Chinese semiconductor industry development model encounters new problems

Recently, after successively sending out the acquisition of Deyi Semiconductors, the news of Micron's desire to acquire Wuhan Xinxin shakes and affects the entire semiconductor industry in China. At the same time, this mode of development of the Chinese-specialty semiconductor industry with “government-funded, corporate-hosted” is also Once became the focus. The reporter interviewed Gu Wenjun, a senior analyst at iSuppli. He believed that this kind of cooperation model of “enterprise hosting” avoided the financial risks caused by the over-investment and depreciation of the early stage companies. At the same time, he also believes that Wuhan Xinxin will be a deadly blow to China’s storage industry if it is acquired by foreign investors.

"Hosting Model" Should Solve Four Problems

It is reported that Chengxin was established in 2005. The main body is an 8-inch semiconductor production line. Chengdu Industrial Investment Management Co., Ltd. under the Chengdu government and Chengdu Gaoxin District Investment Co., Ltd. are its main investors. SMIC is responsible for daily Operation and management. As the first 8-inch production line in the Midwest, the establishment of Chengxin Semiconductor pioneered the "hosting model" of foundries, which once attracted the attention of the industry. According to the cooperation agreement between SMIC and the Chengdu government, SMIC will not only deliver technology, talent, and equipment to the factory, but also pledge to repurchase the company's equity for a certain number of years after the completion of the factory.

Gu Wenjun told reporters that this kind of cooperation model of “enterprise escrow” has avoided the financial risks caused by the excessive investment and depreciation of the early stage enterprises. However, the cooperation between local governments and enterprises must be well-controlled and supervised in the following four issues. First of all, the semiconductor industry needs economies of scale. Excessive dispersion is not conducive to the development of enterprises and the construction of industrial chains. At present, local governments mostly seek "whereabouts."

Second, the semiconductor industry needs long-term capital investment, and the government generally invests a sum of money in the early period, but there is no continuous investment in the later period. Third, how companies are also important to the development of such expansion companies. Whether they want to develop as their core competitiveness and are willing to invest their energies and resources are all problems. Fourthly, how the government and enterprises establish a long-term development strategic relationship that is mutually restrictive, mutual supervision, and mutual cooperation is also a key issue.

At the same time, Gu Wenjun also pointed out that this “host management model” will not come to an end, and it may play a significant role in the development of emerging industries such as LED and new energy.

Xinxin’s acquisition by foreign capital will be a fatal blow to China’s industry

It is understood that as the "hosting" side of the SMIC, has been actively lobbying the Chengdu government and hopes to become core semiconductor. However, SMIC has continued to lose money in recent years, although the latest quarterly earnings report losses, it can not change this image, plus the cause of disputes with TSMC and other reasons, so that the Chengdu government is even more skeptical of SMIC.

Gu Wenjun said that after all, Chengxin is an 8-inch factory and is not the only analog Fab in China. Wuhan Xinxin is a brand-new 12-inch factory and is the only storage chip foundry. Therefore, if Xinxin is acquired and reorganized into a production line of a foreign-funded enterprise instead of an open foundry, then this is just starting to happen in China. The storage industry will be a deadly blow. At present, domestic chip design companies that are manufactured in Wuhan have already been forced to find partners overseas.