Smart things June 22 news, according to foreign media Bloomberg, in 2021, the average sales growth rate of China’s chip industry will be the first in the world. Of the 20 fastest-growing chip companies in the world, according to data compiled by Bloomberg,19 are from China, a 137% increase from 8 last year.
Following the U.S. sanctions on Huawei, in 2020, the U.S. began to restrict the sale of technology to companies such as SMIC and Hikvision.
Although this move has hindered the technological growth of these companies, it has also stimulated the development of China’s chip manufacturing industry to a certain extent, and has become a major external cause for the growth of the average sales of China’s chip industry.
1. The global chip shortage may create opportunities for domestic chip factories
According to Bloomberg, the ongoing shortage of chips has led to a decline in production at auto and consumer electronics makers around the world. Affected by the epidemic, many overseas foundries were unable to operate, and some large orders were transferred to local Chinese suppliers.This status quo favors the development of local Chinese chip makers, allowing Chinese suppliers to more easily enter the international market.
Orders for chip-making equipment from overseas suppliers rose by 58% last year as local factories expanded in China, according to industry body Semi, which in turn boosted local business and technology.
According to the list provided by Bloomberg, the 19 Chinese companies with the fastest average sales growth in the world,Distributed in the upstream and downstream of the semiconductor industrywhose business involves software design, manufacturing processors, and providing important parts for manufacturing chips.
in,SMIC’s sales surged 67% in the latest quarterwhich far exceeds some of the world’s leading semiconductor companies such as GlobalFoundries, TSMC and ASML.
▲ According to data from Bloomberg, the top five fastest-growing chip companies in the world in 2021 are Suzhou Guoxin, Cambrian, Chuangyao Technology, Gaolun Electronics, and Zhenlei Technology.
2. The epidemic affects the overseas supply chain of chips and promotes the development of the domestic semiconductor industry
SMIC and Hua Hong Semiconductor are the largest chip contract manufacturers in China. In the first half of 2022, when Shanghai was under epidemic control, the factories of the two chip companies in Shanghai also maintained normal operations. With the help of the government, the necessary materials and equipment can be delivered to the chip factory by cargo flights in Japan.
“The most obvious trend is that China seeks self-sufficiency in the supply chain. Under the lockdown affected by the new crown epidemic,Chinese customers who previously used imported chips must start purchasing domestically produced chips in order to ensure smooth operations. ” said Phelix Lee, an analyst at Morningstar, an American investment research firm.
3. With the support of the “specialized and new” little giant policy, it is estimated that it will receive billions of dollars in investment
Bloomberg also said that it is expected that the Chinese government will, according to the “specialized and innovative” little giant plan,Investing billions of dollars in the chip industry, in order to fund and support the top leading enterprises in the segmented technology field. Therefore, while the stock prices of chip-head companies such as Cambrian have doubled from their lows, analysts say there may still be room for these companies’ shares to rise.
In addition to well-known companies in the chip field such as Huawei and SMIC, other chip companies in China have also begun to emerge and develop their own unique advantages.
General Electronics, whose sales have doubled in the past four quarters, says it has developed software that can be used to make 3-nanometer chips. After winning the title of “Specialized, Special and New Little Giant”, Gelun Electronics promised to enter the field of electric vehicles and artificial intelligence. In addition to this company, YMTC is also said to be being considered by Apple as the latest supplier of iPhone flash memory.
According to the China Semiconductor Industry Association,Total sales of Chinese chipmakers and designers to grow 18% in 2021reaching more than 1 trillion yuan (about 150 billion US dollars), setting a new record.
Conclusion: Three factors affect each layer, China’s chip industry may usher in a golden period of development
U.S. sanctions have indeed restricted Chinese chip companies’ access to advanced chip manufacturing processes, but this has not affected China’s share of the mid-to-low-end chip market. According to the data,China’s cumulative chip imports in the first four months of 2022 decreased by 24 billion compared to the same period in 2021, the number dropped significantly. This is because the “global shortage of cores” has affected the supply chain of overseas chips, and on the other hand, the rapid development of state-owned chips has increased the self-sufficiency rate.
The current global market of the semiconductor industry has reached 550 billion US dollarsan industry that plays an important role in defense, artificial intelligence, self-driving cars, and more.
The development of China’s chip industry is ushering in three major opportunities: the global chip shortage, the impact of the epidemic on overseas supply chains, and the support of the “specialized, special, and new” little giant policy. If these opportunities can be seized, China’s chip industry may usher in a golden period of development.
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