release time:2022-03-08Author source:Song ShiqiangBrowse:1018
Hi everyone, I’m Song Shiqiang from Kinghelm, the “street vending economist” of Huaqiang North Commercial Area in Shenzhen. As our ancestors said that “A diamond is forever, while a joke spreads through ages”, I will continue our topics today. Let’s talk about SWOT analysis.As we all know, China hasmuch strength for integrated circuit, such as its huge market, rapid development speed, and so on; while weaknesses also exist; for example, we have a weak foundation, and most companies in this industries usually scatter, and are disordered, small and poor. This is the very special phenomenon at present. Meanwhile, we have many opportunities: No. 1: Huge development potential. We had poor performance and no resources previously; No. 2: This is a great opportunity for domestication NOW by pooling our wisdom,because many foreign companies hinder our further development. The crisis is that there are few companies sticking to the end, because of the huge investment and long development cycle of integrated circuit industry. At first, all companies rush into the circle without rational analysis or persistence, finally losing money and destroying industry ecology. We have proposed many concepts in this industry in recent years, such as smart manufacturing, UAV (unmanned aerial vehicle), robot, Beidou BDS/GPS, wearable devices and AI and VR (I call it AV), but few enterprises earn profits in the process. For example, we Kinghelm (www.BDS666.com) has been investing in Beidou GPS navigation module, Beidou GPS antenna connection line, WIFI antenna, 4G, 5G antennas, connectors and so on, but we earn a few after several years of hard work. Those who worked on Beidou circle were either incorporated by central enterprises in weapon industry, aerospace industry and other industries, or went bankrupt, except me, an “entrepreneur who sticks to the industry by selling his house all the way”.
1. Strength Analysis
One of China’s strengths is its huge market. First, Chinese mainland has gradually grow into a huge consumer market of electronic products, and secondly, the volume of exporting business after production and processing in China is also very large, as Professor Wang Zhihua from Tsinghua University told me. With a certain market volume and part of R & D, we are sure that our domestic technologies and industry will upgrade and advanced technology concepts will be transformed and applied into practice easily. We could also cultivate a large quantity of talents in this process. It's definitely a very good deal to exchange market for talents, development and technology.
The second is China’s rapid economic growth. China ushers the fastest growing economic speed and has the world’s second largest economic size over the past dozens of years. We also have positive and compound growth. In other words, our whole industry chain and ecological chain develop harmoniously, and usher symbiotic growth and positive circulation. This round of fast development also brings the growth of R & D, talents and capitals and it stimulates the development of integrated circuit industry as well.
The third is China’s huge consumer market. As the president of Kinghelm and also the best “stall economist” of Huaqiang North, I’m good at analysis from economic perspective. Huaqiang North electronic market was locked down due to COVID-19 some time ago but we all set up stalls along streets. The above actually reflects the massive consumer market in China. Premier Li Keqiang said on the Two Sessions that we still had 600 million people with monthly income lower than RMB 1,000. It was also said there were about 900 million people with a monthly income lower than RMB 2,000. This number is equivalent to the total population of the entire Europe. Only by strengthening reform and opening-up, emancipating the mind and stimulating people’s creativity can the society become more vigorous and the country become more competitive. The corresponding increase of people’s income and consumption upgrading will help China’s economy develop rapidly in a new round.
The fourth is our huge development potential. The huge potential is mainly due to our poor foundation previously and our big gap with powerful countries such as European countries, the US and Japan. We can learn successful experience and lessons to avoid loss and take a shortcut. As the development momentum rises, we can achieve fast development thanks to our large volume and energy. It means “we must comply with the latest trend” or “those standing on the highest point” as said by Lei Jun, Xiaomi’s president. We Kinghelm and Slkor stand on the point, too!
2. Weaknesses Analysis
The first is our weak foundation. Before the founding of the new China, China was a semi-colonial and semi-feudal country of poverty and weakness, and basically had no any industrial foundation. After liberation, we used the industrial system of the former Soviet Union according to the call of Professor Zhou Zucheng from Microelectronics department of Tsinghua University. Mr. Zhu Yiwei from Tsinghua University once told me that China's integrated circuit started relatively early, and was even better than Korea’s and Japan’s integrated circuit industry in 1950s and 1960s. But we finally fell behind because of insufficient comprehensive national strength and the Cultural Revolution. After the reform and opening-up, the industry started to rise again and has yielded achievements by complying with the third industry transfer. We still need to accumulate strengths in various aspects. I’d like to recommend a book called Review of Integrated Circuit Industry in 50 Years written by Zhu Yiwei from Tsinghua University. Zhu elaborated his ideas in this book.
The second is IPRs (intellectual property rights) protection. Respect for IPRs should be intensified in China. We plagiarized foreign products without digestion or further innovation, so foreign companies feel disagreeableand even made more efforts to boycott our industry. The above problem is also unbeneficial to us, too. The domestic situation is also not that good, especially small and medium-sizedcompanies. They have no IPRs protection awareness, relevant knowledge and any measures in this aspect. If IPR are not protected, no one will invest in original R&D and the most basic research. The final result is that we have no innovation and development. It is impossible to improve technology or make innovation, if everybody just copies from each other. Finally all the enterprises produce the same commodities and compete with a lower price. We, the Kinghelm (www.bds666.com) have spent several years to obtain several patents for Beidou GPS navigation antenna connection line. My friend Dr.Williams said the domestic WPS was still not applied on large scale because of Microsoft Office pirating in China, although WPS charges no price.
The third is that we have no a long-term goal. We have a quite impetuous society now. Frankly speaking, most channels on Tiktok and Kuaishou live streaming, Headline Today and Baidu are all junk information and they can do anything for the purpose of winning traffic. For example, the girlfriend of a man surnamed Wang sells diet drugs on Moments of WeChat. I will not tell you her name, because I’m afraid that Wang will be upset about it. What hope can there be for a country or a nation, if there is too much superficial information? I also organized live streaming on Huaqiang Lecture and will also on Lichuang E-commerce (WWW.SZLCSC.COM). Through live streaming I express some valuable information through some ways that are easy to understand. All valuable things must be those that are summarized after a long period of time so we must be always persistent. This is particularly true for our integrated circuit industry. We must keep making progress. TSMC has still made efforts, although it is already a leading enterprise and Morris Chang is still making efforts to make exploration, reform and adjustment at his 80s.
Live streaming of Mr. Song from Kinghelm
Here I’d like to share some complaints. On the way to work today, my carwas nearly scraped by a Meituan takeaway food deliveryman traveling on the wrong side of road. Weibo pushed the latest trends of several lesser-known female stars, people in elevator all played Tencent games, and 360 Window popped up some ads that men need to reinforce their kidney while women need to enrich blood after I opened the computer. While I presided over a meeting, some female robots from Ping An and Hewlett-Packard called me for 18 times to recommend loan to me. When I searched on Baidu, there were hundreds junk information appearing. Do these head companies have the basic bottom line? Is it possible for these so-called high-tech companies compete with Google’s Android system and Falcon rocket of Elon Musk?
The fourth is that we lack strategic planning. The concept of integrated circuit industry could help officials to show their career achievements in official career. Therefore, local governments are doing everything they can to make the best use of this concept. The process planning, initiation and approval of relevant central authorities is actually messy. As my friend in Beijing complained that there were20 projects of semiconductor production line in the state, mainly in IGBT, 3rd generation of semiconductor SiC gallium nitride. The situation is actually the same as Photovoltaic (PV) power in previous years. However integrated circuit requires high demand for key resources such as capital, talents, industrial ecology and supply chain. Thus, over-investment in this industry will finally leave some problems to our country, wasting taxpayers’ money, national resources and time. A businesswoman of Huaqiang North, who sells second-hand original IC said that it was driven by interests and also meat virtue loss; it was impossible to yield any achievement and a waste of resources!
Development opportunities for integrated circuit. I still put all my efforts in Kinghelm (www.bds666.com) regardless of the tough environment, because, first, the development potential is huge. Second,the containment of foreign countries for our products also means good opportunities for domestication; third, China has a complete industry system and the last is the huge amount of investment.
First, huge development potential. By comparingthe data in all links of the semiconductor industry chain between China and foreign countries we could see a huge gap. The US brands such as Texas Instruments TI, Qualcomm, Intel and so on and they are all leading companies in the whole industry. As forhigh-end simulator, RF and other aspects, the US has brands such as XILINX, ADI, Skyworks and so on and our domestic peers try to catch up with them. Dr. Wang Haili, from Hercules Microelectronics (Beijing) Co., Ltd. and concentrating on FPGA graduated from the same school with me but later than me. His company still sticks to this after going through twists and turns, and their products are quite good and have been recognized by the market and capital. Pangomicro, Gowin Semiconductor and other companies are also engaged in FPGA, and it is actually a very good small ecosystem. And their development potential is the gap withthe US companies plus China’s massive incremental market. There are more than 1,800 domestic integrated circuit design companies, and many of them have been listed. It actually means a good development momentum.
Second, containment by foreign countries. It’s a good thing once judged from other perspective. Because of the above, the state offers preferential policies very much and a chance is given for our domestication. For instance, lots of customers have been testing samples of Slkor (www.slkormicro.com) SiC product, MOS field-effect tube applied to dishwater and electric tool. In addition, domestic manufacturers have a chance to develop high-end products, upgrade technology step by step to occupy the market. There is a company named Zhongyilihua (www.ccfeihua.com), and it is a team from National University of Defense Technology. They started their own business and applied RISC-V framework to their products without any IPR conflict with the US. It has shipped phonetic chip with low-power-consumption in bulk, and these products are applied to intelligent lighting equipment and intelligent home. They also can optimize instruction set and customize according to requirements of customers, achieving “independent and controllable” affect. This is actually the development path for tech companies.
Slkor Product MOS Field-effect Tube Series
Third, perfect industrial system. Kinghelm has lots of talented friends. One of our friends, Dr. Bryant Niu once said that China hadabout 700 industrial systems among over 1,300 industrial systems classified by the United Nations so we are the country with the most complete variety in the world. In the epidemic, we could supply masks, medical gloves, mask machines, ventilators and other equipment made and increased their output very quickly. The above cannot be separated from China’s perfect industrial system. Resource matching and activation of social organization are comprehensive strengths for developing integrated circuit. Uncle Bao, friend of Uncle Shou, and Dandan (Li Dan), friend of Wang Zijian are also my friends. Our ancestors said that “talk will be easier when a man and a woman work together”, so I invited several businesswomen to discuss with Dr. Niu, giving him sense of happiness and fulfillment.
China has a large capital base. For example, China’s large funds for Phase 1 integrated circuit is RMB 120 billion and they are used for large projects. In addition, a large number of wealth has been accumulated by nongovernmental organizations over the past years due to rapid development of economy, and a lot of hot money is idled. Thus, government and society shall lead these capitals well, and strongly encourage private equity funding of integrated circuit joint ventures.
I also heard from my group friend Susana Cuihua that domestic companies such as Xiaomi and Vivo started to hunt for talents specialized in mobile phone chips; Alibaba has spent years on developing T-head and Harmony HMS operating system of Huawei will also be launched. Treatment of those specialized in chip industry is also improving and I’ve heard that the annual salary of fresh undergraduate could reach RMB 300,000. It was said that “stock market in America and house market in China” are booming. I truly believe that as a former one. Jason Fan, the owner of “Chip Master” and a friend of mine in Singapore, once told me that the stock of integrated circuit was the only stock that was worth investing in the Chinese stock market. Thus, “SMIC” comes to support domestic stock market. In recent years, integrated circuit companies occupy a huge percentage in companies launching IPO in domestic capital market. It actually means social capital transfers to integrated circuit industry in large scale.
The greatest crisis lies in the huge capital invested for integrated circuit; for instance, a foundry factory costs billions of theU.S. dollars. SMIC has invested so much money but it just has started to earn profits in recent years. There’re many other aspects of investment, such as human resources and other resources. I invest Slkor (www.slkormicro.com) by selling houses while others start business continuously or by selling houses. Huge investment is needed in developing new products, brands and market. I wrote a joke a few year ago that there was an engineer who sold his house to start a business; and ten years later, he succeeded and used the money he earned to buy the house he sold. Protagonist in the first half of the story is me, while I am not sure whether I can succeed or not. So, I shall try hard to write jokes to advertise our MOS field-effect tube.
Second, long cycle. For example, Slkor has operated for 5 to 6 years but it hasn’t earned profit yet. Lots of businessmen have an idea of running business like setting up a stall. They want to earn money as long as the stall opens. However, integrated circuit industry it is different because it entails investment and accumulation for a long time, as well as talents, technology, equipment and market. Professor Zhou Zucheng from Tsinghua University told me that efforts of generations were required before China’s integrated circuit industry reached the level of international advanced companies, from the first generation including Chen Datong, Wu Ping, Wei Shaojun, Zhu Yiming, Deng Feng and other talents. They came back to China from overseas giving up excellent pay and conditions; the second generation including Zhao Weiguo, Yu Renrong, Lv Huang, GaoFeng, Zhao Lixin, Liu Weidong graduated from Class Radio EE85 and Zhao Haijun from SMIC; the third generation includes a large number of overseas students who have returned to China in recent years to start businesses and work for the country, as well as other entrepreneurs, who will stamp their names on the page of history. Only through the unremitting efforts can China’s integrated industry catch up with and even exceed the leading countries.
Third, uncertainty. Uncertainty is caused by the huge investment and long cycle time, includinguncertainties of market, earnings, environments and other factors. The success of starting a business depends on your effort, and also sometimes on you luck. Integrated circuit industry has a bright future and also provides enough time to make exploration. I have some personal ideas about the large funds. Dr. Williams Goushengzi, a friend in WeChat group named BDS666 once said that no one bid for the new material funds invested by government for 3 to 4 years, because the responsible person in charge of these large funds were from management without the knowledge of industry and they just focused on financial indexes. However, lots of new material companies cannot make profit and even lose money in a short time, so they really need the support of the state’s preferential policies. Without a scientific evaluation system, money efficiency will be lower. By contrast, accurate investment can reduce uncertainty for a start-up company.
Fourth, homogeneous competition. If Jew runs a gas station in desert or opens a Pizza store or hotel nearby, they all can make a lot of money. If Chinese runs another one or two gas stations by following them,these stations may go bankrupt. Everything will be in vain withoutthe idea of differentiated competition. The competition between local governments is also homogeneous. For instance, Xi’an and Chengdu will follow Nanjing which sets up a wafer plant with same technology and market, but the result is no business and no profit. That is a big problem in China.
Difficulties and Glories
1. Obstacles and Difficulties
The first obstacle is that several key points of industry chain are restricted, or in other words, it is “throat cutting”. Western countries worked together to make sanction against us, including EDA software, most basic material, advanced equipment (such as ASML mask aligner), and the latest technology. They refuse to sell them to us, even if we offer them a high price.
The second is weak industrial foundation. China has depended on agricultural for thousands of years with a very weak industrial foundation. Although many industries start to emerge in recent years, the quality is still worse than expected and they need to make improvement in the long run. For instance, steel production quantity has increased to satisfy the capacity requirements but their quality is still poor. We need to focus on high-grade, precision and advanced technology.There is a big gap between domestic companies and foreign ones such as GE, Siemens, Oracle, SAP, Microsoft and Android in terms of industrial software, database and operating system and also between our machine tool and those from developed countries. Experts said that Shenyang Machine Tool needed 40 years to reach the level of Japan’s Fanuc of Japan. We have also a big difference with Germany’s Zeiss, such as a series of measuring devices including coordinate measuring machine.
The third is poor research basis. Ren Zhengfei from Huawei said that we lacked enough mathematicians, chemists and physicists for our chip undertakings and our research basis was very poor. Colleges and universities are also impetuous and few teams choose to engage in basic research in a down to earth manner, because it is hard to gain and industrialize the results and the government is also unwilling to give practical supports. Some local governments work together with colleges and universities to run laboratories only for the purpose of GDP of project industrialization. Who can really concentrate on basic research in such an environment? Everybody is busy issuing papers, applying for academic titles or project subsidy or earning money for buying an apartment or sending their kids for training classes. Personally speaking, I also believe we lack aestheticians and philosophers. For instance, Apple’s products are beautiful and easy to operate. You can operate it even without consulting operating instructions. Our government shall make adjustments in opinion guidance and evaluation system.
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The fourth is craftsmanship spirit. Craftsmanship spirit is needed in the entire product manufacturing process, ranging from function realization to stable performance, from sample to volume production. It costs a lot of time to improve details, and improve and optimize processes. Craftsmanship is required in the process. The biggest problem is how we can hold it up and create high-quality products under such a fast development pace of the society.
The fifth is China has not yet integrated into the world’smainstream industrial system. After joining WTO, China could export its products much easier but it still plays a role as OEM factory doing burdensome work only. China has only a few companies with R & D ability such as Huawei and DJI. Will there be a big difference if there were 10 to 20 or even 50 companies like Huawei in China? Bank and administrative monopoly companies rank the first in China’s stock market and they are rich after earning profits from small and medium-sized enterprises; in addition, head companies such as Alibaba, Baidu, Tencent, 360, Headline Today and Meituan exploit small and medium-sized enterprises in various ways. Technology companies ranking the top in the US stock market are fabulously wealthy!
1. Hope and Glories
There is no doubt that our future is hopeful and glorious. As we start to lay emphasis on integrated circuit after learning a lesson for years, the industry will be improved gradually. We didn’t have the conditions previously but we do nowadays. With diligence and high social efficiency, we will surely accumulate wealth. I Local residents in Europe and South Africa are lazy, and it is quite normal if they could play football well. But we’re better than them in developing integrated circuit industry.
China has strong social mobilization capacity and abundant capitals. Integrated circuit industry is a capital and technology intensive industry. Its success in Korea and Taiwan (China) cannot be separated from the full efforts of the state or region. We have enough capitals and a powerful government so industry development would be efficient. Our mobilization capacity can be best reflected by our fight against COVID-19.
With an enormous population, so many talents and a large market size, we could surpass the formers although we start late. For instance, the land and population of Shanghai is twice higher than those of Tokyo, while the GDP of Shanghai is just half that of Tokyo. It means huge development potential.
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Moore's Law and Shannon's law have already reached their limits for integrated circuit. We can understand it as below: In front of us there is a wall, and we still have a long way to go before reaching it but our rivals run slower and slower.We can catch up with and even exceed them by advantages in size and mechanism.
China will regain its strength and stand out among all countries worldwide with its over 5,000 years of history and great civilization. Chinese culture develops continuously, so is our country. This is actually incomparable for other ethnic groups of the world. It is culture, not force, economy ortechnological resources, that enables a country to become the winner among the rest ones. We are glad to see that the Chinese from all over the world use various languages to cherish the memory of their life in the great China and recite the same poetry in various dialects. Culture and spirit will never die. I hope we will work harder and strive for the prosperity of our country and the happiness of our people!
This article was written by Song Shiqiang, general manager of Shenzhen Kinghelm Electronics Co., Ltd. I’d like to extend my gratitude to Professor Zhou Zucheng, Professor Wang Zhihua and Mr. Zhu Yiwei from Microelectronics Department of Tsinghua University and Mr. GaoFeng from Stony Creek Capital, Mr. Wu Bo from Li Chuang E-commerce and Mr. Wu Shaowen from Ittbank for their support and guidance in writing.
Note: The article was reprinted online, and IPRs protection supported. Please note the original source and author when reprinting. In case of any infringement, please contact us and we will delete them immediately.
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