Sadness China

Poor market environment, financing environment, relying on a single product can conquer the most chips in China Enterprise out of the rise and fall again?

"Hello, here is the latitude in it? "On October 20, when reporters on the weft in Ningbo, in accordance with the company's Web site provides telephone call, the head a man answering the phone said:" it is BYD! ”。

Ningbo latitude for financial deficits in bankruptcy on October 6 to 170 million price auction for semiconductor industry "outside the circle" of enterprises--Shenzhen BYD co., Ltd.

According to internal staff of latitude in introduction, basic standstill current latitude business, BYD has just received, layoffs were positive, although specific programme has not been decided, but most people are worried about their future.

Cold spell

Outside view, weft in Ningbo bankruptcy auction came suddenly. Ningbo weft was established in February 2002, is the first 6-inch chip production enterprise of Zhejiang Province, became the first in 2007 by four State ministries such as Ministry, the Ministry finds "the State encourages the IC enterprises." The data from the public on its website that "in March 2008 the production shipments of 14,726, invasive operation to ship the number record. The first quarter of 2008, our total shipments 36,396, representing an increase of 6,186 2007, an increase of 20.5%, achieving revenues of US $ 7,100,469, increase of 12.2% over the same period last year. ”

According to informed sources in the circle, Ningbo weft in funding crisis for a long time, early commitment of large shareholder in the amount of funds not in place on time, the company has repeatedly for loans to banks, partners, and civil institutions. Under the situation of shortage of funds continues, disagreements left and the Board two years ago, the founder of the company, which resulted in deterioration in the company. Currently circulating within the company is, the total arrears amounted to us $ 70 million, which the Bank part there are 40 million dollars.

In fact, weft is a microcosm of China chip industry current living situation. In May of this year was known as "TD chips leading enterprise" Maxine Kamin information technology Corporation as shareholder no longer continue to invest, thus funding strand breaks and the official receiver. Maxine Kamin of the collapse of the entire chip industry "watershed", set off the entire chip industry in China "alert", after which, the chip industry as a whole was clouded by a pessimistic mood.

Zhangjiang Hi-Tech Park in Shanghai, such an atmosphere the most intense. Microelectronics Shanghai Zhangjiang Science Park in Hong Kong, here is the distribution center of IC enterprises. Many office buildings, making a rental ad, according to recent IC company contract or constantly fail to close the door, many Office rooms are vacant. When asked what firms, one IC professionals told reporters that failures are only a few people to say names on small companies, small to even have the website. Because the companies generally face money crisis, most companies are in a State of contraction or adjust.

Located where the tripod-core communications (Shanghai) Limited (referred to as "Ding-core") could have access to two rounds of financing, preparing to be listed in a "big business", because of the money chain crisis now had to layoff shrink now leave it with less than 20 people, "small business", and ready to face the fate of bankruptcy. The company designed the chip industry is also very famous, Ding-core has been hailed as "Chinese radio-the first core"--filled the Chinese TD-SCDMA Industry chain in the field of radio frequency short plate, while Ding core also undertake national development and Reform Commission, Ministry of information industry and Ministry of science and technology joint implementation of the "3G (TD-SCDMA) national industrialization special" radio frequency integrated circuit research and development projects.

Ding core had obtained investment from Intel Capital Corporation, TMT like Ding cores (digital new media) company was VC (venture capital) were Favorites, but now, "Intel Capital withdrew, unwillingness to vote money." And Maxine Kamin, because 3G delays in business leads to investment in this area of VC only into the difficult outputs, Enterprise lost patience and thus to the tripod core. In order to survive, now Ding core business had to move to conventional CMOS RF SOC chips--though not with high technology content in this area, profit margins are low, but at least you can have income.

From the beginning of the second half of 2007, due to United States subprime mortgage crisis and economic slowdown, resulting in slower consumer demand for semiconductors Terminal, global semiconductor has entered a period of slower growth. ISuppli forecasts, 2008 global semiconductor market growth of only 4%, and China's semiconductor market growth only 6.1%, and growth in the next three years are at 10%.

"The chip industry has entered a recession, and the industry downturn coincided with the global financial crisis," this is considered the capital of chip industry has been highly dependent on "cold" because of the attacks. Not only China, the whole of Asia even chip companies around the world in the future days are not going to be kind. However, in the global industry downturn, weak chip enterprises in China, is limited to the domestic capital market financing conditions and restrictions, are particularly great.

More for the chip design companies were "worse" is that some IC distributors are afraid of financial crisis itself, have been made in advance to protect themselves, said Zheng Wenzong, IC shangwenye, since I have seen the market demand will not be very good, the client and the likely collapse of crisis, under the circumstances, would prefer conservative, in response to, cut down by some poor may be closed or credit customer.

In fact, starting from 2007, actions semiconductor and vimicro simultaneous decline of profits it has made winter feeling in the industry to the semiconductor industry. "Semiconductor industry's return on investment is too low, in the United States listing of Spreadtrum, vimicro He Ju of the PE values are very low, VC interest have been transferred. "One chip design company, operators said. Although vimicro, actions semiconductor chip design companies such as the overseas listed really successful venture capital a taste of taste, but most of the semiconductor company's performance had some people lose heart, industrial growth and profit decline in varying degrees.

Said one IC design industry, from the technology industry boom in the world now, future global bargaining chip market will become increasingly greater pressure. If you cannot successfully products sold in exchange for cash on hand, IC company funding strand breaks occur.

With echoes of, capital market in the semiconductor industry's enthusiasm is cooling, bank loans, venture capital and other inputs of all sources of funds in the semiconductor industry is also increasingly cautious. United States national venture capital Association, a copy of the latest survey, although the 2008 global venture capital investment in high-tech projects will continue to increase, but the semiconductor industry investment will decline.

A domino effect has spread to the whole industrial chain and all of the links.

Knockout stages

If the led chip distressed external causes of collective enterprises in China are now industry and external environmental factors of an economic downturn, the internal cause is congenital lack of capacity.

Each basic, founder of the company is a foreign person who master a certain technology design company, essentially the original design of research and development company in the early extension of the relatively easy. But as the chip performance upgrades, defects of IC designing enterprises in terms of research and development capabilities will be more and more obvious, woefully inadequate patent accumulation is belonging to the company.

Some companies are shortsighted, just easier to develop and the needs of the market products without doing long-term technical reserves. Most enterprises have stared at several areas such as mobile phones and MP3/PMP, making it part of the product homogeneity of a serious, price wars continue.

At present, about 600 domestic IC design enterprises, design is the highest level of 90 nanometers, but relative to advanced foreign small enterprises still appears to be low level and size. On the product structure, domestic design enterprises mainly in the traditional focus on smart cards, analog products and consumer products.

And more serious problem is out of the market. Company founder CEO is technical origin, on how to do product in China, how to mass production is not very clear, understanding and positioning on the market is also inaccurate. This enterprise is difficult to grow up, VC money to burn out, not up, only the Conference people, contracted. For example, Maxine Kamin, closure of its reasons, in addition to TD market delayed, the company's market strategy also has problems. Maxine Kamin is always first to launch new products, but not for existing products refined and stability so that the user can't use, so the first TD tender Maxine Kamin keliwushou.

Look at the "China first street," said hua qiang bei in Shenzhen, how many electronic products with Zhangjiang IC chip design companies? Here are the most popular Taiwan enterprise mediatek not a large number of IC designing enterprises in the Mainland. China IC design company it is difficult to understand and grasp the market's real requirements, out of the local market, it is difficult to profit the most fundamental cause of this is point them towards bankruptcy.

Chip design integrated, platform of development trends in the industry, whether it be mediatek Intel, TI is it go this route. Enemy of integration is a small design company, a small company-produced films may fetch $ 3 dollars and integrated chip plus a same function only need to increase the cost of a few cents.

To mediatek for this kind of integrated, large-scale international company, domestic small company it is difficult to fight. Moreover, with the improvement to the clustering of China IC industry in the world, similar to Taiwan mediatek IC design industry giants such as constantly shifted from high-cost areas to the domestic market. This means that the number of domestic enterprises in the past to win will be a major change in the status, cruel fittest is inevitable. The climax of failure have not come.

Survival difficult for many small and medium-sized chip business, if you do not want closure can only be actively seeking acquisitions. Business better received from these companies seeking merger and acquisition of small business phone. "There are many investment banks find us to recommend the acquired object, also have enterprise initiative to find us. "According to vimicro Chairman John Deng said. At this stage, to ensure there are sufficient funds on hand, vimicro no merger plan.

Li Ke, Director of China semiconductor industry association, information exchange, mergers between reorganization domestic chip design is difficult, because each level almost, and inadequate domestic intellectual property once the merger, executives will soon set up a new company. After the collapse of Maxine Kamin, former executives of the company created two new companies. "Chip business depends on the core talent, people, technology also went. ”

Weft in the semiconductor factory in comparison, with equipment, plants, customers and intellectual property rights, there is value of mergers and acquisitions, and IC design company's main asset is the talent. Smart business is very clear, and its going to cost a fortune to mergers and acquisitions than highly paid personnel dug over. So have seen such a scene: in the day of the closure of Maxine Kamin, Huawei and other companies sent car blocking at the gate of Maxine Kamin "Rob".

To find a way out

Most face difficulties of IC design enterprises may have to be on their own, like vimicro, actions semiconductor and Spreadtrum has listed businesses, like John Deng said "shengshengsisi is still very far away", but now days are difficult. According to the fiscal 2008 second quarter data show, actions semiconductor company decline in both revenues and net profit, with net profit down over 20%; vimicro net loss of $ 1 million; Spreadtrum Communications net profit fell 6%, operating margin dropped from 7.9% in the same period last year to 4.2%. After initial successes achieved, which way next? This is what they had to answer questions.

Three years ago, actions Semiconductor offer first MP3 when control of single-chip, taste the taste of demand, several salesmen are dealer to recover the goods to the night phone can't power on. In 2006 when the torch is the most brilliant, then company revenues of US $ 170 million, stable global MP3 boss on the throne. However, because the product of a single, fail to open up new areas of the company, and MP3 in upgrading, actions semiconductor after short-term peak, rapid decline, urgent need to develop new growth areas.

In the same situation also occurs in stars micro-body. Vimicro in PC camera chips has been a big success, occupy 70% of global market share. This means vimicro has very limited room for further expansion in this area. With the slowdown in PC sales, price competition is increasingly fierce. Current income from PC, 70% star in the field of micro-, while was granted numerous testimonials, now has to face the lean challenge.

Now that these companies have recognized this and therefore is actively entering new areas. For example, vimicro is actively entering the mobile phone chip market, John Deng very optimistic about China's mobile phone market potential, he said vimicro in recent years in expanding mobile phone market, revenue has accounted for 20% of the current mobile, handsets, as a percentage than is expected in the future will be further enhanced. However, John Deng admitted, in the mobile phone market, vimicro faced more severe competitive pressure. At the same time, vimicro also in the expanding market for monitoring such as high-end multimedia processor, the main domestic market, this market has only just started.

Actions semiconductor high profile recently announced the launch of new products that can be QD-RMVB video formats are supported, flagship PMP market, but for this poor response in the industry. In the view of one industry source, the product of actions semiconductor has no lead, you are, Swiss core has launched similar products last year, and eventually taking the PMP market dominance.

Product line and started by DVD mediatek chip, digital TV has covered optical storage chips, four plates of chips for wireless communications, digital consumer chips. From optical storage chips, mobile phone, DVD Player control chip chip, to the next digital TV chip, mediatek several major product lines go hand in hand. By contrast, vimicro and actions semiconductor such as chip design also did not try to do everything all by oneself out of a product model, and this mode is also often made many renowned chip company dreary out of the moment.

"The chip industry is a high risk industry, rely only on the single market, often concealed a crisis. Moore's law's semiconductor industry development under the guidance of swift, the consumer electronics market changes faster, changes in the market of the original product is conceivable, if new product and when the new crop is still in the blade and the old one is all consumed-temporary shortage, business is now in trouble. "Freescale Semiconductor company senior engineer Li Xingyu think.

Several leading domestic chip companies for this future fate, who are unable to predict, at least for the moment we have seen, but always "Bo yan, its dead suddenly Yan" tragic cycle.