Prospects for the development of domestic semiconductor technology

China's semiconductor market demand is strong, and the market growth rate is much higher than the global average. However, the expansion of industrial scale and the prosperity of the market do not mean that the share of domestic companies is greater. On the contrary, China's semiconductor market is increasingly becoming a paradise for foreign companies. The development of domestic semiconductor companies is facing strong pressure and the living environment is worrying.

From the perspective of the two branches, discrete devices are slower to replace, have lower requirements for technology and manufacturing, and are not obvious in terms of periodicity. Therefore, they are more suitable for domestic enterprises. With the shift in production capacity of international low-end discrete devices, domestic companies can Get advantages in the low-end market. From the point of view of the industry chain, we are relatively optimistic about the design industry, that local design companies have the possibility of a breakthrough. Based on policy support, market demand, and capacity transfer, we judge that the semiconductor industry has great growth potential in China, and the compound annual growth rate for the next five years will remain at more than 20%.

Based on market demand and capacity transfer, we judge that the semiconductor industry has great potential for growth in the country. The average annual compound growth rate in the next five years will remain above 20%, and the market size in 2009 will be close to 1,000 billion yuan. This judgment is mainly based on the following points:

The first is national policy support. The development of the semiconductor industry in China cannot be separated from the support of national policies. The “Provisional Measures for the Management of Special Funds for the Research and Development of the Integrated Circuit Industry” implemented by the Ministry of Finance, the Ministry of Information Industry, and the National Development and Reform Commission, implemented on April 23, 2005, indicates that the country has established a special fund for the research and development of the integrated circuit industry. Used to support industrial development. This is an important document issued after stopping the VAT refund policy in the No. 18 document.

The second is huge market demand. Demand for computers, communications, and consumer electronics drives demand for semiconductors. For example, global handset shipments are expected to increase from 670 million units in 2004 to 1.1 billion units in 2008, an increase of over 64%. Areas that will grow rapidly in the future will come from digital television, 3G, and high-end consumer electronics.

The third is the transfer of international production capacity. The transfer of production capacity for chip manufacturing and packaging testing has become apparent. International large factories have set up factories in China or transferred production lines to domestic companies for operation. For discrete devices, for example, Fairchild, Vishay, and Philips all transferred some of their production capacity to China. However, our concern is that even with a large market size and policy support, the technical capabilities and industry scale of domestic companies will not necessarily be the protagonists of the market. There are still many areas where domestic semiconductor companies need to improve, mainly focusing on technological capabilities and talent development.

Fourth, the rapid development of China's semiconductor industry, industrial chain gradually improved. After a long-term development, China’s semiconductor industry has established a basic industrial structure. Accelerating development in recent years has shortened the gap with foreign advanced technologies. With a certain industrial scale, it is still relatively weak.

Technology is the foundation of the semiconductor industry. The technology in this industry is rapidly updated. For example, the wafers manufactured by the chip have reached a size of 12 inches and the process reaches 90nm. The major semiconductor companies in China have their products or processing capabilities concentrated in the low-end segment and fewer high-end chip products. In addition, due to the fierce competition in the industry and the gap in pay levels, the flow of talents in domestic semiconductor companies is too frequent.

Then we discuss the development of the semiconductor industry from multiple aspects:

The design industry: Some companies have achieved a breakthrough in the design industry in the semiconductor industry played a leading role. From the design level, digital ICs mainly use CMOS technology. The feature sizes of mainstream logic IC designs are mainly distributed in 0.18-0.35um, and the integration degree is mainly distributed in millions of gates; microprocessors and memory ICs are mainly distributed in 0.13-0.25. Um, the integration level can reach 100 million gates; analog ICs mainly use CMOS and BIPOLAR processes.

In 2004, the market scale of global IC design reached US$33 billion, a year-on-year increase of 32% (excluding domestic design industry data). North America and other places are the most developed regions in the IC design industry, accounting for about 75% and 20% of the global share, respectively. The proportion of domestic design companies is only about 3%.

There are about 500 semiconductor design companies in China. Most companies are small and medium-sized (less than 20% of the population exceeds 100). Most of them are engaged in low-end design business and lack high-end design companies with strong technical strength. Most of the products rely on consumer products, and it is difficult to enter the high-end chip market with high profit margins.

However, there are still some design companies that have achieved significant levels of breakthroughs, such as Actions (MP3 chip), Beijing Zhongxing Micro (digital multimedia chip), Fuzhou Ruixin (MP3 chip), Hong Kong Solomon LCD driver, and Shanghai. Spreadtrum Communications (TD-SCDMA standard mobile phone chip). These new emerging design companies are the basis for the rapid development of China's IC design industry. The future pattern is that many small and medium-sized companies will be eliminated or merged, and a group of large-scale and competitive companies will emerge.

Chip Manufacturing: Technology and Fundamental Chip Manufacturing is divided into Front End and Back End processes. The former includes the Wafer Fabrication process and the Wafer Probe process. The latter is the packaging and testing process. Usually what we call chip manufacturing mainly refers to the previous process.

Chip manufacturing has higher requirements for capital and technology, and this link also concentrates most of the foreign investment. Since Hua Hong NEC built the first 8-inch chip production line in mainland China in 1999, from 2000 to 2004, Taiwan-funded and foreign-funded chip manufacturing plants built eight other 8-inch lines and a 12-inch line on the mainland. Currently there are about 10 8-inch lines under construction and two 12-inch lines. The 8-inch line process is distributed at 0.35um-0.13um, and the 12-inch line process is 90nm. An 8-inch line that uses new equipment will require $1.0-15 billion in investment, and a 12-inch line that uses new equipment will require about $2.5 billion in investment. However, apart from first-tier manufacturers such as SMIC and Hua Hong NEC, most second-tier manufacturers use second-hand equipment. Selecting used equipment can get a faster return on investment, such as an 8-inch, 35,000-per-month production line, and using used equipment can cost back 2 years in advance.

Package testing: relatively low gross margins The purpose of packaging is to complete the combination of chips and other circuit components; the testing process tests the electrical characteristics of the packaged chips. The packaging and testing industry has relatively low requirements for capital and technology. For example, the investment in a packaging plant is about one-third of that of an 8-inch chip factory, and there is no need for high technology research and development expenses, but the level of gross profit margin is relatively low. It is 15-20%. At the same time, package testing is a labor-intensive industry. There are about 60 furniture-scale packaging and testing companies in China. There are four major categories: the wholly-owned sealing and testing plant of the international IDM manufacturer, the joint-stock sealing and testing plant of the international IDM, the Taiwan-funded sealing and testing plant, and the domestic sealing and testing plant.

What should we do in the future?

1. China should adopt more preferential policies and form a good investment environment to attract more funds to China's semiconductor industry.

The United States, Japan, and South Korea rely on preferential policies to guide investment, and a large amount of funds are poured into the semiconductor high-tech fields to accelerate the transformation of the industrial structure to a knowledge-based economy. China has also adopted a series of preferential measures, such as the "Encourage the Development of Software Industry and IC Industry Policies" promulgated by the State Council in 2000. If you invest in establishing a semiconductor industry, the state must follow up investment if you apply for a bank loan. The state will subsidize interest rates of 1% to 5%. China should formulate more attractive policies than other countries, so as to attract more investment and technology into this national strategic industry. For example, it is necessary to learn that South Korea makes full use of the three to five-year buffer period of accession to the WTO to protect the naive industry. The integrated circuit industry and semiconductor products offer more favorable incentive policies within the framework of WTO.

2. In the short term, we can use the methods of importing, digesting, absorbing, and catching up, focusing on the development of semiconductor-appropriate technologies and products with high market demand, and achieving the rolling development of the semiconductor industry through technological transformation, capital accumulation, and market expansion. .

In the introduction of investment, we must pay attention to the selection of market-oriented main products and guide enterprises to enter high-value-added markets. However, in the long-term, we should learn from the principles of self-design and production by Japanese semiconductor companies, establish a “one-stop” system for design and production, and jointly develop the production technology with an official leader, and develop more. Key technologies, increase the proportion of semiconductor products with independent intellectual property rights. Of course, if the goal of large-scale technology cooperation is to develop products, it will be difficult to achieve success due to conflicts of interest. To learn from the United States and Japan, we must first cooperate in research and development of technology, and large companies themselves will become commercialized, and cooperation and development will be successful. In addition to the close technical cooperation between large companies, we can also refer to the characteristics of the US semiconductor industry mainly composed of technology-intensive SMEs, and actively encourage domestic private enterprises and private capital to participate in the research and manufacturing of related materials and equipment in the semiconductor industry. This is determined by the diversity and complexity of the device manufacturing process, the material requirements, and the rapid product updates.

3. Talent development is a key factor in the development and breakthrough of the Chinese semiconductor industry.

At present, China's development of the semiconductor industry is the lack of talent, both technical personnel, but also semiconductor companies have experienced senior executives. We should learn from the development experience of Malaysia and other Southeast Asian countries and formulate a talent attraction policy for high wages and low (zero) personal income tax to attract overseas semiconductor design, manufacturing and management experts to work in China. For a few high-tech designers and technicians, high-paying appointments are made, and even more favorable treatment can be given, such as the holding of corporate shares. At the same time, we must never neglect the cultivation of technical talents and provide better professional quality training for grassroots operators, technicians, and engineers. This is also crucial for a production-oriented semiconductor company.

4. To strengthen the linkage between design companies and downstream manufacturers and promote the application of domestically produced chips in the complete machine is the only way out for the development of the integrated circuit industry in the future.

In the course of the development of China's integrated circuit industry over the past two decades, government support has played a decisive role. The future development of the industry still needs government support and guidance. At the same time, we also see that China has a vast market space, and it has become the world's largest integrated circuit product consumer market since 2005. China's integrated circuit companies only use the advantage of being close to the market, and interact with the entire machine manufacturer, and the entire industry has vitality.