Source: ICCAD Annual Meeting
Continue to create value for customers
Chairman of Design Branch of China semiconductor Industry Association, Dr. Wei Shaojun
November 21, 2019
Distinguished leaders, entrepreneurs, friends, ladies and gentlemen,
The 2019 Annual Meeting of IC Design Branch of China Semiconductor Industry Association was held today in Nanjing, a beautiful city on the banks of the Yangtze River. On behalf of the Design Branch, I would like to extend a warm welcome to all leaders, entrepreneurs, friends and people from all walks of life who are concerned about the development of the IC design industry. I would like to express my high respect to the leaders of the Ministry of Industry and Information Technology and the National Integrated Circuit Industry Investment Fund who attended the meeting to guide the work. I would like to express my heartfelt thanks to the Nanjing Municipal People’s Government for their strong support for the convening of this annual meeting, and to the conference staff for their hard work.
The phenomenon of anti-globalization and unilateralism in recent years has shown great negative effects. In 2019, the global semiconductor industry has entered a downward range and is expected to record negative growth, and it is very likely that the negative growth will exceed double digits for the first time since 2008. As an important part of the global semiconductor industry, China’s semiconductor industry is also difficult to survive alone, and the growth rate of development has declined. On the other hand, affected by the adjustment of the global Electronic information industry supply chain, China’s semiconductor industry has also obtained rare development opportunities. The two influences interact, and my country’s integrated circuit industry has generally maintained a good development trend in the past few years. According to the statistics of the China Semiconductor Industry Association, the overall sales of China’s integrated circuit industry from January to June this year increased by 11.8% year-on-year, compared with 23.9% in the same period of the previous year, a decrease of 12.1 percentage points, of which the design industry increased by 18.3% from January to June 2019. %, down 4.5 percentage points from 22.8% in the same period in 2018. Although the overall situation is good, the slowdown in growth rate is an indisputable fact.
Entrusted by the Council, I am now reporting to the General Assembly on the overall development of China’s IC design industry in 2019. The title of the report is: “Continue to Create Value for Customers”, including three parts: overall development, achievements and challenges, and several points think. For reference.
1. Overall development
In 2019, the development of my country’s integrated circuit design industry first declined and then increased, and continued to maintain a good development trend.
1. The scale of the industry continues to grow. With the strong assistance of local associations and national integrated circuit design industrialization bases, the design branch conducted a systematic statistical survey on the operation of design enterprises across the country (excluding Taiwan). Since the end of the year has not yet reached the end of the year, the company still provides forecast data, and some listed companies cannot disclose their performance in advance due to the restrictions of the rules. Therefore, the data given here must be different from the final statistical results at the end of the year. In view of the fact that we make qualitative judgments on the development of the design industry in 2019 based on these data, there may be incomplete and inaccurate places, please understand and pay attention when using them. It should be noted again that all kinds of data reported here come from local associations, national integrated circuit design industrialization bases and design companies, and the data statistics still follow the principle of “low or high”.
The statistics show that there are 1,780 design companies in the country, 82 more than last year’s 1,698, and the number has increased by 4.8%. Before that, there were different news showing that the number of design companies has increased significantly, some say 2,000, some say 3,000, causing anxiety and worry in the industry. But from the statistics of this time, this situation did not appear. Under the current general situation, the increase in the number of enterprises by 82 did not exceed previous expectations.
The industry-wide sales in 2019 are expected to be 308.49 billion yuan, the first time to cross the 300 billion yuan mark, an increase of 19.7% from 257.70 billion yuan in 2018, and a growth rate of 12.7 percentage points lower than the previous year’s 32.4% (according to China’s semiconductor industry). According to the statistics of the association, the total sales of the integrated circuit design industry in 2018 was 251.93 billion yuan. If the data of the general association is used, the corresponding growth should be 22.5%. Considering the comparability of the data, here we still use the design branch in 2018. statistics, namely 257.7 billion yuan). According to the exchange rate of 1:7 between the US dollar and the RMB, the annual sales are about 44.07 billion US dollars, and it is expected that the proportion of the global integrated circuit product sales revenue will exceed 10% for the first time.
2. Regional industrial development. When counting the development of regional integrated circuit design industry, we continue to follow the following principles: in regional and city statistics, respect the contribution of enterprises to the local economy of the registered place; when it comes to specific enterprises, they will be scattered in various places. Branch sales are consolidated.
Table 1: Forecast of development data of various regions in 2019 (unit: RMB 100 million)
According to the above principles, statistics show that the Yangtze River Delta, the Pearl River Delta and the central and western regions all achieved double-digit growth. Table 1 shows the industrial development statistics of each region in 2019. The industrial scale of the Yangtze River Delta, the Pearl River Delta, the Beijing-Tianjin-Bohai Sea Rim and the central and western regions reached 109.32 billion yuan, 124.72 billion yuan, 62.65 billion yuan and 28.85 billion yuan respectively, with a growth rate of 29.5%, 37.4%, 4.7% and 27.2%. . The growth rate of the Pearl River Delta region reached 37.4%, 17.7 percentage points higher than the national average; the growth rate of the Yangtze River Delta region was 9.8 percentage points higher than the national average, and the growth rate of the Beijing-Tianjin-Bohai Rim region was 15 percentage points lower than the national average. The growth rate in the central and western regions was 7.5 percentage points higher than the national average. The industrial scale of the Pearl River Delta region and the Yangtze River Delta region both crossed the 100 billion yuan mark.
In the statistics in Table 1, there is a phenomenon that the sum of the industrial scales of various regions is larger than the aforementioned 308.49 billion yuan, and the difference is 17.05 billion yuan. The reason for this is that some companies have a presence in multiple cities, so the relevant cities count the sales of these companies into their own statistics, and even increase it to the official data of the local government. The design branch has tried to divide the data of these enterprises according to regions, but the enterprises do not want to cause harm to the local government in the process, so the design branch has to remove these double-counted data from the total number, but the data in the regions and cities are excluded. The original data remains unchanged in the data. Please be careful when using these data.
Table 2: Top 10 Cities in China’s IC Design Industry Growth Rate in 2019
Statistics on the integrated circuit design industry in major cities show that in 2019, except for Hong Kong and Dalian, the design industry in all major cities recorded positive growth. Table 2 presents the top 10 city forecasts by growth rate in 2019. Among them, Shenzhen ranked first with a growth rate of 44.8%, followed by Shanghai with a growth rate of 41.7%, Wuhan and Xi’an with a growth rate of more than 30%, and Wuxi, Chengdu, Jinan and Xi’an with a growth rate of more than 20%. .
Table 3: Top 10 Cities in China’s IC Design Industry Development Scale in 2019
Table 3 gives the forecast of the top 10 cities in terms of design industry scale in 2019. Shenzhen, Shanghai and Beijing continue to hold the top three positions. The first Shenzhen city continued to maintain its status as the leader, with an industrial scale exceeding 100 billion yuan for the first time, and Shanghai once again replaced Beijing to become the second. After last year’s design industry sales in Hangzhou and Wuxi exceeded 10 billion yuan, Xi’an’s industry scale exceeded 10 billion yuan for the first time this year. Statistics show that among the top ten cities, there are 4 cities in the Yangtze River Delta region, 2 cities in the Pearl River Delta region, 3 cities in the central and western regions, and only 1 city in Beijing in the Beijing-Tianjin-Bohai Rim region. The distribution pattern in 2018. The sum of the industrial scale of these 10 cities reached 293.11 billion yuan, accounting for 95% of the entire industry, an increase of 4.7 percentage points from 90.3% in 2018.
3. The overall development quality is improving. In 2019, the overall development quality of the design industry improved. Table 4 shows the latest ranking of China’s top 10 integrated circuit design companies in 2019 based on statistical data. From the distribution of the top ten design companies, there are 3 in the Pearl River Delta region, 4 in the Yangtze River Delta region, and 3 in the Beijing-Tianjin-Bohai Rim region. The threshold for entering the list of the top 10 design companies has been raised to about 4.8 billion yuan, a significant increase of 1.8 billion yuan from 3 billion yuan last year. The total sales of the top ten enterprises was 155.80 billion yuan, accounting for 50.1% of the industry scale of the entire industry, an increase of 9.9 percentage points from 40.21% in the previous year, the largest increase in recent years. The growth rate of the top ten design companies reached 46.6%.
Table 4: Top 10 design companies in 2019 (forecast, unit: RMB 100 million)
The overall development quality of the industry continued to improve. In 2019, 238 companies are expected to have sales of more than 100 million yuan, an increase of 30 companies or 14.4% from the 208 companies in 2018. Table 5 shows the growth in the number of companies with sales over 100 million since 2010. The total sales of these 238 companies with sales of over 100 million yuan reached 233.76 billion yuan, an increase of 28 billion yuan over the previous year’s 205.76 billion yuan, accounting for 75.8% of the industry’s total sales, down from 79.9% in the previous year up 4.1 percentage points.
Table 5: Growth in the number of companies with sales exceeding 100 million
Table 6 shows the regional distribution of companies with sales over 100 million. It can be seen that the Yangtze River Delta region has the largest number of companies with sales of over 100 million, a total of 107, an increase of 24 over the previous year, accounting for 45%; the Pearl River Delta has 45 companies with sales of over 100 million, a decrease of 3 over the previous year. The proportion has dropped to 18.9%; there are 40 companies in the Beijing-Tianjin-Bohai Rim region, a decrease of 4 from the previous year, accounting for 16.8%, and 46 companies in the central and western regions have sales of over 100 million, an increase of 13 from the previous year, and the proportion has increased to 19.3%.
Table 6: Regional distribution of companies with sales exceeding 100 million
Table 7 shows the city distribution of companies with sales of over 100 million. From the data point of view, Beijing has the largest number, reaching 30, which is 3 less than the previous year, accounting for 12.6%; Shanghai is second, with a total of 27, which is 1 less than last year, accounting for 11.3%; Shenzhen ranks No. 1 Three, 26 companies sold more than 100 million yuan, 3 less than the previous year, accounting for 10.9%. In addition, there are 21 companies in Hangzhou, 20 companies in Wuxi, 17 companies in Chengdu, 16 companies in Nanjing, and 12 companies in Xi’an, 11 companies in Hefei and 10 companies in Suzhou have sales of more than 100 million yuan.
Table 7: City distribution of companies with sales exceeding 100 million
Table 8 shows the distribution of enterprises with different sales in each region. Among them, the number of enterprises with sales of 50 million yuan to 100 million yuan is 218; the number of enterprises with sales of 10 million yuan to 50 million yuan is 417; There are 907 enterprises with an amount of less than 10 million yuan. The accuracy of these data is limited due to insufficient sample size.
Table 8: Regional distribution of enterprises by sales
Statistics on the profitability of enterprises should be able to more accurately reflect the operation of the entire industry. However, similar to the previous statistics on the distribution of companies with different sales, in the process of statistics, most companies are more cautious about providing this content, so that the number of statistical samples for whether companies are profitable is insufficient. Therefore, the statistical data of corporate profitability obtained by extrapolation based on past accumulation may have large errors, which are only for the reference of entrepreneurs and friends. According to the extrapolation of the collected statistical data, the number of profitable companies in 2019 is roughly 781, an increase of 36 from 745 in 2018; the number of unprofitable companies has increased from 953 last year to 999. 46 more. According to the statistics of the top 100 design companies, the average gross profit margin of these companies is expected to be 34.2%, up 2.2 percentage points from 32.0% in the previous year. Judging from the situation in recent years, the gross profit margin of the top 100 design companies has been hovering around 30%, with little overall improvement.
The average gross profit margin of the top ten design companies was 32.18%, an increase of 0.51 percentage points from 31.67% in 2018. Although the gross profit margin of the top ten design companies is increasing, the gross profit margin of some individual companies is also declining, and the gross profit margin of some companies is low. In recent years, the scale of the top ten design companies has continued to grow, but their profitability has not increased simultaneously. The average gross profit margin of the top ten design companies has been lower than that of the top 100 design companies for three consecutive years.
Table 9 shows the personnel size statistics of design enterprises. Statistics show that there are 18 companies with more than 1,000 employees; 33 companies with 500-1,000 employees, an increase of 12 over the previous year; 153 companies with 100-500 employees, an increase of 27 over the previous year. Family. However, 88.5% of the total were small and micro enterprises with less than 100 employees, a total of 1,576, 43 more than the previous year. The number of enterprises with more than 100 employees has increased significantly, but the overall number is still small. In 2019, the number of employees in my country’s chip design industry is about 180,000, and the corresponding per capita output value is 1.928 million yuan, or about 275,000 US dollars, and the per capita labor productivity has increased significantly.
Table 9: Scale of design companies in 2018-2019
4. Product structure. Table 10 shows the distribution of the main product fields of design companies in my country in 2019. The number of companies is increasing in the five fields of communications, smart cards, computers, navigation and consumer electronics; the number of companies in the multimedia, analog and power fields is decreasing. The number of companies engaged in communication chip design increased from 307 in 2018 to 403, and the corresponding total sales increased by 7.8% to 112.82 billion yuan; smart card companies increased from 71 in the previous year to 102, and sales increased by 24.6%. reached 17.21 billion yuan; the number of companies engaged in computer chip design increased from 109 last year to 140, and sales increased by 16.9% to 42.03 billion yuan; companies engaged in multimedia decreased from 75 last year to 55, and the total sales fell The number of companies engaged in the research and development of navigation chips increased from 28 to 41, and the total sales increased by 157.4% to 1.47 billion yuan; the number of analog circuit companies decreased from 210 to 102 , sales fell by 7.4% to 13.12 billion yuan; the number of companies engaged in power device business decreased from 115 to 89, and the total sales increased by 23.5% to 9.78 billion yuan; the number of consumer electronics companies from the previous year. 783 The number of homes increased to 847, and sales increased by 55.6% to 96.03 billion yuan, continuing the growth momentum in 2018.
Table 10: Design companies and sales distribution in various product fields (unit: RMB 100 million)
The lack of stability in corporate categorization that has persisted over the past few years has not eased. A considerable number of enterprises frequently change fields when filling in the classification. There may be various reasons: first, the business direction of the enterprise is still being adjusted; second, the main business of the enterprise has not yet been formed; third, the enterprise has changed the direction of the main business during the process of merger and reorganization; A variety of businesses, and the growth of different businesses is random, resulting in frequent changes in classification.
5. Industrial concentration has improved. In 2019, the total sales of the top ten design companies accounted for more than 50% of the total industry sales for the first time, reversing the previous decline. The total sales of the three largest communication chip companies exceeded 100 billion yuan, accounting for 88.7% of the total sales in this field of 112.82 billion yuan; in the multimedia field, one company accounted for 57.6% of the total. With the steady increase in industrial concentration, the previous situation of small, scattered and weak is expected to usher in a turnaround, and the chip design industry will experience positive changes in the absence of a “group of small sampans” and the lack of an “aircraft carrier fleet”. We can fully expect the grand occasion of China’s IC design industry to have several “aircraft carrier fleets” in the near future.
6. On mergers and acquisitions and capital markets. Since 2017, under the influence of the U.S. government’s tightening of approvals for Chinese capital to acquire U.S. companies, outbound M&A has basically stagnated. However, the long-awaited comprehensive liberalization of the domestic capital market has emerged. Since the beginning of this year, Broadcom Integrated has been listed on the main board, Zhuosheng Microelectronics has been listed on the Growth Enterprise Market, and Montage Technology and Jingchen have been listed on the Science and Technology Innovation Board. Not only does the domestic capital market open the door for the IPO of chip design companies, but it also actively supports the mergers and acquisitions of domestic companies. Recently, Weil shares successfully acquired Howe Technology, and Junzheng Microelectronics successfully acquired Beijing Silicon Semiconductor. With the active layout of the National Integrated Circuit Industry Investment Fund and the hard work and accumulation of entrepreneurs and friends over the years, more design companies will land in the capital market or realize restructuring in the future.
2. Achievements and Challenges
In 2019, although the development of China’s integrated circuit design industry encountered many difficulties, it continued the good trend of these years in general. While a batch of high-end general-purpose chips made breakthroughs, the competitiveness of mid- and low-end chips continued to improve. According to the statistics of China Customs (Table 11), in the five years from 2014 to 2018, the value of China’s imported integrated circuits increased from US$211.7 billion to US$312.1 billion, an increase of 43.3%. Among them, microprocessor/microcontroller increased from $105.22 billion to $127.44 billion, an increase of $22.22 billion in absolute value; semiconductor memory increased from $54.28 billion to $123.07 billion, an increase of $68.97 billion; amplifiers increased from $9 billion It increased to $9.77 billion, an increase of only $770 million, a growth rate of 8.6%, and other integrated circuits increased from $49.22 billion to $51.77 billion, an increase of only $2.52 billion, a growth rate of only 5.2%. This shows that in the field of amplifiers and other integrated circuits, the competitiveness of domestic enterprises has been greatly improved, effectively curbing import demand.
Table 11: Imported integrated circuits in 2014/2018 (unit: RMB 100 million)
High-end general-purpose chips represented by CPU are the jewel in the crown of global semiconductors, and my country’s external dependence in this field has always been high. This year, the situation has changed. Domestic CPUs have achieved good results in the dedicated market. Although domestic CPUs are still not comparable to the international advanced level in terms of overall indicators, the quality of service to customers has been improved through measures such as being close to the market and actively responding to customer needs, which not only meets the needs of the dedicated market, but also continues to improve in actual use. own ability, and gradually improve the competitiveness of products. At present, some domestic CPUs have begun to step out of the dedicated market and try to enter the open market to participate in competition. Being in the huge market of China, we have reason to believe that in the next few years, high-end general-purpose chips such as domestic CPUs will be able to continue to improve, continue to narrow the gap with the international advanced level, gradually win the favor of the market, and develop a domestic high-end general-purpose chip. development path.
As individual countries continue to try to provoke international trade disputes with unilateral methods, the global supply chain system established over the past 30 years is being seriously challenged. Domestic and foreign companies are seriously thinking about and actively responding to and deploying their own secure supply chains. Affected by this, China’s chip design industry has felt pressure on the one hand, and on the other hand, it has also obtained rare development opportunities. Some domestic high-end general-purpose chips have gone from being uninterested before to now becoming very popular. If you use cold and warm knowledge, you may not be able to describe the current mood of these companies. In fact, they are going through a critical stage of development, a challenge but also an opportunity, pain and joy. It can be boldly predicted that if the current situation does not fundamentally change, the Chinese chip design industry will assume more responsibility for the security supply chain. Even if the current situation changes, the need to establish a secure supply chain will not disappear. After all, the lessons learned cannot be forgotten.
2. Challenges faced
Although the development speed of China’s integrated circuit design industry in the past 20 years is obvious to all, it has become a bright spot in China’s integrated circuit industry, but from the perspective of products, we still have not gotten rid of “the overall technical level is not high, the core product innovation is not strong, the enterprise The competitive strength is not strong and the traces of barbaric growth are obvious”. The statistics of 2019 show that the deep-seated problems affecting the development of the design industry still exist, and the existing deep-seated contradictions have not been fundamentally alleviated.
First, my country’s chip design industry has not been able to meet the needs of the market. “Strong demand and insufficient supply” is still the fundamental contradiction currently facing. Although the industry-wide sales in 2019 reached 308.49 billion yuan, surpassing the 300 billion yuan mark for the first time, it was only 44.07 billion US dollars in US dollars. According to WSTS statistics, in 2018, we imported 312.1 billion US dollars of integrated circuits, of which nearly 50% were exported to the international market along with the whole machine products, but more than 50%, that is, 158.4 billion US dollars of integrated circuits, were consumed in the Chinese market. If we apply the 2019 data to 2018, that is, remove the $44.07 billion of local products, there are still more than $114 billion of imported products. Although we do not hope to achieve 100% localization, the local market share of 27.8% does not mean that my country’s integrated circuit design industry has sufficient competitiveness. What’s more, the products of China’s integrated circuit design industry are mainly concentrated in the low-end, and there are not many achievements in the field of high-end general-purpose chips. Centering on products, especially high-end chip products, will inevitably become the development focus of my country’s integrated circuit industry.
Second, the technological progress of the vast majority of integrated circuit design companies in my country is still very limited. The overall technical route has not been freed from following and imitating, and in most cases following others, the product innovation ability is not strong, the competitiveness is weak, and the phenomenon of product upgrading and upgrading relying on the progress of technology and EDA tools has not changed. There are still few companies that can define the design process by themselves and adopt the COT design method for product development according to their own needs and processes.
Third, although we have made some progress in the field of artificial intelligence chips in recent years, we have made several influential chip products, which have also given the international community a new understanding of my country’s design industry, but if we carefully examine the The achievements in the field of artificial intelligence chips, it is not difficult to find that these achievements are still very preliminary, which does not mean that they will be able to win in the future competition. The fundamental reason is that our core technology is not good enough. At present, the international development path of artificial intelligence chips lies in the basic consensus on the collaborative design of algorithms and chip architectures, but Chinese companies either focus on developing chips based on existing algorithms, or focus on adjusting algorithms according to chip implementation requirements. There are still very few companies that can integrate architecture design with algorithm design.
Fourth, although high-end general-purpose chips such as CPUs have made important breakthroughs in the special-purpose market, due to the limited size of the special-purpose market and the particularity of applications, the growth of products, especially in enhancing the competitiveness of products in the general-purpose market, is very limited. . What is even more worrying is that when the outside world is suppressing and containing me, it is easy to direct the attention of enterprises to those dedicated markets that we have more control over. Achievements, forgetting that the ultimate goal of developing integrated circuits is to serve the general market and to be able to dance with international partners on the same stage. If you can’t turn your energy to 95% of the public market, then even if you do well in the 5% of the private market, you will still be entertaining yourself and will not be the king of the market.
Fifth, under the influence of the ZTE incident and the Huawei incident, building a secure global supply chain has become the consensus of many companies. Due to the lack of IDM in China, this aspect brings a rare development opportunity for the integrated circuit design industry, and on the other hand, it also puts forward higher requirements for the design industry. It is worth noting that when customers switch from international sellers to domestic enterprises, they will not adopt low standards and low requirements for us. They will treat us with the same standards as international counterparts, or even harsher and more critical eyes. Only when our products reach the same level as our international counterparts, can we obtain entry qualifications, and there is no guarantee that we will be able to get the market. In fact, Chinese chip design companies are not only faced with product performance and quality that meet the standards of international counterparts, but also have a competitive advantage in cost. If our products don’t consistently create value for our customers, why should they choose us? Clearly, our business must face many challenges. Are we ready for this?
Three, some thoughts
First of all, let us review the development goals for the integrated circuit design industry put forward by the “National Integrated Circuit Industry Development Promotion Outline”: by 2020, the total sales of the integrated circuit design industry will reach 350 billion yuan. This year, we handed in a good answer sheet with a performance of 308.49 billion yuan, which can be said to have passed the midterm exam. Next year, industry-wide sales only need to grow by 13.5% to reach the target. Therefore, we are now fully confident that we will be able to exceed the development goals set for us in the planning outline.
Second, uncertainty is an important symbol of the current international situation, which will inevitably have an impact on the integrated circuit industry. On the one hand, we must have bottom-line thinking, make various possible plans, and take precautions. “Everything is foreshadowed, and if you don’t predict it, you will fail.” If you are prepared, you can deal with it calmly. On the other hand, the IC design industry also needs to establish a secure supply chain. We don’t want all links to be mine, but we should also avoid trapping us when they go wrong. Integrated circuit design is related to products, and it is the producer of integrated circuit products. Problems in the design industry will directly affect the downstream electronic machine industry. Therefore, it is not unfounded to propose to improve and establish a secure IC design industry supply chain.
Third, we must seize the development opportunity brought by the fifth-generation mobile communication, work hard, and strive for a new level of design industry. In any case, the 5G era has arrived. More people’s understanding of 5G is still on the improvement of communication speed, and they do not know much about the deep-level industrial restructuring that may be triggered by the 5G era. In fact, the increase in speed is only one of the many benefits brought to us in the development of 5G. First of all, users need to replace their mobile phones in the 5G era, and the huge market of 5 billion mobile phones in the world has enough room for imagination; secondly, with the support of the features of enhanced mobile broadband, the time to download a high-definition movie is shortened to a few seconds to For more than ten seconds, the user can download a high-definition movie for viewing on the plane during the boarding process, and a high-definition movie has a capacity of several GB. The mobile phone will not be 128GB or 256GB, but may be 1TB, 2TB, the demand for storage will double several times. In this way, it is understandable why the major players of global semiconductor memory have been desperately expanding production recently. Due to the increase in bandwidth, the transmission of ultra-high-definition video has become possible, and technologies such as virtual reality, augmented reality and mixed reality have gradually become practical; Implementation of the “Internet Plus” action plan. The unique slicing function of the 5G system will promote the vertical integration of the industrial field and bring about the adjustment of the industrial structure. There are too many business opportunities here; fourth, large-scale machine-type communication will truly realize the interconnection of everything, paving the way for the development of smart cities and precision agriculture. Imagine that the arrival of 5G can allow us to deploy 1.2 trillion sensors on 1.8 billion mu of arable land (120 million hectares), bringing efficient, energy-saving and green agricultural production, and greatly changing the rough production model of my country’s agriculture. The possible benefits of 5G cannot be stated one by one, and some may not be apparent for many years, but we have to make arrangements now.
Fourth, the development of the design industry needs the attention of the whole society, not only the talent training of colleges and universities, the strong support of consumers, but also the support and help of the government. At present, the popularity of integrated circuits across the country is in the ascendant, and the enthusiasm of local governments to attract investment is high. Integrated circuits have become the key target of investment attraction, which has greatly promoted the development of the integrated circuit design industry, but also brought some negative effects. Of the 1,780 chip design companies we count today, a considerable proportion of them are made up of branches of our companies in various places. Although from the enterprise’s point of view, it is possible to obtain support and preferential treatment from the local government by setting up branches, but the increased management costs cannot be ignored. If the construction of branch offices is still reasonable, the role of a large number of micro start-ups may be difficult to classify as completely positive. A considerable number of these start-ups are not based entirely on market principles, but are favored by local governments. The attraction of policy and financial support will face great challenges in future development. What is even more worrying is that a large number of dwarf-type and vegetative enterprises are still occupying the extremely scarce and very valuable human resources, which prevents social resources from being concentrated in advantageous enterprises, which in turn affects the healthy development of the entire industry. We sincerely hope that local governments will keep their original intentions when developing the integrated circuit industry, and prevent “doing bad things with good intentions.” At the same time, we also appeal to all entrepreneurs and friends. It is good to be able to achieve an IPO, but being acquired is also a sign of business success. We hope that in the next few years, the number of integrated circuit design companies can be effectively reduced, and a group of large-scale chip design companies with tens of thousands of employees and sales of more than 10 billion yuan will emerge.
Finally, open cooperation is the key to the vigorous development of China’s integrated circuit design industry from small to large, and the design industry needs open cooperation most. Our development today is indeed plagued to a certain extent, but it is not caused by openness. Instead, we are more worried about the self-isolation under the banner of breaking the embargo and the development of closed doors under the slogan of ensuring security. If this is the case, our industry will never be able to get out of the “air-raid shelter” of those special markets, and our enterprises will never be able to go abroad and become a strong player who can compete in the international market.
China’s integrated circuit design industry has achieved good results in 2019, which is the result of the joint efforts of colleagues across the industry. The next few years will be a critical period for the development of China’s integrated circuit industry. The design industry is responsible for providing products that meet demand and competitiveness. We cannot relax. Customers are always our God. Only by continuously satisfying customers’ needs and creating value for customers can we finally realize our value.
thank you all!