"US President trump signed a memorandum announcing that he would take measures to impose tariffs on Chinese products, restrict Chinese investment, and resort relevant issues to the WTO dispute settlement mechanism. The US government plans to impose 25% tariffs on Chinese imports up to US $60 billion. Among them, 1300 product categories, including modern railways, new energy vehicles and high technology, will be affected by tariffs.
So, if this trade friction does not turn fighting into friendship, what impact will the semiconductor industry suffer?
The trade deficit of nearly 200 billion in integrated circuits and the increasingly heavy Chinese market of American semiconductor enterprises
Although the impending Sino US trade war seems to be taking a turn today, Reuters and other foreign media disclosed today that China and the United States are holding consultations. During the negotiations, senior officials of the trump administration asked China to reduce tariffs on imported cars, allow foreign investors to hold a majority stake in financial services companies, and buy more semiconductor products produced by the United States.
It is reported that China is willing to increase US semiconductor imports. However, it is not known how American chips will replace Korean and Taiwanese chips, because there is little overlap between American chips and Taiwanese and Korean chips. In terms of amount, Reuters calculated based on China's customs data that the United States accounted for only 1% of China's total semiconductor imports last year.
Some analysts believe that the Sino US trade friction is aimed at "made in China 2025" to limit the development of China's high-tech and high value-added fields. As a strategic industry affecting the national comprehensive competitiveness, the integrated circuit technology level and industrial scale have become an important symbol to measure a country's industrial competitiveness and comprehensive national strength. The trade dispute has also attracted much attention to the integrated circuit industry. However, since 2013, the annual import volume of China's integrated circuits has been more than US $200 billion, while the import volume of China's crude oil in 2016 was US $115.308 billion. More importantly, the import volume increased significantly by 14.6% year-on-year in 2017, and the overall deficit was close to US $200 billion.
In terms of demand, the scale of domestic integrated circuit market in 2017 is estimated to be 1382.92 billion yuan, and the scale growth rate remains above double digits all year round. In terms of supply, the self-sufficiency rate in the domestic semiconductor field is seriously insufficient, especially in the fields of high-end equipment, materials, storage and so on. According to semi data, China's chip self-sufficiency rate is expected to be only 27% in 2017, and China's IC industry is still strongly dependent on foreign countries. The gap between supply and demand will continue, and the Industrial Import orientation will remain stable.
In this regard, analysts believe that it has little impact on the continuous import-oriented domestic semiconductor industry.
Let's look at the development of American semiconductor enterprises in China. Here are the major American semiconductor enterprises with a high proportion of revenue in China according to Goldman Sachs. In addition, Texas Instruments (TI) exceeds 40%, and large manufacturers such as Xilinx and Intel also rely on the Chinese market more than 20%.
It is worth noting that the Chinese market is actually becoming more and more important to semiconductor enterprises in the United States and other parts of the world, and they are basically actively carrying out localization work in China, such as Qualcomm, Ti, etc. the return is also obvious. For example, when trump visited China at the end of 2017, Qualcomm signed a memorandum of understanding with Xiaomi, oppo and vivo. The three companies will purchase no less than $12 billion of chips from Qualcomm in the next three years.
It can be said that semiconductors play a very important role in Sino US trade. Although the United States accounts for a small proportion of China's total semiconductor imports, China is highly dependent on the import of semiconductor chip products and related equipment from the United States. Similarly, many American semiconductor enterprises have become too dependent on the Chinese market.
Take the following two areas as examples to see the situation of China and the United States.
Comparison of smart phone chips between Chinese and American Enterprises
A smart phone contains a variety of chips, such as baseband, application processing, RF front-end, wireless communication, power management, memory, touch screen and fingerprint identification chips. At present, American manufacturers have great advantages in baseband, application processor, RF front-end and power management chip. 95% of the RF chip market is occupied by European and American manufacturers, and the localization process in China is slow. In terms of baseband and and application processing chips, mainland manufacturers strive to catch up. At present, there are two SoC design plants, Hisilicon and Spreadtrum, respectively, in the high-end and medium and low-end chip markets, with the market share of chip shipments of 5% and 7% respectively. On the touch screen and fingerprint identification chips, mainland manufacturers have basically realized domestic substitution.
Comparison of memory chips between Chinese and American Enterprises
In many other fields of semiconductors, the self-sufficiency rate of the mainland is still low, such as storage (the self-sufficiency rate of mainstream storage DRAM and NAND flash is about 0%), semiconductor equipment (the self-sufficiency rate was 11.5% in 2016) and some semiconductor materials (the self-sufficiency rate of cutting-edge photoresist is 0%). Once the self-sufficiency rate is too low and foreign suppliers are too concentrated, it is easy to strangle the corresponding downstream manufacturers in China, resulting in multiple factors limiting the government's countermeasures.
As the third giant of DRAM and the fourth giant of NAND flash, micron is increasingly dependent on the Chinese market. In 2009, the Chinese mainland surpassed the United States and became the first source of revenue in the first largest US revenue area. Since then, the Chinese mainland has been growing steadily. In 2017, the mainland's revenue reached 10 billion 400 million US dollars, up 96%, accounting for 50% of the total revenues of the US dollar.
At present, there are many restrictions on the taxation of American memory products. In the absence of substantial capacity release of continental storage, the two major memories are expected to remain in short supply. Taking dram as an example, if a tax is levied on Meguiar's DRAM products, on the one hand, it may exacerbate the shortage of storage supply in the mainland and damage the interests of China's downstream terminal application manufacturers; On the other hand, it may aggravate the monopoly situation of Samsung and SK Hynix in China's DRAM market, which is not conducive to the sound development of China's semiconductor industry in the long run.
Mainland storage started late and lagged behind in technology. Although we try our best to catch up with it with the strong support of the state and capital, and we have also seen the establishment of three major memory bases in mainland China, it still needs more time and energy to truly realize the domestic replacement of storage.
What aspects of China's semiconductor industry were targeted in the 301 survey?
In the first chapter, the 301 survey focuses on the process of China's introduction, absorption and re innovation of foreign intellectual property rights and technologies. One important example is integrated circuits, and refers to a number of industrial policies in China's integrated circuit field, such as the 12th Five year development plan for integrated circuit industry, the outline for promoting the development of national integrated circuit industry, and so on.
Secondly, in Chapter 2 of the 301 investigation report, "China's unfair technology transfer system to U.S. companies in China", citing the investigation report of the U.S. Department of Commerce and the Bureau of Homeland Security on the U.S. integrated circuit industry, 25 U.S. integrated circuit companies said that they had to form joint ventures with Chinese entities and transfer intellectual property rights in order to develop the Chinese market, The total sales of these companies exceeded $25 billion in 2017.
Third, Chapter IV "foreign investment" of 301 investigation report. It lists China's "going global" strategy, which focuses on the overseas acquisition and sea going strategy in the field of integrated circuits with the support of a number of national policies. It also focuses on Beijing of Tsinghua University (Ziguang group) and several acquisition cases, such as micron and Western Digital. At the same time, this chapter of the report puts forward that "the emergence of state supported funds and investment companies is an important new feature of China's financial industry", and takes the National IC industry fund as a typical case. Finally, the report lists several Chinese investments in the field of integrated circuits in the United States, such as Jichuang North's acquisition of IML, Yizhuang Guotou's acquisition of Mattson, and ISSI's M & A.
Chen Ping, chief analyst of Haitong Securities, pointed out that the United States mainly focuses on China's strategic emerging industries represented by the semiconductor industry, which can be summarized as follows:
1. Complete the introduction, absorption and re creation of foreign intellectual property rights and technologies through the incentive policies implemented by the government;
2. Coerce foreign-funded enterprises with market entry conditions to transfer intellectual property rights;
3. Cross border acquisitions with the support of state led industrial funds.
These allegations are clearly unreasonable. Chen Ping stressed that the Sino US trade friction makes it difficult for the external environment of China's semiconductor industry to further deteriorate, and highlights the significance of establishing a complete independent industrial chain.
If trade friction worsens, how can China counter it?
Analysts pointed out that if the trade war intensifies, both sides are bound to take further sanctions and countermeasures. From the perspective of countermeasures, on the one hand, China can strengthen the amount and scope of taxation. In the semiconductor field, tax reduction or additional tax increase may be cancelled for domestic products with substitution ability, such as nor, medium and low-end chips, so as to strengthen the price competitiveness of domestic products in the market.
In addition to tax countermeasures, China's biggest advantage lies in its market advantage and can take a variety of means. For example, in view of the U.S. M & a restriction policy on China, China's Ministry of commerce can reasonably reject the M & A cases of some U.S. - funded enterprises, especially those that may reach a new monopoly pattern after M & A. For example, Qualcomm acquired NXP.
In addition, we can also strengthen the investigation and punishment of monopoly enterprises, such as US funded enterprises such as Qualcomm and Intel. If we take the opportunity to ask the merging party to give considerable compensation and preferential measures, it will be conducive to the development of relevant domestic industries to a certain extent.
It is worth noting that at present, in the semiconductor field, the mainland still has a large gap in realizing domestic substitution, and it is difficult to counterattack through tax policy. In any case, trade friction is not a long-term behavior. From the perspective of long-term development, only by paying more attention to self-development, industrial accumulation, increasing policy and capital support, and practicing internal skills can we be in a favorable position of competition and fight back from the inside out.
Original address: https://www.eeboard.com/news/zhongmeimaoyi/
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