial intelligence. Smart, China still has a chance.

Once the chip investment forms a platform, new companies will find it difficult to do so. In particular, the initial investment of chip companies is very large. If your competitors take advantage of the opportunity to occupy the market and amortize equipment costs, you cannot compete with them. The cost curve will Far from lagging competitors, you cannot compete unless you rely heavily on government subsidies and support.

Zhang Suyang, managing partner of the volcanic rock capital management, stated that China’s real standard VC is doing large-scale investment in China, that is, around 2004-2011. There are many people who cast chips during this period. Actually, the basic application chips are now produced. Many companies also invest in that time.

However, there are several problems with the chip. First, it either succeeds or fails. Unlike some model innovations, this path can be changed without delay.

Second, early VCs were not large. In the late 1990s, 100 million U.S. dollars were big funds. When most of the chips were put into production, they were basically an average profit. They did not bring monopolistic profits. Therefore, after the second half of 2000, it is very difficult for everyone to enter this field of chips.

For VCs, it likes to invest in projects that can generate greater demand and get money back quickly. You say that it's good to beat drums to make money, and how many times you actually get profits.

In the second half of 2000, mainstream VC investment chip companies mainly invested in the third round, basically 90% did not go into the first round, and the remaining 10% did the second round, put things out, the second round of The third round of valuation will not be far behind, so everyone will vote in the third round.

'For this reason, some of the things related to our basic layers are basically invested by the state. Because capital is profitable, this is beyond reproach.'

AI chip is the future opportunity

From the investor's point of view, only the AI ​​chip currently has a real chance in China.

Today, the Cambrian, the first unicorn in the field of smart chips, announced the completion of hundreds of millions of dollars of round B financing, with an overall valuation of 2.5 billion U.S. dollars.

This round of financing was funded by China State Capital Venture Capital Fund, Guoxin Qidi, SDIC Venture, Guoxin Capital, CICC Capital, CITIC Securities Investment, Jinshi Investment, TCL Capital, Chinese Academy of Sciences Science and Technology Achievements Fund, followed by investment. Yuanyu origin, Guoke Investment, Alibaba Innovation Investment, Lenovo Ventures, Zhongke Turing continued to support the investment.

The founder of the Cambrian Dynasty, Chen Tianshi, said that at present, they are on the same starting line with their foreign counterparts. They hope that the Cambrian will occupy 30% of China's high-performance smart chip market after 3 years; One million devices integrate the Cambrian processor's intelligent terminal.

As for the commercialization of the Cambrian chip market, Chen Tianshi once revealed that the first is the terminal and the second is the cloud. The terminal products are smart phones, smart glasses, drones, self-driving cars, and so on. They need chips to identify images, video, and text. In the cloud, such well-known cloud clients such as HKUST News, China Branch, etc., are already customers of the Cambrian.

Xiaoshui Long, chairman of Chuangdong, said that venture capital institutions need to pay more attention to and invest in genuine core original things because core innovations have vitality and competitiveness. He emphasized that the wave of model innovation may have passed, but greater opportunities have emerged. It is in technological innovation, including the biological, AI, and chip industries that everyone mentioned.

It may be that LP does not understand it, but investors must stick to it. Only in this way can they earn more. Although companies that invest in technological innovation have a long time, they do not grow as fast as the model, but sticking to it can be rewarded.

Zhu Xiaohu believes that there are still opportunities for artificial intelligence chips. In the recent market, the artificial intelligence chip companies that were very hot on the market put them one or two. 'In addition, in my opinion, in China, it is better to accumulate capital and strength and then to follow the technical route. Spectrum.

Today's Internet giant, whether it is Ali, Tencent or Didi, spends a lot of money on the development of core technologies. Didi established a lab in the United States and recruited many excellent engineers. This is a path I think is more realistic.

Zhang Suyang stated that unless it is a real AI chip now, it can produce high profits in the short and medium term, and other things even if you do, that is, the average profit, or zero profit status.

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