According to sources, recently, Sun Zhengyi, chairman and president of Softbank Group, led a high-profile low-profile visit to Beijing by ARM, during which he held talks with Zhao Weiguo, chairman of Ziguang Group. Although it is impossible to know the specific content of the talks, it is not difficult to imagine that it is inevitably related to the frequent movement of Ziguang in the semiconductor field in recent years.
In the context of China’s official view of semiconductors as a strategic industry, China has continuously increased its support for the development of the semiconductor industry in recent years, up to the 120 billion yuan national integrated circuit industry investment fund established by the central government, down to all levels. Local government's semiconductor industry development fund. At the same time, a more direct way is to initiate industrial mergers and acquisitions globally by supporting private equity funds. The Ziguang Group's fund is one of the most influential private equity funds.
Taiwan, a major semiconductor industry, is facing tremendous pressure from the mainland. Taking IC (integrated circuit) design as an example, in the second quarter of 2016, the mainland IC design output value officially surpassed Taiwan, becoming the second largest IC design industry cluster after the United States.
In the context of the continual overseas mergers and acquisitions represented by the Ziguang Group, many Taiwanese semiconductor companies have even begun to consider selling companies to the mainland before the market value shrinks. Of course, there are also huge pressures on the island's main chip makers.
On the 26th of last month, Taiwanese chip maker MediaTek held a corporate briefing and announced the fourth quarter 2016 financial report. Compared with the previous quarter, MediaTek's revenue in the fourth quarter was approximately RMB 15.08 billion, a decrease of 12.4% quarter-to-quarter, and the gross profit margin fell again by 35%, actually 34.5%.
MediaTek's stock price trend in the past 5 yearsThroughout the fiscal year 2016, MediaTek achieved a record high in total revenue, reaching a huge scale of approximately RMB 60.6 billion. In contrast, the gross profit margin for the whole year decreased by 7.6% to only 35.6%, while the net profit also hit a new low in four years, only 5.28 billion yuan.
In the long run, MediaTek's share price has shown a peak-to-valley phenomenon. Since it reached the peak of NT$526 in July 4, 2014, its trend has been on the decline since the beginning of the year. The recent price is only At around 220 yuan, although it has not fallen below the threshold of NT$200, it is also approaching the lowest level in history.
In response to this situation, most of the comments may be attributed to the saturation of the smartphone market, and major manufacturers are striving to lower prices, resulting in a serious reduction in the profits of the supporting manufacturers represented by MediaTek. However, from a broad background, China's emphasis on the semiconductor industry and the entire IT industry is causing a sharp shift in the balance of science and technology across the globe.
Under the dominant position of the semiconductor industry in the United States and East Asia, the determination of the rise of mainland China also indicates that the prospects of other players will be less optimistic, and Taiwan may be the first to bear the brunt of this change.
Quickly make up for the shortcomings of technology, the Chinese capital army
The importance of the semiconductor industry in today's technology sector is self-evident. At present, various electronic devices such as mobile phones and PCs that people often encounter in their lives have benefited from advances in semiconductor technology. It changes the way of life, thinking and civilization, and not only lays the foundation for industrial and technological development, but also the heart and soul of the information age.
As an important market for semiconductor products, China consumes more than 100 billion US dollars of semiconductor products each year, but more than 90% of them are imported, and the national productivity is less than 10%.
The Chinese government has clearly realized the importance of the chip industry. Therefore, driven by the will of the country, a series of layouts in the semiconductor field began to appear.
The most important of these is the National Integrated Circuit Industry Investment Fund, which was established on September 24, 2014. Funds with a scale of more than RMB 100 billion are invested in integrated circuit chip manufacturing. After that, Ziguang Group set up semiconductor industry bases in Wuhan and Nanjing with US$24 billion and US$30 billion respectively.
In addition to the strength of local companies, Samsung Electronics has invested a huge amount of 30 billion US dollars to set up a factory to produce memory chips in Xi'an, which is regarded as the largest foreign investment project in the domestic electronic information industry. All these actions show that the Chinese government is making every effort to reverse the backwardness of the semiconductor industry, and the plan is to increase the current micro-chip production rate of less than 10% to 70% by 2025!
Mainland China is so eager to catch up in the semiconductor field that several technologies, such as artificial intelligence, cloud computing, wearable devices, and the Internet of Things, which represent future trends, require the support of the semiconductor industry without exception. If this "short board" cannot be replenished in time, it will affect the development and progress of the entire technology sector.
Therefore, in addition to independent technology development, China's semiconductor industry, represented by SMIC and Tsinghua Unisplendour, is an important technology acquisition method, which is a large-scale merger and acquisition, relying on abundant capital advantages to achieve “curve overtakingâ€.
In general, the M&A business has been carried out smoothly in China. Tsinghua Unisplendour has invested in Rideco and Spreadtrum. The P/E ratio of 500 times once proved that the market is optimistic about its development momentum. However, on the road to go out, the problem is probably much more than expected.
In 2015, due to the consideration of national security issues in the United States, Tsinghua Unisplendour failed to declare a $23 billion acquisition of Micron Technology, the world's third-largest memory chip maker. Similarly, Tsinghua Unisplendour’s plan to acquire Fairchild Semiconductor for $2.6 billion has been stalled. At the end of 2016, due to national security considerations, Qualcomm’s $47 billion acquisition of NXP Semiconductors was also rejected by the US Government Foreign Investment Review Board (CFIUS).
In Europe, on October 25, 2016, the German Ministry of Economic Affairs also announced the withdrawal of the previous permit issued by the Fujian Hongxin Fund to acquire German chip manufacturer Aixtron.
Based on this analysis, European and American countries have shown strong vigilance against China's acquisitions in the semiconductor field, which indicates that overseas acquisitions of Chinese companies will become more and more difficult for a long time to come.
As an important part of the global semiconductor industry, Taiwan has accumulated a large number of outstanding semiconductor companies in the process of global electronic information industry transfer. For a long time, the development of Taiwanese enterprises has relied heavily on the vast market of the mainland, and the two sides have formed a good interactive relationship. Therefore, next, Taiwan has become the goal of the mainland semiconductor giants to keep an eye on, which is a matter of course.
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