The ZTE incident, which ended on July 14 with THE company paying a $400 million bond and a $1 billion fine, not only exposed zte’s many problems, but also directly brought China’s lack of “core” to the forefront, triggering a national debate on China’s “core”.
From the technology to the market, China’s semiconductor industry everywhere “core” pain
In recent years, China’s semiconductor industry has played an increasingly important role in the international market. In 2017, the size of the domestic semiconductor market reached 1,686 billion yuan, with a compound growth rate of 10.32% from 2010 to 2017, much higher than the average growth rate of 2.37% of the global semiconductor industry, becoming an important driving engine of the global semiconductor market. Although China’s semiconductor surface is a thriving like, but China’s semiconductor lack of core technology, the lack of “core” problem has always been a heart problem plaguing China’s semiconductor industry, this year “ZTE event” completely pulled off the last FIG leaf, opened the Chinese semiconductor industry has been several major problems.
Problem 1: can not design and produce chips independently. China accounts for more than 50 percent of the global chip market, but imports cost $300 billion a year, more than double the amount of crude oil, the second largest. The root cause of this asymmetrical and awkward situation is that China cannot produce and design chips by itself. At present, China is only a chip power rather than a chip power.
In the field of chip production, although Chinese enterprises can produce chips, the tools and manufacturing technology of chip production are monopolized by several foreign companies, and the number of Chinese enterprises that can master the technology of chip production tools is almost zero. For example, the production of chips is inseparable from the “lithography machine”, and high-end lithography machine is exactly the most sophisticated equipment, known as “the flower of modern optical industry”, in today’s world, there are only a handful of countries that can produce lithography machine, only the Netherlands, the United States, Japan and other countries. The absolute leader is ASML of the Netherlands, which accounts for about 80% of the global market for lithography machines. Its 28-nanometer lithography machine has long been commercially produced and is moving into the 7-nanometer market. And China’s current commercial accuracy is the highest is only Shanghai Microelectronics 90 nano lithography machine, the gap in more than 10 years.
In the field of chip design, the situation is better than that of production. Chinese companies are involved in all kinds of chips, except high-end chip design is weak, other areas have opened up some of the market. However, chip design is inseparable from chip architecture, and China’s current chip architecture does not have independent intellectual property rights, and chip design mainly adopts common architecture such as ARM and X86. Therefore, In a strict sense, Chinese chip enterprises do not have the ability to independently design and manufacture chips.
Problem two: most chip enterprises only chip OEM. Most Chinese chip companies are currently in the middle and lower reaches of the chip industry, mainly engaged in chip production. In 2017, half of the top 10 listed chip companies in China were chip agent manufacturers. For example, the famous “SMIC”, founded in Shanghai in 2000, is one of the world’s leading IC foundry enterprises and the largest and most advanced IC chip manufacturer in Mainland China, but the actual profit deficit is only 4%, which is in the lower part of the chip production process.
Problem three: the chip industry structure is unreasonable. The development of China’s chip industry is extremely unbalanced. In the field of high-end chips, there is no other domestic chip except Hisicylin. In the field of mid-end chips with lower requirements, only Spreadtrum and a few enterprises in the Cambrian industry support the field. Most of China’s chip enterprises still stay in the production and manufacture of low-end chips, which leads to the unreasonable structure of China’s chip industry and is not conducive to the healthy development of China’s chip industry.
What is the cause of China’s semiconductor industry “core” pain
Chip industry as a strategic industry that affects social, economic and national defense security and comprehensive competitiveness, has always been the focus of the development of major powers, but as a chip country, China is always under the control of others in the chip field, causing China to lack of “core” what are the reasons?
The root cause is a lack of talent. The development of any industry is inseparable from the promotion of talent, talent is the core of the development of the industry and the company. According to the “China integrated Circuit Industry Talent White Paper (2016-2017)” released in May 2017, The demand for talent in China’s chip industry is as high as 700,000, while the current number of employees in China’s chip industry is only 300,000, leaving a talent gap of nearly 400,000. There are many reasons for the acute shortage of talent, but there are two main ones.
First, the domestic chip industry wages are relatively low, serious brain drain. According to data from Wuhan Talent Exchange Center, the salary of domestic chip practitioners is generally less than 300,000 RMB, while the average annual salary of foreign counterparts is more than 600,000 RMB. Is not only a pay gap between peers, in the domestic Internet enterprises and artificial intelligence is an endless stream, because very high salary, such as alibaba group has 3 to 5 years working experience of personnel salary can reach more than 40000, and real wages were higher than 12 months, so this kind of people salary of up to 500000 above, However, the salary of chip industry is not proportional to that of Internet enterprises and artificial intelligence industry, so it is difficult to introduce talents and retain talents.
Secondly, the talents trained by domestic universities are not in line with the talents needed by enterprises. According to insiders, there is a mismatch between the supply and demand of universities and enterprises. The reason for the mismatch of talents is that there are barriers in disciplines in universities, and chip research and development is not a separate discipline, which requires relevant personnel to master the knowledge of physics, material science, computer science and other knowledge, and needs composite innovative talents.
The internal reason is that insufficient capital investment leads to the backward manufacturing and design process. Throughout the chip development history of the world’s chip powers, it is not difficult to find that the United States, Japan, South Korea and Europe, which occupy an absolute dominant position in the market, all took the national effort at the beginning of the chip, not willing to let the government directly intervene to help its development. Chinese chip development initial period the government has also invested a lot of resources to support the development of the chip, but after several failed gradually abandoned the massive support for chip industry, in the domestic chip products can not be commercial, lost a lot of money to support of the government, many businesses fell rapidly, the rest of the enterprise such as core technology products is only can be commercial in the low-end market, Struggling to maintain the company’s operations, the company was unable to introduce or develop more advanced manufacturing processes and chip designs under the condition of insufficient funds, which ultimately led to falling far behind other advanced chips in the chip field.
The external reason is foreign technology blockade. China’s chip industry started late, chip manufacturing and design field is almost blank, and there is an urgent need to learn advanced chip technology from foreign countries. However, the United States joined a number of countries to sign the infamous “Wassona Agreement”, which implemented technology blockade on China, forbidding the transfer of technology within three generations in any way.
Although the Chinese nation has been constantly striving for self-improvement and has made two bombs and one star under the technological blockade, it has to be admitted that the technological blockade in the field of Chinese chip by foreign countries does slow down the pace of the development of Chinese chip industry. Now spreadtrum has begun to show its talents after a difficult and slow development. It has become the hegemon in the low-end chip field and has become increasingly abundant in the middle and high-end chip field, which has caused qualcomm to surround and block, and Qualcomm intends to form a joint subsidiary with LeadCore technology to attack Spreadtrum. The development of China core is not only blocked by foreign technology, but also surrounded by foreign enterprises, so the survival and development space is severe.
The right medicine can let the “core” disease both symptoms and root cause
Zte’s banned event has rung the alarm bell for us. Although China’s chip industry is facing many problems, we should think over the pain and tackle the difficulties head-on to solve the “core” disease of China’s semiconductor industry. Symptomatic drugs can get twice the result with half the effort. The current problems in China’s chip industry can also be solved from the following three aspects.
The solution is to introduce and train talents actively. The fundamental reason for the slow development of China’s chip industry is the lack of talent. The talent gap in China’s chip industry is as high as 400,000. To solve or alleviate the lack of talent, it is necessary to increase source and reduce expenditure.
Open source: There are two main ways to solve the talent shortage problem from the open source perspective. First, the active introduction of talents, just like the large-scale introduction of foreign investment in the early stage of China’s reform and opening up, can quickly and effectively alleviate the problem of talent shortage in the chip industry, and also make China’s chip industry to a higher level in the short term. Second, vigorously cultivate relevant talents. The key to solve the shortage of talents is to cultivate talents. To cultivate talents, colleges and universities not only need to pay attention to the cultivation of chip talents, expand the enrollment scale, adjust the setting of disciplines to break disciplinary barriers, but also need the relevant national policies to give preference to chip education.
Throttling: to solve the shortage of talents, we should not only solve how to recruit talents, but also how to retain talents and reduce the loss of talents. Reducing the brain drain can also be started from two aspects. One is to increase the actual income of practitioners and solve the worries of talents on life. Two can improve the benefits of practitioners, so that people feel happy.
Solve the financial problem to provide impetus for development. At present, Chinese chip enterprises are small in scale and lack of risk resistance and market competitiveness. The r&d investment of the chip industry requires continuous huge investment, which is easy to cause capital turnover difficulties for enterprises. In order to solve the problem of insufficient funds for enterprises, it is necessary for all sectors of society to continue to invest a large amount of money in chip enterprises, and enterprises can only solve the funding problem of R&D wholeheartedly. After the outbreak of “ZTE incident” this year, many technology giants also brought huge sums of money to support the development of China’s chip industry. Alibaba not only acquired several chip enterprises, but also used huge sums of money to set up chip research institute, which not only solved the capital problem for chip enterprises, but also gave a dose of heart to the chip industry.
“Core” disease also needs “new” medicine, with innovation to drive chip development. In order to make Chinese chip enterprises bigger and stronger, technological innovation and management innovation are indispensable to solve the pain of lacking “core”. Technology and management innovation is not going to do, to the Chinese government and chip companies continue to invest a lot of resources, from the foundation at the bottom of the chip production tools, production technology, architecture and chip IC design and r&d team to promote company management innovation, establish a scientific and efficient research and development, production, management mechanism.
summary
Zte incident let us clearly realize that although China’s semiconductor industry is full of vitality, but in the seemingly healthy industry is hiding an involuntary “core”. In addition to the “core” pain, we should clearly recognize the gap with foreign advanced technology, after the pain should be through training talents and innovation and other ways to narrow or even surpass competitors, China from a chip country into a chip power, in order to solve the “core” disease of China’s semiconductor industry.
Article/Liu Kuang public account, ID: Liukuang110