Europe and the United States have increased investment, how should the "Chinese core" exert its strength?

Financial Investment News commentator Liu Ke

The chip dispute "Romance of the Three Kingdoms" is in full swing. On February 8, the EU's Chip Act was released, under which the EU will invest about 45 billion euros to support chip production, pilot projects and start-ups by 2030.

This is not a separate event.

Four days ago, the U.S. House of Representatives passed a bill that would allocate nearly $300 billion to technology investments, providing a boost to the U.S. semiconductor industry. The U.S. Competition Act of 2022 is highly targeted and will provide comprehensive support for the formulation, research and adjustment of current U.S. trade policy to challenge China's growing technological clout. In a long list of provisions, the bill includes $52 billion in grants to support chip design and production in the United States.

It should be known that this bill is to fix the industrial policy in the form of law and form a long-term national industrial development strategy. The semiconductor chip industry in the United States itself is a global leader, with Intel, Qualcomm, Ultramicro, Nvidia, Apple and other top global semiconductor chip companies, in such a situation, the United States also needs to support the semiconductor industry in the form of laws, which shows its emphasis on the chip industry.

The other pole of the chip "Romance of the Three Kingdoms" in Europe is actually not weak, which is mainly in the application fields of power devices, microcontrollers, sensors, RADIO frequency technology, semiconductor equipment and automotive chips.

From an enterprise point of view, ASML, Bosch and the British ARM that NVIDIA have always wanted to acquire are all first-class semiconductor chip companies in the world.

If the United States is the "academic bully" in the semiconductor field, then Europe is the "excellent student" in the semiconductor field, and now these two top students are making efforts, and the strength is super strong.

As early as 2020, the EU-17 countries announced that they would invest 145 billion euros (about 1.2 trillion yuan) in the next two or three years to promote joint research and investment in advanced processors and other semiconductor technologies in EU countries.

The EU's Chip Act will use 30 billion euros to promote the chip industry and 12 billion euros for pilot projects such as quantum chips, with the goal of increasing the EU's share of global chip production from the current 10% to 20% by 2030.

Finally, let's look at the third pole of the chip "Romance of the Three Kingdoms", that is, the current situation of semiconductor chips in the Asia-Pacific region, especially Chinese mainland.

From the perspective of industrial policy, China's determination to vigorously develop integrated circuit semiconductors is firm, and all localities have formulated relevant industrial plans, and at present, the scale of the integrated circuit industry is estimated to exceed 100 billion by 2025, and there are 11 provinces and cities in Anhui, Beijing, Fujian, Guangdong, Hubei, Jiangsu, Shanghai, Shandong, Shaanxi, Sichuan, Zhejiang and so on. However, from the perspective of overall planning and industrial policy, it is not very clear.

In the capital market, integrated circuit semiconductors have become "outcasts" of institutional funds in the past six months.

The A-share semiconductor index has retraced by more than 40% from the high point in June last year, and some leading stock prices have been slashed or even discounted by 30% or even 40%. For example, the latest stock price of Guoke Micro, which has recently fallen sharply, is only 40% of last year's high, and the current stock price of Zhongwei Company is only less than 50% of the high point, and the performance of these companies is in a state of high growth, Guoke Micro forecasts that the net profit in 2021 will increase by about 300%, and the net profit of Zhongwei Company will increase by about 100%.

In fact, in the case of global lack of cores, the overall performance of A-share semiconductor listed companies in 2021 is good, in the 2021 performance forecast released by nearly 100 A-share semiconductor companies, 90% of the companies will achieve profitability in 2021, of which Weier shares, Zhonghuan shares, Changdian Technology, Gigabit Innovation, China Resources Micro, Zhuoshengwei Net profit of at least more than 2 billion yuan, in terms of net profit growth rate, nearly 50% of the companies increased by more than 100% year-on-year.

Under such an excellent fundamental, the performance of semiconductor chip stocks is very poor, especially after entering 2022, there is no improvement, and there is a trend of accelerating decline.

Semiconductor "Romance of the Three Kingdoms" other two poles have begun to exert force, and we ourselves are in a weaker situation, excellent are forced, if we do not catch up with the gap will become larger and larger, how to compete in the future? Only by increasing the support of the policy side, strengthening the leading enterprise in the industrial side, concentrating on the capital side to break through, improving the independent controllable ability under the premise of continuously improving the technical level, and increasing the proportion of domestic substitution in the terminal market, can we be invincible in the competition and be uncontrolled in the future.