China's new integrated circuit industry policy attracts attention

- Dec 09, 2019-

China's new integrated circuit industry policy attracts attention


In early 2013, 43 members of the CPPCC proposed a proposal to optimize the layout of the integrated circuit industry, which attracted great attention from leaders of the party and the state. Chairman Xi Jinping made important instructions; Beijing investigated the integrated circuit industry and pointed out that accelerating the development of China's integrated circuit industry is a strategic decision made by the central government. At the end of 2013, Beijing first tried out and launched the Beijing Integrated Circuit Industry Development Equity Investment Fund, with a total scale of 30 billion yuan and a phase of 9 billion yuan. It is reported that the central government will also take the establishment of an industrial fund as the core of this new deal, and relevant policy details have entered the stage of consultation and will be announced shortly.

One stone provoked a thousand waves, and the fund's support ideas for the New Deal of the integrated circuit industry have drawn great attention from all sides. First, 7 billion yuan in the first phase of the fund will be used for manufacturing and equipment, which also means that the new policy will still focus on support in the manufacturing sector. In the world today, the United States and Taiwan have the most advanced integrated circuit manufacturing enterprises. The gap between mainland China and the two is constantly increasing, and the investment in integrated circuit production lines is billions, which is difficult for individual companies and local governments to bear. This industry fund will effectively ease the pressure on corporate investment and accelerate the rapid upgrade of China's integrated circuit manufacturing industry. In addition, the fund will focus on supporting domestic integrated circuit enterprises, especially providing strong support for domestic enterprises to implement mergers and expansions, which also provides rare opportunities for the rapid development of Chinese integrated circuit enterprises. Last year, Tsinghua Unisplendour's acquisition of Spreadtrum and Ruidico injected a stimulant into the long-standing quiet domestic integrated circuit industry. For a long time, the field of mobile phone chip design has long been monopolized by foreign companies such as Qualcomm and MediaTek. Domestic mobile phone chip design companies such as Hisilicon, Spreadtrum, Ruidico, and MediaTek have faced fierce competition and have been "inadequate." In this context, heating up in groups will become an important way for the development of Chinese integrated circuit companies. Through the acquisition and integration, the two companies will realize complementary advantages and rapidly expand the size of the enterprise, thereby participating in fierce market competition at home and abroad. The introduction of this fund will provide financial support for more "Spreadtrum-Ridico" mergers and reorganizations, thereby greatly improving the competitiveness of domestic integrated circuit companies. At the same time, the fund will strongly support the construction of domestic integrated circuit industrial parks and provide a good carrier for industrial development.

The new policy not only provides new ideas for the development of domestic enterprises, but also inevitably promotes the transformation of multinational companies' development models in China. Last year, Texas Instruments, a global leader, set up a production base in Chengdu and announced that it would transfer most of its global production capacity to China. After the implementation of the new policy, more and more multinational enterprises will set up production bases in China with the support of industrial funds. In addition, domestic enterprises can use industrial funds to cooperate with multinational companies in areas where they have technological advantages. At the end of last year, the domestic integrated circuit company Datang Telecom announced the establishment of a joint venture with the world's leading automotive electronics company NXP to enter the automotive electronics field. In the joint venture, Datang Telecom will hold 51% and NXP will hold 49%. NXP will transfer and authorize some of its intellectual property rights in power management (including battery management) to the joint venture. For a long time, the core chips of automotive electronics have been monopolized by foreign manufacturers, making it extremely difficult for domestic companies to catch up. With the help of industrial funds, domestic enterprises can quickly master core technologies through joint ventures and cooperation, thereby promoting the rapid development of the industry.

However, the New Deal has also raised a series of questions. First of all, the focus of the New Deal's key support areas is too broad, and it is not clear which specific areas are targeted, which may lead to another "spreading pepper noodles" and fail to focus on making up for the weak links in the Chinese integrated circuit industry. In addition, the fund is jointly funded by the central government, local governments, and social capital. Among them, social capital will occupy a dominant position. The introduction of the capital side will greatly weaken the voice of integrated circuit companies and bring the development of the integrated circuit industry. Hidden danger. A well-known domestic company has stated that the introduction of industrial funds will change the company's equity structure, and companies will be very cautious in this regard. At the same time, the integrated circuit industry, as the basic core area of the country, requires strategic development perspectives, and continues to invest in basic research and development and industries or projects, while the investment without social capital is more "short-sighted" and tends to areas that "less investment, quick effect" With the project in the long run, it will not be conducive to the long-term development of China's integrated power industry.

It is reported that key domestic integrated circuit cities such as Shanghai, Shenzhen and Wuhan will also follow the Beijing model, and recently issued relevant industrial fund management rules, while cities such as Wuxi, Suzhou, Chengdu, Xi'an, and Hefei are also actively planning related policies.

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