No shortage of money, no shortage of market, but China's semiconductor industry is short of 60,000 talents

Reporter Chen Baoliang reports from Beijing

"In 2017, the total sales volume of China's integrated circuit design industry is expected to be 194.6 billion yuan, which is an increase of 28.15% from the previous forecast of 151.8 billion yuan in 2016." On November 16, Wei Shaojun, chairman of the China Semiconductor Association's design branch, worked in the integrated circuit design industry in China. At the 2017 conference, the pre-statistical results of the development of the IC design industry were announced. He said that although the high-end capacity of China's IC design industry is severely insufficient, its global share is still rising. The estimated total revenue for the industry in 2017 is approximately US$29.3 billion. It is expected to account for nearly 30% of the world's total.

In June 2014, the State Council issued the Outline for Promoting the Industrial Integration of the Integrated Circuit Industry. The medium-term objective of the industry planning is: “By 2020, the gap between the integrated circuit industry and the international advanced level will gradually narrow, and the average annual growth rate of the industry-wide sales revenue will exceed 20%. Sustainability of enterprises has been greatly enhanced.” From 2014 to 2016, according to the statistics of China Semiconductor Association, the total sales volume of the integrated circuit industry was 301.54 billion yuan, 360.98 billion yuan, and 433.55 billion yuan, respectively, achieving 20.2%, 19.7%, and 20.1 respectively. The growth rate of %.

It is worth mentioning that the integrated circuit design industry has always played a leading role. In the integrated circuit industry, the output value of the design industry accounts for about 38%. From 2014 to 2016, IC design companies generated revenue of RMB 104.74 billion, RMB 132.5 billion, and RMB 164.43 billion, respectively, creating growth rates of 29.5%, 26.5%, and 24.1%, respectively.

“According to the outline requirements, in 2020, the total sales volume of the design industry will reach 350 billion yuan, which will require a compound growth rate of 21.6% in the next three years,” Wei Shaojun said. “From the trend point of view, the ratio of 21.6% is not high, but it is not. With the growth of the base number, it will be more and more difficult to achieve this growth rate."

Industry returns to rationality

In 2013, relevant departments began to investigate the IC industry and plan to introduce support policies. This year, China produced 1.46 billion mobile phones, 340 million computers, and 130 million color TV sets. The information technology industry was 12.4 trillion yuan, but it imported 231.3 billion U.S. dollars. Due to the lack of the core value of integrated circuits, the industry's average profit margin is only 4.5%.

In 2014, the national integrated circuit industry promotion program was issued, and a national integrated circuit industry fund of 140 billion yuan was also established. In the past three years, dozens of local governments and large amounts of social capital have flooded into China's integrated circuit industry. According to incomplete statistics from the China Semiconductor Investment Union, since 2013, local governments have established more than 27 funds, and together with state funds, the size of the industry's total funds has exceeded 600 billion yuan.

During this period, the IC industry staged hundreds of domestic and foreign mergers and acquisitions, industry investment, semiconductor-related listed companies have also continued to grow, and exceeded 100. Moreover, in 2016, the semiconductor company's A-share financing alone has exceeded 22 billion yuan. Through the M&A route, China's semiconductor industry has rapidly become bigger and stronger, and it has become the mainstream voice of the industry for a long time.

"At that time, the US chip company had a PE value of only 10 times, while China was 40-50 times." A semiconductor industry veteran introduced: "Returning to domestic listing, you can make a lot of hands. At that time, the goals of semiconductor capital were It is more than 3 times the return on investment in 12 months, and less than this number will not be discussed."

However, after 2016 and 2017, this route began to suffer coldness in various resistances. "First of all, semiconductor capital does not understand the domestic listing environment at all. A 'three-year replacement of the main body before it can be listed' is a headache for people." The above-mentioned sources said that "an endless stream of restrictions has put a lot of capital and too many projects on hold." ”

At the same time, the foreign semiconductor industry continued to strengthen cyber security review and rejected a large number of Chinese-funded semiconductor acquisition projects. In 2016, the United States CFIUS accepted 173 projects, among which acquisitions declared by Chinese-funded enterprises accounted for a large proportion, 173 projects created new historical highs, and the number of rejections also set new records. During this period, Canyou Bridge acquired Lattice Semiconductor for US$1.3 billion. Canyou Bridge, a Chinese-funded company, reported to CFIUS three times and was rejected three times.

In 2017, the security review in the United States continued to tighten, and domestic capital operations failed to break through due to various reasons. The rise of the Chinese semiconductor industry in 2014 due to borrowing and M&A quickly became basically stagnant.

“In the past two years, there have been too many temptations from capital. It seems that capital can solve all problems. We have even forgotten our own heart.” The above-mentioned veteran recalls, “Our original intention is not the triple return, but the Chinese Resources are gathered in the semiconductor industry and the company is first. Now we are back at this starting point."

Shortage of 60,000 talents

In 2016, under the stimulus of various crazes, the number of Chinese IC companies involved increased dramatically from 736 to 1362 companies and increased 626 companies. In 2017, the number of design enterprises in the country increased by 18, with a total of 1,380.

However, most companies have escaped the fate of being eliminated. Luo Zhengqiu, deputy general manager of TSMC’s China business development, said with emotion: "There is no such thing as a total of 1380 IC companies in all other countries."

In fact, in the United States, the annual revenue of the top ten semiconductor design companies accounts for more than 90% of the total industry. In Taiwan, this proportion also exceeds 80%. High investment and high-tech content make the industry naturally have a very high industry concentration.

In China, in 2017, the total revenue of the top ten semiconductor design companies was 89.315 billion yuan, accounting for 45.9% of the total industry, which was slightly lower than 2016's 46.11%. The industry concentration is still far below the international level. However, Wei Shaojun introduced that in 2017, 191 companies with sales of over 100 million yuan generated revenue of 177.19 billion yuan, accounting for 91.03% of the industry, an increase of 10.06% over 2016, and the degree of industrial concentration has improved.

However, the top ten design companies have continued to erode their profitability while their revenues are increasing. In 2017, the average gross profit margin of the top 10 design companies was 28.67%, which was a decrease of 6.39 percentage points from 35.06% in 2016.

At the same time, the average gross profit margin of the top 100 design companies was 29.28%, which was a decrease of 1.32 percentage points from 30.6% in the previous year. “The phenomenon of continued weakening of profitability has emerged last year,” Wei Shaojun said. “And this phenomenon this year Still continuing."

To improve overall profitability, you must achieve breakthroughs in high-end areas such as CPUs, memory, and FPGAs. In China, imports of CPUs and memory account for 70% of total imports. With the dramatic increase in memory prices in 2017, the ratio will continue to increase, but the domestic production ratio of these products is zero. Moreover, to achieve an average annual growth rate of 21.6%, Chinese companies must also fill these long-term gaps.

The difficulty of further development lies mainly in talent. In 2017, China’s chip design industry employs about 140,000 people, generates revenue of 194.6 billion yuan, and has a per capita output value of 1.39 million yuan and about 210,000 dollars, which is a relatively high per capita output value in recent years. In contrast, in fiscal year 2016, Qualcomm’s 30,500 employees generated revenues of US$22.3 billion and their per capita output value was US$731,000, which is 3.5 times that of Chinese employees.

Wei Shaojun calculated that “if we maintain the current per capita output value, we will need 280,000 employees to achieve the 2020 goal. However, the total number of graduates that our colleges and universities can cultivate before 2020 does not exceed 80,000, and there is a gap of more than 60,000. ”

This is only a calculation of the gap in the number of talents. If the quality of talents is taken into account, the gap will be further expanded. He said: “We do not have shortages of money, no shortage of markets, or shortage of talents.”

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