Tsinghua University Professor Wei Shaojun: China needs to re understand the globalization of the semiconductor industry and maintain the integrity of the global supply chain

On June 17th, the 2nd China Nansha International Integrated Circuit Industry Forum (2023 IC NANSHA), organized by Xinmou Research, opened in Nansha, Guangzhou. According to the Daily Economic News, Professor Wei Shaojun from the School of Integrated Circuits at Tsinghua University attended the forum and delivered a speech

The keynote speech on "Re globalization of the Semiconductor Industry".

Wei Shaojun mentioned that under the trend of anti globalization, China's semiconductor industry is currently facing severe challenges. He pointed out that in the past decade, we believed that China's chip manufacturing had developed rapidly, but in reality, this growth was largely contributed by foreign-funded enterprises in China. Wei Shaojun also emphasized that China's integrated circuit industry must firmly move forward and its position in the super large chip market will not change in the short term. China needs to re understand the globalization of the semiconductor industry, maintain the integrity of the global semiconductor supply chain, and achieve re globalization.

Frankly speaking, the performance of listed integrated circuit companies is not satisfactory

Wei Shaojun first starts with the current situation of the global semiconductor industry. He stated that the globalization process of the semiconductor industry is currently being interrupted. Since the beginning of this year, the Netherlands has banned the sale of lithography machines to China, and the Japanese government has introduced export control measures for 23 types of semiconductor manufacturing equipment. The Chinese semiconductor industry, based on globalization, is facing challenges.

Wei Shaojun said that in the past 10 years, the sales revenue of domestic integrated circuits has continued to increase. While acknowledging the progress of the industry, he rationally pointed out that in terms of value, the proportion of domestic chips in the domestic market demand has increased from 13% in 2013 to 41.4% in 2022, which is still far from the demand of the domestic market.

He also provided a set of data stating that the average annual compound growth rate of domestic semiconductor manufacturing enterprises has reached 14.7 since 2016; But the growth of foreign-funded enterprises is faster, with an average annual compound growth rate of 30%. The contribution of foreign-funded semiconductor manufacturing enterprises to the growth of China's semiconductor manufacturing industry is twice that of domestic enterprises. Our (semiconductor) manufacturing industry still needs a lot of external support. On the other hand, from China's perspective, we still have great potential for development

The Daily Economic News reporter noticed that Wei Shaojun also conducted financial data statistics on 135 semiconductor (full industry chain) companies listed on the Science and Technology Innovation Board and the Growth Enterprise Market. The results show that as of April 30, 2023, the total market value of these 135 companies was 3082.5 billion yuan, which is less than half of Nvidia's market value. Meanwhile, 135 companies achieved a cumulative revenue of 282.19 billion yuan in 2022, with an average gross profit margin of 39.1%, which is relatively low.

In addition, he also conducted statistics on 62 chip design companies on the Science and Technology Innovation Board, with an average gross profit margin of 34.2% in 2022, which is 27.8 percentage points lower than the 62% of American semiconductor companies; But their average R&D expenses account for 20.8%, which is 3.8 percentage points higher than American semiconductor companies. This is a good thing. But if we only look at the total R&D expenses, the R&D expenditures of these 62 Sci Tech Innovation Board chip companies are about 2.91 billion US dollars

How can we achieve the re globalization of the semiconductor industry?

Wei Shaojun stated that the process technology of Chinese semiconductor manufacturing enterprises is currently mainly at 14 nanometers, while the domestic wafer foundry capacity is seriously insufficient. As of the end of 2021, Chinese semiconductor companies have a total production capacity of approximately 440000 12 inch wafer foundries. Compared with the current monthly production capacity demand of 1.5 million pieces in China's integrated circuit design industry, there is a huge gap.

Although there are challenges in the development of China's semiconductor industry, it cannot but move forward. In Wei Shaojun's view, China's position in the super large chip market will not change in the short term. The degree of dependence between China and the world will experience a rebalancing, but the overall trend will not change.

So, how to promote the re globalization of the semiconductor industry? Wei Shaojun proposed that, specifically speaking, China's integrated circuit industry should play to its strengths and avoid its weaknesses, and take the initiative in development. For example, China has a leading advantage in 5G chips; Secondly, China must adhere to expanding opening up and inviting friends widely. We need to re understand the globalization of the semiconductor industry, maintain the integrity of the global semiconductor supply chain, and achieve re globalization. If the formation of the global semiconductor supply chain in the first 20 years was mainly characterized by division of labor, then globalization must have emphasized cooperation more, where you have me and I have you, and we can develop together, "said Wei Shaojun. He emphasized the need to make good use of China's huge market and enable partners in the global semiconductor supply chain to benefit together.

Finally, China's integrated circuits also need to seize the new opportunities of new energy vehicle chips and artificial intelligence chips, and expand new space. Artificial intelligence is an unmissable 'feast'. The development of high computing power, low energy consumption, or high energy efficiency artificial intelligence servers/chips has become inevitable, and this is the direction of development, "said Wei Shaojun.

From: Daily Economic News