The layoffs of large manufacturers have been enlightened to China's chip design service industry

This week, news of another layoff in Marvell Technology's Chinese mainland business was rampant.

Around 2015, Marvell implemented large-scale layoffs in Chinese mainland, but the layoffs at that time were mainly marketing positions. In October 2022, the company laid off most of its R&D team in China, and this time, the layoffs were upgraded again, and it was decided to lay off all remaining R&D personnel in China.

Marvell is headquartered in Silicon Valley and has R&D centers in Shanghai, Nanjing, Chengdu and Beijing. The company, which designs high-bandwidth network communications and memory chips, is Broadcom's main competitor. Marvell's total number of employees in China was close to 1,000, of which the international research and development center in Shanghai once had more than 800 research and development personnel, which is the company's third largest research and development center in the world. After the layoff, Marvell's "technical content" in the Chinese mainland business has dropped to almost zero, and only sales and after-sales service and IT support personnel remain.

In addition to its own network communication and memory chip design level in the world, Marvell's chip design service level is also the first echelon in the industry, in the context of the United States suppressing the development of the Chinese mainland semiconductor industry, Marvell's Chinese mainland R & D team all withdrawn, will also have a certain impact on China's chip design service industry.

01

The value of chip design services

Let's first introduce the industrial background of chip design services and their existence value.

The birth of TSMC has divided the two major links of design and manufacturing, and also spawned more startups, which has brought a problem - a chip from design to wafer foundry tape-out, lack of a professional team to act as a bridge to assist inexperienced design companies to reduce tape-out costs and speed up product launch. Chip design services were born.

With the development of the Internet of Things, the types of application chips are increasing, and at the same time, the demand for the number of chips in a single category is also different, some are large, and some are small. In addition, due to the weakening of the effect of Moore's Law, the development of chip products is no longer blindly seeking speed and innovation, but needs to find differentiation, chip research and development is becoming more and more refined, it is difficult to use the "top-level planning + saturation investment" method of the large group army to develop those products that are oriented to the Internet of Things and have shipments of no more than 10 million. It is becoming more and more difficult for chip companies to rely on a standard product to eat the market, and differentiated competition puts forward more and higher requirements for customization. These have accelerated the development of the chip design service industry.

Chip design service companies can make full use of their expertise in design, give full play to the advantages of professional division of labor, and help customers enhance the value of their products.

As an increasingly important part of the integrated circuit industry chain, chip design service companies, especially well-known enterprises in the industry, need to have complex chip design capabilities, rich IP, and good cooperative relations with wafer foundries to provide guarantees for customers such as Fabless to improve product performance and accelerate product launch.

The services that chip design service companies can provide include: 1. The customer puts forward chip function requirements, and the design service company gives RTL source code and other soft cores; 2. The customer puts forward the chip function requirements, and the design service company gives the GDS and other hard cores; 3. The customer gives netlist, and the design service company starts from netlist and goes all the way to tape-out.

Of course, the above is only the service content provided by pure chip design service companies, plus wafer foundries and EDA/IP manufacturers that can provide related services, the content will be more extensive.

In the face of the increasingly detailed vertical division of labor in the industrial chain, the market has emerged many chip design service companies with their own focus in the fields of IP development and transaction services, chip design and development services, chip application platform solution services, embedded software services, foundry services, packaging and testing services, and venture capital services related to chip technology transfer.

At present, there are many companies engaged in chip design services around the world, among which the companies with a high degree of specialization and strong service capabilities include the following: Broadcom, Marvell, MediaTek, Faraday, Creative Electronics (GUC), Socionext (Fujitsu and Panasonic's LSI business portfolio), Brite Semiconductor, Alchipchip, VeriSilicon Microelectronics, etc.

Among the above companies, Broadcom, Marvell, and MediaTek are Fabless, Faraday Technology and Creative Electronics are service companies supported by wafer foundries, UMC and TSMC have invested in Faraday Technology and Creative Electronics respectively, and SMIC has invested in Brite Semiconductor.

Globally, Broadcom, Marvell, and MediaTek are the ones with the highest technical level and the strongest design service capabilities, and are in the first camp. In particular, most well-known chip companies, including Chinese mainland, are using Broadcom's design services, and Broadcom occupies a high share of the global chip design service market.

As a world's leading design service company, Marvell has put more energy and resources on the service of high-end customers, for example, the company's core design service capabilities are mainly reflected in 5nm custom ASIC chips, and is customizing a cloud computing chip for Microsoft, and the two sides are also cooperating to develop its next-generation ThunderTh3 (7nm process) project.

02

The impact of Marvell's withdrawal on China's local chip design services industry

Through the above introduction, you can have a general understanding of the background of the chip design service industry and the value of related companies, and at the same time, you can also know Marvell's position in the industry.

This time, Marvell laid off the entire Chinese mainland R&D team, which occurred in the context of the continuous suppression of China's local electronic semiconductor industry in the United States. In the past year, the United States has continuously introduced new policies, not only restricting the development of local Chinese enterprises, but also squeezing out the business of international semiconductor manufacturers, including American companies, in the Chinese mainland.

In the short term, Marvell's departure should not have an impact on Chinese mainland's chip design services industry. However, an industry veteran said that although Marvell's withdrawal, the initial will not have a significant impact on China's local design service industry, but based on the long-term consideration of the US policy on China, this may be the beginning of changes in this segment, although Taiwan's two major chip design service companies are still operating in the mainland, but under the influence of US policy, they are also waiting and seeing, anything can happen, in the future, China's local design service manufacturers to gradually provoke the beam.

At present, in the Chinese mainland, the chip design service enterprises with a high market share are mainly the following 4: Faraday Technology, Creative Electronics, Sechipchip Electronics, and VeriSilicon Microelectronics. Other design service companies, although there are many (especially in recent years, under the wave of US suppression and localization, more related companies have emerged), but most of them are very small, limited in technology and service capabilities, difficult to form a "moat", and generally not strong. At the same time, most of the business of large manufacturers such as Marvell and Broadcom is not in Chinese local companies (most of these companies do not need such high process technology and service levels). In this case, the two top enterprises in Taiwan have been highlighted, both in terms of market influence and technical level, which are significantly higher than China's local chip design service companies.

However, the step-by-step suppression of the Chinese mainland semiconductor industry by the United States has cast a shadow over the future business development of Taiwanese enterprises in the mainland. Everyone needs to plan ahead, and enterprises in Taiwan should be fully prepared.

03

Problems with local chip design services in China

As mentioned above, in recent years, a number of local Chinese chip design service companies have emerged, although the number has increased, but the existing "quality" problems are becoming more prominent, at the same time, the development of the entire industry is uneven, and there are many other problems that need to be solved.

At present, the IP design capabilities of relevant enterprises in China are generally weak. Whether it is Fabless or wafer foundries, most local companies buy ready-made IP from international EDA and IP manufacturers. Previously, the problem of doing so only existed at the level of high price, but as the US policy of suppressing China's semiconductor industry gradually tightened, the problem of security gradually became prominent, in the future, even if you want to spend more money, I am afraid that you will not be able to buy the corresponding IP. The development of chip design and manufacturing tells us that the importance of IP is becoming more and more prominent, without a sufficient number of high-quality IP, high-performance chips cannot be designed, and unsolvable problems will be encountered at the manufacturing end.

Another point is differentiated design, as mentioned earlier, the semiconductor industry chain will appear chip design services this format, a very important reason is that relying on a single category of chips to hit the world, eat the market era is over, because the development model of homogeneous competition is unsustainable, chip companies to win customers, must launch differentiated products, so that they will be competitive. Similarly, companies that provide design services must have the ability to provide customized chip design services according to the different needs of customers. Suppose a design service company has dozens or even hundreds of customers, these customers may be Fabless, may also be system equipment manufacturers (such as Huawei), and may be Internet large enterprises, their business characteristics and needs are different, if this design service company does not have enough IP, design experience accumulation, not familiar with various types of customer business system parameters and characteristics, the know-how of various chip designs is not clear, then, it is difficult to provide customers with customized services. With the development of the market and applications, the demand for this customized service will be more and more in the future, and the requirements are getting higher and higher, and the chip design similar to competitors, it is difficult to achieve differentiation, without differentiation, the competitiveness is not strong, customer products are not competitive, and it is difficult for enterprises to provide chip design services to survive for a long time.

In addition to differentiation, design service companies also need to take into account the performance and cost of the chip, because this is also an important reflection of customer competitiveness.

In summary, the overall competitiveness of China's local chip design service companies is not strong, there are many problems to improve, only by continuously improving the level of technology, while controlling the number of enterprises, trying to concentrate human and financial resources, can form a joint force.

Take precautions and be fully prepared for future development, whether it comes or not, with me as the main one, in order to be invincible.