The purple light Group of our parent company put forward five years beyond MediaTek's goal

Absrtact: Cover story in the government tens of billions of yuan strategic funds and related policy support, the company of the mother of the Purple Light group presented five years beyond MediaTek's goal. At present, the two sides in the talent, market and capital areas are head-to-head, the fierce competition. Newspaper reporter Chen

Cover story

With the support of the government's tens of billions of yuan strategic funds and related policies, the Purple Light Group of our parent company proposed five years to surpass MediaTek's goal. At present, the two sides in the talent, market and capital areas are head-to-head, the fierce competition.

Newspaper reporter Chen Baoliang Beijing report

MediaTek, the world's fourth-largest chipmaker, is facing a far-reaching challenge, with its strength in 2013 at 14th place. (According to the IC Insights report released in May 2014).

2014, the exhibition revenue of 1.2 billion U.S. dollars, and MediaTek 2014-year income of about 6.6 billion U.S. dollars. The annual revenue is less than 20% of MediaTek's. However, MediaTek and the exhibition are the world's leading handset chip suppliers. In the field of mobile phone chips, MediaTek is now the world's second-largest provider of mobile phone chips, followed by the third.

Since its inception, also with MediaTek in the 2G, 3G mobile phone chip market many times, but most of the time the exhibition is downwind. But Zhao Wei, chairman of the Violet Group, the parent company, recently said publicly: "to overtake MediaTek within five years." "This time, the confidence of the exhibition is supported by the government's tens of billions of funding strategy, government policy support and the larger Chinese mobile phone market."

The uproar over MediaTek's stock market

Since the acquisition of Morningstar Semiconductor (Mstar) in 2012, MediaTek's share price rose from about NT $270 to NT $500 and the market value of NT $796.2 billion was once the third largest market capitalisation in Taiwan, and the top two were TSMC and Foxconn.

But this growth was halted in June 2014. At this time, coincides with the Ministry of Industry officially promulgated the "National Integrated circuit Industrial Development platform", the government has made it clear that it will introduce a number of policies, including industrial funds. The fund was formally established in September 2014 and the Fund has been prepared for over 130 billion yuan.

China wants to reshape the core of the information industry--integrated circuit industry, aiming to let "a group of enterprises enter the international first echelon to realize the leap-forward development" in 2030. Previously, most of China's chips depended on imports. In 2014, China imported chips of about $260 billion trillion, up 12% from 2013 's 231.3 billion trillion, becoming one of China's largest imports.

The Government decided to support a number of leading enterprises, led to the rise of the entire integrated circuit industry, the exhibition is regarded as China's integrated circuit industry seeded. Under this background, Tsinghua Holding's purple Light group invested 1.78 billion U.S. dollars wholly to acquire the mainland's largest mobile phone chip design company communications. Six months later, Purple Light group again shot, 900 million U.S. dollars to acquire the second largest mobile phone chip design company RDA. With two acquisitions, Purple Light group ranks among China's integrated circuit team, and has been Beijing, Hefei, Xiamen and other local government support.

Since then, the purple Light group has attracted the international strong aid to Intel. September 26, 2014, Intel Investment Violet Group 1.5 billion U.S. dollars, under the agreement, Intel will focus on technical cooperation with the exhibition, strategic layout, the two sides will jointly develop and sell a series of Intel architecture based system chips.

When the exhibition was fully supported, MediaTek's market position began to be questioned by the capital markets. In September 2014-November, MediaTek's share price fell from NT $506 to NT $427, a two-month decline of 17% and a market capitalisation of nearly 125 billion NT dollars.

By November 24, 2014, MediaTek's share price had rebounded when it announced an investment of 300 million yuan in the Shanghai Venture-guide fund. By the end of January 2015, MediaTek's shares had rebounded to more than 480 NT dollars as the news of the "2014-year income reached $6.6 billion" was positive.

However, in February 2015, the Purple Light group and the integrated Circuit Big fund, the country opens the bank to sign, obtains the big fund 10 billion yuan investment, as well as the national opening line 20 billion yuan credit limit. Violet Light Group Chairman Zhao Wei in the press conference: "The future 30 billion yuan is mainly used for international mergers and acquisitions, chip design and development", and he said the target in 2020 to achieve 10 billion U.S. dollars in output value.

At this point, MediaTek's share price hit Waterloo again. At the press deadline, MediaTek's share price fell to NT $434.

Talent Market Capital "triple war"

Of course, the impact of the exhibition is not limited to the stock market.

MediaTek's shares fell 3% per cent on the same day, March 16, when the news of Ching, the head of MediaTek's mobile chip division, was exposed by Taiwanese media.

Public data show that Ching in 2000-2011 in charge of MediaTek mobile phone chip research and development, MediaTek variety of products from its hands, has served as Chairman Tsai Special Assistant. In 2012, Ching from MediaTek and served as a consultant to a third party advisory body. In 2013, MediaTek sued Ching for "leaks" in the Taiwanese district court, but the lawsuit was not supported by the court.

By reporters to confirm: At present, Ching Wen "ban period" has been full, and has officially entered the professional exhibition, as Senior vice president. For the exhibition, the Ching of the text is helpful to shorten the gap with MediaTek.

It is reported that in 2014 years, the exhibition from MediaTek hired more than 10 employees, but in the meantime, MediaTek in August 2014 on the basis of leaks reported several of the staff. The war of talent between the two sides is fierce.

In addition, in September 2014, the Purple Light group and the Xiamen municipal government, decided to invest 4 billion yuan in Xiamen set up integrated circuit industrial park. Yanhui, the Secretary-General of the China Federation of Mobile phones, said that one of the main aims of the industrial park is to attract Taiwan's IC talent, "from Monday to Friday to work in Xiamen, weekend back, which is very convenient." ”

In 2014, the capital-backed exhibition was rapidly expanding, with the number of employees rising from 2000 to 4000, almost one-fold. In contrast, MediaTek now has tens of thousands of employees and plans to add 2000 new employees in 2015. "No matter the quality and quantity of talent, there is no small distance from MediaTek," he said. "Yanhui said.

Violet Group Chairman Zhao Wei has said that the next 5 years, the purple Light plan to invest 30 billion yuan, the team size from now more than 4,000 people expand to 15000-20000 people.

In addition, there are fierce market competition between the two sides. January 2014, the exhibition WCDMA chip to the market, and quickly in China, India, Russia and other markets to seize customers, to a very low market share of nearly 40%. At present, WCDMA Shuffle has become the main source of income.

In response, the market for MediaTek 3G is losing out, and Taiwanese media are generally worried about MediaTek's 3G market. In recent days, Taiwanese media reported that MediaTek had decided to reduce the price of 3G chips by 15% to meet competition from the exhibition. Meanwhile, the 4G chip SC 9830, which is scheduled to be released in April 2015, is also seen as a threat to the MediaTek 4G market.

According to Li Li, CEO of the Exhibition, 2014 year, the exhibition chip shipments of 450 million, of which 200 million are smart phone chips. In 2014, MediaTek's smartphone chip shipments were 350 million. In terms of shipments, the gap between the two sides is gradually narrowing.

In addition to talent, market, competition from the capital sector is more confrontational.

February 2015, the Purple Light group and the State Integrated Circuit industry fund, the core Investment management company, the National Development Bank signed the cooperation agreement, the Purple Light group obtains the National Fund 10 billion yuan to support, the National Development Bank will provide 20 billion credit limit to the purple light group. The 30 billion Yuan fund will be mainly used for international mergers and acquisitions and chip design and development. Violet Group Chairman Zhao Wei at the signing ceremony also said that mergers and acquisitions will be the most effective means of development of the Violet Group.

However, November 24, 2014, MediaTek invested 300 million yuan in the Shanghai municipal government IC Industry venture capital fund, which is mainly used to invest in Shanghai regional integrated circuit start-up companies. Then, in early March 2015, MediaTek announced that it would invest 300 million of dollars in the investment sector, MediaTek's venture capital, which is mainly responsible for investing in integrated circuit companies in Greater China, Europe, Japan and North America. At the same time, a number of people familiar with the matter told reporters: "MediaTek is still actively working, hoping to participate in the National Integrated circuit large fund." ”

It can be expected that in the future in the field of integrated circuit mergers and acquisitions, MediaTek and the Violet Group will have a more intense confrontation.

The journalist consulted MediaTek on the topic of industry competition, and MediaTek said "no comment on the relevant information about the third party", but in response to the reporter's request, MediaTek's head of the Beijing area responded by phone: "It is necessary to consult with the headquarters on whether to reply, but generally do not reply, do not wait As of press deadline, MediaTek has not yet responded to reporters.

The challenges of both sides

"If there are no major mistakes, Violet will indeed be able to earn beyond MediaTek within 5 years through mergers and acquisitions," he said. "After all, MediaTek's revenues were similar to today's Yanhui five years ago, and MediaTek grew by mergers and acquisitions," he said. ”

In 2011, MediaTek acquired the WLAN chip maker Leiling Technology, and in 2013, MediaTek completed the acquisition of the TV chip maker MStar, which earned about $700 million a year, the latter earning $1.13 billion trillion for 2013 years, and the two acquisitions, which contributed to MediaTek's annual income of about 1.8 billion dollars. The violet light with capital support can replicate this path.

"But if specific to cell phone chips, 5 years is hard." "Yanhui thinks:" Regardless of technology accumulation, or research and development investment, the gap between the two is too big. "In 2014, MediaTek's research and development investment amounted to 1.4 billion dollars, and the total revenue was just 1.2 billion dollars."

The only thing to be thankful for is that the next generation of mobile communication technology 5G commercial date probably after 2020, the exhibition has plenty of time to catch up with MediaTek before the next technological change. Moreover, over the years 2G, 3G, 4G Technology update process, the time gap between the first generation of products and MediaTek is shrinking. MediaTek's first five-mode 4G chip was unveiled last year, with shipments approaching 40 million, and the five-mode 4G chip SC9830 will also be released next month, which has now achieved mass production, with 4G technology accumulating gaps of less than 1 years.

For MediaTek, the biggest challenge is the closure of the policy environment.

Chen Datong, founder partner of Huashan Capital, the first person in the industry called China's Semiconductor, told reporters earlier MediaTek's DVD, TV and cell phone chips are all backed by the rise of the mainland market, "but it is hard for MediaTek to take part in the mainland's chip industry, which is booming as Taiwan's management of mainland investment is so closed." ”

The rise of mainland chip companies is bound to hit MediaTek. Chen Datong introduced that in 2000, the mainland chip design industry output value of less than 10% of the Taiwan region, "but in 2013, the mainland chip design industry's output value is 70 billion yuan, has been close to the Taiwan region." It is estimated that the GDP of the mainland will surpass that of Taiwan in 2015. ”

"From the enterprise point of view, the current gap between the exhibition and MediaTek is still relatively large, 5 years beyond too difficult." But 10 years later, there is hope. Chen Datong said.