The localization of integrated circuits has entered the deep-water area, what is the future industrial development and investment trend?

The localization of integrated circuits has entered the watershed of the deep-water area, and which fields have more development prospects and investment opportunities in the future have attracted much attention from the market.

On October 15, at the "Global Asset Management Center Shanghai International Week 2024 - International Financial Center and International Science and Technology Innovation Center Linkage Development Forum", Liu Linfa, director of the Development and Research Department of Shanghai Integrated Circuit Industry Association, said that in the next 10 years, it can be seen that industrial technology will continue to develop, and the device architecture will continue to innovate, and realize industrial application. Cluster development.

Han Kang, head of the Party Working Group and Secretary-General of the Shanghai Asset Management Association, said that in the future, more attention will be paid to the five market-oriented technical forces and their integration to promote the development of science and technology finance, namely the power of association members, the power of industrial parks, the power of technology associations, the power of investment groups, and the power of digital finance.

The future development trend of the integrated circuit industry

Talking about the investment and financing status of China's semiconductor industry in 2024, Sun Yong, investment manager of the new phase of the fund of Shanghai Lingang New Area Private Equity Fund Management Co., Ltd., said that the overall financing environment has declined, and there are a large number of homogeneous companies in the market, and enterprises cannot carry out a new round of financing because of the irrational valuation of the previous round.

He specifically analyzed that on the one hand, the primary market is still in a downward cycle, and the domestic investment and financing market is still sluggish; On the other hand, in the first half of 2024, the pace of A-share IPO issuance will be tightened, and the possibility of exiting through IPO will drop significantly.

This is also reflected in the data. In the first half of 2024, the number of semiconductor companies whose IPOs were terminated surged, with 33 semiconductor companies canceling their IPO review in the first half of the year, almost double the number in the same period last year. According to incomplete statistics, in the first half of 2024, a total of 9 semiconductor-related companies will be listed, with a total amount of 7.0678 billion yuan, less than 1/3 of the number of listed companies in 2023, and less than 1/10 of the amount of funds raised.

Compared with the current downturn, China's semiconductor industry has experienced a high wave of development in the past few years due to "domestic substitution". In the eyes of the industry, the future is still promising.

In Sun Yong's view, since May 2019, the localization of semiconductors has gone through four stages, of which 2022 has been the localization 4.0 stage, namely: the watershed of localization entering the deep-water area, and deep localization.

For the localization path in the 4.0 era, Sun Yong believes that it will be promoted along four main lines: first, semiconductor equipment, which will begin to achieve large-scale production in 2022, especially mature process localization equipment; second, chip materials, which will relay 0 to 1 breakthroughs after equipment, especially materials in the yellow light area and have the ability to prepare materials in the upstream; third, EDA/IP, which will land in the capital market and become a new category of underlying hard technology; Fourth, the vertical promotion of equipment and parts, the vertical promotion of localization makes the industrial status prominent, and will usher in a historic development window.

Combined with the incremental factors of the global market, Sun Yong said that looking back at the 28 years of global science and technology, unlike the previous round of mainly relying on smart phones and mobile Internet, the leading factors in this round of semiconductor development are: artificial intelligence and energy revolution.

"Semiconductors are a cyclical industry, and if this wave of capacity expansion is fully utilized, there will be further development in the future." Sun Yong said.

In Sun Yong's view, after more than 20 years of rapid development, especially in the past 10 years, mainland semiconductors have solved the problem of 0~1, but the problems of 1~10 and 10~n have not been solved. Continental semiconductors have entered the stage of structural coexistence of surplus and scarcity, with low-end surplus, high-end scarcity, small enterprise surplus, and large enterprise scarcity.

At the same time, he said that the development of semiconductors has entered the stage of overcoming difficulties, and it is necessary to do difficult and correct things, and to have the spirit of marathon. At present, the industry has entered a cycle of mergers and acquisitions, and it is hoped that some enterprises in China will become bigger and stronger through mergers and acquisitions in this cycle. The seeds of world-class enterprises are among the companies that have been listed, and such enterprises need to be supported to become bigger and stronger.

The key point to build an integrated circuit ecosystem

"Without an ecosystem, there are no customers, and without customers, the ecosystem cannot be further cultivated." Wang Qiang, director of the investment management department and science and technology innovation department of the Lingang Industrial Zone Company, said that if the ecosystem is a circle, then the center of the circle is a leading enterprise.

The development of the integrated circuit industry is also inseparable from a good ecology. So, what elements are needed to build an ecology for the healthy development of integrated circuits in the Lingang New Area?

Ji Wanyi, deputy general manager of Minlian Lingang Park, said that the park has introduced some leading enterprises to build an industrial ecosystem, and the current industrial ecology is still in the early and middle stages, mainly focusing on leading enterprises to extend the chain and supplement the chain, attracting upstream and downstream enterprises of leading enterprises to settle in. The next direction of investment promotion is mainly some small and medium-sized enterprises, which are in the growth stage and cannot be separated from the support of funds, especially integrated circuits are capital-intensive industries, and the demand for funds is very large; Second, policy support is also important.

"We are also more inclined to promote the landing of small and medium-sized enterprises in the future." Wang Qiang believes that small and medium-sized enterprises pay more attention to policies, team building, and whether they can recruit talents, and they also have a strong demand for equity financing.

From the perspective of enterprises, Zeng Jianhong, chairman and general manager of Peiyuan Electronics, believes that a good ecology is that enterprises can find upstream, that is, they can have a better supply chain and find better downstream customers.

Zhang Lingxiang, head of the second investment department of the Lingang New Area Fund and the head of the first phase of the Huanxin Fund, said that after deeply participating in equity investment, he directly entered the ecosystem. "Because as a government investment platform, we have advantages in resource docking, capital docking, and the introduction of technical talents. Therefore, industry funds play an indispensable role in the ecosystem. He said.

So, for integrated circuit enterprises at different stages, what kind of financial services need to be provided to promote the further development of enterprises?

"There are relatively many mature enterprises in Lingang, and in this case, we may focus more on the industrial chain of Lingang, to find some relatively small or start-up enterprises, and accompany them to grow together through equity investment." Zhang Lingxiang said.

In Wang Qiang's view, attracting long-term capital and patient capital to invest in capital-intensive and long-term return industries requires the design of institutional mechanisms, and the core needs to unswervingly advance towards the market-oriented route.

(This article is from Yicai)