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2019

03/18

The Last Hope of Japanese IC: Sony Semiconductor

It's amazing: "The era of Sony Semiconductor has arrived. Sony DNA, which created the world's first real Transistor Radio, is still in the semiconductor field. Over the past few years, it is expected to invest more than 2 trillion yen (about 120 billion yuan). It should be the leader of Japanese Semiconductor industry. Sony's best CMOS (Complementary Metal Oxide Semiconductor) image sensor should drive the sale of photodiodes, photoCouplers, microcontrollers, memory and other components, which is unusual! "

It was an analyst in the securities industry who said the above. Indeed, Sony's image processing chip, CMOS image sensor, has been ranked first in the world with absolute advantage, accounting for 51% of global sales in 2018 (51% of global sales, from Techno Systems Research).

The huge demand for surveillance cameras and vehicles

It is said that China has invested 20 trillion yen (about 1.200 billion yuan) in the social credit system, the core of which is to promote the introduction of camera surveillance networks throughout the country. It is said that there are about 100 million surveillance cameras at present, which will increase to 600 million in the future, and most of them use Sony's CMOS image sensors. Although the development trend of image sensors for smartphones is declining, with the transition to high-end products, the number of products with three sensors is increasing, which has become a "downwind" to promote Sony's development.

In terms of vehicle, Sony's technology is absolutely outstanding. According to Sony's technical level, the product has 100 million pixels, high temperature resistance to 150 degrees, DRAM, high precision and super high speed, and no LED signal flashing. This should be beyond the expectation of Samsung and Omnivision. If a car is driverless with Level 4 or more, 19 CMOS image sensors will be installed on it. It is estimated that the number of driverless cars shipped per year is 100 million. It can be predicted that the performance of Sony Semiconductor, which dominates the vehicle market, will rise sharply.

Establish and implement equipment investment totalling more than 2 trillion yen (about 120 billion yuan)

In the past two to three years, Sony has made a decisive investment of 600 billion yen (about 36 billion yuan) and the production capacity of 300 mm wafers has to be increased to more than 130,000. With the expansion of equipment in Japan's mountain-shaped science and technology factory as the core, the production capacity of Nagasaki and Kumamoto factories has gradually increased. In addition, the former Fujitsu Triple Factory (Foundry, Chip Manufacturer) under UMC (UMC Electronics Co., Ltd., Unicom) is also commissioned for production.

Sony's next step is to increase the wafer production capacity by 200,000 pieces, which requires at least 1 trillion and 200 billion yen (about 72 billion yuan) of investment, and ultimately more than 2 trillion yen of equipment investment. First of all, this is certainly true. It is certain that new large-scale factories will be laid out, and the relevant personnel responsible for attracting investment in Daofu prefectures and counties in Japan should begin to be active.

Contribution to sales of other semiconductor components

CMOS image sensor integrates photodiode, Photo Coupler, Microcontroller, Memory and many other semiconductor components. Sony has been purchasing components from outside that it does not produce. For example, optocouplers are purchased from Toshiba and DRAMs from Micron Technology Inc. However, Sony recently set up a new storage business within its group, and began the development of Resistive Random Access Memory, ReRAM. The microprocessor of Reza Electronics, which is currently in trouble, may use Sony's ReRAM in the future, and Sony is expected to commission Toshiba to produce memory memory memory in the future.

Today, with Toshiba's uncertain future and Risa's turbulence, Sony Semiconductor is the "missile head" of Japan's semiconductor industry, and may become the real savior. Moreover, the point is that CMOS image sensors in short supply are different from memory in price plunge. CMOS prices are about $1.7 per unit (about RMB 11.5 yuan, 13 million pixels), and there has been no price reduction in this year.

Current Situation of Semiconductors in Japan

IHS Markit announced the ranking of global semiconductor companies in the fourth quarter of 2018. This time, according to an interview with IHS Markit, we learned the ranking of major Japanese semiconductor companies in 2018. According to the figures, the overall sales of Japanese semiconductor enterprises increased by 4.7% in 2018 compared with 2017, reaching the size of 44.2 billion US dollars (about RMB 300.6 billion). Toshiba Memory (hereinafter referred to as Toshiba Storage) is the driving force behind this growth. Toshiba Storage's sales in 2018 amounted to $10.588 billion (about 72 billion yuan), an increase of 18.7% over 2017, making it the only Top10 company in Japan to achieve double-digit growth rate. In addition, there are four negative growth enterprises in Top10, namely, Reza Electronics in the second place, Toshiba in the fifth place, Japan Science in the sixth place and Panasonic in the ninth place.

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Japan's Domestic Semiconductor Sales Ranking

Toshiba Storage accounts for about 25% of the total sales of semiconductors in Japan. However, in August 2018, Toshiba Storage was sold to Japan, the United States and South Korea. It is no longer Toshiba's consolidated accounts company, but a non-listed company that has no obligation to submit portfolio reports. Therefore, there is a big gap between the statistics of Toshiba's storage and the statistics of the various market research companies. According to the survey of IHS Markit, Toshiba ranked seventh in the world (only in the fourth quarter of 2018, the ranking dropped to ninth due to the impact of the storage semiconductor bubble burst), according to Gartner's survey, Toshiba's storage fell below the top 10 (twelfth bits). According to IHS Markit, sales of Western Digital, a business partner of Toshiba Storage, increased by 2.2% over 2017, to $8.4 billion (about 57.1 billion yuan), ranking 12th in the world.

The second ranked Renesas Electronics was unaffected by the memory semiconductor bubble, and the situation was not optimistic due to the continuous increase in the number of microprocessors and other products. Sales in 2018 decreased by 3.1% from 2017 to 6 billion 707 million US dollars (about 45 billion 600 million yuan). Although Reissa Electronics acquired Intersil in the United States, it did not produce a significant effect after the acquisition. Rather, the reduction in Reissa Electronics's own sales seemed to offset the effect of the acquisition of Intersil. In order to reduce inventory, 9 factories in Japan plan to stop production for up to two months, which is likely to affect the performance in 2019.

The third is Sony Semiconductor Solutions Corporation, whose CMOS Image Sensor (image sensor) ranks first in the world. Although the smartphone market is in poor condition due to the downturn, it increased by 1.2% in 2018 from 2017 to 6.63 billion US dollars (about 45 billion RMB).

Sony is still investing in its future business. If it is fast, it will probably overtake Risa Electronics and become the second largest semiconductor company in Japan this year.

By the way, the top three companies account for more than half of Japan's total sales (54%). The third-ranked Sony Semiconductor Solutions Corporation has more than twice the sales of the fourth-ranked Roma, which can be said to constitute Top Group of Japanese Semiconductors.

In addition, Toshiba Semiconductor (Toshiba Device & Storage, excluding Toshiba Memory) ranked fifth, followed by Nissan Chemistry, Mitsubishi Electric, Mikan Electric, Panasonic and Socionext. With regard to Panasonic, the statistics are based on the semiconductor businesses of Automotive & Industrial Systems Company (its subsidiary is Panasonic Semiconductor Solutions).

The total sales of these Top 10 companies increased by 4.8% over last year, to $36.89 billion (about RMB 250.9 billion), accounting for 83.5% of the total sales of Japanese semiconductor companies. Compared with the global semiconductor market, the global Top5 company occupies 50% of the market, and the global Top10 company occupies about 60% of the market share, so we can see that the "oligopoly" is further developing.

In addition, Japan has the largest Fab factories using 150 mm (or smaller) wafers in the world. At the same time, it is well known that Japan has closed the most Fab factories in the past 10 years. Many Japanese semiconductor manufacturers are unable to make full use of Scale Merit, and Japan has not cultivated Fabless (IC Design Company), which can achieve rapid growth. Therefore, it is in line with the global semiconductor enterprises. Compared with industry, the growth rate of semiconductor enterprises in Japan is relatively low.

epilogue

According to an earlier article in Nikkei. com, according to the ICInsights report, Japanese companies accounted for 49% of the global share in 1990, but only 7% by 2017. Among the top 10 semiconductor companies in the world in 2018 released by Gartner, an American consulting firm, there are no Japanese companies. This shows that Japan's semiconductor industry has begun to slow down, and there are four reasons for this:

Inappropriate organization and strategy

At first, most of the semiconductor enterprises in Japan are only the sub-departments of integrated electronic enterprises. However, with the gradual expansion of business, semiconductor enterprises are often slowed down by the organizational strategy of integrated business when they need to make quick decisions. This business incubation mechanism has become the shackles of the development of Japanese semiconductor industry.

From the organizational point of view, comprehensive enterprises often take a few steps slowly to make investment decisions. They are small in scale and lack the ability to cope with external changes. When competition becomes fierce gradually, they are easy to be left behind by their opponents.

2. The Quality of Operators

Yukio Sakamoto, former president of Japan's Erbita Memory, pointed out that semiconductor, as a globalized industry, often requires leaders of enterprises to start negotiations around the world. The managers of enterprises must have enough ability and network to lead enterprises to the world and develop continuously. There are few such talents in Japan. Usually, the managers of enterprises only focus on the competition with domestic enterprises.

3. Closed door construction

Professor Ruo Lin Xiushu of the Graduate School of Tokyo University of Science said that Japanese companies refused to acquire because of their fear of difficulties and were only stuck in independent technology research and development, which led to insufficient competitiveness in innovation.

Taking Qualcomm as an example, as a "factory-free enterprise" based on intellectual property rights, Qualcomm expands intellectual property rights by acquiring start-ups. After constructing a rigorous patent strategy, the abundant technological innovation ability can be transformed into market competition advantage, and the market leading position can be obtained by means of intellectual property rights. This idea of creating value through intellectual property rights is lacking in Japanese enterprises. Closed-door manufacturing is also one of the important reasons for the slowdown of the semiconductor industry in Japan.

4. Emphasizing Technology and Despising Marketing

Industry insiders have pointed out that with the change of competition rules, the market can no longer win by virtue of weak technological leadership, and strategic cooperation with customers to expand use and create demand has become increasingly important.

However, Japanese enterprises are relatively slow in external changes. Although they have launched some common technology development projects, they have failed to contribute to the re-emergence of semiconductors in Japan, because the focus of competition in the semiconductor industry has shifted to marketing rather than technology.

But Sony's rise in recent years has given Japanese semiconductor companies new hope that this will also become their guide.