Integrated circuits (semiconductor ICs) are the core size market in the semiconductor industry.

According to WSTS World Semiconductor Trade Statistics Organization publicly disclosed data, the global semiconductor product size is expected to grow to $555.9 billion in 2021, of whichIntegrated circuit product size of $463 billionIt is up to 83.3 percent. From the perspective of product scale, the scale of integrated circuit products has long occupied more than 80% of the global semiconductor product scale, which is the core scale market in the semiconductor industry. This report defines the integrated circuit market, namely semiconductor IC(Integrated Circuit), as the research scope, while the optoelectronic device, discrete device and sensor market is not within the research scope of this report.

Development History of China Semiconductor Industry

From an international perspective, the scale of China's semiconductor industry fluctuates and expands.

According to data from the WSTS World Semiconductor Trade Statistics Organization, the sales volume of China's semiconductor market has increased from US $91.375 billion in 2014 to US $192.5 billion in 2021, with a compound annual growth rate of 11.23. With the improvement of consumption level, the progress of information technology and the rapid development of digital economy,China's demand for semiconductor products continues to expand, gradually growing into a larger single semiconductor sales market in the world.In 2021, semiconductor sales will account for 34.6 percent of the global market.

China's semiconductor IC industry development drive

China's chip external dependence is high, the chip self-sufficiency rate needs to be improved.

The development of the semiconductor industry is vital to my country's economic growth, job creation, key technological breakthroughs, and national security. It is also the key to seize the historical opportunities of a new round of technological and industrial revolution. Against the backdrop of the impact of the epidemic and rising global trade protectionism,China urgently needs to increase its chip self-sufficiency rate and get rid of its dependence on international technology dominated by the United States.On the one hand, my country's IC import and export has a huge trade deficit for a long time, chips are highly dependent on foreign countries, and high-end chips are heavily dependent on imports; on the other hand, according to IC insights data, my country's IC self-sufficiency rate is generally showing an upward trend, but it is still at a low level. The chip self-sufficiency rate needs to be improved. Looking back on the development of the global semiconductor industry, we should realize that the chip self-sufficiency rate can not be greatly improved in the short term, and we need to persevere and work for a long time.

Tier 1 capital market investment enthusiasm is high, 2021 ushers in a new round of financing climax.

Benefiting from the opening of the board and the further promotion of domestic independence, the enthusiasm for investment in the primary market of the semiconductor IC industry has continued to heat up since 2019, with the number of investment and financing reaching a record high of 232 in 2021, up 45.9 percent year-on-year.. Judging from the financing rounds, they are mainly concentrated in the early stage (round C and before), with a total of 607 rounds, accounting for 70.2 per cent, of which pre A- A ++ has more financing rounds, accounting for 49.3 per cent of the early (round C and before) financing rounds. From this point of view, industrial capital and venture capital funds pay more attention to the advance layout of the semiconductor IC industry.

China Semiconductor IC Industry Policy Development

Support continues to increase, IC industry basic, leading, strategic continued to highlight

After the special project period, the industry support period to the national strategy period, the importance of the semiconductor industry in China's scientific and technological progress and economic growth has become increasingly prominent, and policy support has also been increasing.. At present, the uncertainty of the international environment is rising, and the semiconductor industry has become a key area for countries to strengthen their layout and play games. Therefore, it is expected that future policies will continue to support the localization process of the semiconductor industry.

Panorama of Semiconductor IC Industry Chain

Upstream hardware and software materials and equipment, midstream design and production, downstream product applications

The integrated circuit industry chain can be divided into upstream hardware and software materials and equipment layer, midstream IC design and production layer, and downstream IC products and application layer.. Upstream hardware and software materials and equipment include technical services, EDA tool licensing, semiconductor equipment and semiconductor materials four categories, corresponding to support the midstream design and production layer. The midstream design and production layer can be divided into IC design, IC manufacturing and IC sealing and testing, and then the original enterprise through distributors or direct sales model into the downstream product application layer.

3. China Semiconductor IC Product Opportunities

According to publicly disclosed data from the WSTS World Semiconductor Trade Statistics Organization, the global digital circuit market is expected to reach $388 billion billion in 2021, accounting for 84.2 percent of the global integrated circuit market, and the global analog circuit market is expected to reach $72.8 billion billion, accounting for 15.8 percent of the global integrated circuit market.From the historical development trend, although the product scale of digital circuits and analog circuits fluctuates, the ratio has been stable at 85:15 for a long time.

Digital Circuit Demand Market

Demand for data centers, new energy vehicles, etc. is rising, and the digital circuit market is expected to increase.

Traditional downstream applications of digital circuits are concentrated in the fields of computers, communications (including mobile phones), traditional automotive electronics, and storage. After decades of development, the application of digital circuits in these fields has been very mature, and the market has become saturated.In March 2022, the National East and West Counting Project was launched, driving the demand for regional data center construction; at the same time, the trend of automotive intelligence and industrial automation in the post-epidemic era is on the rise, artificial intelligence infrastructure construction is in full swing, and digital circuits are ushering in a period of growth opportunities.

Digital Circuit Development Opportunities

The gap between high-end product technology and performance still exists, and seizing development opportunities requires gradual progress.

Overview of the development of domestic digital circuit manufacturers, in the field of high-end digital circuits such as automotive MCU, computer MPU, general-purpose CPU and DRAM,Domestic manufacturers are still in the initial stage of development, and there are problems such as backward technology and imperfect product ecology.However, the exploration of domestic manufacturers in the low-end application field has accumulated experience for breaking through the high-end, relying on the domestic IC industry foundation, plus the return of IC talents and policy financial support and other dividends, Domestic manufacturers can gradually break through advanced processes and high-end applications while stabilizing the low-end market.

analog circuit golden window period

Trade frictions and lack of core tide break the closed supply chain, bringing a golden window for enterprises.

Analog chips have many market opportunities and broad product substitution space, and the threshold is relatively low, easy to build friendly cooperative relations with domestic supply chain manufacturers. In addition, analog chip enterprise products usually have a short R & D cycle and a long life cycle, which can quickly help enterprises achieve profitability and high gross profit. Although analog chip enterprises in the entrepreneurial and business perspective are more attractive, but because of the analog chip iteration slow, long life cycle characteristics, downstream customers sticky strong, the market supply chain is closed for a long time, domestic analog chip enterprises for a long time difficult to have a greater development and breakthrough.Now, under the influence of "trade friction lack of core tide", China's analog chip market is loosening, gradually breaking the originally closed product supply chain, bringing golden opportunities for more domestic analog chip enterprises to enter the list of customer suppliers.

Analog Circuit Development Opportunities

Accuracy, speed and stability improvement are the key to the entry of domestic analog chips into high-end

Analog chips can be divided into consumer electronics, industrial communication and automotive electronics from low-end to high-end, and the accuracy, speed and stability requirements of analog chips are increasing in turn.At present, Sino-US trade friction superimposed on the structural lack of core tide, for domestic analog chip manufacturers to break through high-end products has brought a good opportunity. From the manufacturer's point of view, the domestic analog chip head enterprises have resources, technical advantages, transformation breakthrough is relatively easy, but small and medium-sized manufacturers transformation pressure is relatively large, or will usher in a reshuffle period.

All levels of government: policy guidance

Local conditions, overall planning, long-term operation

The development of semiconductors and chips is the result of the joint force of the whole industry chain, and a certain link of the non-industrial chain can be independent.Under the current macro trend of local pursuit of relevant economic indicators such as taxation, employment and output, it is easy to induce problems such as blind investment, overcapacity and misnamed. Based on this, we put forward the general principles and related points of the chip industry landing. Overall, the introduction of local chip industry should follow the following steps:

Investment institutions: capital assistance

There is a mismatch between capital and technology, testing their determination and insight to go both ways.

The semiconductor industry has a long return on investment cycle and high uncertainty, and has not received much capital attention in the early stage. And benefit from the national strategy-driven and independent controllable industrial development, the semiconductor industry business climate is rapidly improving, in recent years, a large number of capital into the rapid speculation market, the head of the institutions to raise the code is to further raise the valuation of enterprises.However, the actual development of semiconductor IC enterprises need to be steady, the acceleration of the capitalization process is difficult to quickly mature enterprises. The break in the secondary market has been a wake-up call to the market. In the future, capital investment will no longer be blind to the track and follow the trend, but will pay more attention to the product strength and long-term development ability of the target enterprise.For developing semiconductor IC companies, they need to continue to strengthen their core technology and competitive advantages to gain capital favor, while shell companies without core technology will eventually be eliminated, and the semiconductor IC market will usher in a new wave of reshuffle.

Under the industrial dividend, more attention is paid to the core competitiveness and long-term operational capabilities at the enterprise level.

Although investment in the semiconductor industry has gradually calmed down after the upsurge, the future semiconductor industry is still a golden track for investors to pay sustainable attention to in the context of national independent control and surge in downstream demand. Taking the widely favored automotive electronics and industrial control as an example, investors can judge the main battlefield of future growth from the perspectives of market size, market increment, domestic substitution space and downstream demand capacity,In judging the general direction of the industry track, it is necessary to focus on the core competitiveness and long-term operation capability of the prudent target enterprise, and conduct a comprehensive analysis from the six dimensions of team capability, project experience, industrial collaboration capability, software ecology and customer verification, market space and product capability to find high-quality enterprises that can fight side by side.,Help semiconductor IC enterprises to achieve leapfrog development and walk through the deep water area of semiconductor IC industry together.

Industry manufacturers: innovation breakthrough

Chip process process miniaturization problems, domestic manufacturers still need to break through

Over the past few decades, the semiconductor chip process has basically followed Moore's Law in continuous progress. However, as the process shrinks to less than 10nm, the cost of chip design and manufacturing is rising rapidly, while microscopic physical effects such as impurity fluctuations and quantum tunneling are beginning to emerge, and Moore's Law is approaching the limits of physics, technology and cost.Under the trend of Moore's Law approaching the limit, the IC industry is exploring possible development directions, and the continuation of Moore's Law through structural optimization and process miniaturization is one of the development directions..At present, the international advanced chip process technology has reached 5nm, the domestic advanced process is still in the 14nm stage, behind 2-3 generations. Since advanced processes are mainly used for mid-to-high-end mobile phone AP/SoC, CPU, GPU, ASIC, etc., and these markets are almost completely occupied by international companies, domestic manufacturers still need to overcome difficulties, strive to catch up, and break through advanced processes.

Chiplet-SiP model brings opportunities and challenges for the development of Chinese manufacturers

The Chiplet-SiP model is the industry's innovative exploration in the direction of extending Moore's Law (More than Moore), with huge development potential, which is both an opportunity and a challenge for domestic manufacturers..Chiplet, that is, different processes and functions of the core particles; SiP, that is, system packaging technology, the essence of the Chiplet-SiP model is based on heterogeneous integrated system packaging technology to package different functions and processes of the core particles and components together to form a complete function of the chip module. This model can reduce design and manufacturing costs and shorten production cycles while improving chip performance, allowing chip manufacturing to partially bypass the limitations of advanced process technology, or bring new opportunities for the domestic semiconductor industry to achieve corner overtaking. However, this model depends on the progress of system packaging technology and core-particle interconnection technology to solve the problems of transmission speed drop and heat dissipation caused by core-particle stacking, which needs further exploration.

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