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2019

04/26

Current Situation and Future Development of Integrated Circuits in China

On the importance of the chip and integrated circuit industry, Qualcomm and Apple both officially announced recently that they had agreed to abandon all lawsuits worldwide and settle formally. Qualcomm said that as part of the agreement, the authorization period between it and Apple was six years and could be extended for another two years. As a result, better than Apple, it will eventually have to compromise with Qualcomm on baseband chips, which shows the importance of the chip and integrated circuit industry.

Recently, Qualcomm and Apple both officially announced that they agreed to abandon all lawsuits worldwide and settle formally. Qualcomm said that as part of the agreement, the authorization period between it and Apple was six years and could be extended for another two years. As a result, better than Apple, it will eventually have to compromise with Qualcomm on baseband chips, which shows the importance of the chip and integrated circuit industry.

Domestic substitution of integrated circuits in China is proceeding step by step.

On the contrary, China's integrated circuit industry has witnessed a boom of integrated circuit industry in the wake of the rejuvenation incident. Local governments have also issued a number of support policies, and domestic substitution is proceeding step by step.

According to preliminary statistics, as of April 2019, more than 15 provinces and municipalities in China have set up investment funds for local integrated circuit industries of varying scales, with a total scale of about 500 billion yuan.

In February 2019, the output of integrated circuits in China was close to 23 billion pieces.

According to the statistical data of "Market Demand Forecast and Investment Strategic Planning Analysis Report of China's Integrated Circuit Industry" published by Prospective Industry Research Institute, the output of integrated circuits in China declined gradually in February-April 2018, changed like a parabola in the quarter of 2011-3, and increased slightly in the quarter of 2012, an increase of 9.78% compared with the quarter of 2011. In December 2018, China's output of integrated circuits was 14.4 billion pieces, down 2.4% from the same period last year. From January to December 2018, China's output of integrated circuits was 173.95 billion yuan, an increase of 9.7% over the same period last year. From January to February 2019, the output of integrated circuits in China was 22.95 billion yuan, down 15.9% from the same period last year.

Statistics and Growth of Integrated Circuit Production in China from 2018 to February 2019

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The Industrial Structure of Integrated Circuits in China tends to be more optimized

Ren Aiguang, Director of Integrated Circuits Department of Electronic Information Department of Ministry of Industry and Information Technology, said publicly that in 2018, the sales revenue of integrated circuit design industry in China increased from 35% to 38% from 25.93 billion yuan in integrated circuit design industry, manufacturing industry and sealing industry, and the sales revenue of manufacturing industry increased from 23% to 28% from 181.82 billion yuan. Sales revenue of 219.39 billion yuan, the proportion decreased from 42% in 2012 to 34%, and the structure tended to be more optimized.

Statistics and Forecast of Sales Income of Integrated Circuit Industry Structure in China from 2015 to 2020

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At the same time, China's integrated circuit industry scale compound growth rate is nearly three times that of the world. In 2018, the global semiconductor market was 477.94 billion US dollars, and the composite growth rate was 7.3% from 2012 to 2018. In 2018, the sales volume of China's integrated circuit industry was 653.2 billion US dollars, and the composite growth rate from 2012 to 2018 was 20.3%.

Analysis of Integrated Circuit Distribution and Industrial Policy in China

Since 2013, with the establishment of the state's 100 billion-scale integrated circuit industry fund and the strong support of the local government for the integrated circuit industry, China's semiconductor chip sales have maintained a high growth rate of more than 15%.

In 2014, the State Council issued the National Integrated Circuit Industry Development Promotion Outline, which upgraded the development of the integrated circuit industry to a national strategy, and defined the key points and objectives of the development of the domestic integrated circuit industry during the 13th Five-Year Plan period. In September of the same year, the National Integrated Circuit Industry Investment Fund was established, with the initial total amount exceeding 130 billion yuan.

In the government work report of 2018, integrated circuits were listed in the first place of the real economic development of the government work report. The importance attached by the national government to the industry can be seen. Previously, the State Council, in its report Made in China 2025, requested that China's chip self-sufficiency rate should reach 40% by 2020 and 50% by 2025, which means that China's integrated circuit industry will account for 35% of the world's scale in 2025, which is to say, it will surpass the United States in the world's first place.

In recent years, many places in China have responded to the national strategy and invested heavily in the integrated circuit industry. After years of development, the industrial layout is mainly concentrated in Beijing-Tianjin-Hebei region, Yangtze River Delta with Shanghai as the core, Pearl River Delta with Shenzhen as the core, and central and western regions with Sichuan, Hubei and Anhui as the core.

After more than 60 years of development, Shanghai integrated circuit industry has formed a complete integrated circuit industry chain which integrates design, manufacturing, sealing, materials, equipment and other supporting services. It is the most complete domestic integrated circuit industry chain and the most balanced industrial structure of the city.

In recent years, with the ever-expanding demand for integrated circuits, together with the ZTE and Jinhua events, the voice for the localization of integrated circuits has become higher and higher. The development of integrated circuit industry in Beijing, Shanghai and Shenzhen alone is not enough to supply domestic industrial demand. As a result, a series of policies have been promulgated all over the country to promote the development of integrated circuits.

5G Development Promotes the Development of Integrated Circuit Industry

New opportunities. In the era of 4G, Qualcomm is the dominant company with a high proportion of CDMA patents. At the World Mobile Communication Congress, Chinese enterprises have launched 5G chips, terminal equipment and related network solutions. This indicates that in the future, the 5G market will develop into a multi-faceted market structure of checks and balances.

1. Investment Opportunities in Integrated Circuit Industry

Chips are the key to promote the development of 5G industry. Chips should provide higher standard functions and performance. The technological innovation of key components has a profound impact on the upgrading of 5G network and the integration of equipment. The diversified application scenario of 5G provides a huge market opportunity for component enterprises, and also puts forward higher requirements. In the era of emphasizing intelligence and networking, chip products such as FPGA, GPU and ASIC will reach a scale of 20 billion US dollars in 2021. For domestic chips, if they have a place in the 5G era, they must enter the high-end market in many fields.

2. 5G Layout of Integrated Circuit Enterprises

As the core component of 5G mobile phone, 5G baseband chip directly determines whether the communication network can be successfully connected and plays an important role in shortening the "communication generation gap". At present, only Qualcomm, Huawei, Intel, Ziguang Zhanrui, Unifax and Samsung have launched 5G baseband chip products. 5G is both an opportunity and a challenge for the development of integrated circuits in China.

HUAWEI

At 0.45 a.m. on November 17, 2018, during the discussion of 5G short code scheme at the 187th meeting of 3GPPRAN, Huawei's Polar Code (Polarization Code) scheme emerged from two major competitors in the United States and France, and became the eMBB scene coding standard for 5G control channel. Having the voice of 5G standard, Huawei has begun to focus on the research and development of 5G chip.

In February 2018, Huawei released the first 5G commercial chip of 3GPP standard, Baron 5G01. In January 2019, Huawei officially released 5G multi-mode terminal chip Balong 5000 (Baron 5000) and the first 5G commercial terminal based on the chip, Huawei 5G CPE Pro, which caused a sensation in the industry. In contrast, although Qualcomm and Samsung chipmakers also have baseband releases on 5G chips, Huawei is the first company in the world to complete the 5G network full commercial test. This chip not only uses the most advanced 7Nm process technology, but also supports 5G NSA and SA network format. It also achieves downward compatibility with 4G/3G/2G network and truly achieves full network coverage. Subsequently, Huawei released a higher-end mobile phone, 5G foldable mobile phone Mate X, at the World Mobile Communications Conference, which carries Huawei's self-developed processor and 5G baseband chip Balong 5000.

Huawei's achievements on 5G chips are driving world progress, largely due to its growth rate in communication standards and chip research and development. Although Huawei does not have a "high priority" in the global pattern of integrated circuit industry at present, with the introduction of independent OS system in the future and the construction of Internet in the 5G era, Huawei's journey in the field of integrated circuit will have more confrontations with Apple, Qualcomm and other international front-line companies in the future.

high pass

Recently, Qualcomm announced that it officially launched its second generation 5G new Air-port modem, Miaolong X55, which is an upgraded version of X50 launched in 2016. It adopts the latest 7Nm technology, covering a wide range of frequencies, with lower power consumption and higher performance, more abundant usage scenarios and a peak download speed of 7Gbps. In addition, Qualcomm also introduced antenna tuning solutions QAT3555, millimeter wave antenna module QTM525 and envelope tracking solutions QET6100. Kristiano Amon, president of Qualcomm, said that in the future, a SoC mobile platform integrating 5G baseband chips would be launched to end the design of non-integrated X50 baseband mobile phones.

Intel

Intel launched the XMM 81605G modem at the World Mobile Communication Congress. In terms of technical specifications, XMM 8160 supports 5G SA (Independent Networking)/NSA (Non-Independent Networking) specifications and downwards compatible with 4G/3G/2G, etc. In terms of frequency band, it covers Sub 6GHz (600MHz~6GHz FDD/TDD) and high frequency millimeter wave. The former is mainly used for 2/3/4G and domestic 5G, while the latter is used for domestic 5G mid-late and European and American 5G mid-term. Intel has also announced a partnership with Skyworks to optimize multimode 5G radio frequency (RF) solutions. In addition, around the cloud, devices and edge computing areas, Intel has also carried out a layout, released a new programmable acceleration card N3000 of FPGA, dedicated to accelerating virtualization network functions. Intel also launched its first Intel-to-Strong D series, codenamed Hewitt Lake, to provide energy-efficient system chip configurations and enhance edge computing capabilities.

Purple highlights

In addition to Huawei, Ziguang Zhanrui has also launched the first 5G baseband chip, Ivy 510, which supports sub-6GHz bandwidth and 100MHz bandwidth. It aims at large-volume applications such as AR/VR/4K/8K high-definition online video, AR/VR online games, and supports multiple application scenarios such as smartphones, home CPE, MiFi and Internet of Things terminals. The launch of Ivy 510 indicates that Ziguang Zhanrui has officially entered the world's 5G first echelon. At present, the main products of Ivy 510 are data products. In the future, Ziguang Zhanrui will invest in 5G experimental prototype machine, and carry out planned research and development of flagship SoC to improve its ecosystem and enhance market competitiveness.

MediaTek

At the World Mobile Communication Congress, MediaTek launched 5G baseband chip Helio M70, which is an integrated modem that spans from 2G network to 5G network and is manufactured based on the 7Nm process of TSMC. Unlike Intel's application scenarios, Allied Development's Helio M70 places its target market in mobile devices, smart homes, automobiles and other fields. It takes "the fastest sub-6GHz" as its entry market and occupies an important part in the field of 5G baseband chips.

Samsung

In August 2018, Samsung Electronics officially announced the launch of its 5G baseband chip Exynos Modem 5100, which uses a 10nm process. Samsung said it was the first 5G baseband chip in the world that fully meets the 3GPP standard. Exynos Modem 5100 is an all-networking chip that supports sub-6GHz and mmWave bands in the new 5G NR air port protocol finalized by 3GPP. It is also downward compatible with 2G GSM/CDMA, 3G WCDMA, TD-SCDMA, HSPA and LTE of 4G. In addition, Samsung's Exynos Modem 5100 baseband not only fully complies with the 5G standard of 3GPP, but also increases the signal search intensity of 4G. The peak download speed of 4G can reach 1.6Gbps. In the 6GHz band, the peak download speed of 5G is 2 Gbps in theory; in the mmWave band, the peak download speed of 5G can reach 6 Gbps.

THE END

From a global perspective, 5G is the commanding point of the next information technology revolution. 5G will promote the interconnection of all things. From the Internet to the mobile Internet to the 5G Internet of Things, a new way of production and life may come. From the perspective of China's situation, behind the rise of big powers, strong scientific and technological support is needed to speed up the development of domestic chips, which is the key to lead the global 5G process.