Some investors made predictions: "In 2023, for chip design companies, if they do not generate scale and scale income, it is basically unlikely to get large financing." ”
Zheku broke the halberd and fired the first shot of chip financing.
01 Chip enterprise financing "prosperous"
From the perspective of time, semiconductors have three waves of financing boom.
The first wave of craze can be counted as starting with the "909 Project" and "908 Project". The government has led the investment of tens of billions of yuan to build large-scale integrated circuit production lines, and has successively invested in the establishment of two core state-owned enterprises, Huajing and Huahong. During this period, domestic wafer manufacturing enterprises, whether foreign or domestic, are developing, and Huayue, Shanghai Beiling, Shanghai Advanced, Shougang Daily, Hangzhou Shilan, and SMIC have also begun to appear.
According to relevant reports, in 2010 and before, the total number of investment in chip semiconductors in China was 128, and the financing scale was 3.719 billion yuan, which was relatively small in number and scale. It is true that there is no huge financing at this stage, but the government's investment and support at this stage have given confidence to integrated circuit-related enterprises.
The second wave of financing began around 2014 and 2015, and this wave of financing continued until 2021. Two landmark events occurred at this stage: the first was the establishment of the 100 billion National Integrated Circuit Industry Investment Fund (referred to as the Big Fund); The second is that 2019 is the turning point, Huawei was sanctioned by the United States, which triggered market sentiment.
Under the dual influence, it has led to an increase in domestic semiconductor investment. In 2019, the investment amount of the domestic semiconductor industry was 30 billion yuan, which soared to 140 billion yuan in 2020, and by 2021, the total amount of chip semiconductor financing exceeded 387.6 billion yuan, approaching 400 billion yuan, which is an increase of more than ten times.
During this time, semiconductors can be described as "gold everywhere". Financing of more than 100 million yuan in the investment market abounds, and even VCs once invested in semiconductors. Many chip design companies have raised higher rounds of financing, and the deposit-computing integrated chip company Zhicun Technology has completed a B2 round of financing of 200 million yuan; Moore Thread completed 2 billion yuan in Series A financing and 1.5 billion yuan in Series B; Horizon also closed up to $1.5 billion in funding in 2021.
According to the investor at the time: "Investing in a semiconductor company, the company received 2.5 billion yuan two weeks after releasing a new round of financing plan, many investment institutions signed and sealed the contract and the investment amount was empty, and some institutions paid first without doing due diligence." ”
During this period, many domestic chip design factories have been established. However, the semiconductor industry has also experienced a thrilling time: at the beginning, the shortage of cores led to the tension of its industrial chain, and then to the cold wave of capacity saturation, inventory backlog, and price decline, a wave of ups and downs began.
The cold wave brought about a change in the direction of investment, and the third wave of financing arrived.
When the United States began to issue a ban on advanced semiconductor equipment entering China in 2022, many semiconductor listed companies planned to purchase new batches of equipment, which is embarrassing. The decoupling impact of the industrial chain has led to obvious changes in the direction of capital and entrepreneurship, and the direction of financing has shifted from the former chip design to more original equipment and materials.
From the data point of view, the once high-profile chip design track, investment and financing began to cool. In the primary market investment and financing in the semiconductor field in 2022, projects with a financing amount of about 1 billion yuan or even higher are mainly concentrated in the field of semiconductor materials and equipment.
02 Chip financing enters winter
As mentioned earlier, OPPO Kuzhe fired the first shot of chip financing "winter", because Kuzhe will not be the first to fall in "winter".
There are three reasons for this judgment.
First, after three waves of financing, China has established many chip companies, according to data reported by titanium media, there are more than 170,000 chip-related enterprises in China (Note: only the name of the enterprise, the name of the brand, the business scope of the chip related enterprises). The number of such a large number of enterprises is not much compared to foreign countries.
In many semiconductor subdivisions, there have been some leading enterprises in China, including: Weier Semiconductor, Unigroup Zhanrui, Yangtze River Storage, ZTE Micro, HiSilicon, etc., such enterprises have been relatively mature in their own fields, the Chinese market is very large, but the market is limited after all.
At present, in the track of some low-end chips in China, there has been a low-quality involution, and the phenomenon of price fighting, patent battle, and domestic replacement of domestic production exists. Low-end chips are in the red sea of vicious competition, but high-end chips are still difficult to find, which also makes the investment market differentiated.
In terms of similar tracks, capital will not always choose "similarity", but choose "innovation". When interviewing investor Zhu Zheng, the author also said that when choosing a company, he looks more at the team and entrepreneurial field.
Zhu Zheng said: "Now because if it is simple copy homogenization, there are already many leading people in the market, and it has formed a scale, the team has to go through an initial team, with limited funds, and has been running for several years, and even has been listed companies, and more than one listed company is doing the field, it will be much more difficult for the team to be able to succeed." ”
Low-end chips, basically no one in the primary market anymore.
Second, the valuation of chip companies is very high, coupled with most of them relying on government subsidies and no excellent products, there will be more and more thunderstorms.
As mentioned earlier, there are many domestic chip companies, and when semiconductors are "full of gold", too many people pour into semiconductor entrepreneurship, even company-related engineers have to resign and come out to start a business. This has led to a mixed core level of startups, all of which have obtained high valuations through rapid financing. A founder of a semiconductor VC investor told him: "I have a valuation of 1.5 billion, can you accept that we will talk."
High valuations do not bring high returns, and many semiconductor companies have become the norm. Last year, the first day of the STAR Board was the norm, and the company accounted for 40%.
At the same time, many semiconductor companies rely heavily on government subsidies.
In 2019, AMEC's financial report disclosed that government subsidies exceeded half of net profit. In 2019, AMEC achieved revenue of 1.947 billion yuan and net profit of 189 million yuan, and received a total of 137 million yuan in government subsidies from January 1, 2020 to March 13, 2020, accounting for 73% of AMEC's net profit in 2019.
If you think that 2019 is too far away, you can look at the example of last year. In 2022, due to the poor profitability of its main business, BOE will again have a negative non-net profit in 2022. In 2022, BOE's government subsidies included in the current profit and loss will be 5.458 billion yuan, a year-on-year increase of 1.63 times, and its government subsidies can cover the two losses deducted from non-net profits in 2022.
In this way, government subsidies are not "scraps" for enterprises, but occupy the main income. It is believed that this is not the original intention of the government subsidy.
Third, the exit mechanism for IPOs is becoming increasingly difficult.
Since 2022, the difficulty of IPOs has increased substantially. Although the IPO pass rate in 2022 reached 87%, if the companies that cancelled the review or terminated the withdrawal were included, the "true pass rate" was only 60%.
The issues related to the demonstration of scientific and technological attributes mainly include: first, the compound growth rate of operating income in the past three years after updating financial data is less than 20%; Second, the core technology is mostly mature and general technology in the industry, the market competition is fierce, the research and development threshold is low, the technical indicators have no obvious advantages over similar domestic products, and the demonstration of technological advancement is insufficient.
For the key issues in different fields, the current design field focuses on "whether there is a significant dependence on IP cores"; The equipment field focuses on "whether to rely on key components"; The test area inquiry focused on "whether to rely on purchased equipment and consumables or on the issuer's core technology". The attributes of science and technology will occupy an increasingly important position.
Not long ago, Dai Weimin, chairman of VeriSilicon, also said: "The delisting of the science and technology innovation board starting this year will be the new normal, and the threshold of the science and technology innovation board is also increasing year by year." ”
03 After a Zheku thunderstorm, there are more "Zheku" lurking
On the one hand, the Zheku, organized by OPPO, represents those "cross-field" chip design companies. In recent years, there are many companies that have crossed fields to semiconductors and started to make chips. These include very well-known mobile phone manufacturers across chips, such as Huawei's Kirin series chips, vivo self-developed V1 image ISP chips, and Xiaomi's Surge C1 chips. In addition, many automobile companies have begun to develop their own chips across sessions, and Tesla, BYD, Geely, and Wei Xiaoli have announced their plans for self-developed chips.
However, at present, in addition to the Kirin chip is eye-catching, most of the mobile phone manufacturers are still testing the edge chip, and the car manufacturers have not made a big splash except for the leader Tesla's fully autonomous driving on-board computer FSD chip successfully on the car. The market is also looking forward to what kind of answers such cross-border core enterprises can finally deliver.
On the other hand, Kuzhe himself is mainly engaged in chip design, and in the wave of entrepreneurship, chip companies are increasingly "collapsing".
The entrepreneurial core figure ran
Two typical companies that fell last year, one named "Qi Lingxin" and the other named "Nuoling Technology". Qi Lingxin was established less than 9 months ago, raised 600 million yuan, and burned out less than 3 months after announcing the completion of financing. After completing the financing of 200 million yuan, Nuoling Technology also ceased operations.
In both cases, there was a problem, that is, the "departure of core personnel". Lin Wei is the core technical personnel of Qi Lingxin, who previously participated in the development of Intel Itanium processor (x86 architecture server CPU) and Huawei HiSilicon Kirin CPU (ARM architecture mobile phone CPU). After Kong Xiaohua, the core personnel of Nuoling Technology, left, no company was willing to finance Nuoling Technology.
Gross margin is not high
The problem of low gross profit margin is reflected in many enterprises, among which Feiqiao Technology, which is mainly engaged in the research and development, design and sales of RF front-end chips, is an example.
According to the prospectus, Feiqiao Technology has entered the supply chain system of many well-known consumer electronics brands such as Samsung and Honor during the reporting period, as well as ODM manufacturers such as Huaqin Technology and Wingtech Technology. However, due to the fierce market competition, Feiqiao Technology adopted a low-price strategy, resulting in 4G PA and modules, one of the main revenue sources (16.20%, 1.80%, -7.15% and 0.36% respectively from 2019 to the first quarter of 2022), and the gross profit margin decreased significantly. This directly led to the company's failure to achieve profitability for four consecutive years, with a loss of nearly 1 billion yuan.
Feiqiao Technology is mired in a vortex of huge losses and deteriorating operating cash flow, and its cash flow is stretched. On the disclosure date of the first round of inquiries from the actual controller of the company, there were still many large debts outstanding.
All in all, when the semiconductor industry develops to 2023, the heat of financing slowly recedes and the market tends to calm down; Those "impetuous" companies drowning in the investment boom in 2021 and 2022 will also surface with market choices and the passage of time, and after a Zheku thunderstorm, there are more "Zheku" lurking.
The cold winter of chip financing has begun.