Several people in the semiconductor industry have been taken away to investigate, triggering an industry earthquake. In the past few years, China's chip industry has become an investment hotspot and its development has accelerated. But at the same time, the fact that a large number of imported chips have not changed, and imports still account for about 1/3 of the global market. In 2021, the United States will invest 55% of the world's semiconductor research and development, while China will only 3.1%. Some key card neck areas are still on the road to difficult attack, and the situation is grim.
Wen | Shi Zhao
Editor| You Yong
The semiconductor industry is setting off a storm of investigations.
On July 29, according to IC TIME's information, Diao Shijing, former director of the Electronics Department of the Ministry of Industry and Information Technology and former president of Tsinghua Unigroup, was investigated and is currently in a state of disconnection with the outside world. In mid-July, Zhao Weiguo, the former chairman of Tsinghua Unigroup, was taken away by relevant departments for investigation.
According to public information, Diao Shijing joined Tsinghua Unigroup in 2018 and is in charge of the chip business sector. Subsequently, he also served as the chairman of Tsinghua Unigroup, the executive chairman of Tsinghua Unigroup Zhanrui, and the executive director of Yangtze River Storage. In 2019, Diao Shijing served as the chairman of the DRAM business group of Tsinghua Unigroup.
Earlier, on July 27, Caixin reported that Ding Wenwu, president of the State Integrated Circuit Industry Investment Fund Co., Ltd., was investigated by relevant departments. Only 10 days ago, on July 17, Lu Jun, the former president of the State Chip Big Fund Management Company, was suspected of serious violations of discipline and laws and was under investigation.
"It is estimated that more corporate executives will be involved in the industry." Several chip-related sources told Digital Intelligence Frontline.
Although these chip people may be investigated for different reasons, in response to the national integrated circuit big fund (hereinafter referred to as the big fund) has been investigated, a senior expert told the digital intelligence front line, "the big fund in the domestic semiconductor industry chain in the initial stage, actually played a pulling role." According to relevant data, the first and second phases of the large fund have pulled trillions of yuan of capital into the semiconductor industry. "But the investment efficiency of large funds is not high enough, in the long run, the domestic semiconductor industry must solve the problem of independent controllability, which is also the most essential problem."
01
He was still attending an event a week before he was taken away
The news that the relevant person in charge of the big fund was investigated was released very suddenly. According to industry sources, Lu Jun also arranged the upcoming conference activities a week before the investigation, and Ding Wenwu just attended the sixth Jinwei Semiconductor Summit held in Xiamen on July 16 and made a speech at the main forum.
Ding Wenwu and Lu Jun are at different levels of the structure of the big fund.
Large funds have a two-tier management structure based on ownership and management rights. Among them, the State Integrated Circuit Industry Investment Fund Co., Ltd., where Ding Wenwu worked, has ownership, while Huaxin Investment, where Lu Jun once worked, as the only management institution entrusted by the former, undertakes the fund investment business. Founded in August 2014, Huaxin Investment is an integrated circuit investment management institution under the China Development Bank.
Since the establishment of Huaxin Investment in 2014, Lu Jun has served as the president of Huaxin Investment and participated in a large number of investment work until the end of 2020, when he was transferred back to the China Development Bank. Ding Wenwu was previously the director of the Department of Electronic Information of the Ministry of Industry and Information Technology, and has been the president since the establishment of the big fund in 2014. Major projects invested by large funds are subject to the approval of the board of directors of the fund company.
According to Sina's report, some insiders said, "This also shows that the current state's promotion of the semiconductor industry is becoming more and more strictly managed." According to the person, "in the early years of the big fund investment period, the construction cost of some semiconductor factories was obviously only more than 200 million yuan at the beginning, but it was said that the cost of building a factory was nearly 2 billion, and there were many opaque places in the middle." ”
A semiconductor industry expert told Digital Intelligence Frontline that since its establishment in 2014, the semiconductor fund has been running for 8 years and has contributed to the promotion of semiconductor investment. But its investment efficiency is not enough, but also need to solve the most essential problem, that is, the semiconductor industry chain of the independent controllable problem, which also includes the problem of the card neck of the lithography machine.
After the news that the two relevant responsible persons of the big fund were investigated, on July 29, the concept stock of the big fund fell by more than 3%.
02
Pull trillions of dollars into the industrial chain
The Big Fund was established in September 2014. At that time, chip autonomy has been put on the agenda, and it cannot be achieved by relying on the strength of enterprises alone. Therefore, in 2014, the State Council issued the "Outline for promoting the development of the National Integrated Circuit Industry", proposing to establish a national industrial investment fund.
The registered capital of the first phase of the big fund is 98.720 billion yuan. According to the 2018 annual report, there are 16 shareholders actually contributed by large funds. Among them, the shareholders with a shareholding ratio of more than 5% are the Ministry of Finance (36.47%), China Development Bank Financial Co., Ltd. (22.29%), China National Tobacco Corporation (11.14%), Yizhuang SDIC (10.13%), China Mobile (5.06%), Shanghai Guosheng Group (5.06%) and Wuhan Financial Holding Group (5.06%).
According to the report of Guosen Securities in October 2019, as of the end of 2018, the first phase of the investment of the big fund was basically completed, and the total investment amount was about 104.7 billion yuan.
According to the amount of investment, the largest investment area is the integrated circuit manufacturing industry, with an investment amount of 50.014 billion yuan, accounting for 47.8%; Followed by chip design, 20.590 billion yuan, accounting for 19.7%. Semiconductor equipment, including lithography machines, was 1.298 billion yuan, accounting for 1.2%.
Image source: Guosen Securities
Guosen Securities pointed out in the report that from the perspective of the proportion of investment scale, the upstream investment in the industrial chain such as semiconductor equipment and materials accounts for a relatively small proportion, accounting for about 1.4% and 1.2% of the total investment scale, respectively. With the country's requirements for the autonomy and controllability of the overall core science and technology, the domestic semiconductor industry chain needs industrial upgrading for a long time, which is expected to be the direction of key investment in the industry.
In October 2019, the second phase of the big fund was established with a registered capital of 204.15 billion yuan and a total of 27 shareholders. Similar to the phase I fund, shareholders include the Ministry of Finance, China Development Bank Financial Co., Ltd., China National Tobacco Corporation and other state-owned departments and state-level funds, as well as local government background funds, central enterprise funds, private enterprise funds, etc.
According to TechSugar, as of March 31, 2022, the second phase of the big fund announced investment in 38 companies, with a cumulative agreed investment of 79 billion yuan.
Among them, the chip manufacturing industry has received a larger proportion of investment than the first phase, about 59.4 billion yuan, accounting for 75%; Integrated circuit design tools and chip design are about 8.1 billion yuan, accounting for 10%; The investment in equipment, parts and materials is about 7.5 billion yuan, accounting for 10%.
Semiconductor industry insiders told the front line of digital intelligence that the investment adopted by the national large fund is fundamentally different from the previous subsidy model, which will stimulate local governments and social supporting funds.
Huaxin Capital said that in its investment process, a large proportion of investment in industrial funds and joint investment with the main body of industrial companies are no longer "the mayor has the final say", but mainly "the market has the final say".
According to the data of Tianyancha, the investment forms of large funds include: direct acquisition of equity in unlisted companies, investment in industrial funds, establishment of mezzanine investment, and acquisition of equity in listed companies and other primary and secondary market investments. GF Securities said that large funds did not do venture capital and angel investment, and the exit methods included repurchase, mergers and acquisitions, and public listing.
Driven by the guidance of large funds, the investment and financing environment of the domestic integrated circuit industry has improved significantly. Especially after 2018, ZTE and Huawei encountered US sanctions, and the chip investment boom began.
Public information shows that the first phase of the big fund leveraged 514.5 billion yuan of local and social funds to invest in the integrated circuit industry and related supporting links. Sub-funds have also been established by local governments and associations, among others.
At present, the first and second phases of large funds have led to trillions of investments. "China's semiconductors are in the start-up stage, and investment pull is needed." The above experts said.
Careful analysis of the investment of large funds, more than half of the capital is used in chip manufacturing. However, because many manufacturing plants were not built the year before and last year, they did not catch up with the growth dividend brought about by the chip shortage in 2020 and 2021.
03
Shift from OEM to "Product Technology-Centric"
The big fund has been operating for 8 years, and the chip boom is returning to rationality. Judging from the price-earnings ratio of listed chip companies, many companies have returned from hundreds of times to about 30 times at present.
Wei Shaojun, a professor at Tsinghua University, said at the end of June this year that he combed through the 2021 annual reports of 22 semiconductor companies listed on the Science and Technology Innovation Board and found that the average gross profit margin of these 22 semiconductor companies was 46.9%, while the average gross profit margin of US semiconductor companies was 62%.
A semiconductor expert told Digital Intelligence Frontline that according to data from market research institute IC Insights, in 2021, the United States will invest 55% of the world's semiconductor research and development, and China's investment in semiconductor research and development will only 3.1%. Global semiconductor companies' R&D spending accounted for 13.1% of total sales in 2021, at $80.5 billion.
To a certain extent, this shows that China's investment in semiconductor research and development is still far behind that of the semiconductor power of the United States, and the overall technical level of domestic semiconductors is still not high, "the situation is very grim."
Wei Shaojun also called again at the Nansha International Integrated Circuit Industry Forum in China in June this year that the mainland semiconductor development model is mainly BASED on foundry and makes money by doing "hard work". In the long run, if the industry wants to break the situation, it must turn to the "product-centric" industrial development model, and promote enterprises to become the main body of technological innovation.
"The global semiconductor industry is undergoing major changes. China is an emerging semiconductor industry power, design, manufacturing, packaging and testing, materials, equipment five major industrial sectors are neat, but the industry is large but not strong. Wei Shaojun said.
The fact that China relies heavily on imports of chips has not changed. Senior semiconductor experts told Digital Intelligence Frontline that in 2021, the global semiconductor output value will be 558.5 billion US dollars. According to the information of the mainland customs, the mainland imports 400 billion US dollars of chips, accounting for about 2/3. Removing some double counting, there are data that believe that China imports 1/3 of the world's chips every year.
Wei Shaojun also believes that China's imports of integrated circuits will account for nearly 78% of global sales in 2021. "Of the 78 percent of our imports, we use 35 percent of our own, and the remaining 42 percent are processed and then exported." China is the world's largest importer of chips.
Wei Shaojun said that compared with developed countries, equipment, materials, IP and IDM models are obvious shortcomings of the mainland semiconductor industry.
"On the one hand, the key card neck area should be invested. For example, it is reported that the 28-nanometer lithography machine is out, but what is the effect of technology and application? Semiconductor experts said, "On the other hand, this situation of a large number of imported chips must be changed in the long run, and we cannot even import a large number of low-end chips." ”