Once China overcomes the chip problem, will the chip become the price of cabbage?

With the rise of China’s chip industry, many friends hope that made in China can greatly reduce the price of chips, thus replicating the previous trajectory of China’s occupation of the global market in the light industry. However, is this really beneficial to the Chinese chip industry?

Will lower chip prices increase the market?

Many friends believe that lower chip prices can increase demand, and ultimately allow chip companies to open up the market and benefit consumers at the same time. This statement is not correct. For high-end chips, such as GPUs, it is indeed possible; but for mid-to-low-end chips, the current price is low enough, and further reduction of the price is nothing more than gaining more share in the stock market by involution, and not Can’t open up more markets – for example, the typical price of mid-to-low-end PMIC is 10 cents, and MCU is less than 50 cents. In the mid-to-low-end chip market, further reduction of the price can’t be opened except to increase the degree of involution new market share. In order to enter the high-end chip market, China needs not only to spend money, but also to accumulate time, and the length of this accumulation is unbearable for the current hot money. It took Huawei more than ten years to make mobile phone chips. World-class, this time period has long exceeded the exit time of mainstream funds. Therefore, the current capital hot money cannot bring help to the Chinese chip industry in line with its popularity, and the price reduction caused by the in-rolling of chips boosted by hot money cannot help the healthy development of the Chinese chip industry.

The price of chips into cabbage means the inner volume boosted by hot money

As a practitioner in the semiconductor industry, I hope that the chip will not become the price of cabbage. Because the price of chips into cabbage means that the entire market has become cost competition, whoever can reduce the cost lower will win; and in China, the easiest way to reduce the cost is of course to reduce the cost of employment, and everyone understands the consequences. . I hope this situation will not happen to China’s chip industry.

Specifically, I will talk about my concerns about the Chinese chip industry. At present, because the Science and Technology Innovation Board provides a rapid exit mechanism for investment in the semiconductor industry, capital has overheated in the semiconductor industry. Many funds investing in the Internet have also poured into the semiconductor industry. The rhythm of these funds investment is to hope that they can be listed and exited within three to five years. However, this short and fast rhythm and China’s backward fields such as CPU and memory in the chip industry will take a long time for ten years. The rhythm of grinding a sword is incompatible. Therefore, it is very likely that these capitals will pour into the fields where Chinese chips have not been blocked – such as IoT and wireless interconnection, which will aggravate the influx of these chip fields and make the prices of chips in these fields really become cabbage prices; and In the fields where China is truly behind and needs more than ten years of solid accumulation to catch up with the estimated advanced level, these hot money will not enter due to the return cycle. In the end, it led to a double world of ice and fire: due to the influx of hot money in the middle and low-end fields, the Chinese chip industry was in a bloody sea, and the chip price fell to the price of cabbage; in the high-end field, capital was unwilling to invest, and it was still monopolized by foreign companies. Then, as capital found the next hot industry and left the semiconductor industry, causing a wave of small and medium-sized companies to close down, China’s semiconductor industry entered a cold winter period of several years.

China’s chip industry should say goodbye to “second philosophy”

In addition, the Chinese chip industry should bid farewell to the traditional “second-born philosophy”. The so-called “second philosophy” is not to create new categories, but to wait for the pioneers of chip companies in Europe and the United States to verify the feasibility of the category before copying other people’s products, and rely on micro-innovation and lower (manpower) cost to seize the market. In fact, many friends who support the price of chips at the price of cabbage have implied this idea, because if you are making revolutionary products, the best choice must be to set the threshold high and rely on reasonable (rather than the price of cabbage) pricing. to maintain comfortable profit margins and attract high-level talent, thus creating a virtuous circle. Wherever the “second-child philosophy” prevails, the industry will not be healthy – the practitioners are very tired, and they are always in a state of catching up in technology. A typical example is the chip design company in Taiwan. The chip field has always been in a state of chasing, and practitioners are also very hard (“bursting liver”). If China’s chip industry wants to do better than Taiwan, it must say goodbye to this “second-born philosophy” and be determined to be a pioneer (not just a chaser) in promising fields, so as to lead the global chip industry trend.