Tsinghua University Wei Shaojun: How does China complement the CPU this ring?

Absrtact: This big fund has completely overturned this model, is the National industrial Investment system revolutionary reform and the innovation. Instead of providing all the capital, the state is leveraging the country's money to pry into larger social capital. Newspaper reporter Chen Baoliang Beijing report

This big fund has completely overturned this model, is the National industrial Investment system revolutionary reform and the innovation.

Instead of providing all the capital, the state is leveraging the country's money to pry into larger social capital.

Newspaper reporter Chen Baoliang Beijing report

2014, the watershed of China's integrated circuit industry.

April, "National integrated circuit Industry Development Platform" released, September, 120 billion national integrated circuit industry Fund was established. The government has shot, China to reshape the core of the information industry-integrated circuit industry.

The whole industry chain was lit up. Soon, the national large fund quickly assembled 98 billion yuan. At the same time, Beijing, Shanghai, Hubei Local governments have set up local funds, the total size of 70 billion yuan. November 3, China's largest, the world's sixth-largest chip-seal testing enterprises in the large fund to provide 300 million U.S. dollars under the support of the acquisition of the world's fourth-largest testing company Singapore Star Division Jinpeng.

In fact, before this, the sense of smell of the central enterprises have already shot. In June 2013, the Violet Group issued an offer of about 1.8 billion dollars to the exhibition, and in November, the Purple Light group again announced a 900 million dollar takeover of RDA.

March 2014, the Pudong branch to the U.S.-listed LAN Technology issued a takeover offer, and eventually to 680 million dollars to complete the LAN technology privatization. August, Qing-core, Pudonko investment bid for the acquisition of Howe Technology, 1.78 billion U.S. dollars. These two acquisitions, behind the scenes, are Chinese electronics. In addition, China Electronics is also working with the world's fifth-largest chip design company Marvell to discuss cooperation matters.

The huge layout of the central enterprises, Intel, TI and other international giants also began to overweight the Chinese market. Intel invested 1.5 billion U.S. dollars in the purple Light, and in Chengdu to invest 1.6 billion U.S. dollars to build advanced technology packaging workshop. Similarly in Chengdu, TI also selected 10 billion yuan to build the plant plan. And the chip giant Qualcomm will be its 28mm chip to SMIC manufacturing production.

"In the next 10 years, China's integrated circuit industry will grow in mergers and acquisitions, and gradually become the focus of the global integrated circuit industry." January 14 Night, the reporter interviewed Huashan capital founding partner Chen Datong.

Chen, the first batch of students who entered Tsinghua University after the "Cultural Revolution", was the first batch of ph. In the 1995, Chen Datong with friends in the United States to set up a omnivision, dedicated to CMOS image sensor chip, and won the Japan's long-term monopoly of the market, and to lead the market so far, almost all of China's mobile phone companies are omnivision customers.

In July 2000, OmniVision in the United States, and Chen Datong returned after the listing, and in 2001 opened the communications. 2007, the exhibition in the United States listed, and Chen with the exhibition after the listing Jiliuyongtui, plunge into the venture.

Chen Datong first joined the Northern Lights, after the founding of the Huashan Capital, leading a series of integrated circuit investment. 2013, the Beijing municipal government set up the first 30 billion local integrated circuit industry fund, Chen Datong and its team participated in some fund management work.

Witnessed the past more than 30 years of China's integrated circuit industry changes, growth, competition and bottlenecks, Chen with the future of the magnificent full of expectations.

The big fund is the revolutionary innovation of the National Industrial investment

"21st century": In the past two years China's integrated circuit industry has been unusually active, a large-scale mergers and acquisitions, the Government issued relevant policies, but also set up a large number of billions of large-scale national fund, more action is still quietly fermentation. How do you evaluate the current situation of China's integrated circuit industry? How to understand the government's layout logic?

Chen Datong: China's first integrated circuit industry, are relying on the planned economy era of some state-owned enterprises, research institutes to support, in the global Open competition era, most of the market eliminated. Later the country in the 90 's launched the famous 908, 909 project, but also failed to solve the problem. The fundamental reason is that the state investment model under the planned economy is not suitable for integrated circuit industry.

However, in 2000, two events occurred. Shanghai United Foreign and social capital in Zhangjiang established two international level of integrated circuit manufacturing plant-SMIC and Acer, are two truly market-oriented enterprises, and the State Council 18th, "to encourage the development of software industry and integrated circuit industry," issued a number of policies. This attracted a number of turtles returned to business, led to a wave of entrepreneurial, private capital, venture capital, combined with local government incentives, many integrated circuit companies, a few years have appeared more than 600 chip design companies, during this period, the National Ministry of Electronics Development Fund, major scientific and technological special, The 863 program also provides a lot of support.

For more than 10 years, this group of enterprises to Amoy waves, the growth of a group of leading enterprises.

However, into the 2013, China's integrated circuit industry began to appear two bottlenecks. First, the investment of manufacturing cannot keep up, now make investment to reach Bai, and within 5 years cannot be profitable, so social capital mostly exits this field. Manufacturing capacity, technology can not keep up with development, the vast majority of design companies have orders to get overseas to produce.

Another bottleneck is mergers and acquisitions. Industry development to a certain scale, mergers and acquisitions natural appearance, 2013 purple Light acquisition of the exhibition to many enterprises opened a door to the leading enterprises as a platform, the industry a series of mergers and acquisitions began to appear, which will attract more start-ups, they can grow in the future, can also be acquired.

If the past more than 10 years of market competition is the "spring and Autumn Warring States", then the next decade, China's integrated circuit industry will be the main way to the development of mergers and acquisitions, integration around these leading enterprises. This is how Silicon Valley grew up, and so did internet companies.

But to break bottlenecks and acquisitions requires a lot of capital, and a less-than-profit capital, which can only be invested by the state.

So, at the end of 2012, the Shanghai municipal government joined four companies and wrote a letter to the national leaders, and the state began to launch the integrated circuit industry. Later, the Snowden incident caused the state to more and more attention to information security, and accelerated the process.

April 2014, the "National integrated circuit industry Development platform," the official release of the establishment of a strategic, market-based operation of the Industrial fund, with the country's small money to pry, this is a revolution in the field of Chinese industry investment, turned upside down changes.

"21st century": Do you think the National Big fund "marketization"? What is the difference between the government's previous industrial support practices?

Chen Datong: In the past, state-dominated investment projects were planned economy routes. All are state investment, development plan by the NDRC, Ministry of Industry and other competent departments, and market distance is far away. The country's money is Tang, there is no clear return on investment requirements, there is no supervision of investment responsibility, the results of these investments are limited.

This big fund has completely overturned this model, is the National industrial Investment system revolutionary reform and the innovation.

First, the state no longer provides all the capital, but rather leverage the country's money to pry into larger social capital. For example, the big fund, the state's money only more than 30 billion, the rest of the money from the fund to social capital raised. The rest of the big Fund's nearly billions of dollars come from some central enterprises. All these investments are supervised. The state's money is not free, go is the form of loans, to repay the principal and interest, the other several enterprises of the injection, but also a clear enterprise assessment constraints, are required to return, so the fund must be in accordance with market-oriented operation.

Second, the voice from the enterprise dominates. National Bank, Ministry of Industry, there are still teams to participate in the formulation of strategic plans, the operation of the Fund, the National Bank's team is mainly responsible for the operation of investment projects, the Ministry is mainly responsible for industrial direction, but the government is no longer leading the direction of development plans "from the masses, to the masses

The fund management team contacted all the leading enterprises, local governments, research institutions, even Huawei, ZTE, Lenovo, Wave, Tcl and other end-users, they have a large fund strategic deployment will put forward a lot of ideas, brainstorming, you can see the real demand for the entire industry chain, and on the basis of the real market to meet the needs of investment direction.

The change is obvious. Previously, a number of national investment project meetings, the majority of participants are college professors, state-owned enterprise leaders, competent departments, few enterprises and market voice. But now, the market voice has dominated.

The "Two legs" of the big Fund

"21st century": But the company's recommendations will inevitably be more representative of their own interests, in the country's major funds investment direction, how to identify and balance the interests of enterprises and market demand?

Chen Datong: Indeed, I have read a lot of proposals, there are enterprises, local government, these suggestions, 60%-70% really from the market line, is aimed at the industrial pain point, the other 30%-40% is to represent their own interests. These phenomena are normal.

Therefore, the need to distinguish between the corporate advice, the interests of different enterprises, the various local governments to make a difference, but they reflect the industrial pain point is the same. By synthesizing all viewpoints, we can find the demand of the industrial chain. Investment planning by national funds can also provide standards for local investment.

In this way, the state can make full use of the existing talent for strategic deployment, but also to solve the lack of industrial talent, fund management personnel problems.

"21st century": Has the big fund already formulated the detailed development plan of the domestic integrated circuit industry?

Chen Datong: No, it's not exactly necessary. In my opinion, the way of the National Industrial Fund is "walking on both legs".

One leg is the national strategy leading, the main solution depends on the market way cannot solve the problem. For example, the manufacturing capital investment, advanced technology development, memory, CPU, IGBT, FPGA, DSP, such as the lack of basic devices, these problems if the country does not make strategic layout, simply rely on the market will not be. Now that the country has put forward this direction, then the industry has a lot of people who dare to think, dare to make suggestions. These are the most difficult to solve, but the whole industry can not be missing link, is the country must plan, is also planning.

For example, the country now set up the top design of manufacturing industry, first of all, to calculate how many design companies in the country, these enterprises in the next 10 years how many shipments, how much, what the process of manufacturing capacity, the current production capacity of our country how many, there are many gaps. Based on these judgments, determine how much capacity to invest.

The other leg is the market. For example, Heiss, the exhibition, the core, these design companies have their own market judgments, have their own development strategy, the law of market competition will naturally give the answer, no State intervention. There are acquisitions, which enterprises can buy, the acquisition of communication resistance, how to operate in the future, these are the market can solve the problem, but also through the market means to solve.

The big fund invests in the enterprise project, also is based on the market judgment. For example, long electric technology acquisition, is long electric technology found large fund companies, the company judged that this is a strategic investment, is a profitable investment, so large funds to provide long-term electricity 300 million of dollars. But the follow-up, long electric technology negotiations, market operations, corporate culture integration, must rely on market approach to solve.

And the big Foundation is constantly communicating with industry. As far as I know, at present, the big fund has the leading enterprise's discussion meeting has already opened at least 5 times. From the establishment of large funds, fund investment projects, investment methods, are discussed with the enterprise. Whenever the industry develops to a new stage, or a new demand arises, the National fund can understand the market dynamics through the enterprise and give a reasonable plan through the market demand.

Global IC industry moving to China

"21st century": you just mentioned that the next 10 years of development model will be around the leading enterprises to carry out the acquisition, restructuring-oriented. "National integrated circuit Industry Development platform" issued so far, the domestic does appear some soul-stirring acquisitions, and acquisitions intensified. But are these acquisitions really successful?

Chen Datong: The hottest thing at this stage is acquisitions. The capital market is always impulsive and irrational, and Chinese enterprises often like to go to extremes.

Now, many domestic leading enterprises are in the "Happy enclosure", as long as their own, want to buy, and then integrated into a platform. have been fortunate to see a number of corporate acquisition plans, can be said to be a grand strategy.

In theory, these acquisitions are feasible. But the real market in the future is not necessarily the case.

National large fund to pry the trillion capital into the integrated circuit industry, can indeed solve the problem of money in the acquisition. But of the factors that determine the success or failure of an acquisition, capital accounts for at most 20%. Acquisition process, how to communicate, after the acquisition through a variety of incentive methods to retain the team, how to integrate the two companies different culture, retain customers, reduce costs? Long electric technology to acquire Singapore company Star Branch Jinpeng, now the biggest difficulty is these.

However, the acquisition of international companies, Chinese companies in this regard almost 0 experience. Even in Silicon Valley, all the acquisitions are mostly failures, with few successes.

There will be a lot of acquisitions in China over the next 10 years, but there will certainly be plenty of acquisitions to fail. Over the next decade, market competition will be more brutal than the "spring and Autumn Warring States" of the past decade, and Chinese companies will pay tuition fees.

From this point of view, the industry now has some false, but it is also a few times more than the dead. Chaos is temporary, sooner or later will be market norms, successful enterprises can trip out a road for other enterprises to learn from. The global integrated circuit industry is moving in this way to China.

"21st Century": exhibition, Heiss can surpass MediaTek?

Chen Datong: It's possible. The biggest change in the world over the past 30 years has been the rise of the Chinese market, which is the foundation of China's emergence as a group of international companies.

In fact, the rise of Taiwan's industry, MediaTek's growth has benefited from the mainland market, MediaTek's DVD, TV, cell phone chips are on the mainland, the rise of mainland enterprises will certainly impact on Taiwan's enterprises.

Take the design industry as an example, the Taiwan region's chip design output value ranked second in the world, after the United States. In the 2000, the continent's chip design industry had only less than one-tenth of Taiwan's output. However, in 2013, the mainland design industry output value of more than 70 billion, has been close to Taiwan. It is estimated that the mainland will overtake Taiwan in 2015, at the latest 2016.

From a corporate point of view, within 5 years, perhaps Heiss, the show may also be difficult to overtake MediaTek, because the gap is too big. But after 10, there is hope beyond.

In fact, MediaTek is very anxious now, they want to participate in this change, but because the Taiwan region for the mainland investment management is strict restrictions, MediaTek difficult to do. If such restrictions are relaxed, Taiwanese companies such as MediaTek will also have a chance to blend in and grow with the mainland's integrated circuit industry.

"21st century": the Internet of things, wearable technology is emerging, which will affect the semiconductor industry? Do Chinese companies have a layout?

Chen Datong: China's IC companies rarely advertise the layout of these areas, but there are many companies in China that have been laid out for years. Just now the internet of things has not yet broken out, so the basic sound of the market is not heard.

In fact, in the Internet of things, many technologies are already mature. Can be sure that once the market outbreak, will rapidly rise a group of Chinese enterprises, they may develop their own leading enterprises, may also be the existing leading enterprises to buy.

At present, the domestic mergers and acquisitions in the enterprise-level, strategic, market areas, the future of the acquisition may be based on this emerging technology technology companies.

"21st century": What is your confusion about the development of China's semiconductor industry? You can name a person to help you solve the problem.

Chen Datong: CPU (central processing unit) is the brain of the computer, it undertakes the task of information processing, is an information society essential basic constituent cell. At the same time, CPU is also one of the key links in China's integrated circuit industry chain. How to make up this link? I think only Wei Shaojun, director of the Microelectronics Institute of Tsinghua University, can answer this question.