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Wen | A round of finance
What does advanced semiconductor technology mean for a country in the future?
"Over the past 50 years, oil reserves have been linked to global geopolitical issues, and in the digital age, the location of chip factories will also become the key to the great power game." Intel CEO Pat Gelsinger said in an interview with the media.
Nowadays, semiconductor chips are as important as oil, and whoever masters advanced semiconductor manufacturing in the future will become more important, and even become an opportunity to overtake in curves.
In this wave, the power of CVC (industrial capital investment) is rising strongly. With hard technology becoming the object of investment pursuit, in addition to Internet giants, industrial capital such as Huawei and SMIC has also turned to the semiconductor field and begun to become a vane for semiconductor investment.
01, the global semiconductor war is white-hot
The war based on global semiconductors has long been white-hot, and looking back at the domestic solution to the problem of semiconductor "card neck" has become a top-down consensus.
The latest data released by the American Semiconductor Industry Association (SIA) shows that the global semiconductor market size exceeded $500 billion for the first time in 2021. Regionally, sales in the U.S. increased by 27.4 percent, in China by 27.1 percent to $192.5 billion, in Europe by 27.3 percent, and in Japan by 19.8 percent.
At that time, the war on semiconductors intensified. In 2022, the U.S. House of Representatives passed the U.S. Competition Act, which includes $52 billion in grants and subsidies for the semiconductor industry, and another $45 billion in supply chain strengthening; the European Chip Act in the European Union plans to invest more than 43 billion euros in public and private funds to boost the European chip industry.
In addition, the United States, the European Union, and Japan have also begun to attract giants such as TSMC, Samsung Electronics, and Intel. It is reported that TSMC plans to spend $12 billion to build a new factory in Arizona, USA, and plans to invest $7 billion (half from Japanese government subsidies) in Japan to join hands with Sony and Denso to build a new chip factory; South Korea's Samsung Electronics also announced at the end of 2021 that it will spend $17 billion to build a new chip factory in Texas, usa, and also plans to put into production in 2024; Intel has set its new U.S. factory site in Ohio, planning to spend $20 billion. To this end, Intel has requested financial support from the U.S. government.
Looking back at China, China's imports of integrated circuit chips from the United States are worth more than $200 billion, far exceeding the amount of crude oil imports, and fluctuations in any link in the semiconductor value chain will affect the entire industry.
In 2019, the war between the technology industry between China and the United States kicked off, and in 2020, the United States openly sanctioned Huawei, requiring chip manufacturers (TSMC, SMIC) not to use the tools of American companies to produce parts and components used by Huawei.
National policies, capital markets, entrepreneurs have rolled up their sleeves to the end, the country set off a semiconductor fever phenomenon, during this period there are three giants with particularly bright results, investment performance can be regarded as half of the semiconductor market.
02, eventful autumn, three legs standing
Heroes in the chaotic world, "giants" in the autumn of troubles,
Due to the characteristics of the semiconductor industry itself, CVC has become the most influential representative of it. At present, the semiconductor investment market has formed a CVC situation of Hubble Capital, Xiaomi Industrial Investment, and SMIC Juyuan.
From the perspective of investment time, SMIC Yuanju is the first enterprise to invest in the name of CVC, and on July 25, 2001, SMIC Juyuan A round invested in the high-end silicon-based material research and development platform Xinao.
In 2014, SMIC Juyuan Equity Investment Management (Shanghai) Co., Ltd. (hereinafter referred to as "SMIC Juyuan") was formally established, with a current fund management of more than 20 billion yuan, and the investment territory covers the materials, design, equipment, IP and services of the integrated circuit industry chain and the extension fields such as MEMS, sensors and LEDs, and the invested enterprises involve early, growth and mature enterprises.
It is worth mentioning that most of the partners of SMIC Juyuan come from industrial backgrounds, such as partner and president Sun Yuwang, who was senior vice president of Datang Mobile, founding president/chairman of Lianxin Technology, and executive vice president of Datang Telecom before joining Juyuan Capital, and has rich practical experience in corporate strategy and cooperation, innovation and development, with more than 20 years of experience in the ICT and integrated circuit industries; partner Zhang Huanlin graduated from Tsinghua University, Stanford University, European Business School, and has served as Philips, NXP, Senior executives of many well-known semiconductor companies at home and abroad, such as Freescale, have more than 20 years of experience in the semiconductor industry.
Other SMIC Juyuan investment team members also have rich industrial experience, from SMIC, Datang Telecom, Ericsson, Texas Instruments, MediaTek, PMC-sierra, Lucent Technology, Cisco and Silicon Valley Paradise and other well-known technology enterprises at home and abroad, the advantages of industrial background not only let them have a deep understanding of the semiconductor industry, but also mastered many high-quality industrial resources and contacts.
Xiaomi Industrial Capital began to get involved in investment in 2010, and is currently investing in two main companies, one is Xiaomi Technology and the other is Xiaomi Yangtze River Industry Fund.
Public information shows that xiaomi industry investment is mainly led by Lei Jun and Lin Shiwei, and it is worth noting that Lin Shiwei (Alain Lam) can be described as a big man in the capital industry.
It is reported that Lin Shiwei graduated from Oxford University with a master's degree in engineering, has more than 20 years of practical experience in the capital market, has worked for Morgan Stanley and Credit Suisse, was responsible for the capital market business of the technology, media and telecommunications industry in the Asia-Pacific region during his tenure as managing director of Morgan Stanley, and has operated more than 140 transactions with a total transaction amount of more than $60 billion for many well-known technology companies around the world; after Credit Suisse, he was responsible for the technology, media and telecommunications business, and traded more than 40 transactions with a total transaction amount of more than $20 billion.
He is also an old friend of Xiaomi, who completed the IPOs of Xiaomi, Kingsoft Cloud and Huami before, and is currently the vice president and chief financial officer (CFO) of Xiaomi Group, responsible for the overall coordination and management of the group's financial work, reporting to the group CEO Lei Jun and president Wang Xiang.
At the same time as the legal person of the Yangtze River Industry Fund, Lin Shiwei is so important to Xiaomi, and the answer has been found in the announcement of Xiaomi Group. Xiaomi Group said in the announcement that Lin Shiwei's joining "will further strengthen the group's business planning, budget management and other financial related work, work together to promote the improvement of the company's overall operational efficiency, and further strengthen the expansion and maintenance of investor relations."
The establishment of Huawei Hubble investment is at a special point in time, in 2019, the United States launched multiple rounds of targeted sanctions against Huawei, from chips and devices to comprehensively limit the supply of Huawei. On April 23, 2019, Hubble Investment was born, which is 100% controlled by Huawei Investment Holding Co., Ltd. At this time, the birth of Hubble investment seems to be saddled with a mission to solve the problem of Huawei's chip "card neck" and solve the problem of China's chip "card neck", so in the direction of investment, it is mainly around the investment layout of integrated circuits and semiconductor industry chains.
According to the information from the sky eye, Hubble Investment is also two major entities, one is Hubble Technology Venture Capital Co., Ltd., and the other is Shenzhen Hubble Technology Investment Partnership Limited Partnership.
Led by Huawei's elder Jiang Baiyi, it is reported that Bai Yi joined Huawei in August 1997, served as an employee of the R&D Department, director of the Research Institute Cooperation Department, and deputy director of the Enterprise Development Department, and began to serve in Huawei's Enterprise Development Department, Capital Management Department, Financial Risk Control Center and other departments in August 2007, serving as president and vice president, and took charge of Hubble Investment on April 23, 2019.
After the A round of financial inventory, it was found that although the three giants all invested in the semiconductor field, they showed different characteristics in investment according to the structure of their core team members and the differentiation of the company's business.
03, no matter how much they are, each has its own advantages
The three giants have a unique investment characteristics, the root is Miao Hong's professional player SMIC Juyuan, and the Millet Industry Fund around the core business layout aims to solve the card neck problem of "focused teenager" Hubble investment.
SMIC Juyuan is a fund that "focuses" on investing in the semiconductor industry, covering the whole stage of seed rotation to Pre-IPO, and the upstream and downstream enterprises in all subdivisions including manufacturing, packaging and testing, equipment, materials, core components, EDA/IP and other fields, with a total of more than 170 investment projects so far.
From the perspective of investment stage, the VC stage accounts for about 40% and the PE stage accounts for about 60%; from the perspective of investment region, 60% of the investment in the project is concentrated in the Yangtze River Delta region, followed by Guangdong, where design enterprises account for 50%, and materials and equipment account for more than 10%.
Thanks to the support of the capital market for the semiconductor industry and the industrial effect of SMIC Juyuan in the semiconductor field, its IPO performance is also quite impressive, and there are 16 investment companies that have been listed, including Well-known semiconductor companies in the industry such as Weier Shares, Montage Technology, Anji Technology, and XinPengwei, which have passed 12 and more than 40 companies have launched IPO projects.
Adhering to the "professionalism" in investment, Sun Yuwang, president of SMIC Juyuan, has publicly stated: "SMIC Juyuan does not follow the trend, does not make a fuss, does not chase stars, refuses to inflate valuations, and the research department will do in-depth research on each new technology and select high-quality target investments from them." ”
Due to SMIC's leading position and SMIC Juyuan's ecosystem effect, SMIC Juyuan has also invested in a number of domestic AI chip emerging players, such as Biling Technology (cloud general AI chip), Exploration Technology (terminal AI chip based on storage-first architecture), Zhicun Technology (memory-computing integrated AI chip), entropy entropy technology (data generation AI chip), etc.
Xiaomi industry investment is divided into two main lines according to the characteristics of the main company, namely investment in the new consumption field and hard technology investment.
Xiaomi Technology's investment layout in the new consumption field is intended to create a new retail strategy of Xiaomi, that is, to build an ecological chain of Xiaomi, such as No. 9 balance car, Purple Rice, Huami and other enterprises. According to the statistics of public incomplete data, as of March 29, 2022, a total of more than 387 investments have been made.
Xiaomi Yangtze River Industry Fund investment layout in the field of hard technology, its investment layout is used to support the business expansion of Xiaomi and Xiaomi ecological chain enterprises, such as Wansheng Technology (smart phone chipset design and seller), Lice Technology (consumer-grade lidar developer), Zhige Technology (AR optical display module and diffraction grating developer), Black Sesame Intelligence (autopilot computing chip developer), according to public incomplete statistics, as of March 29, 2022 a total of more than 115 investments.
The two industrial capitals invested a total of 493, involving semiconductor equipment, packaging and testing, MEMS sensors, electronic components, analog chips, etc. Overall, Xiaomi's investment layout is still very extensive.
From the perspective of the purpose of the establishment of the two millet funds, if a company obtains the investment of millet, it seems to mean that it has obtained the "admission ticket" to enter the millet supply chain, which is a very tempting condition for new consumption and hard technology companies.
Hubble Investment is like a "focused" teenager whose purpose is to solve the mission of "card neck" technology.
First, focus on the field. Through the public incomplete data statistics (as of March 29, 2022), Hubble has invested in 73 enterprises, including chip design, EDA, testing, packaging, materials and equipment, which are mainly divided into three categories, one is to continue to expand the investment in the field of leading enterprises, such as wafer probe needle leading enterprises Qiangyi Semiconductor; second, forward-looking investment, the invested companies represent the future technical direction; the focus is still on enterprises that invest in solving problems in Huawei's supply chain.
Second, phased focus. Investment is characterized by accounting for no more than 10% of the shares, investing in a certain field in a concentrated time period, giving orders, and there are boundaries, and HiSilicon-related do not touch.
Third, focus on technical value. "More emphasis on technical value, rather than commercial value" Recently, an investor close to Hubble Investment said in an interview with The Finance reporter that Hubble Investment pays more attention to supply chain controllability than making money. This means that the focus of Hubble's investment will be on card neck technology and future technology routes, and these things are not done by Huawei itself.
Up to now, Hubble has invested in seven listed companies, including Changguang Huaxin, Dongwei Semiconductor, Tianyue Advanced, Juguang Technology, Dongxin Shares, Canqin Technology, and Siruipu.
Since the establishment of Hubble Investment Cong, the investment style has changed from a conservative to a steady style, and the investment strategy has gradually shifted from the past to mergers and acquisitions to strategic investment and VC investment. Most of this is to find supply chains and support domestic semiconductor companies.
04, the change has arrived, the dragon head began to appear
In the past two years, the development of the semiconductor industry has been in full swing, the heat has risen in all directions, and the number of financing and the amount of financing have both soared.
According to the statistics of Yunxiu Capital, in 2021, there were a total of 534 financings in the semiconductor industry, with a total financing amount of 153.6 billion; of which the number of large projects with a financing amount of more than 500 million yuan was 46, accounting for only 8.6% of the total, but the total financing amount reached 99.2 billion, accounting for 64.6% of the total financing amount. It is not difficult to find that the leading effect of the semiconductor industry has gradually become prominent.
"For semiconductor heat is also a normal phenomenon of market development", zhang Huanlin, a partner at SMIC Juyuan, said that on the one hand, the monopoly of foreign giants has allowed domestic capital to see the opportunity and just need of "domestic substitution"; on the other hand, following the technical route of giants in product research and development can not only obtain the market, but also have less risk.
However, in Zhang Huanlin's view, it is difficult to embark on the road of benign development by simply replacing the semiconductor industry in the mainland.
"It is not enough to imitate others, we must have our own ideas and clarify our own development direction, so as to ensure sustainable competitiveness." In Zhang Huanlin's view, domestic substitution may be a stepping stone to enter the industry, but it is not a road for the company's sustainable development.
"The chip itself is not an industry, just a technology and a tool that can bring people some new ways and means to deal with problems." Zhang Huanlin said.
In addition, with the technological transformation of the mainstream position of chips is also migrating. From the second half of 2021, the demand for chips for notebook computers, mobile phones and TVs began to slow down, and the popular areas of semiconductors began to gradually tilt, mainly concentrated in the three popular tracks of data center, automotive and semiconductor manufacturing, as well as equipment materials, EDA/IP and other fields.
Therefore, the more the industry is overheated, the more we must remain calm and think, the value of an AI chip company is that the chip it designs can solve the actual terminal application problem, "can bring earth-shaking changes to the actual application of society and life, is the AI that people really need." Zhang Huanlin said.
Reference Articles:
- Invest in more than 50 semiconductor companies in one year! Dialogue with SMIC Juyuan Managing Partner: The three rules of survival of chip startups| wisdom things