China's IC design industry has developed rapidly in recent years, with an increase of nearly 10 times in five years, and its growth rate ranks first in the world. In addition to the common problems faced by the semiconductor industry such as investment and financing system, talents, and entrepreneurial environment, the development of China's semiconductor industry is a serious problem. In terms of applications, consumer electronics, smart cards and card readers occupy most of the application market; In the direction, IC card chips and audio and video decoding chips account for nearly half of the market. In addition, how to integrate China's IC design industry and how to protect intellectual property rights are also worthy of discussion by the IC design industry.
IC design industry development is seriously "partial"
Although China's IC design industry has achieved remarkable results in recent years, there are also various contradictions and problems in its development process. The most outstanding performance is the "partial" problem in industrial development.
At present, the application market for IC design companies in China has covered many fields such as consumer electronics, communications, computers, industrial control, electronic instruments and smart cards. However, the performance of domestic IC design companies in these markets is not "going in the same direction." From the perspective of the revenue structure of the domestic IC design industry in terms of application market, consumer electronics, smart cards and card readers have been the two largest IC product applications in recent years.
In 2007, the consumer electronics sector accounted for 40.2% of domestic IC design revenue, and smart cards and card readers accounted for 25% of total revenue. These two areas account for 65% of the overall revenue of the domestic IC design industry. In these two fields, the development of the smart card chip market is mainly driven by the second-generation ID card replacement, and the consumer electronics chip market is mainly concentrated in the low-end fields such as digital products, small household appliances and electronic toys. However, few high-end manufacturers such as flat-panel TVs, smart home appliances, and inverter control are involved.
In the product direction, the current "IP" phenomenon in the domestic IC design industry is also obvious. In 2007, only IC card chips and audio and video decoding chips accounted for the entire IC design industry sales. With a revenue of 43.8%, in addition to these two categories of products, domestic IC design companies' products are mainly concentrated in communication ASIC (application specific integrated circuit) chips, power management chips and MCU (micro control unit) and ASSP (standard general purpose chip). ). LCD (liquid crystal display) driver IC, FPGA (field programmable gate array), flash memory products, chipset, graphics card and other high-end general-purpose products domestic IC design companies are still not available.
It is precisely because the domestic nearly 500 IC design companies focus their business in a few areas and products, resulting in increasingly fierce internal competition in the domestic IC design industry, and is highly susceptible to fluctuations in individual markets. In 2007, the overall development speed of the domestic IC design industry slowed down noticeably, and the performance of individual enterprises even showed a significant shrinkage. This is a prominent reflection of this contradiction.
Big companies are not strong, small businesses are not dead?
In addition to the "partial", the common problems of the semiconductor industry, such as investment and financing systems, talents, and entrepreneurial environment, are also the must-have for the development of the IC design industry. However, it is not just these basic problems that plague the current domestic IC design industry. Some new features and new trends that have emerged in the rapid development of semiconductor technology and rapid changes in industrial structure have also become new problems that plague the current development of the domestic IC design industry. "Integration" is undoubtedly a hot topic in the current domestic IC design industry. It is true that more than half of the nearly 500 IC design companies in China have more than half of them, and the “partial†has led to a relatively small market space and a fierce price war, so they integrate industry resources through “merging similar projectsâ€. The call to eliminate vicious competition naturally rises. However, we observed through the observation of the living conditions of domestic IC design companies. The survival status of large enterprises is not superior to that of small and medium-sized enterprises. On the contrary, the survival toughness of many small and medium-sized “grassroots†enterprises is sometimes better than that of large enterprises.
In the surrounding areas of Shenzhen, dozens of IC design companies with annual revenues of over 10 million are not uncommon. These unseen companies are quietly enjoying the benefits of “near water towers†​​with the global IT manufacturing capital. On the contrary, the team size of more than 300 people, the cumulative investment of nearly 100 million US dollars in Kaiming information, "one person goes to the sky" in the night, this can not but cause us to think. The semiconductor industry has its own development characteristics, and the Chinese market has unique game rules. The competitive strength of enterprises is not fully reflected in the scale of the big and small, whether it conforms to the development trend of the semiconductor industry, whether it is more important to grasp the rules of the game in the Chinese market.
IC design companies no longer need complex organizational structure and large personnel scale. At present, the fierce market competition in the domestic IC design industry has accelerated this evolution process. The ever-compressed profit margin makes it difficult for IC design companies to maintain a huge Staff team. Compared with “bigâ€, “lightweight†and “flexibility†are more important to IC design companies. Under such circumstances, the integration of China's IC design industry is not simply a merger of similar items. How to find the ideal combination between "divide" and "combination" also requires the in-depth exploration of IC design companies.
Development model is worth exploring
With the rapid advancement of semiconductor technology, the life cycle of IC products is continuously shortening, and time to market has become an important factor in determining the success of a product. At the same time, the cost of research and development of chips is rising. How to minimize the time-to-market while minimizing the cost of R&D has become a top priority for the survival of IC design companies.
The current game rules in the IC design market are very similar to the domestic mobile phone industry. It is undeniable that the so-called "cottage machine", a unique industrial phenomenon in China, has achieved amazing success. The "cottage machine" has already begun to enter the overseas market on a large scale after sweeping the domestic mobile phone industry. MP3, MP4, games, navigation, Bluetooth, dual card dual standby and many other new technologies are often first integrated and applied to the "cottage machine".
Compared to brand new mobile phone products, it takes several months to develop. A “cottage machine†often takes only half a month from development to launch. In addition, the “cottage machine†can open tens of thousands of orders, can imitate any style that customers are interested in, and can rely on brands and advertisements. Quickly enter the market. Coupled with its price of more than 50% lower than the brand mobile phone, it is no wonder that the "cottage machine" can be so successful.
Flexibility and economy are also important factors in the IC design industry. Similar to the modularization of the "cottage machine", the use of mature IP modules "æ”’" chips. Both the development cycle and R&D investment are significantly less than the ICs that have been "made" from the underlying design. In addition, the phenomenon of "imitation", which has plagued the IC industry for many years, is still an unavoidable problem in the current IC market.
As the speed of IC product upgrades continues to accelerate, its life cycle has even been squeezed to a shorter time than the time it takes to apply for a patent for the product, making it difficult for companies to rely on intellectual property to protect their market share. SigMatel won the lawsuit but lost the market and eventually got the outcome of the acquisition. This case is worthy of our research and thinking.
The development of China's semiconductor industry is a serious problem. In terms of application, two major applications of consumer electronics, smart cards and card readers occupy most of the market, and other applications have a small share.
(Author: CCID Consulting Center for semiconductor integrated Li Ke)
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