IC enters deep transformation period: steady growth

The core message: In 2013, the growth rate of the global semiconductor industry will rebound periodically. With the gradual introduction and implementation of the implementation rules of the Guofa No. 4 Document, China's integrated circuit industry will enter a period of profound transformation, and the industrial development will focus on the transfer of structural adjustment. The growth rate of industrial scale will stabilize and pick up. However, with the international semiconductor giants fully converting 28nm/22nm process integrated circuit products, and 3D packaging technology will also enter the commercial production stage, China's integrated circuit industry will face severe challenges. Faced with the new situation, how does China's integrated circuit industry seek to survive in monopoly and seek development in the predicament? How to strengthen the foundation to enhance the core competitiveness of the industry? How to assemble resources to overcome key difficulties? In view of the above, CCID think tanks proposed to speed up the promotion of investment and financing policies for integrated circuit companies, improve and perfect the government procurement mechanism for integrated circuit products, guide the upstream and downstream enterprises in the industrial chain to establish strategic cooperation alliances, and rely on countermeasures recommended by manufacturing and packaging industry leaders to accelerate mergers and acquisitions and restructuring. .

Next year's situation: The scale of the industry will maintain stable growth In 2012, due to the combined effects of fluctuations in demand from domestic and foreign electronics manufacturing industries and the adjustment of the market's own inventory, the domestic integrated circuit industry will show the trend of “low first and then high”, and will achieve both industrial scale and industrial structure. new progress. Looking forward to 2013, China's integrated circuit industry will continue to be stable under the guidance of Article IV regulations and gradually implemented. Active investment in the central and western regions, gradual release of production capacity, and driven by the favorable factors such as the demand for the mobile Internet terminal market to drive rapid development increase. At the same time, industrial development also faces the unfavorable factors such as the mass production of 28nm/22nm process integrated circuit products by the international semiconductor giants, the practical mass production of 3D packaging technologies, and the pressure for industrial restructuring and upgrading in the eastern coastal regions.

(I) The global semiconductor industry will accelerate its cyclical recovery. Affected by the global macroeconomic impacts of the European debt crisis, slow global economic growth, and slowing economic growth of the BRICS countries, the global semiconductor market continued to be in a slump during the first half of 2012, but With the 28nm/22nm advanced process achieving mass production, the semiconductor industry has achieved a cyclical rebound in the second half of 2012. It is expected that the global semiconductor market will reach US$301.9 billion in 2012, an increase of 0.8% from 2011. In 2013, the global semiconductor industry will completely step out of the bottom of the industrial cycle and stabilize and rebound. It is expected that the growth rate of the industry will also return to more than 6%. Due to the existence of the silicon cycle, the global semiconductor industry is characterized by a cyclical growth, that is, the growth rate of the industrial scale maintains a periodic rise and fall, showing an M-type curve change once every 10 years. From 2012 to 2015, the global semiconductor industry will experience the first rising band of the M-type cycle.

The cyclical rebound of the industry in 2013 was partly due to the mass production of 28nm/22nm advanced processes. Driven by the rapid growth of smartphones and tablet computers, the competition in the mobile smart terminal chip industry is fierce, and the 28nm/22nm advanced technology meets the low-power and high-performance requirements of smart terminal chips. According to information released by TSMC, the 28nm process accounted for 5% of TSMC's sales in the first quarter of 2012, rising to 13% in the third quarter, and it is expected to exceed 20% in the fourth quarter and 30% next year. In addition, after Intel successfully introduced a new generation of 22nm processors this year, 2013 will also release 22nm technology smart phone chips. Taiwan Semiconductor and Global Foundries also announced that they will achieve mass production of 28nm process in 2013. There is a lot of evidence that the global integrated circuit industry will fully enter the 28nm/22nm process node in 2013.

(II) The scale of China's integrated circuit industry maintained a steady growth In 2012, affected by the fluctuations in the demand for electronics manufacturing at home and abroad and the adjustment of the market's own inventory, the domestic integrated circuit industry showed the trend of “low first and then high”, and the first quarter industry growth rate. It fell sharply and it rebounded significantly in the second, third and fourth quarters. According to preliminary statistics from the China Semiconductor Industry Association, domestic integrated circuit production reached 71.3 billion in January-September 2012, an increase of 21.9% year-on-year; the industry’s total sales revenue was 137.7 billion yuan, an increase of 22% year-on-year. It is expected that sales of integrated circuits in China will reach 180 billion yuan in 2012, an increase of more than 15% year-on-year. Under the expectation of a cyclical rebound in the growth rate of the global semiconductor industry in 2013, the growth rate of China's integrated circuit industry will also maintain steady growth. It is expected that the growth rate of China's integrated circuit industry in 2013 will be approximately 18%, and the industrial scale will reach 210 billion yuan.

In 2013, the promulgation of the four-nation document of the State Development of the People's Republic of China will promote the stable growth of the industry and ensure the transformation and upgrading of the industry. Since 2000, China's integrated circuit industry has ushered in a golden period of industrial development. Apart from the international financial crisis that occurred in 2008 and 2009, China’s integrated circuit industry has maintained a steady growth momentum, and its growth rate has been faster than the global average. speed. The reasons for the rapid growth of China's integrated circuit industry is that the country attaches great importance to the development of the integrated circuit industry and successively issued the No.18 document of the State Development, the No.4 document of the Guofa, and other supporting policies, forming a favorable environment for industrial development. The year 2013 is the third year after the publication of the Guofa No. 4 document. It will also be a year when the details of the No. 4 document will be promulgated and implemented. At present, in order to implement Circular No.4, the "Notice on the Refund of Value-added Tax for Purchase of Value-added Tax for Procurement Equipment from Integrated Circuit Enterprises", "Notice on Further Encouraging the Development of Enterprise Income Tax Policies for Software Industry and Integrated Circuit Industry" and "Key Issues in National Planning Layout" have been issued. A series of rules such as the "Trial Procedures for the Certification of Software Firms and Integrated Circuit Design Companies" and others such as investment and financing policies, research and development policies, and talent policies are being actively researched and formulated. In 2013, the four-character regulations will continue to be issued and gradually implemented. This will further improve the development environment of China's integrated circuit industry and promote the steady growth of the industry.

(3) The active investment in the central and western regions led to the shift in the focus of the industrial region. In recent years, investment in the integrated circuit industry in the central and western regions has increased rapidly. Newly-built 12-inch and 8-inch production lines and packaging and testing companies have settled in the central and western regions. In terms of chip manufacturing, the first phase of the US$7 billion Sanxing memory project was settled in Xi'an High-tech Zone, becoming the largest foreign investment project in China's electronic information industry. Texas Instruments has established a production base in Chengdu. The first phase will invest 275 million U.S. dollars, and the second phase plans to invest 600 million U.S. dollars. It is estimated that the annual turnover will reach 1 billion U.S. dollars. In IC packaging and testing, Intel invested 600 million U.S. dollars in Chengdu to establish its largest chip packaging and testing center in the world. Micron Semiconductor’s module assembly and chip packaging projects have settled in Xi’an with a total investment of US$250 million and an annual export volume of US$500 million.

With the newly-built foreign investment projects having settled in the central and western regions, the industrial area of ​​China's integrated circuits is undergoing a major shift in its industrial center. This is because cities such as Chengdu and Xi’an have a good foundation in supporting facilities, technical personnel, resources, and energy. Compared with the eastern coastal areas, land costs, labor costs, and investment policies are even more advantageous. It is expected that investment in urban integrated circuit projects in the Midwest will continue to increase in 2013. The gradual release of the new plant and the gradual release of production capacity will provide a strong guarantee for the rise of the integrated circuit industry in the central and western regions.

(IV) IC design industry leads overall industry development In the first half of 2012, the IC design industry continued to maintain rapid growth, and the industry sales increased by 20.8% year-on-year. The chip manufacturing and packaging and testing industries rebounded significantly in the second quarter. In the first half of the year, the chip manufacturing and packaging and testing industries increased by 6.2% and 1.6% respectively. It is estimated that the integrated circuit design industry in 2012 will increase by 24% year-on-year, accounting for more than 30% of the total industry, and the growth rate will be higher than the overall growth rate of the industry. In 2013, driven by the promulgation and implementation of Article 4 regulations, favorable conditions for fiscal funding and taxation, and positive factors such as emerging applications providing vast market space, China's integrated circuit design industry will continue to maintain rapid development. Sales revenue reached 10 billion U.S. dollars, a year-on-year increase of more than 25%, accounting for more than 1/3 of the entire industry.

The main driving force for the steady growth of the IC design industry in 2013 was driven by the demand of the mobile internet terminal market. The rapid growth of global smartphones and tablets has driven the market demand for related chips and has become the main driving force for industrial growth. China is the world's largest consumer market for integrated circuit products. In 2013, driven by the demand for mobile terminal products such as smart phones and tablet computers, smart phone application processors, mobile communication baseband chips, terminal multimedia chips, and related integrated circuit products will become integrated in China. The main growth point of the circuit design industry.

(V) Completion of the Beidou Navigation Group Network Accelerated the Growth of the Commercial Beidou Chip Market In 2013, with the official commercial operation of Beidou Navigation, the civilian Beidou navigation chip market will grow rapidly. The successful launch of the last satellite of China's second-generation Beidou navigation project in October 2012 marked the successful completion of the regional networking of China's Beidou navigation project. Recalling the development history of the Beidou navigation chip, 2010 was the year of chip development and design. In 2011, it was the terminal test and chip production year. In 2012, it was a large-scale purchase year, and in 2013, it will become a mass production of Beidou navigation chip and increase substantially. Year. Guoteng Electronics, Beidou Xingtong, Huali Chuangtong and many other manufacturers have launched Beidou chips with independent intellectual property rights. Beidou+GPS-based chips will become the standard for smart phones, and timing, measurement and navigation will become the largest market for Beidou civilian use. .

But at the same time, it must be noted that Beidou still cannot replace the position of GPS in the civilian market in a short period of time. The main reasons are reflected in the following aspects: First, the layout of satellites and ground stations is still not complete. The ground terminal receiver can receive a small number of satellites, to improve navigation and positioning accuracy, technical difficulty is greater than GPS. The second is that the GPS baseband chip technology of foreign countries has been developed to the fourth generation. It has accumulated a great deal of practical experience in anti-multipath and inertial navigation. The chip technology has been very mature, and it has achieved a single chip solution, which has obvious advantages in terms of cost. Third, the current number of users of Beidou is relatively small, and no operators have invested in the construction of a ground-based reinforcement system.

Concern: how to transform the chip manufacturing and packaging industry upgrade China's chip manufacturing industry due to technology and investment bottlenecks, has lagged behind the pace of rapid development of China's integrated circuit design industry, can not fully meet the needs of the domestic chip foundry market. Another pressing issue in chip manufacturing and packaging is how to upgrade. With the loss of geographical advantages, eastern coastal manufacturing and packaging companies cannot survive the fierce market competition unless they can transform and upgrade their technologies and models.

(I) 28nm/22nm process capacity release to form upstream industry monopoly In 2013, 28nm/22nm process technology will become the mainstream, and the release of foreign advanced process capacity will form a monopoly in the upstream industry. In 2012, Intel, Samsung and other foreign integrated circuit manufacturing giants have mass-produced 28nm/22nm process products. In 2013, SMIC, the leading company in China's integrated circuit manufacturing industry, began mass production of 40nm process products. The process technology lags behind two generations, and the process update rate of the Moore’s Law is calculated to be five years behind that in foreign countries.

Because of the bottleneck of technology and investment, China's chip manufacturing industry has lagged behind the rapid development of China's integrated circuit design industry and cannot fully meet the needs of the domestic chip foundry market. More than half of the OEM demand for integrated circuit design in Mainland China was assumed by TSMC, UMC, Global Foundries and other OEM companies outside Mainland China. TSMC is the largest share of the OEM market in China. Currently, the revenue of China's customer business accounts for less than 40% of SMIC's turnover, and the 0.18μm to 65nm production process foundry business accounts for nearly 90% of SMIC's revenue, while the 45nm to 40nm high-end production process The chip foundry business is almost entirely undertaken by other OEM companies. At present, the technology level of domestic key design companies has reached 40nm, and 28nm chips are being researched and developed. It is no longer possible to find chip foundry companies in mainland China. Therefore, due to gaps in chip production technology, reliability, and design services between chip manufacturing OEMs in mainland China, larger integrated design companies in mainland China generally seek overseas OEMs.

(II) Impact of commercial production of 3D packaging technology on the current industry structure in China In 2013, 3D packaging technology will form a commercial mass production after years of research and development. At present, full-chain companies such as Intel and Samsung, chip manufacturing foundries such as TSMC and Taiwan United Electric, as well as chip-package OEM companies Riyueguang (Taiwan) and Sinpin (Taiwan) have successively released 3D packaging mass production plans. TSMC announced the official launch of 3D packaging services in early 2013. Taiwan United's 3D packaging line entered the product testing stage in the fourth quarter of this year and was officially commercialized in volume production in 2013. The commercial production of 3D packages will impact the industrial structure of our country, which is embodied in the following aspects:

One is that 3D packaging has greatly increased the technical barriers for the packaging industry. From the perspective of the traditional industrial chain division, the packaging and testing industry has a lower technical threshold compared with the chip manufacturing and chip design industries. However, with the gradual realization of “3D packaging” from concept to products, the global integrated circuit packaging industry will usher in a technological revolution. . Second, the packaging industry and the manufacturing industry may merge. As the packaging process has greatly increased the added value of products, chip manufacturing foundry companies have also started to engage in the packaging field. TSMC announced the launch of the 3D packaging business in 2013. This is an important beginning for the integrated development of the chip manufacturing and packaging industries. Thirdly, packaging companies will be polarized. The scale of production and profits of leading enterprises will increase, competition among SMEs will become more fierce, and the elimination of backward companies and backward production capacity will be accelerated.

(III) Manufacturing and packaging companies in the eastern region are facing the dual pressures of industrial transfer and transformation. The integrated circuit industry is a capital-intensive and knowledge-intensive industry. However, with the increasingly fierce competition in the global integrated circuit market, IC companies have become more and more important. Cost issue. With the increase of labor costs and land costs in the coastal areas, the eastern region's integrated circuit manufacturing and packaging companies are faced with the dilemma of either shifting the industry or transforming and upgrading their profits. Compared with middle and western enterprises, chip manufacturing and packaging and testing companies in the eastern coastal areas have seen rising labor costs and land costs. At the same time, as the country attaches great importance to the development of the central and western regions, the central and western regions have attracted large amounts of investment and have gathered large numbers of talents. The original talent and capital advantages in the eastern coastal areas are gradually weakening. However, the capital investment for industrial transfer is relatively high, and small and medium-sized enterprises do not have the financial strength to transfer, and large enterprises are not feasible because of the inertial transfer of development. The success of the transfer of enterprises depends largely on the central and western regions. Whether the preferential policy is enough attractive.

Another pressing issue in the chip manufacturing and packaging industry in 2013 is how to upgrade. With the loss of geographical advantages, eastern coastal manufacturing and packaging companies cannot survive the fierce market competition unless they can transform and upgrade their technologies and models. Large companies with strong profitability and better financial status must improve their competitiveness through technology research and development, mergers and acquisitions, and restructuring, while companies with poor profitability and low profit margins can pay very limited R&D expenditures, and they will face the risk of non-transformation. The grim predicament of "finding death".

(D) China's mainland terminal chip design companies face the strong challenge of MediaTek The smart terminal chip has occupied a large proportion of China's IC design industry, and is also one of the main drivers of industrial growth. However, most of China's smart terminal chip products are in the low-end market. The main competitiveness of the products comes from low prices. With MediaTek, Qualcomm, and other companies all arranging mid-to-low-end chip products, mainland smart terminal chip companies are afraid of semiconductor giants. Strong challenge. In 2013, in the field of low-end and mid-range smart phone chips, MediaTek will have a huge impact on Chinese mainland companies. In the first half of 2012, MediaTek's global smart phone application processor business volume increased 13 times compared to the same period of last year. The rapid growth of MediaTek smart terminal chips was mainly due to the strong demand for low-end smart phone market in mainland China. The impact of MediaTek’s strong return on Chinese mainland companies is reflected in the following two aspects: First, MediaTek’s technology and product layout is very complete. It has all the smart terminal chips such as application processors, baseband chips, wireless network chips, and radio frequency chips. Design technology. Second, MediaTek is good at integrating an integrated chip R&D platform, paying more attention to the remedy of technical shortcomings and the integration of solutions, and has extensive experience in technology integration, cost control, and product strategy.

Countermeasures and Suggestions: Strengthen strategic cooperation and mergers and acquisitions. Accelerate the promotion of investment and financing policies for integrated circuit companies, improve and perfect the government procurement mechanism for integrated circuit products, and guide the upstream and downstream enterprises in the industrial chain to establish strategic cooperation alliances. Rely on leading manufacturers of manufacturing and packaging industries to speed up mergers and acquisitions.

(I) Accelerate the promotion of investment and financing policies for integrated circuit companies First, we must speed up the issuance of the No. 4 document investment and financing implementation rules, implement related IC investment and financing policies, and encourage national policy financial institutions to support key integrated circuit technology transformation, technological innovation and industry Project. To create a favorable environment for industrial development and promote the transformation and upgrading of China's integrated circuit industry in the new era. Second, we must improve the risk investment mechanism of the integrated circuit industry, and in addition to improving the existing fiscal, taxation, and financing policies, set up a government-led integrated circuit venture investment fund. Encourage private capital to enter the integrated circuit industry, improve private capital's entry and exit policies, and increase the efficiency of technological achievements through risk investment. Encourage large-scale enterprise groups in various industries to participate in or integrate IC companies. Third, we must establish a local financing system for the integrated circuit industry. Encourage local governments to innovate financing products that are suitable for the development characteristics and needs of local key enterprises, and increase financial support for small and medium-sized IC companies through the means of sunshine and transparency. Fourthly, we must support the ICBC companies' listing and financing at home and abroad, guide financial and securities institutions to actively support the development of the IC industry, and support qualified innovative SMEs to list on the SME board and the GEM.

(II) Perfecting the government procurement mechanism for integrated circuit products First, we must further implement the “Regulations for Implementing the Government Procurement Law” and formulate relevant rules for the terms and conditions, clarifying the product range of domestic chips that should be included in government procurement electronic information products (such as general-purpose processors and Universal memory) and its share in the overall product. Second, we must improve the government's procurement review mechanism for integrated circuit products. On the basis of the high-quality screening team with high level of screening policy and professional and technical supervisors and experts, establish a scientific and reasonable procurement evaluation method. Third, we must adopt a comprehensive financial supervision system to strengthen the rational implementation of policies. Financial departments at all levels are the administrative departments of government procurement. They must use modern information methods to promote e-government procurement, increase the transparency of procurement information, increase procurement efficiency, and standardize procurement behavior.

(C) to guide the upstream and downstream enterprises in the industrial chain to establish a strategic cooperation alliance First, we must strengthen cooperation between upstream and downstream supporting industries in the domestic IC industry chain. Through the cooperation between integrated circuit design industry, manufacturing industry, packaging and testing industry, equipment and materials, and other supporting industries, the overall competitiveness of the industrial chain will be enhanced. At the same time, it integrates upstream and downstream application chain resources to establish a national, provincial, and municipal industrial alliance linkage mechanism to promote IC design cooperation between production, research and development, and promote IC design industry development, application and industrialization. Second, we must promote cooperation between domestic electronic equipment manufacturers and integrated circuit companies. Through the comparative advantages of individual machine industries such as smart terminals and communication devices, the development of related integrated circuit products will be promoted and the bargaining power of overseas markets will be enhanced. Third, through the establishment of a silicon intellectual property database (IP library), a mechanism for sharing innovation results among industries. Intellectual property is the soul of long-term development of future enterprises. The establishment of a silicon intellectual property database (IP bank) with the industry alliance as a medium, and the establishment of a corresponding intellectual property protection and sharing mechanism to effectively protect and share the technological achievements among alliance member units. .

(4) Relying on the leading enterprises of manufacturing and packaging industries to speed up mergers and reorganizations by increasing the tilt of factor resources and policy support, and promoting the combination of advantageous enterprises. Promote the integration of enterprises in various forms, encourage the integration of similar enterprises, integration of upstream and downstream enterprises, integration of complete enterprises and integrated circuit companies, and encourage enterprises to expand international cooperation and integrate international resources for mergers and acquisitions. Second, we must encourage leading enterprises in the industry to participate in horizontal mergers and acquisitions. Through horizontal mergers and acquisitions, we will expand the research and development capabilities, production scale, and sales channels of leading companies to improve their international competitiveness. Third, we must encourage leading companies in the industry chain to undertake vertical mergers and acquisitions. Through vertical mergers and acquisitions, leading companies in the key links of the industrial chain can be extended to the upstream and downstream links to enhance their ability to avoid risks, and to increase their bargaining power in the international market through competition in the entire industry chain. Fourth, we must encourage leading enterprises in the industry to eliminate backward production capacity through means of corporate restructuring. Only by lagging behind the outdated production capacity of the enterprise can we focus our development efforts on our own strengths, so that our production and sales can be upgraded efficiently.