Why China's chip industry stagnates

The problems that have emerged in the development of the chip industry are currently hanging high on more emerging industries. How to avoid the same problems from being replicated, and more need to be solved from industrial support policies and systems.

The problems in the development of the chip industry are not unique.

Since 2009, in the background of a new round of science and technology-driven industry development, the enthusiasm of the chip industry, which has gradually faded throughout the country, is shifting to strategic emerging industries.

In this new round of industrial enclosure boom, the market and institutional risks of the neglected high-tech industries in China once again lurked in them, and may lead to the emergence of more cores.

New "one industry" surge

Strategic emerging industries have replaced "one industry" as a new upsurge.

Since 2009, the government has introduced policies for the development of strategic emerging industries, allowing local governments that are dying for the chip industry to find a new "science and technology industry direction." The accumulation of integrated circuits such as photovoltaics, LED, and new energy, which has been integrated into the integrated circuits of the past and “have fewer investments, yield faster, and generate more profits” has become a new trend of local governments.

During the two sessions in 2010, representatives from the National People's Congress stated that the development plan of the central government's strategic emerging industries has not yet been introduced, and local governments have already moved forward. There are 18 provinces and districts proposed to build new energy bases, and nearly 100 cities put solar energy in As a pillar industry, wind energy has even been formulated by individual provinces and cities as a new energy industry plan with hundreds of billions of yuan and trillions of yuan in value.

In this process, the story of the chip industry is repeating itself: the temptation of local governments to be promoted by upgrading industries, improving employment, and increasing fiscal revenues, and taking great risks in pursuing the responsibilities of investors and even companies, similar to that of chips. Most of these industries are also high-risk industries where foreign capital occupies technology, market, and funds, and require large amounts of capital to invest.

In many areas that are being speculative, as key technologies are controlled by people, domestic companies can only compete at a certain point in the industry chain and cannot form complementary industries. For example, in the Internet of Things, many devices and applications with “domestic” signs are still using the core chips and sensors of foreign brands.

Be alert and catch up with the strategy

The intention of the country's development strategy for emerging industries is to achieve a catch-up strategy for the long-term development of the country’s overall strength through a new round of industrial changes driven by science and technology, to achieve industrial restructuring, but due to the influx of local will, the implementation of the national catch-up strategy has It may evolve to distort the cause of the market.

“In the national economy of developing countries, there is likely to be greater and more frequent cyclical fluctuations and economic crises than in developed countries.” In a report completed in late 2009, Peking University’s experts at Beijing University stated that due to the large number of investment by developing country companies, Industries that have matured in developed countries, have relatively stable technologies, and have already existed in the product market, have "advantages in later developments" that have enabled them to analyze the existing technologies and market conditions in the developed industries in the developed countries, making it easy for the prospects of the industry. Properly predicting and reaching consensus, and triggering a large influx of businesses and capital into industries with good prospects, there has been a “surge of investment”.

“Developing countries often use investment to stimulate the economy, and the sources of investment are relatively dispersed, which further increases the scale of investment and exacerbates the difficulty of estimating and coordinating other investment situations,” the report said.

This phenomenon has appeared in the chip industry and is now erupting in strategic emerging industries.

Another problem is that, due to the industry's influx, the state's support resources for the industry are diluted, or because the interests are difficult to balance and continue to push back, so as to miss the prime time for industrial development.

In this regard, some experts believe that a viable model is that the government can first let the company perform a round of market elimination, and then choose its winners to give support. Another advantage of this move is that it can circumvent the lack of direct market support for the enterprise.

However, the current situation is that in technology and strategic emerging industries, industrial support is still more limited to “better benefits” and early support “one-hit sales”. When the company develops to a larger scale, it needs to face international competition. When the opponent’s market represses and capital infiltrates, the country lacks systematic protection and support.

An expert said that the national ministries and finances at all levels often in fact subsidize the industry, but these subsidies are too scattered and the amount is generally less, and for start-up companies may be timely rain, but for the most thirsty high-investment industries and Leading companies in the industry, such subsidies are very tasteless.

During the interview, a local government official had a lot of emotion: Looking at the investment in China's high-tech industry, from Shen Tian Ma, SVA, BOE to SMIC, these companies in the core industrial chain card position may have already fallen, or rely on Local governments and enterprises are struggling with their own efforts and fighting with international competitors can only be alone.

Give policy less than market

However, whether the state's support for strategic emerging industries can be more diversified is worth looking forward to.

Previously, a question worth paying attention to was why are the same investment projects driven by local governments and enterprises. The domestic auto industry in China has seen many successes, but the chip industry has been stagnant so far?

Analysts believe that one of the important reasons is that China’s huge domestic demand market has boosted the growth of many domestic automakers. In the chip field, the largest PC, communications and memory markets, and a large number of high value-added high-end markets have been Occupied by foreign companies, they can only survive in the cracks, with a slight positive resistance, that is, they will be severely cleaned.

One example is DRAM. This area has been firmly controlled by Samsung. According to sources in the chip industry, in the process of DRAM industry development, many of the price fluctuations and even the crashes are behind Samsung's presence. Based on technology, capital, and market scale advantages, Samsung can eliminate all threats in the DRAM field by all other manufacturers.

“Keeping a look at domestic demand is the best way,” said Qiu Shanqin, director of the Software and Integrated Circuit Promotion Center of the Ministry of Industry and Information Technology. In the past 10 years, the Chinese chip industry has been taking the path of giving up the market and giving up resources for technology, but now the domestic industry base and The market situation has changed and this strategy is no longer the best policy.

“I think that the supportive thinking of the chip industry should change. We must look at the domestic market and provide more application markets than financial support.” Qiu Shanqin said that the strength of the enterprise still depends on the market. In China, many have developed better. Chip makers are using ID cards, bus cards, set-top boxes and other product markets to gain development. In the future, such policy promotion should be able to try to further promote, such as follow the successful model of home appliances to the countryside, the car to the countryside, to encourage Chinese users to use the policy Local chip products, "This approach is more reasonable and effective than financial support."

"Give money to give policy, give policy to market." Said Qiu Shanqin.

Wang Changlin, director of the Institute of Industrial Economics and Technology Economics of the Macro Development Institute of the National Development and Reform Commission, once stated that in the 1980s and 1990s, China was more of a direct financial support for enterprises, and the target was mainly state-owned enterprises. In strategic emerging industries, More through a more diversified approach, in addition to the government to provide funds to support the market, and guide private funds to enter, but also through policies such as government procurement, encourage applications, create a good market environment, and promote industrial development.