Wei Shaojun: Promoting the re-globalisation of the semiconductor industry is in the interest of all mankind
The globalisation process of the semiconductor industry has been interrupted and the global supply chain of semiconductors is suffering from man-made disruptions. Wei Shaojun pointed out that first the US government's unreasonable crackdown on Chinese companies such as Huawei caused disruption to the global semiconductor production order, then superimposed on the impact of the global pandemic of the new crown epidemic, and by the impact of the industrial cycle, the world has seen an unprecedented shortage of chips ......
Recently, Wei Shaojun, a professor at Tsinghua University, attended the 2nd Nansha International IC Industry Forum in Guangzhou and delivered a keynote speech entitled "Re-globalisation of the Semiconductor Industry". He said that after the past 20 years of development, it is very regrettable that the globalisation process of the semiconductor industry has been interrupted and the Chinese semiconductor industry, which was built on the basis of globalisation, is facing serious challenges. In this regard, China should re-conceptualise the globalisation of the semiconductor industry, actively maintain the integrity of the semiconductor global supply chain and physically promote the re-globalisation of the semiconductor industry.
Semiconductor global supply chain is being undermined
In Wei Shaojun's view, the birth of the semiconductor global supply chain is a reflection of human beings following the laws of social and economic development. In the past three decades, with the unification of mobile communication standards, related product technologies have also been gradually unified, promoting the globalisation of the semiconductor industry and the globalisation of the semiconductor supply chain. Although the formation of a global semiconductor supply chain is influenced by various factors including cost, delivery time, capacity, technology, market, economy, culture and society, the semiconductor supply chain has been driven by the fundamental drive to maximise profits, and has gradually achieved globalisation through the "government acquiescence, industry driven" approach. In 2006, with China's Semiconductor Industry Association joining the World Semiconductor Council (WSC), the global semiconductor supply chain was able to fill the last gap in the market. Since then, with China's active participation, the global semiconductor supply chain has been continuously improved, which has greatly contributed to the steady growth of the global semiconductor industry. According to statistics, the sales scale of the global semiconductor industry was US$247.7 billion in 2006, while it reached US$574.1 billion in 2022, an increase of 131.8%. And according to China Customs, the value of China's imports of integrated circuits exceeded US$200 billion for the first time in 2013, US$300 billion in 2017, and US$400 billion by 2021. China's global share of imported ICs has been over 60% since 2012, peaking at over 80%. China has played a key role in the global supply chain of semiconductors, contributing significantly to the development of the global semiconductor industry. It is also clear from this that the semiconductor global supply chain has indeed generated considerable profits for all parts of the industry chain. There is no doubt that China is both a participant, a beneficiary and a contributor to the globalisation process.
However, the globalisation process of the semiconductor industry has been interrupted, and the semiconductor global supply chain is suffering from artificial damage. Wei Shaojun pointed out that first, the US government's unreasonable suppression of Chinese companies such as Huawei caused disruptions in the global semiconductor production order, then superimposed on the impact of the global pandemic of the new crown epidemic, and the impact of the industrial cycle, the world has seen an unprecedented shortage of chips. The US government used this opportunity to try to exclude China from the global semiconductor supply chain for the purpose of suppressing China - first by restricting the development of semiconductor companies from other countries in China through the Chip and Science Act, and then by joining forces with Japan, South Korea and Taiwan to create the so-called "Chip The U.S. has also pressured the Netherlands and Japan to introduce export control measures for semiconductor equipment, seeking to exclude China from the global supply chain of semiconductors.
At the same time, the "America First" strategy pursued by the United States and the series of oppressive measures and tactics adopted during the global chip shortage have also made major countries and regions in the semiconductor industry worried and have introduced their own "chip bills", which have in fact launched an The "arms race" in the field of semiconductors has in fact started. As the six member countries and regions of the WSC account for 95% of the world's semiconductor industry, this "arms race" is bound to be global. "If each country and region to engage in a set of their own, the end result will certainly make globalization stagnant, but also will certainly make the semiconductor global supply chain fragmentation, this is an inevitable phenomenon." Wei Shaojun said bluntly. This is also TSMC founder Zhang Zhongmou said "globalization and free trade is almost dead, and is unlikely to be restored" the deep-seated reason behind this statement. No one doubts that once the global supply chain for semiconductors ceases to exist, everyone will be a loser.
China's semiconductor industry faces serious challenges
Similarly, the Chinese semiconductor industry, which has been established on the basis of globalisation, is bound to face serious challenges. According to Wei Shaojun, the main model of China's semiconductor industry is "design-foundry". The advantage of this model is that the best allocation of resources can be sought globally. If the premise of globalisation does not exist, this model can only be local or regional resource allocation, the advantage will be greatly weakened.
Wei Shaojun told reporters that since entering the new century, with the help of globalisation, the progress of domestic IC products has been very obvious, with industry-wide sales revenue growing from 8.15 billion yuan in 2004 to 515.62 billion yuan in 2022, an increase of 62.3 times, with an average annual compound growth rate of 25.9%, 3.1 times faster than the global average annual compound growth rate of 6.39% in the same period. However, the growth of market demand was even faster during the same period, so there is still a large gap between the development of domestic IC products and market demand. Statistics show that in 2022, the sales revenue of domestic chips in terms of value will only account for 41.4% of the domestic market demand and only 13.6% of the global market, and the market share of high-end products is not high.
Meanwhile, in the field of integrated circuit manufacturing, the growth of foreign-owned companies in China accounts for a large proportion of the growth in China's semiconductor manufacturing industry. With the increasing suppression of Chinese companies by the US, the development of the domestic semiconductor manufacturing industry has slowed down, although there is still an average annual compound growth rate of 14.7%, far less than the 30% growth rate of foreign companies. With the disruption of the globalisation of the semiconductor industry and the disruption of the global supply chain of semiconductors, not only will the development of the domestic semiconductor manufacturing industry face huge challenges, but it will also affect the development of the chip design industry.
Promoting the re-globalisation of the semiconductor industry
"Semiconductors are a top priority for China's industrial development." Wei Shaojun said, China's semiconductor industry is in a critical moment of internal and external problems, we need to have firm confidence and fully understand that China's ongoing industrial upgrading is the right way in line with the law of things.
In Wei Shaojun's view, China's mega-chip market position will not change in the short term, and the interdependence between China and the world is likely to rebalance, but the general trend will not change. He proposed that the re-globalisation of the semiconductor industry should be promoted on the basis of achieving self-reliance and self-improvement. "The more others suppress us, the more self-reliant and self-improving we have to be. But self-reliance and self-improvement is not the same as self-enclosure, but rather finding ways to break the blockade and containment." He believes that the core of the re-globalisation of the semiconductor industry is to unite all countries and companies willing to cooperate and recreate globalisation around the large Chinese market. If the previous globalisation was characterised by the division of labour, re-globalisation will be dominated by cooperation. In the past two decades, China has been more involved in the globalisation of the semiconductor industry and the globalisation of the semiconductor supply chain, lacking in leadership, but in the process of re-globalisation, China's role needs to change fundamentally, to play an important role and make a difference.
Wei Shaojun believes that the key to China taking up the heavy responsibility of re-globalisation lies in realising the self-reliance and self-improvement of semiconductor technology. Currently, the overall situation of China's semiconductor companies is not optimistic. According to an analysis of the annual reports of 135 companies listed on the STB and GEM, the average gross margin was only 39.1%, and the proportion of R&D investment to sales revenue was 14.3%; while an analysis of 62 chip design companies listed on the STB showed that although the R&D ratio reached 20.8%, the gross margin was only 34.2%. It is urgent to increase investment in R&D and enhance product competitiveness.
Under the tide of counter-globalisation, the only path to seek development is innovation. Wei Shaojun said that while maintaining an open and cooperative posture, it is necessary to open up new tracks and expand new spaces outside the traditional market. Statistics from the China Association of Automobile Manufacturers show that the average number of chips per car has reached 934, and 1,459 for electric cars, which means that vehicle-gauge chips will be a strategic must in the future. In addition, artificial intelligence is a feast not to be missed, and the development of high-calculus, low-energy and energy-efficient artificial intelligence server chips will become a necessity and a major development direction. These new tracks and spaces will further enhance China's position and strength in the re-globalisation process, and will inevitably provide a positive boost to the development of the global semiconductor industry, thus hedging against the effects of reverse globalisation.
Recently, Wei Shaojun, a professor at Tsinghua University, attended the 2nd Nansha International IC Industry Forum in Guangzhou and delivered a keynote speech entitled "Re-globalisation of the Semiconductor Industry". He said that after the past 20 years of development, it is very regrettable that the globalisation process of the semiconductor industry has been interrupted and the Chinese semiconductor industry, which was built on the basis of globalisation, is facing serious challenges. In this regard, China should re-conceptualise the globalisation of the semiconductor industry, actively maintain the integrity of the semiconductor global supply chain and physically promote the re-globalisation of the semiconductor industry.
Semiconductor global supply chain is being undermined
In Wei Shaojun's view, the birth of the semiconductor global supply chain is a reflection of human beings following the laws of social and economic development. In the past three decades, with the unification of mobile communication standards, related product technologies have also been gradually unified, promoting the globalisation of the semiconductor industry and the globalisation of the semiconductor supply chain. Although the formation of a global semiconductor supply chain is influenced by various factors including cost, delivery time, capacity, technology, market, economy, culture and society, the semiconductor supply chain has been driven by the fundamental drive to maximise profits, and has gradually achieved globalisation through the "government acquiescence, industry driven" approach. In 2006, with China's Semiconductor Industry Association joining the World Semiconductor Council (WSC), the global semiconductor supply chain was able to fill the last gap in the market. Since then, with China's active participation, the global semiconductor supply chain has been continuously improved, which has greatly contributed to the steady growth of the global semiconductor industry. According to statistics, the sales scale of the global semiconductor industry was US$247.7 billion in 2006, while it reached US$574.1 billion in 2022, an increase of 131.8%. And according to China Customs, the value of China's imports of integrated circuits exceeded US$200 billion for the first time in 2013, US$300 billion in 2017, and US$400 billion by 2021. China's global share of imported ICs has been over 60% since 2012, peaking at over 80%. China has played a key role in the global supply chain of semiconductors, contributing significantly to the development of the global semiconductor industry. It is also clear from this that the semiconductor global supply chain has indeed generated considerable profits for all parts of the industry chain. There is no doubt that China is both a participant, a beneficiary and a contributor to the globalisation process.
However, the globalisation process of the semiconductor industry has been interrupted, and the semiconductor global supply chain is suffering from artificial damage. Wei Shaojun pointed out that first, the US government's unreasonable suppression of Chinese companies such as Huawei caused disruptions in the global semiconductor production order, then superimposed on the impact of the global pandemic of the new crown epidemic, and the impact of the industrial cycle, the world has seen an unprecedented shortage of chips. The US government used this opportunity to try to exclude China from the global semiconductor supply chain for the purpose of suppressing China - first by restricting the development of semiconductor companies from other countries in China through the Chip and Science Act, and then by joining forces with Japan, South Korea and Taiwan to create the so-called "Chip The U.S. has also pressured the Netherlands and Japan to introduce export control measures for semiconductor equipment, seeking to exclude China from the global supply chain of semiconductors.
At the same time, the "America First" strategy pursued by the United States and the series of oppressive measures and tactics adopted during the global chip shortage have also made major countries and regions in the semiconductor industry worried and have introduced their own "chip bills", which have in fact launched an The "arms race" in the field of semiconductors has in fact started. As the six member countries and regions of the WSC account for 95% of the world's semiconductor industry, this "arms race" is bound to be global. "If each country and region to engage in a set of their own, the end result will certainly make globalization stagnant, but also will certainly make the semiconductor global supply chain fragmentation, this is an inevitable phenomenon." Wei Shaojun said bluntly. This is also TSMC founder Zhang Zhongmou said "globalization and free trade is almost dead, and is unlikely to be restored" the deep-seated reason behind this statement. No one doubts that once the global supply chain for semiconductors ceases to exist, everyone will be a loser.
China's semiconductor industry faces serious challenges
Similarly, the Chinese semiconductor industry, which has been established on the basis of globalisation, is bound to face serious challenges. According to Wei Shaojun, the main model of China's semiconductor industry is "design-foundry". The advantage of this model is that the best allocation of resources can be sought globally. If the premise of globalisation does not exist, this model can only be local or regional resource allocation, the advantage will be greatly weakened.
Wei Shaojun told reporters that since entering the new century, with the help of globalisation, the progress of domestic IC products has been very obvious, with industry-wide sales revenue growing from 8.15 billion yuan in 2004 to 515.62 billion yuan in 2022, an increase of 62.3 times, with an average annual compound growth rate of 25.9%, 3.1 times faster than the global average annual compound growth rate of 6.39% in the same period. However, the growth of market demand was even faster during the same period, so there is still a large gap between the development of domestic IC products and market demand. Statistics show that in 2022, the sales revenue of domestic chips in terms of value will only account for 41.4% of the domestic market demand and only 13.6% of the global market, and the market share of high-end products is not high.
Meanwhile, in the field of integrated circuit manufacturing, the growth of foreign-owned companies in China accounts for a large proportion of the growth in China's semiconductor manufacturing industry. With the increasing suppression of Chinese companies by the US, the development of the domestic semiconductor manufacturing industry has slowed down, although there is still an average annual compound growth rate of 14.7%, far less than the 30% growth rate of foreign companies. With the disruption of the globalisation of the semiconductor industry and the disruption of the global supply chain of semiconductors, not only will the development of the domestic semiconductor manufacturing industry face huge challenges, but it will also affect the development of the chip design industry.
Promoting the re-globalisation of the semiconductor industry
"Semiconductors are a top priority for China's industrial development." Wei Shaojun said, China's semiconductor industry is in a critical moment of internal and external problems, we need to have firm confidence and fully understand that China's ongoing industrial upgrading is the right way in line with the law of things.
In Wei Shaojun's view, China's mega-chip market position will not change in the short term, and the interdependence between China and the world is likely to rebalance, but the general trend will not change. He proposed that the re-globalisation of the semiconductor industry should be promoted on the basis of achieving self-reliance and self-improvement. "The more others suppress us, the more self-reliant and self-improving we have to be. But self-reliance and self-improvement is not the same as self-enclosure, but rather finding ways to break the blockade and containment." He believes that the core of the re-globalisation of the semiconductor industry is to unite all countries and companies willing to cooperate and recreate globalisation around the large Chinese market. If the previous globalisation was characterised by the division of labour, re-globalisation will be dominated by cooperation. In the past two decades, China has been more involved in the globalisation of the semiconductor industry and the globalisation of the semiconductor supply chain, lacking in leadership, but in the process of re-globalisation, China's role needs to change fundamentally, to play an important role and make a difference.
Wei Shaojun believes that the key to China taking up the heavy responsibility of re-globalisation lies in realising the self-reliance and self-improvement of semiconductor technology. Currently, the overall situation of China's semiconductor companies is not optimistic. According to an analysis of the annual reports of 135 companies listed on the STB and GEM, the average gross margin was only 39.1%, and the proportion of R&D investment to sales revenue was 14.3%; while an analysis of 62 chip design companies listed on the STB showed that although the R&D ratio reached 20.8%, the gross margin was only 34.2%. It is urgent to increase investment in R&D and enhance product competitiveness.
Under the tide of counter-globalisation, the only path to seek development is innovation. Wei Shaojun said that while maintaining an open and cooperative posture, it is necessary to open up new tracks and expand new spaces outside the traditional market. Statistics from the China Association of Automobile Manufacturers show that the average number of chips per car has reached 934, and 1,459 for electric cars, which means that vehicle-gauge chips will be a strategic must in the future. In addition, artificial intelligence is a feast not to be missed, and the development of high-calculus, low-energy and energy-efficient artificial intelligence server chips will become a necessity and a major development direction. These new tracks and spaces will further enhance China's position and strength in the re-globalisation process, and will inevitably provide a positive boost to the development of the global semiconductor industry, thus hedging against the effects of reverse globalisation.
