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2020

02/19

Analysis of the impact of new crown pneumonia epidemics on the entire chip industry chain and countermeasures

The new crown pneumonia epidemic has severely impacted our economy and society. In the battle against the new crown pneumonia epidemic, the chip industry has become an important force, providing indispensable technical support for epidemic surveillance and protection, testing and treatment, such as providing infrared thermometers, infrared imaging monitoring and Infrared temperature sensor chips for devices such as thermometers, and biochips to shorten the time required to detect virus samples. In addition, various information methods and technologies such as the "cloud supervisor" of Vulcan Mountain, Lei Shenshan, and smart medical platforms are also inseparable from the protection of communication chips.


Against the dual background of fighting the epidemic and trade friction, the development of China's chip industry needs special attention. The chip's entire industrial chain is generally divided into three links. Enterprises in different links are affected differently in the short term, so their coping strategies are also different.


First of all, chip design companies are at the upstream of the chip industry. Mainly R & D personnel can achieve remote office work to a certain extent. Even if some enterprises have production lines, they are highly intelligent and have fewer front-line workers. These companies have abundant cash flow and strong overall risk resistance. The main difficulty during the duration of the epidemic is the inability to guarantee working hours and efficiency. In addition, due to the limited communication between customers, foundries and packaging and testing personnel under epidemic prevention and control, customer verification is difficult. For most design companies in China that are currently “import substitution”, their participation in international competition is low. The impact is mainly due to the delay in the launch of the product; for a small number of design companies, due to direct participation in international competition, the delay in product launch has increased the pressure on many parties. Therefore, it is suggested that such enterprises promote the efficiency of research and development by designing incentives; on the other hand, they need to strengthen cooperation with foreign high-end talents and technologies to improve efficiency and hedge impact.


Second, chip manufacturers are in the middle of the chip industry. Because the chip production line is highly clean, workers need to wear isolation clothing when they are working, and the risk of virus infection is low. At present, they can basically work without stopping, and most of them have a certain inventory. Due to business communication and logistics restrictions, problems such as new customer development, product identification, and delivery delays have been caused, but the overall controllable. What needs to be vigilant is the negative impact of insufficient or delayed supply of raw materials, as well as rising procurement costs and other uncertainties from foreign raw materials in the context of trade frictions. Therefore, it is recommended that such enterprises promote materials to enter the market as needed by actively coordinating logistics channels and negotiating guarantees with strategic suppliers, and adjust production and operation strategies in a timely manner according to epidemics and market changes. In addition, it is recommended that government departments and industry associations increase their efforts to encourage the coordination of domestic “equipment materials-manufacturing” industrial chain enterprises.

Thirdly, most of the packaging and testing companies that are downstream of the chip industry chain are labor-intensive companies, and they are facing some difficulties in returning to work. According to related reports, as of February 13, the domestic production and testing plant's production capacity was only about 50% of normal conditions. As the upper reaches of the industry chain are still more sustainable in the midstream, the downstream packaging and testing companies face the biggest challenges, which are mainly manifested in operational difficulties such as incomplete staffing, unfavorable capital turnover, and the need to digest a large amount in the second half of the year. The backlog of demand is tight. It is suggested that in severe epidemic areas, the government consider implementing policies such as “tax and fee reduction, loan discount, industrial special fund support, financing support, loan guarantee insurance support, labor support” and other policies to mitigate the impact of the epidemic on such enterprises. Impact; companies in non-severe epidemic areas need to save themselves and help each other by optimizing production processes and sharing employees across regions to ensure production continuity. In addition, these companies need to consider the operational dependencies in advance, develop and maintain key component suppliers, establish outsourcing contracts, reach strategic cooperation, optimize processes, improve efficiency, etc. to meet the tight production capacity challenges in the second half, especially in the third quarter.


Special attention should be paid to the fact that the epidemic has had a large impact on the newly-established chip industry companies in the past two years, and its impact is even fatal. New chip design companies may face serious risks of losing the time window; new manufacturing companies, especially equipment, are already in place. As equipment cannot be installed and debugged, the factory can only be in a standstill, with huge pressure on depreciation of fixed assets and employee salaries. ; Newly-established packaging and testing companies are similarly affected. In short, new chip companies have suffered severe setbacks in this epidemic, and it is difficult to apply for the qualifications required for policy concessions. Therefore, the risk of cash flow interruption is high and requires special attention and special support from the government. In addition, the major chip companies in Wuhan currently include Yangtze River Storage, Hongxin and Xinxin, all of which are in the midstream of the chip industry. Although shipments are still being maintained, if the epidemic lasts a long time, it will affect the subsequent production of related companies. And business.


Finally, we need to pay attention to other industries connected to the chip industry to avoid and prevent the possible chain reaction caused by the epidemic. Because the chip is the basic component, the product can only be delivered to the user after being assembled with other components, so there may be some "breakpoints" in the process of the epidemic. Of particular concern is that the printed circuit board (PCB) industry, which is widely used in communications equipment, computers and network equipment, consumer electronics, automotive electronics, industrial control, and medical industries, is more likely to become a "breakpoint". Due to the high degree of customization of PCB industry products, many participants, mainly small and medium-sized enterprises, the ability to resist risks is generally not high. Therefore, on the one hand, it is necessary to actively negotiate with downstream end customers in the domestic market to avoid the risk of breach of contract compensation; on the other hand, if the pressure of foreign order transfer is highlighted, proactive negotiations should be undertaken to ensure subsequent orders. It is recommended that the customs department deploy in advance to save as much time as possible for enterprises facing foreign markets to reduce losses.


Compared with last year, demand will not increase significantly in the first quarter of 2020. If the epidemic is controlled in the first quarter, the potential demand in the first quarter will be reflected in the second quarter, so the demand in the second quarter will increase significantly, and the demand in the third and fourth quarters will increase significantly. 5G promotion at home and abroad and the Tokyo Olympics also provide certain demand support for the development of China's chip industry. China's chip industry is expected to maintain double-digit growth in 2020. It is recommended that relevant chip companies increase the promotion of various types of chips that play a key role in fighting the epidemic, open up foreign markets, and build the popularity and international influence of Chinese chips. Leading companies in the chip industry should play a greater role, further drive the localization of the supply chain, and make full use of domestic demand to drive industrial growth. In addition, not only the domestic semiconductor industry and the closely related communications equipment, computers, and network equipment industries, such as the entire machine industry, will be affected by the epidemic. Many foreign related companies will also be affected to varying degrees. It is recommended to strengthen information with foreign companies. Exchanges, close cooperative relations, and jointly promote the return of the chip industry to normal conditions.


In the long run, the development of China's chip industry is good. In particular, the epidemic made the government and the public see the powerful power of science and technology and the broad prospects of high-tech applications, which provided a wider market space for the development of the chip industry. Due to the strategic position of the chip industry in China, it will continue to benefit from huge rigid demand in the future. 5G-scale commercial, new energy vehicles, consumer electronics, artificial intelligence, Internet of Things, cloud services and other emerging industries will also become the development of China's chip industry. Powerful driving force. Although China's chip industry is facing a large short-term impact brought by the epidemic and the complex and changing international competition environment, relying on huge and strong demand, growing markets, and government and social support, the development prospects of China's chip industry must be bright. .