September 30, 2020
2267
On September 26, the issue of “SMIC’s export controls imposed by the United States” aroused great attention in the industry. In addition, there were rumors earlier this month that the United States believed that SMIC was suspected of “military involvement” and threatened to impose sanctions, as well as SMIC’s statement and As the situation progressed, SMIC was pushed to the forefront. Sensitive and sensitive industries, and all kinds of public opinions on the Internet are overwhelming. There are those who know and worry, those who are outraged, those who fear pessimism, and those who criticize and criticize. As the world's leading research institution in the semiconductor industry, even though the mood is extremely heavy and writing is very difficult at this time, the core research still needs to face the problems, professional analysis, and in-depth interpretation.
1. The difference between "export control" and "entity list".
Although neither SMIC nor the U.S. Department of Commerce issued a clear statement, according to the information obtained by SMIC, SMIC was included in the US "export control" concern list, and was not included in the "entity list"! More precisely, the letter circulated on the Internet on September 26 was sent by the Bureau of Industry and Security of the US Department of Commerce to the SIA (American Semiconductor Industry Association), and then sent by the SIA to the relevant company. The relevant US company has also received this letter.
Because it is the weekend, many detailed rules have not yet been released, and relevant companies are also learning the details. Even if SMIC is finally confirmed to implement "export control", this is still different from being included in the "entity list." If it is included in the “export control”, SMIC’s US suppliers must apply for a special license in accordance with EAR 744.21(b) of the US Export Control Regulations when supplying SMIC. If military suspicion is confirmed, SMIC, as a military user, requires special permits for the items in the arms control list. Although the procedures are a lot of trouble, it is far less serious than being included in the "entity list"-applications made by the "entity list" will be "presumptively rejected", and the approval process for military users or military purposes will be delayed, but It is still possible to be approved-but in the current sensitive political situation, obtaining approval will be difficult.
2. What is the impact on SMIC?
Once SMIC is subject to export controls, under the current sensitive political situation, the subsequent approval process will undoubtedly be bumpy. This will directly cause SMIC to encounter obstacles in purchasing equipment materials and spare parts from the United States and some international companies, and even the possibility of out of stock; SMIC's cooperation with US customers and some international customers will be seriously affected; at the same time, China The cooperation with the United States and some international partners will encounter obstacles. The impact is comprehensive and serious!
But will US sanctions put SMIC in a desperate situation, or even shut down? The answer is obviously no. If the United States imposes sanctions on SMIC, SMIC’s business will be greatly affected, but it will not be suspended. The first is that SMIC has been in operation for 20 years and has a complete set of equipment, mature technology, multiple technologies and diversified suppliers with a monthly production capacity of hundreds of thousands of pieces; secondly, after the Huawei incident, SMIC has become more aware of danger Strong, has already strengthened the bottom line thinking, and has made dual preparations for the upstream and downstream industrial chains including equipment, spare parts, raw materials, and international customers. For example, there are sufficient reserves of raw materials; for example, the proportion of North American customers' revenue has been greatly reduced, and the proportion of domestic customers' revenue has increased; now SMIC has been listed on the domestic science and technology board, and currently has more than 100 billion yuan in cash, which is good for the winter and the protracted battle In order to provide comprehensive logistics support.
3. How to read SMIC's statement?
Since the media era, there are many voices. As soon as SMIC made a statement, some said that SMIC was "kneeling", some said that SMIC was "weak", and some even said that SMIC was a technical comprador. There are also public accounts that claim that companies want to bind patriotism and issue the above-mentioned list of entities to be proud, even saying "the glory of life, the greatness of death". Among them, there are many keyboard guys who are "satisfied with a moment of quickness of speech and ability for a moment". Seeing some comments on the Internet that "watching the excitement is not too big" that do not understand the current situation, do not understand the industry, and do not know the gap, I can't help but feel bitter and angry.
As an industrial person, one must have deep, sober, rational, and comprehensive determination. I don’t want to cite Han Xin’s story. I want to share with you the words of Gongsun Chujiu and Cheng Ying in "Orphans of the Zhao Family": Gongsun Chujiu said: "Is it difficult to stand alone or to die?" Cheng Ying said: "It's easy to die, stand up Lonely ears." Gongsun Chujiu said: "The first emperor of the Zhao family met his son, and Ziqiang is the one who is in trouble. I am the one who makes the change. Please die first."... Cheng Ying! In the past, I couldn’t die because of the troubles in the palace. I tried to hide the orphan of the Zhao family. Now I sell me again. Even if I can’t stand, I will bear it!" Baoer said, "Heaven is heaven! What is the orphan of Zhao? Sin? Please live it, it's okay to kill Chujiu alone." The generals refused, and then killed Chujiu and the orphans.
Gongsun Chujiu regarded death as home, spared his life for loyalty, and dared to throw his head for the purpose. This spirit has inspired us for thousands of years, and it has also moved us deeply. But the ancestors thousands of years ago knew that "death is easier to live". After a hundred deaths, he was given the reputation of "loyalty and generosity", but to live, he had to endure the humiliation, the pressure of self-blame, the pain of nurturing, and Cheng Ying even bore the reputation of selling friends and seeking glory! This is even more difficult in the ancient times, where fame was important and the pursuit of history and fame. Gongsun Chujiu's generosity to die is to live, death is a means, and life is an end. His "death first" touches us not only with loyalty and sacrifice, but also with the overall situation and wisdom; Cheng Ying's commitment to live and bear the burden of humiliation Only then did Gongsun Chujiu's death make sense. The moth's spirit to fight the fire is commendable, but as the ashes pass, no brilliance remains. Only those who endure the humiliation and bear the burden can take responsibility and history! There is hope if you live! Thousands of years ago, it is true now!
Back to semiconductors, most of the thousands of chip design companies in China are produced by SMIC. At the moment when global production capacity is extremely tight, if SMIC "death generously", it will be difficult for thousands of Chinese companies to obtain production capacity. The design industry of China will be fatally hit; furthermore, the development of domestic equipment and materials is even less likely to count on international companies for initial verification. In a sense, SMIC is not only responsible for providing production capacity for domestic design companies, but also for supporting the verification of domestic equipment and materials. This is not only determined by SMIC's strength, but also by the laws of manufacturing in the semiconductor industry.
It’s easy to say irresponsible light words in the online self-media. Keyboard man and mouth-talking are easy, but does it make sense for China’s semiconductor development? Although SMIC can choose to burn both jade and stone, for the overall situation of China's industry, hundreds of equipment and materials companies and thousands of design companies need SMIC to stay alive!
4. How to view the status quo of Chinese semiconductors?
1. Semiconductors, my country is not strong yet
In the past, too many comments on the Internet of "my country is great" and too many good news of "filling in the blanks and achieving catch-up" have caused many people and even some leaders to produce the rapid development of our semiconductors. illusion. The Huawei incident and the Science and Technology Innovation Board have made China's semiconductors become the focus of media attention. Many articles on chips on the Internet are written by people who do not understand China's semiconductor industry. There are a lot of arrogant rhetoric and self-praising propaganda.
In fact, as a latecomer, China's semiconductor industry is far behind and far behind. In this field, my country is currently not very strong.
2. The semiconductor industry in the United States has strong political and technological control, leadership, and dominance
Originally, integrated circuits were dominated by American inventions. The U.S.'s dominance of semiconductors began in the past and has always been in control, and the leadership remains as stable as ever. Because they set the rules of the game and they invented the original technology, so many well-known non-US companies are also subject to the United States. In the conflict, we have seen the hesitation and embarrassment of many non-US companies. This is not only restricted to the United States in geopolitics, but also because it is also restricted in technology.
3. Even if it is an industry that is already independent, it still can’t get rid of dependence when looking for its roots
Some experts say that they are very strong, giving the people the illusion that China's semiconductors have been independent in many key directions, but unfortunately this is not the case. After the ZTE-Huawei incident, the design industry, which was previously hailed as a major breakthrough and filling in the gap, could not solve the chip problem; after the HiSilicon incident, the domestic manufacturing industry still cannot produce for HiSilicon and cannot solve the manufacturing problem; the same if After China's manufacturing is sanctioned, can domestic equipment and materials companies solve the problem? The impassion of peaceful project establishment and the helplessness of war meritorious service are such contradictions but harmoniously appearing in every aspect of China's semiconductor industry. For example, the equipment industry that we have high hopes for, in fact, the output value of China's equipment industry accounts for less than 2% of the global equipment market! At the same time, the key components of many domestic equipment companies are also international suppliers and even many American technologies, and the core teams of many equipment and materials companies are often American. If SMIC is in trouble, they will also encounter SMIC's problems today.
The SMIC incident has a huge impact on China's semiconductor industry! However, it is a pity that it has not attracted higher attention at present, instead, there are accusations and abuses on the Internet. In the self-media era, the diversity of public opinion is normal. But do not condemn right and wrong, to deal with the world. We hope that experts, scholars, leading politicians, and all walks of life in the industry can fully realize the above three points, understand China's semiconductor industry, understand the difficult situation facing SMIC, and not be disturbed by various impetuous voices!
We call for more patience and support to SMIC and a quiet development environment. Accusations and verbal abuse will not help, and remarks will not help. We should understand and understand more thoroughly. More importantly, it takes courage to understand that bowing your head requires courage, and it is harder to bear the burden of humiliation! Only through the darkness can we see the light. Only by living well can we make greater contributions to the Chinese industry.
5. How to do China Chips?
Self-reliance and the entire industry chain may be a solution, but it needs to be based on many success factors such as more patience, longer time, and more professionalism. This is not the best choice for solving current problems.
Perhaps Huawei's single-handed approach to countering US sanctions has made us feel the strength of Chinese technology and high morale. However, Huawei is unique after all. We need companies like Huawei that can improve their fighting spirit and fight on the front line. At the same time, we also need more non-Huawei companies that use roundabout mediation and move forward.
Perhaps the government and the industry have placed high expectations on SMIC, and perhaps the people expect SMIC to be as "positively against the United States" like Huawei. However, SMIC is more dependent on global supply and technology, and even if it is as powerful as Huawei, under the background of global integration, under the background of the current US dominance in semiconductors, it is also actively communicating with the United States, hoping for long-term cooperation. This is not weakness, let alone incompetence, but a pragmatic move, and it is also the Chinese wisdom of "remaining green hills without worrying about not having firewood".
Curves and twists and turns make us walk a few more steps, but they make us go further. No big river can go straight, because only twists and turns can lead to the sea! Similarly, the core road leading to the sea of stars will be tortuous, and even back! But only in this way can we not be afraid of the obstacles of the mountains and the long roads, and we can do so.
To solve the current chip problem, we must either jump out of the chip and look at the chip, and consider the positioning of the chip in the larger category of the country and in a higher overall situation; or pragmatically analyze the strengths and weaknesses of our industry. At this stage, the two strongest segments of our chip industry are capital and the market. We must make full use of these two long boards. Expanding the opening up in finance, and expanding the depth of industry integration with the market. If you can make a bigger story on finance and market opening, discuss with many excellent international companies that under the new situation, through capital opening, financial opening, and market opening, we will promote cooperation through openness, seek development through cooperation, and jointly find new era. Cooperation model.
At this extraordinary time, the semiconductor industry, as an extraordinary industry, must have the mindset of entering a quasi-war-time state, and the foundry industry, which is the mainstay of the industry, should be prepared for danger in times of peace and change. Coremou Research has long put forward the view of the third line of the industry: vigorously support existing mass production companies to actively expand production, add relevant entities, tactically provide more capacity support for the development of China's semiconductor industry, and strategically continue to strengthen China's semiconductor industry Provide guarantee for industrial ecological safety. For SMIC, it actively communicates and strives to exchange space with time; while the domestic moderate increase in new subjects and the layout of the third line of the industry is to exchange space for time.
Not long ago, I had an in-depth exchange with an industry leader of a company listed on the entity list on the development of China’s semiconductor industry, and also discussed some suggestions and plans beyond my "domestic professional practice, open cooperation to the outside world" . I look forward to having the opportunity to expand and make it public in the future.
