On December 2, the US government announced a new round of export restrictions on China, adding more than 140 Chinese enterprises to the list of trade restrictions, involving semiconductor manufacturing equipment, electronic design automation tools and other types of semiconductor products.

 

On December 3, the China Association of Automobile Manufacturers, the China Semiconductor Industry Association, the Internet Association of China, and the China Association of Communications Enterprises collectively issued a statement, expressing firm opposition to this and calling on domestic enterprises to prudently choose to purchase American chips.

 

Following the outbreak, the global automotive supply chain was broken, and after China's chip took the opportunity to find space for development, a large number of domestic chip companies grew rapidly. Will this become the second development opportunity for domestic chips?

 

■ Car companies are on the move

 

The US government issued a new round of semiconductor export control measures to China, the final plan involves 136 Chinese entities and 4 overseas subsidiaries of Chinese entities, and the scope of control is relatively focused, mainly for chips used in advanced artificial intelligence, and the object of control is mainly the manufacturing equipment enterprises of such chips.

 

This is the largest number and scale of new "entity list" companies in the history of US chip sanctions against China. From 2016 to 2019, the semiconductor crackdown on China was about once a year, increased to 4 times in 2021, upgraded to 9 times in 2022, and more than 17 times in 2023.

 

In this regard, Wang Xiaolong, research consultant of Xinmou, introduced that domestic car companies are acting, actively looking for domestic alternative chips, a small number of car companies have their own research and development, and most car companies choose to invest in supporting the development of independent chip companies.

 

For example, SAIC, GAC, the Great Wall, Dongfeng, BYD, Chery, FAW and many other car companies have invested in Horizon, helping them strengthen the forward-looking technology research and development of AI chips at the vehicle level and the construction of engineering landing capabilities. Xinqing Technology has also received financing from diversified investors, covering automotive Oems, upstream and downstream partners in the industrial chain, as well as important national funds and government investors.

 

The ideal car on the one hand and core integration hand in hand, on the other hand is actively promoting self-developed chips, 2023 has set up an office in Singapore, when the team size has more than 160 people, and recently there is news that the ideal car plans to establish a chip research and development office in Hong Kong, intelligent driving chips began to flow.

 

At the same time, BYD and its subsidiaries have invested in more than 20 semiconductor companies, covering all links of the industrial chain such as design, materials and equipment. Recently, BYD equation Bao Bao 8 was released, and its intelligent cockpit uses BYD's self-developed 4nm process BYD 9000 chip.

 

 

■ The trend of localization is irreversible

 

China's chips are struggling to move up, and the domestic scale process is accelerating. From January to October this year, China's semiconductor exports reached 931.17 billion yuan, an increase of 21.4%, and the average monthly export is about 93 billion yuan. By November this year, China's chip exports will exceed one trillion.

 

The relevant person in charge of Suzhou Nano Microelectronics Co., Ltd. introduced that in the automotive field, the localization rate of the overall automotive analog chip is about 10%, but from the perspective of the category of analog chips, the domestic chip has basically completed the breakthrough of most categories from 0 to 1, and achieved comprehensive coverage of the category. In terms of performance, cost, quality performance of large-scale shipments, there is still a certain gap between domestic analog chip products and foreign manufacturers, but the gap is not insurmountable. As long as time passes, domestic chips can catch up with such a gap, and even have the opportunity to grow into a globally competitive chip enterprise.

 

Specific to some subdivided chip fields, such as isolation devices for new energy vehicle three-power systems, including digital isolators, isolation sampling, isolation interfaces, isolation drivers and other chips, the localization rate has reached a relatively high level, and similar products from international manufacturers are at the same level in terms of performance, cost and quality. It even has more advantages in some specific performances.

 

Chips used in automotive lighting, cockpit, domain control and other fields, such as LED drivers, current sensors, Angle sensors, temperature and humidity sensors, vehicle power supply, general interface, etc., have also made significant progress in localization, and are rapidly getting on the car.

 

Finally, in some safety-related areas, such as chassis, passive safety and other systems requiring high-level functional safety, such as the localization rate of ABS wheel speed sensors, pressure sensors, main control MCU and other chips there is still a lot of room for growth, "but domestic manufacturers including Nano Micro have been laid out, looking forward to bringing more choices to automotive customers in the future." The person in charge said.

 

Nano Micro believes that although the current external environment is complex and the market competition is fierce, the trend of chip localization has been basically irreversible. Wang Xiaolong also pointed out that domestic chips have made rapid progress in technical indicators, but there is still a gap between the reliability and production consistency of some chip products and foreign manufacturers, and it is still necessary to accumulate experience and polish time.

 

 

■ Domestic chips become stronger in the crisis

 

For the impact of this round of "entity list" will have, CITIC Securities issued a research report said that this is still mainly around the advanced process of the "small courtyard high wall" type of strategy, because the relevant enterprises have been prepared in advance, the short-term practical impact is limited, in the long term, it is necessary to self-reliance, is expected to further accelerate the process of localization of the whole industrial chain.

 

Liu Weidong, CEO of Jiuhao Electronics, believes that the occurrence of anything has positive and negative effects. On the other side of the coin, the unreasonable sanctions of the United States have also prompted China to pay more attention to the training of chip talents. He recalled that ten years ago, a university's integrated circuit semiconductor major was difficult to recruit, and Liu Weidong was asked to appear as a representative of the enterprise and call on students to apply. Liu Weidong invited senior experts and entrepreneurs to exchange with students, "The result of hard work all afternoon, only one student, so now the chip field of high-end talent is extremely short."

 

In recent years, relevant domestic departments and practitioners have begun to truly realize the importance of sudden chip breaking "stuck neck" technology. On the one hand, the Ministry of Education has approved a number of first-level disciplines of integrated circuits across the country, attracting more outstanding young people to study such majors; On the other hand, the opening of the science and technology board has allowed more funds to pour into the chip industry, which has injected impetus into the development of this industry; Before the United States crackdown, in addition to the new forces of car manufacturing, traditional car companies almost do not give domestic chip opportunities. However, the "lack of core" during the epidemic has given domestic chips the opportunity to get on the bus, and the scale of the bus is also expanding year by year.

 

Wang Xiaolong pointed out that the response speed is the advantage of domestic chips, but before there is no volume, there is no cost advantage. It is not easy to get on the volume, and car companies want to experiment to verify the reliability of domestic chips, and then gradually 1000, 5000, 10,000 gradually on the car.

 

According to the reporter, many domestic and foreign first-level suppliers are actively cooperating with domestic chip enterprises to jointly develop car-gauge chip products and solve technical problems.

 

How to speed up the development of domestic chips? Nano Micro believes that the first thing to solve is the improvement of product competitiveness, domestic chip manufacturers only rely on strong product competitiveness to support, in order to continue to expand the market and customers, for the company, the sustainable development of the industry to build a foundation.

 

The second is to face the future and innovate around customer application. Domestic chip companies can not only do in-situ replacement products, only do market followers. Domestic chip companies need to deeply understand the system application needs of customers, and strike a balance between solving customer-specific problems and solving industry-wide problems, and build the underlying ability to develop differentiated and innovative chip products.

 

The third is industrial integration. The domestic analog chip industry has entered the resource integration stage, should continue to grow through mergers and acquisitions, to achieve the optimization of resource allocation, to create scale effects, to avoid homogeneous competition.

 

The fourth is to explore overseas markets. As an extremely upstream industry, chip has widely penetrated into various industries around the world, and only by actively exploring overseas markets can we obtain feedback and feedbacks from the broader market, thus providing power for the long-term and sustainable development of the company and the industry.

 

Originally published by China Automotive News on December 12, 2024