[Continual price increases have been complained by terminal manufacturers. Samsung, Hynix, and Micron have been surveyed for their three major storage chip giants]. They have been complained by terminal manufacturers for continuing price increases, and after two rounds of talks with the National Development and Reform Commission, they targeted South Korea’s Samsung and Hynix. Micron’s antitrust investigation into the three major memory chip giants has finally started.
On May 31st, 2018, China’s anti-monopoly agencies sent a number of working groups to conduct “surge investigations†and on-site forensics for offices of Samsung, Hynix, and Micron in Beijing, Shanghai, and Shenzhen, marking China’s anti-trust agency. Officially launched investigations on three companies. At present, Samsung has publicly responded that "is assisting the investigation."
Samsung, Hynix, and Micron are the three largest memory chip giants in the world, occupying most of the global market share in both DRAM and NAND product lines. In 2016, due to technological changes in the industry and the replacement of enterprise production lines, the global supply of memory chips has fallen short of supply in recent years, and entered the price increase channel in 2016 Q3. The cost pressures resulting from subsequent price increases are passed on to consumer-grade products such as mobile phones, solid-state drives and memory sticks.
Today, a number of industry sources told the 21st Century Business Herald reporter that “the production capacity of several giants has already met the market, supply and demand have been balanced, even oversupply. Although the price increase rate is smaller than before, prices cannot fall.†So far, the price increase cycle has continued for two years.
In December 2017, due to continued complaints from terminal companies, the National Development and Reform Commission noted that “the price of DRAM industry has soared.†The Development and Reform Commission talked about Samsung and stated that it will pay more attention to issues caused by the “price manipulation†of the industry. After the two sessions in 2018, the anti-monopoly departments of the National Development and Reform Commission, the Ministry of Commerce, and the State Administration for Industry and Commerce merged into the newly established Antimonopoly Bureau of the General Administration of Market Supervision. In May, the anti-monopoly department asked about Micron on the issue of price increases.
According to customs data, China's imported memory in 2017 was 88.921 billion US dollars, an increase of 39.56% compared to 2016's 63.714 billion US dollars. The continuous price increase of storage products has caused a high cost burden on Chinese industries.
At present, Samsung has publicly responded that "is assisting the investigation."
Rising prices change the industry landscape
In 2017, the global DRAM and NAND markets grew by 74% and 46% respectively, reaching US$72.2 billion and US$53.8 billion. Samsung, Hynix and Micron were the biggest beneficiaries. According to the data previously released by IHS Markit, in the DRAM market, the market shares of Samsung, Hynix, and Micron were 44.5%, 27.9%, and 22.9%, respectively. The three companies accounted for 95.3% of the total; in the NAND market, the market shares of Samsung, Hynix, and Micron were respectively 39%, 10.5%, 11.3%, total 60.8%.
Due to the skyrocketing storage market, global semiconductor rankings have undergone major changes. In 2017, Samsung Semiconductor's business revenue surged 50%, surpassing Intel's number one position in the world for the first time with over US$60 billion in revenue. At the same time, Hynix and Micron also rose to the third and fourth place respectively from fourth place and sixth place. According to Gartner data, Hynix and Micron revenue increased by 79% and 78%, respectively.
In the Q1-2018 Q1 price increase interval in 2016, Samsung’s storage chip business revenue increased from 79.4 trillion won to 173.3 trillion won, an increase of 118%; Hynix revenue increased from 3.65 trillion won to 8.72 trillion won, an increase. 139%; while Micron’s revenue increased from US$2.93 billion to US$7.35 billion, an increase of 151%.
During the same period, Samsung’s stock price has increased from 25,000 won in early 2016 to 50,000 won today, Hynix has increased from 30,000 won to 90,000 won, and Micron’s share price has soared from US$14 to US$58, an increase of 314%.
It is worth mentioning that during the crazy price increase of memory chips, a US law firm began to investigate this phenomenon. During the interview and investigation of the Big Three by China's antitrust authorities, the US law firm Hagens Berman launched an anti-monopoly class action lawsuit against Micron, Samsung, and Hynix on April 27, 2018 in the Northern California Regional Court.
The law said that the investigation showed that DRAM manufacturers agreed to increase DRAM prices by limiting the supply of DRAM. In 2017, the price per bit of DRAM rose by 47%, which was the largest increase in 30 years, of which the price of 4GB DRAM products rose by 130%. As early as 2006, HagensBerman had acted as a DRAM antitrust litigation and won a settlement of $300 million for his agent.
During the global Internet crisis of 1999-2002, Samsung, Hynix, Infineon, Elpida, and Micron's five DRAM companies had reached price agreements to control the global DRAM market price. At that time, the United States Dell, HP, Apple, IBM and other computer companies directly bear the cost pressure brought about by price increases. In 2002, the U.S. Department of Justice started suing these companies and made a total of 729 million U.S. dollars in illegal penalties and a monopoly income fine during 2005-2006.
"Countercycle" killer
Today, Chinese companies are far more affected by the increase in the price of memory chips than they were in the United States. In 2017, all flagship mobile phones in China have generally risen by 200-300 yuan, while memory chips have increased by 300%-400% in 2017.
The financial report shows that in fiscal year 2017, Micron’s revenue in China was 10.3 billion U.S. dollars, accounting for 51% of its total revenue. In 2017, Hynix earned 10 trillion won in China, accounting for 33.5% of its total revenue. At the same time, Samsung earned 31.6 trillion won in China, accounting for 23.3% of its total revenue. Among them, Samsung China Semiconductor and Shanghai Samsung Semiconductor's 2017 revenue totaled 28.7 trillion won, or approximately 25.39 billion US dollars.
In 2017, thanks to the increase in storage chip prices, Korea’s exports of electromechanical products to mainland China totaled 73.8 billion U.S. dollars, an increase of 24.7% year-on-year.
However, compared to the current price pressures on the Chinese electronics manufacturing industry, what is more noteworthy is the global competition facing the Chinese storage industry.
In the 1990s, Japan's memory chips once occupied 50% of the global market share. However, Samsung has succeeded in ousting Japanese companies from the altar through three "contradictory expansions." In the mid-1980s and the end of the 1990s, Samsung always increased investment and expanded production capacity during the decline of the DRAM market, constantly depressing industry prices and erode the market share of Japanese companies. During the financial crisis of 2008, the price of DRAM pellets fell more than 80%. At this time, Samsung used 118% of total profits in 2007 for DRAM expansion, aggravated the price drop and caused industry losses, which directly accelerated the bankruptcy of Elpida in the future. And laid the dominance of Samsung.
Between 2015 and 2016, Samsung’s investment in the semiconductor business was 14.7 trillion and 13.1 trillion won, respectively, accounting for more than 50% of the total Capex ratio. In 2017, Samsung Semiconductor’s capital expenditures surged to 27.3 trillion won, or approximately US$24.2 billion. The financial report shows that compared to Q1 2016, Samsung Semiconductor's capacity in Q1 increased by 339% in 2018.
At present, there have been a number of analysts predicting that the DARM and NAND markets will oversupply. At this time, Hynix expects to spend 11.5 billion U.S. dollars in capital expenditure in 2018. Although Samsung did not announce its capital plan for 2018, its Q1 capital expenditure still maintained its upward trend.
The situation is similar to Samsung’s previous deflationary expansion. This is not optimistic for China's NAND and DRAM industries. This means that when China's two DRAMs and a NAND plant enter the mass production stage, they will directly face severe price competition. Obviously, the international giants, which have earned enough profit in 2017, are far more able to withstand price wars than Chinese companies.
In addition to price wars, Chinese companies may also face competitive measures such as litigation and supply control. According to informed sources, Micron Technology has reached an exclusive agreement with semiconductor equipment manufacturers to restrict the supply of semiconductor equipment to Jinhua, Fujian.
Recently, the Secretary-General of the Mobile China Alliance, Lao Zi issued an appeal: "As the world's largest electronics manufacturing base, China needs a stronger market surveillance agency to ensure a fair and just market competition order."
According to financial report statistics, in 2016 and 2017, the revenues of the three companies in semiconductor-related businesses in China totaled 31.6 billion U.S. dollars and 44.68 billion U.S. dollars, respectively.
According to the "Anti-Monopoly Law" and "Anti-price Monopoly Regulations", if operators have monopolistic behavior, they shall be punished in accordance with Article 46, 47, and 49 of the "Anti-Monopoly Law," The sales amount is 1%-10% fine, and the duration of illegal activities needs to be considered. Based on this calculation, if the three giants are ruled to have a price monopoly, the fine may be between 440 million U.S. dollars and 4.4 billion U.S. dollars and 800 million U.S. dollars and 8 billion U.S. dollars.
It needs to be pointed out that the US Department of Justice’s fine for DRAM price monopoly is 20% of sales revenue. In contrast, in recent domestic price monopolies such as Zhejiang Insurance and Jilin Cement, the punishment ratio is only 1% of sales revenue.
For the memory chip industry with a gross margin of 60%, the 1% penalty is negligible compared to the profit from monopolistic behavior.
2. Violet invests heavily in semiconductors and is highly concerned by Japan
China Yangtze Optical Group's memory plant, Changjiang Storage Technology, held a semiconductor equipment installation ceremony on April 11, 2018. On the 26th, the news of President Xi Jinping’s visit to the production line was announced. According to the report of the Nikkei website, this shows that the mainland’s Key semiconductor products and technologies are subject to foreign concerns, but Japan also holds a high degree of concern for mainland semiconductor investment. The reason for the mainland’s concern is that Yangtze River’s storage of the installed production equipment is a 3D NAND flash memory production equipment. It is scheduled to begin production of 32-layer 3D NAND flash memory in 2018, although this progress is even later than Korean electronics giant Samsung Electronics (Samsung Electronics). 4 years, but at least it is a crucial step for the mainland to get rid of the dependence on overseas manufacturers for producing NAND flash memory.
The reason why Japan is concerned is that according to a Nikkei reporter's on-site interview on May 21, 2018, the first buildings of the three factories are stepping up and down, with about 1,000 people entering and leaving every day, including many Japanese semiconductor equipment makers and also from the United States. Silicon Valley, Japan, Taiwan, and South Korea’s talented semiconductor industry highlights the mainland’s ambitions, and it also makes Japan worry about the problem of talent and technology outflow. In Ziguang's plan, Changjiang Storage Wuhan Plant has invested equivalent to 3 trillion yen (about 27.5 billion U.S. dollars), and will invest more than 100 billion U.S. dollars before 2025. By 2025, Wuhan Plant will have 3D NAND flash memory capacity. It will reach 1.5 times the monthly capacity of the world’s largest NAND flash memory factory and Japan’s Toshiba Memory (TMC) Yokkaichi Factory and 1 million per month.
Although advanced semiconductor production can be immediately shipped without buying equipment, it still requires a lot of adjustments to improve product yields, not to mention the technology introduced by Changjiang Storage Technology has lagged behind major international NAND flash memory vendors, but the scale is much larger than that of Toshiba. The memory investment plan, there are 10 years and a large number of talented people, a small number of semiconductor products that still have international competitiveness, NAND flash memory, will be critical. As for the issue of patent obstacles, Ziguang Group is actively looking for cooperation through overseas acquisitions and funding methods. Although Micron Technology is blocked by the U.S. government, Ziguang still has technical cooperation discussions with Micron and Intel. Hopefully, In order to obtain a number of patent rights, it is now relatively minor to avoid the trade war between the United States and the mainland, but according to the Nikkei, it continues to be promoted.
3. No-manufacturers grow robust technology and promote semiconductor industry upgrading;
Recently, a report released by Technavio, a technology and industry research organization, showed that the global fabless IC market will continue to maintain a strong growth rate driven by the demand of emerging frontier technologies, and the compound annual growth rate will reach 7.9% from 2018 to 2022. .
In the early 80s of last century, typical semiconductor manufacturers needed to complete their own work including the development of IC design procedures, design and manufacturing of related equipment, and packaging and testing.
“At that time, the industry has not yet reached the node of 1 micron process. With the development of the industry, the process size continues to shrink, the integration becomes more and more complex, the cost of the IDM model is exponentially growing.†Market research agency StrategyAnalyticsRF and wireless component research Service Director Chris Taylor told reporters.
The features of economies of scale in the semiconductor manufacturing industry have become increasingly obvious, and high investment costs have made many companies unable to expand. Under this background, only the circuit design of the hardware chip is performed, and then the wafer foundry is manufactured as a finished product after the design. The fabless operation mode responsible for selling the product starts to rise, and the vertical division of labor pattern is prosperous.
Fabless mode continues
In Taylor's view, the establishment of a wafer foundry company, TSMC, in 1987 was an important milestone in the development of a fabless model. Taylor believes: “Today, it is impossible for a semiconductor company to complete its own process. Even a giant like Intel needs to be delegated to some foundries, and both design software and manufacturing equipment depend on third parties. ."
The advantages of being light-hearted have contributed to the prosperity of the fabless manufacturers. According to data from ICInsights, a semiconductor industry analyst firm, between 2000 and 2016, the growth rate of global fabless vendors was lower than that of IDM vendors only twice in 2010 and 2015.
In 2003, Qualcomm became the first pure IC design company to enter the world's top 20 semiconductor manufacturers with revenue of US$2.4 billion in the year, and the fabless manufacturers officially began to occupy an important position in the semiconductor industry. By the first quarter of 2018, the industry had already entered the top 15 in the revenue rankings of four fabless vendors, including Broadcom, Qualcomm, Invista, and Apple. In addition, TSMC, which is engaged in OEM, ranks third.
Qualcomm, which ranked No. 1 in terms of revenue in 2017, is one of the representatives of this model. The success of this model has been proven in its own.
In 1985, when Qualcomm was founded, Qualcomm was focusing on the development of the cellular system and its corresponding core standards. "At that time, the company had an infrastructure department, a chip business unit, an R&D department, and a mobile phone business unit. It was indeed a vertically integrated company. This helped us formulate industrial technology standards," said a spokesman for Qualcomm. In an interview, he told reporters of the 21st Century Business Herald.
However, with the development of standards in this area, we realize that vertical integration is not necessary. So, we sold the rest of the division, became a more focused semiconductor company, and at the same time became the core basic R&D engine of the industry. "He said.
East Asia occupies an important position in the field of foundry, which also shows the global division of labor under the foundry model. According to the data updated by TrendForce on May 24, among the top ten wafer foundries in the first quarter of 2018, manufacturers in China, Taiwan, China, and South Korea collectively took up 7 seats. Up to 83.6%.
"What is important is that our products are designed to meet the future needs of our customers. It also depends on the extent to which the foundry's suppliers can provide the necessary guarantees, guarantee our shipments, and balance the production capacity of each business unit." People said that
"The division of globalization has been part of our strategy. At present, this is very effective."
However, in 2017, the growth of fabless manufacturers once again lags behind IDM manufacturers, even though this year's revenue exceeded 100 billion US dollars for the first time. However, ICInsights pointed out that this actually stems from this wave of price increases in the storage market in recent years, with storage vendors adopting the IDM model. Take DRAM as an example: In 2017, the growth rate of global IC market reached 25%, and the growth rate without DRAM was only 16%.
Lin Jianhong, research manager of Jibang Consulting and Development Research Institute, pointed out to reporters that the trade-off between IDM and fabless model is often related to the manufacturer's own product and scale. If the sales scale of the product is still growing at a high rate, the IDM model can also have a good growth. Kinetics, today's DRAM and NAND flash are examples.
Cutting-edge technology drives industry growth
Technavio believes that with the increasing demand for IoT devices for interoperability and the rise of networking devices, IC vendors need to collaborate on the development of open source platforms to set interoperability standards and requirements for corresponding IoT devices. In addition, the report also highlights the automotive industry's drive for growth in fabless manufacturers.
"The automotive market is expected to continue to grow over the forecast period. Affected by this, it can support partial or highly automated, until the demand for fully-automated semiconductor integrated circuits will grow significantly," a Technavio analyst said.
Still taking Qualcomm as an example, its rise is also inseparable from technological innovation. With the development of cellular network technology in the early 1990s, mobile telephony began to gain popularity, and call quality was also improving. But at that time, Qualcomm had started to apply to mobile data networks.
"Probably from 1993 onwards, we started to apply some IP in the PC field to cellular networks and introduced some Internet protocols into the standards of the cellular network." The above-mentioned Qualcomm spokesperson told the 21st Century Business Herald, "despite The development of the Internet is significantly faster than that of mobile networks, but we have already completed the basic design layout at that time.We are optimistic about the future of mobile networks, and everyone will have mobile phones and access to mobile networks through mobile phones. This will become a trend. â€
Qualcomm, which has led many "G" upgrades, has not been absent since it first entered the top 10 semiconductor makers in 2008. In 2017, Qualcomm's revenue ranked sixth among global semiconductor manufacturers (excluding wafer foundry), and was still waiting for approval to complete the acquisition of Qualcomm's NXP (No. 10).
However, in the “Fourth Science and Technology Revolution†led by advanced technologies such as 5G, Internet of Things, and artificial intelligence, Qualcomm’s new “Vision†is expanding beyond the “mobile phone†on which it depends.
“We believe that almost all terminals will have connectivity and intelligence in the future, and a large part of this will be born out of the smart phone industry. Our experience and core technologies in this field have put us in a good position,†said Qualcomm.
This is reflected in Qualcomm's attitude toward 5G, Internet of Things, and artificial intelligence. Qualcomm introduced that in the trend of the Internet of Things, as more and more devices become more intelligent and networked, the application scenarios will become more and more specific, so customized chips for different vertical areas will also appear.
In addition, Qualcomm believes that the upgrade of 4G to 5G is no longer limited to the enhancement of mobile communications and data transmission. Industrial IoT, consumer electronics, healthcare, and other industries will all be 5G application scenarios. This will require more industries to participate in the definition besides handset manufacturers, network operators, infrastructure vendors, and semiconductor manufacturers. 5G will become a more flexible network architecture that is not limited to the mobile phone industry. 21st Century Business Herald
4. National Manufacturing Innovation Center Settled in Fudan Zhangjiang Campus Focused on Integrated Circuit R&D
The National Integrated Circuit Innovation Center in Zhangjiang Campus of Fudan University was approved in January this year for the Shanghai Integrated Circuit Manufacturing Innovation Center. A few days ago, at the demonstration meeting attended by experts from the Ministry of Industry and Information Technology, the Chinese Academy of Sciences, and the Chinese Academy of Engineering, the center unanimously approved the construction plan for the National Center for Manufacturing Innovation.
First-class platform: research, production and research work together
Professor Wei Zhang, Executive Dean of the School of Microelectronics of Fudan University, said that the center relies on the Shanghai Integrated Circuit Manufacturing Innovation Center Co., Ltd. and adopts the “company + alliance†integration of production, teaching and research, led by Fudan University, and the joint industry leader SMIC, Hua Hong Group and others have established upstream and downstream synergies in the integrated circuit industry chain and have established a collaborative innovation model for the industry. Shanghai IC Manufacturing Innovation Center Co., Ltd. is an entity funded by Fudan University, SMIC, and Shanghai Huahong Group. Among them, SMIC is the largest and most technologically advanced integrated circuit wafer foundry in mainland China and one of the world's leading integrated circuit foundry companies. Hua Hong Group is the result and carrier of the national "909" project, and is an integrated circuit industry group with a multi-service platform with the core of integrated circuit manufacturing as its common development. The subject of microelectronics at Fudan University originated from the semi-conductor physics profession established by Mr. Xie Hede and others in the 50s of the last century. He has a good reputation both at home and abroad. He has the only national key laboratory in the field of integrated circuit design in China, namely “Application Specific Integrated Circuits and Systemsâ€. State Key Laboratory.
Innovations: Fast, low-cost memory
A three-story small building and 28 full-time “warriors†in the Zhangjiang Campus is the current home of this national center. In recent years, it has been relying on a vigor and has achieved important innovations. Dean Zhang Wei said: “The semi-floating gate device we researched and developed is a brand-new principle of microelectronics basic device. It skillfully combines the tunneling field effect transistor (TEET) and floating-gate transistor to create a new principle. The microelectronic device, we named it Semi-Floating Gate Transistor (SFGT), which has the advantages of high speed and low power consumption.This achievement has received extensive attention from international counterparts and evaluated this achievement. It is called 'a hybrid racer in a transistor'," said a US-based technology consulting company. “The semi-floating-gate transistor can solve the technical problems faced by dynamic random access memory (DRAM) chips.†There is a potential technical capability to replace DRAM."
In addition, semi-floating gate transistors can also be applied to the cache of the CPU chip. Existing caches usually use an SRAM structure composed of 6 transistors, which has low integration and large area. If half-floating-gate transistors are used, the area can be reduced to 20%. The SFGT can also be applied to an image sensor chip (APS) to increase the fill factor and significantly increase the resolution and sensitivity of the image sensor chip.
R&D target: 3 nanometer integrated circuit
Now, Professor Zhang Wei's heart is quite practical. The National Integrated Circuit Innovation Center led by Fudan University can give full play to the advantages of resources sharing in universities and research institutes, and build a common technology research and development platform for cooperation among the industry; Bringing together high-end talents, developing source innovations, and mastering core technologies to enhance the international cooperation capabilities in the integrated circuit field, provide services for the upgrading of the integrated circuit industry in China, and provide talent support for industrial development.
“We are a neutral, public common technology research and development platform, which is different from the R&D center of the enterprise. The R&D center of the company is mainly engaged in the research and development of target product technology. Our center is the key common technology targeting ICs, highlighting the common technology R&D. Capacity, industry service and the ability to transform results.†Zhang Wei said that common technology research and development work is currently focused on the common technology of 5 nanometer and below integrated circuits, focused on the new device new process R & D, the purpose is to address the choice of integrated circuit mainstream technology in China And the source of reliable technology, support high-end chips in domestic manufacturing companies to achieve production. “The center is currently developing new devices and new processes such as nanowire fence devices and semi-floating gate transistors. By the end of 2022, it will systematically carry out integrated technology research and development, open up key processes for 5nm integrated circuits, and carry out 3nm previews. The research and development of technology will build an integrated circuit advanced technology innovation center with international influence.†Zhang Wei said that Fudan University has planned to build a 29,000 square meter micro-nano electronic building on the Zhangjiang campus, and it will be used for integration in this country in the future. The Circuit Innovation Center strives to create a “first-party array†of IC research and development with 180 full-time scientific researchers in three years.
5. Hua Hong Semiconductor is breaking the top of the company's monthly production of 40,000 chips
Hua Hong Semiconductor (19.9,0.08,0.40%)(01347) is now up 1.92%, to 20.2 yuan; the transaction is about 114 million shares, involving a capital of 23.05 million yuan. Intraday high to see the top of 20.55 yuan.
The Hang Seng Index is now at 30923, an increase of 430 points. The turnover of the Main Board is 18.894 billion yuan.
It is reported that Huahong plans to expand the production capacity of the flawless production line to reach 40,000 chips per month by 2020. The company earlier won the rating of Macquarie Outperform, with a target price of 23 yuan.
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