[core point of view] can domestic analog chips survive under extreme pressure in the United States?

SMM News: as a bridge between real and virtual, analog chips even determine the future of China's semiconductor industry.

In the past two years, the US crackdown on Huawei and related companies has pushed the semiconductor industry to an unprecedented focus. In this context, the realization of domestic core autonomy is no longer a long-term goal in the past, but is replaced by a sense of urgency that "wind and rain is coming".

However, the situation of domestic core lagging behind was not built in a day, and the independent realization of domestic core was not built in a day.

The gap in strength is not only wide.

Judging from the overall market situation, analog chips accounted for 12.2% of the global semiconductor market in 2018. Its Chinese analog chip market accounts for more than 50% of the global market, and the market growth rate is higher than the global average. According to Sadie consultant statistics, China's analog chip market reached 227.34 billion yuan in 2018, an increase of 6.23% over the same period last year, and a compound growth rate of 9.16% in the past five years.

Although the domestic analog chip has a broad space in the market, it still lags far behind in terms of strength compared with foreign countries. From the sales of global analog chip companies in recent years, there is no domestic analog chip company in the top ten.

"looking at revenue alone, there is actually a gap of more than 1 and 100 times between domestic leading enterprises and international leading enterprises. Take the revenue in 2019 as an example. Shengbang shares, as the leading domestic analog chip enterprise, has annual revenue of less than 800 million yuan, while the annual revenue of TI, a leading international company, is 14.4 billion US dollars (about 100.6 billion yuan), a difference of more than a hundred times. " Hu Kangqiao, director and general manager of Core Interconnection (Beijing) Technology Co., Ltd., analyzed.

From the perspective of industrial maturity, the same is true. Wang Shengyang, CEO of Nanxin Microelectronics, said: "from a global point of view, the analog chip industry has gradually transitioned from the rapid growth stage to the mature stage in the past 5-10 years."

In contrast, the domestic simulation industry is still in the early stage of accumulation. Different from most digital chips, the development of analog chip technology does not depend on Moore's law, but mainly on the number of experiments and the accumulation of technical experience in materials. TI, ADI and other established analog chip manufacturers have a history of more than 50 years and have accumulated a lot of R & D experience. On the other hand, the analog chip enterprises in China have been established for decades and as short as two or three years, and they are still very young in terms of seniority, and there is an objective gap between them and foreign giants.

The most obvious manifestation of the seniority gap is the degree of technological leadership. Generally speaking, in terms of relatively low-end products, such as low-end operational amplifiers, LDO, DCDC power converters, etc., there is a small gap at home and abroad; the gap is relatively large in high-end analog products, such as the most widely used high-speed AD/DA chips, which are mainly monopolized by several multinational companies such as ADI, TI, MAXIM and other multinational companies. More than 95% of China's high-end AD/DA chips need to be imported. How big is the gap? Industry insiders pointed out that in the case of resolution 14bit, the international ADC sampling rate can achieve 1G, 3G, 5G or even 10G, but the domestic can only achieve 300m, 500m, the gap is several times.

However, Wang Shengyang also pointed out that the gap at home and abroad is not only at the purely technical level. "I think highly reliable design, mass production quality control and experience, and delivery capacity have become the current shortcomings in China, and when domestic chip companies begin to enter the field of higher-end and higher barriers, this part of the deficiency will appear quickly."

How can we know that US sanctions are not a blessing?

In the field of analog chips, there is such a big gap at home and abroad, in fact, it is caused by a variety of factors. If China was still slack on the development of science and technology due to the idea that "it is better to buy than to buy than to rent", then the sanctions imposed by the United States in the past two years have not only slapped this idea, but also taught Chinese analog chip companies a realistic lesson.

Therefore, Hu Kangqiao believes, "generally speaking, the advantages of US sanctions outweigh the disadvantages to China's semiconductor industry." The good effect is that no one will be willing to use analog chips made in China a few years ago, and domestic enterprises have a very difficult life and can only compete for gross profit or price. However, the current international situation makes China attach great importance to the replacement of domestic chips. "

He learned that after the current domestic chips have been made, many downstream customers have chosen to do two sets of solutions, one is a pure domestic chip scheme, and the other is a mixed domestic and foreign chip scheme. "over time, some downstream customers such as government units and supply departments will have 100% localization requirements. Once the domestic industry upstream and downstream linkage, the upstream analog chip design enterprises are also easier. Even if the initial product is defective, customers will be willing to improve it with chip manufacturers, which is a very good development trend. On the high-end analog chips, the US crackdown actually began a long time ago, not just recently, so it has little impact on this aspect. " Hu Kangqiao expressed optimism about the impact of US sanctions on the domestic analog chip industry.

Wang Shengyang also holds the same view: "from a general point of view, this provides an important boost for the development of the domestic analog chip industry." More importantly, under US sanctions, domestic chip manufacturers have been provided with opportunities to cooperate with leading customers in various industries. "

"where does the United States have a strong monopoly on chips? The reason is that in addition to technical barriers, there are also market barriers. Before 2018, the whole domestic chip industry, including analog chip industry, is mostly concentrated in the field of middle and low-end consumer electronics, basically taking price competition as the main competition strategy. After the trade friction between China and the United States, the head customers of the industry began to actively seek the strategy of domestic substitution. Under this opportunity, I think the domestic analog chip industry has ushered in a very important growth window in the past two years. In the past two years, domestic analog chip companies, including Naxi, have been doubling their growth year by year. " Wang Shengyang added.

However, it should be noted that this benefit is more from a long-term point of view, from the current practical point of view, the biggest problem faced by the domestic simulation core is that the localization rate is too low, and it is very difficult to improve. According to the statistics of forward-looking Industrial Research Institute, the top five companies in the domestic market are all foreign enterprises, and the foreign analog IC is the leader of the standard. Domestic analog IC products are still at an absolute disadvantage in the field of high-end applications.

To what level can the localization rate of the simulation core be improved in a short period of time? Even the optimistic Hu Kangqiao believes: "five years later, to be able to increase to 10% is very great, which means that the simulation enterprise has enough capital and financial resources, and it is very difficult at the beginning." But to what extent can such a low localization rate ensure that domestic downstream customers will not be burdened by "choking"? This is probably the biggest doubt faced by domestic analog chip enterprises and related customers.

The best era of domestic analog cores

Obviously, the domestic analog chip industry, like other semiconductor industries, has ushered in a historical opportunity that can not be sought. The desire of enterprises to strive for the top is important, but the government's "visible hand" will also play an extremely important role in promoting it. Fortunately, at present, the central and local governments have tailored relevant preferential policies for this purpose, such as tax relief, outflow subsidies, Science and Technology Innovation Board and gem registration system and so on.

In a number of policies, Hu Kangqiao believes that "the best policy for simulating IC enterprises is the registration system of Science and Technology Innovation Board and the gem." Under this policy, the former 'half-dead' enterprises are now about to be listed on the market, and the capital, talent and advertising effects have been suspended through listing. "

In this regard, Wang Sheng Yang said: "with the registration system of Science and Technology Innovation Board and the gem, scientific and entrepreneurial enterprises, especially semiconductor enterprises, can benefit from the dividends of the capital market and can get the support of the capital market in the early stage. We can see that in the past two years, many domestic simulation companies have landed Science and Technology Innovation Board one after another.

As for the help to enterprises at the government level, Ai Wei Electronic CEO Sun Hongjun also has some feelings. "Ai Wei, as a high-tech enterprise, invests a lot in R & D and has a high demand for financing." In this regard, government leaders actively help Ai to connect with the bank and solve the financing problem. As some of Ai Wei's products need to be outsourced, sometimes they encounter difficulties in customs clearance. In this regard, government leaders actively invited Xinzhuang Customs to directly communicate with us and answer questions. In order to solve the problem of accommodation for the company's employees, the government has provided apartments for talents. There are many such cases, and the government's efforts to improve the business environment have really made enterprises feel warm and intimate. "

In addition to policy support, the market is also a big driver. With the rise of IoT, 5G and new infrastructure in the future, there is no doubt that there will be greater opportunities for the future of domestic analog IC industry.

"the major areas of new infrastructure, such as 5G, artificial intelligence, industrial Internet and big data Center, have a huge demand for the chip industry, which will usher in new opportunities for the development of the relevant chip industry chain." Wang Shengyang thinks. He is more optimistic about the automobile industry and believes that the automobile industry will become a blue ocean market in the future. It is understood that Nanxin Micro has also launched a digital isolation chip that meets the vehicle specification standards at the right time.

Sun Hongjun also mentioned, "in the future, the development of 5G, the evolution of AI, new energy smart cars, smart homes, will bring huge demand for analog, mixed signal and other devices." We hope that Ai Wei can seize this historical opportunity. "

There is no doubt that the domestic analog chip industry has ushered in a "best era", but at the same time we have to recognize several practical problems. First, the technical barrier of analog chip design is high, and there is a shortage of talents in the industry. Analog chip design not only requires comprehensive professional knowledge, but also requires designers to have a long period of experience accumulation, usually excellent analog chip designers even need more than 10 years of industry experience. The above interviewees Hu Kangqiao and Wang Shengyang even said, "the talent gap in simulating IC is very large!" Whether the domestic simulation talents can support the important task of future development remains to be tested.

On the other hand, semiconductors have become the hottest "tuyere" today, and countless semiconductor-related enterprises have emerged. According to Sky Eye check information, China added a total of 20021 enterprises with "chips, integrated circuits and MCU (micro control units)" from January 1 to May 26, 2020, and 3922 since May, according to Ji WeChat. And this figure, in the domestic decades of IC journey, according to incomplete statistics may also be more than 3000. However, in the long run, are these companies really engaged in related business in the semiconductor industry? Can you survive? It's still an unknown. Even for listed enterprises, "whether they can continue to make profits and remain competitive after listing depends on the accumulation of the company itself." Hu Kangqiao pointed out.

Conclusion

For the domestic analog chip industry, the US sanctions do bring a "dark moment", but it also creates an excellent opportunity for domestic substitution. Can the domestic core seize the opportunity to survive? This is undoubtedly a big test for the domestic core.

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