How To Break Through The Red And Blue Ocean Of Chip Design In Dawan District

Editor's note

The past decade has witnessed the outbreak of chip design industry in Guangdong, Hong Kong and Macao. The outbreak of the industry is attracting the influx of venture capital institutions and private equity investment institutions. A number of "Gazelle" and "unicorn" enterprises with high growth are bred with trillions of funds. In this context, what is the current direction of chip design industry in Dawan district? How to break through technical barriers and market barriers? How to gradually expand the market share of domestic chips? How to realize talent accumulation《 On high growth enterprises -- 2021 Guangdong Hong Kong Macao big bay area gazelle enterprise large series special report, the second issue focuses on the development of chip design industry.

The past decade has witnessed the outbreak of chip design industry in Guangdong, Hong Kong and Macao.

According to the statistics of China Semiconductor Industry Association, in 2010, the sales volume of domestic chip design industry was about 55 billion yuan; By 2020, the sales volume will reach 381.94 billion yuan, with an increase of nearly 600% in 10 years, showing a trend of explosive growth. The development trend of Dawan district is consistent with that of the whole country. According to the statistics of IC design branch of China Semiconductor Industry Association, among the 381.94 billion yuan sales of chip design industry in 2020, the Yangtze River Delta sales volume is 159.97 billion yuan, accounting for 39%, and the Pearl River Delta sales volume is 148.46 billion yuan, accounting for 37%.

As one of the important strategic emerging industries in Guangdong, Hong Kong and Macao Bay area, semiconductor chip industry is attracting many entrepreneurs and collecting a large amount of capital to invest in it. In the whole semiconductor industry, design, package test and manufacturing account for 42.87%, 29.69% and 27.44% respectively. Chip design accounts for the largest proportion in terms of sales volume in the integrated circuit industry chain of Dawan District, and its growth rate shows an explosive trend.

According to the statistics of integrated circuit design branch of China Semiconductor Industry Association, by the end of 2020, there are 2218 chip design companies in China, of which the most concentrated are in the Pearl River Delta, Yangtze River Delta and the Bohai Sea region around Beijing and Tianjin. Chip design industry is experiencing a "big explosion" of entrepreneurship.

Feng Jie, chairman of Shenzhen Lihe Kechuang Venture Capital Co., Ltd., an investment institution, believes that China's chip design industry is in the period of industry explosion and is now ushered in a "historical development opportunity".

The outbreak of entrepreneurship is attracting the influx of venture capital institutions and private equity investment institutions. A number of "Gazelle" and "unicorn" enterprises with high growth are bred with trillions of funds. Shenzhen Stock Exchange, Shanghai Stock Exchange and Hong Kong Stock Exchange have listed chip industry chain related companies, which makes the capital in the open market mainly concentrated in leading companies.

What are the specific directions of current chip design in Dawan district? How to break through technical barriers and market barriers? How to gradually expand the market share of domestic chips? How to realize talent accumulation? In view of many topics in the chip design industry, all media reporters from southern finance and economics recently visited some entrepreneurs and investors in the chip design industry.

In the face of such an industry opportunity, Bai Songrong, co-founder and CTO of Shenzhen Xihua Technology Co., Ltd., a chip design start-up company, and Feng Bingjun, founder and chairman of Hangzhou ruimeng Technology Co., Ltd., all believe that practitioners in Dawan district and even China should dare to enter the unknown "blue ocean" market and pay attention to technology accumulation and capital accumulation, Strengthen the close linkage with all links of domestic manufacturing industry.

The person in charge of Shenzhen innovation investment group, an investment institution, believes that in the face of opportunities, financial institutions should help the real high-quality entrepreneurs in the chip design industry to expand as soon as possible, so as to encourage the birth of more gazelle enterprises, leading enterprises and even giant enterprises in the industry.

The historical opportunity of "China core"

In the office of Shenzhen Tanglang Xihua Technology Co., Ltd., Bai Songrong held a chip about the size of a grain of rice on his fingertips. He told reporters that the interior of the micro device was "like a skyscraper with complicated structure". He said the tiny transistors run through the "rice grains" and form signals as they pass current.

"This is a SAR (specific absorption rate) chip that can monitor the electromagnetic radiation energy of mobile phones per unit time." Bai Songrong said.

Bai Songrong is the chief technology officer and co-founder of Xihua technology company. Before founding Xihua Technology Co., Ltd. in 2018, Bai Songrong had professional experience in foreign and domestic chip factories.

At present, the explosion of domestic chip design industry mainly comes from three forces, including university researchers' entrepreneurship, domestic leading enterprises' technology team entrepreneurship, and "big factory" executives' entrepreneurship. Bai Songrong belongs to the third type.

He told all media reporters of Southern finance and economics that Xihua technology's entrepreneurship was "started in response to the chip demand of 5g era and smart cars". At present, the company mainly develops and designs corresponding chips for 5g and automatic driving.

Bai Songrong pointed out to reporters that chip design starts from conception and definition. When the new market demand arises, the general-purpose chips in the market can not provide corresponding functions, which provides an opportunity for customized chip design.

In fact, it is a path for chip designers in Guangdong, Hong Kong and Macao Bay area and relevant manufacturers in China to break down the original market barriers and technical barriers and open up the commercialization situation.

Shenzhen Huaqiangbei is known as "the first electronic trading market in Asia". Here we can see that the current general chip market has formed a pattern of oligopoly by international "big manufacturers". During a visit to the New Asia e-mall, many IC sales merchants still focus on brands from the United States, Europe, Japan, South Korea and Singapore, including ATMEL, analog devices, Fujitsu, Intel, ITT, lattice, Samsung, Infineon, Texas Instruments, etc. The merchants in Huaqiangbei introduce their products skillfully with English names or abbreviations.

According to the data of China Semiconductor Industry Association, China's chip design will account for about 13% of the global market share in 2020. According to the semiconductor industry association of America, the United States accounts for 65% of the global chip design market.

Yu Hao, an internationally renowned high-performance chip design expert, explained to reporters that the existing international giants have been rushing ahead for decades in the research and development of software and architecture and in market development for decades, which gives them the opportunity to establish thick and high "barriers" in the inherent market structure.

There is a historical factor. After all, the chip industry was born in Silicon Valley in the 1950s.

Zhang Chi, partner of Lihe Kechuang venture capital and head of fund department, told reporters: "the research and development of early electronic products is in the hands of foreign enterprises, and not many people are willing to try domestic chips. The promotion cost of domestic chips is very high."

The chip industry is not a forest without trees. Bai Songrong and Zhang chijun said that it was the comprehensive development of "made in China" and provided sufficient downstream market space for domestic chip design entrepreneurs.

Zhang Chi bluntly said: "we are facing a new round of historical opportunities in the chip industry, and the comprehensive maturity of the manufacturing industry provides a good entrepreneurial environment."

Feng Jie, chairman of Lihe Kechuang venture capital, pointed out: "at present, the major economic participants in the world are aware that the key to economic competition is scientific and technological competition. Especially in the field of chips, China is facing a development opportunity. "

In Zhang Chi's view, Guangdong, Hong Kong and Macao Bay area is the production place of many terminal equipment carrying chips, such as white household appliances, mobile phones, automobiles, medical equipment, communications, etc. the most important chip consumer market in the world is in China, in the Guangdong Hong Kong Macao Bay area.

At present, smart cars have been regarded by the semiconductor industry as another "platform" market with great potential after smart phones. Focusing on automatic driving, car space experience and other aspects, the market demand for "human-computer interaction" technologies such as touch screen, fingerprint identification, voice control, machine vision and so on has generated, and the automotive chip market has exploded. Bai Songrong pointed out to reporters that in the next step, Xihua technology will attach importance to the business opportunities in the intelligent automobile industry, including the research on automatic driving, and carry out the design and development of MCU chips at the vehicle specification level“ The first choice for cooperation will be domestic automobile brands. " Bai Songrong said.

Breakout: Blue Ocean Strategy

Ruimeng technology, which has been established for 12 years, has experienced the process of "localization" in recent years.

Feng Bingjun, founder and chairman of Rimet technology, believes that China's chip design companies must adopt the "blue ocean" strategy, so as to achieve technology accumulation and capital accumulation.

The two business terms Red Sea and blue ocean refer to the market with sufficient competition and the market with huge space for innovation.

"There are always two markets for domestic chips: Red Sea and blue ocean. We don't need to rush to the" Red Sea ", but we can go to the" blue ocean " Feng Bingjun told reporters. The "Red Sea" market of chips mainly focuses on some products with extremely low technical threshold. The unit price of products in this market can be as low as a few cents RMB, and the profit margin is very thin. However, there is still a "blue ocean" in the chip products with certain technical threshold and more profits.

Only by daring to challenge the existing pattern, drive to the "blue ocean", make unremitting efforts to conquer the high-end technology and strive for the sweet point of profit, can China's chip design industry accumulate capital and technology.

Feng Bingjun frankly said that to be a century old store and to create a giant company in China should be the goal of current chip design entrepreneurs.

Rimeng technology focuses on analog chips, and started its business with a motor driver. Motor driver chip is used to control motor operation by current, which is widely used in life and industrial scenes. Life scenes include toys, intelligent locks and sweeping robots, while industrial scenes include Automobile Electromechanical control, 3D printing, industrial robots, etc.

This includes not only the "Red Sea" market of consumer products, but also the "blue ocean" market of industrial products.

Feng Bingjun pointed out: "the consumer market does not have high requirements for analog chip technology, and it is easy to fall into price competition. Only by facing industrial applications can we have a longer life cycle and profit cycle, and can we realize capital accumulation."

However, it is not easy to break into the blue ocean. The motor chip of rimeng has encountered technical barriers and market barriers since its birth.

In terms of technical barriers, Feng Bingjun summed it up as a "double game of money and time". It took more than a year before and after the birth of the motor chip. The whole chip design process generally includes system, layout, circuit design, followed by tape (industry term, refers to trial production). The sample of the finished chip is taken back to the designer for multi-step test, and then sent to the package to package. After a series of actions are completed, small batch sales are started.

"There are a lot of hurdles here. In one step, however, we have to go through part of the process again, and the time will be delayed for a few months." Feng Bingjun said that a lot of manpower, material and financial resources were consumed during the period, which put more pressure on entrepreneurial companies waiting for sales funds to "continue their lives".

Feng Bingjun bluntly said, "at that time, the target customers only used imported products.". This is not because domestic manufacturers "worship foreign countries" but in the international analog chip market, which is mainly dominated by American and European companies. For this pattern, insiders often say that "one super, many strong"“ "One super" refers to Texas Instrument, whose analog chip sales in 2020 will be 10.89 billion US dollars, accounting for about 20% of the global market share“ "Duoqiang" refers to ADI, Infineon, skyworks, St, NXP, Renesas, etc.

Feng Bingjun said frankly, from small batch supply to large-scale supply and finally becoming the core supplier, it is not limited to mastering the design theory to enter the market, but also needs "precipitation of years of experience". The experience here involves understanding market demand and judging customer requirements.

"Analog chip design is a slow industry," said Feng Bingjun. "It needs craftsmanship."

Not only analog chips, but also domestic digital chips, digital analog hybrid chips and other major chip types are actually facing the technical and market barriers experienced by rimeng technology.

In order to break through the current dilemma as soon as possible, domestic chip designers are actually making efforts in different directions.

Yu Hao, vice president of the Shenzhen Hong Kong Institute of microelectronics, South University of science and technology, pointed out that the open source architecture, the progress of domestic developers in software design, and the birth of the third generation semiconductor materials are all creating conditions for breaking the existing barriers.

Yu Hao analyzed that in order to compete with international giants, China's chip industry should make full use of new software, architecture and market demand. He suggested looking for high-end and cutting-edge power points for domestic chips from three aspects of computing, sensors and communication.

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