Chapter 192 Changes in the Global Chip Industry

There will always be Chinese people at the center of the world's semiconductor industry, but China has never been the center of the world's semiconductor industry.

This is what a semiconductor tycoon said at a private gathering. It is also the reality, but it is the reality of the past.

China's backwardness in the semiconductor industry is caused by many factors. During the period of booming semiconductor development in the 4s and s, China lacked planning and development experience in high-tech industries, and international capital had little interest in cultivating China's semiconductor industry. In comparison, international capital clearly favored Neon, V and Wanwan.

TSMC's overtime culture is no worse than that of the domestic Internet giants. When they built a factory in Arizona, America, local American engineers complained. One of them posted on social media saying that TSMC made him sleep in the company and he hadn't had a holiday for a month.

TSMC's chairman Liu Deyin was not tolerant of this and said directly that TSMC has only one culture and if you don't want to be on duty, don't come.

The working groups in these areas within the Confucian cultural circle have a natural tolerance and acceptance of volume culture, which gives them an indispensable advantage in technology-intensive industries such as semiconductors.

China was unable to become a center in the past because of technological gaps and historical reasons.

This situation has now been fundamentally reversed.

Since the birth of topological semimetals, although China has not yet become the world's semiconductor center in terms of production capacity, it is gradually becoming a global center in advanced technology.

Five years ago, it would have been impossible for Junji Tominaga, who worked at the Neon Industrial Economics Research Institute, to give up his stable job and come to work in China.

Although Tominaga offended Neon Semiconductor Company, this offense would not cause Tominaga to lose his iron rice bowl.

The reason why he made such a choice is because of the infinite potential that China has shown in topological semimetals.

Within the new Shiyuan Technology, Chen Yuanguang plays more of an advisory role, while Liang Mengsong, who has fully demonstrated his abilities in the battle of topological semimetal chips, was appointed as chairman and CEO.

Tominaga is the co-CEO sent by Japan.

After getting advice from Chen Yuanguang, Tominaga will continue to communicate with Liang Mengsong.

"Mr. Liang, we think we should focus on the transformation of Nikon's ArF lithography machine, although Nikon has already achieved a breakthrough in the process to 5nm and has also made breakthroughs in the field of EUV lithography machines.

However, this technology has not been verified by the market, nor has its yield rate been verified by large-scale wafer production.

We should take a step-by-step approach to increase the output and technology of the 7nm process, and then explore EUV." Tominaga said.

There are many types of lithography machines due to different light sources. The maximum process range of ArF is 7nm, and the maximum process range of EUV can currently reach 3nm.

However, only ASML can achieve 3nm, and Nikon's 5nm is still a laboratory product.

“I understand what you mean, this is indeed the safest way.

Since we use brand-new materials, the 7nm process is sufficient for us. It means that the power consumption and computing power are equivalent to those of 1nm silicon-based chips. We have launched such equipment and there is absolutely no rival in the current semiconductor market. " Liang Mengsong first affirmed Tominaga's idea.

Then he continued: "Now we have a monopoly advantage thanks to topological semimetals. We are the only one who can produce 1nm equivalent chips, which means we can set prices based on our costs plus the desired profit.

I don’t know how long this time window will last, maybe three years, maybe five years, or it could be longer or shorter.

Because according to the information I received, under the leadership of America, they are uniting all the scientific research institutions that can be united to try to achieve a breakthrough in topological semimetals, and we don't have much time.

Only by fully leveraging our advantages in this rare time window can we be able to respond when they are able to make topological semimetals.”

Liang Mengsong concluded: "In the current time window, both mobile phone manufacturers and chip manufacturers will be willing to pay for our technology.

Even if Nikon's EUV yield rate is only 70%, it is not a big problem.

Mr. Tominaga, you may not know much about the mobile phone industry. Do you know how much Qualcomm tax these mobile phone manufacturers in China have to pay?"

Tominaga shook his head: "I don't know."

Liang Mengsong went on to say: “The Qualcomm tax is between $120 and $150, and if they don’t use Qualcomm chips, then the Qualcomm tax will be reduced to less than $50.

For them, the revenue from self-developed chips can help us cover our costs.”

Qualcomm tax is unavoidable, it’s just a matter of paying more or less, because as long as you are involved in the communications business, you have to pay patent fees to Qualcomm, even if you don’t use Qualcomm chips.

Tominaga said, "What if the yield rate is not even 70%?"

"Then we can raise the yield rate and bear part of the losses."

Shiyuan is developing lithography machines for topological semimetals, and domestic chip manufacturers in China are all allocating part of their production capacity to make modifications to make these production lines suitable for topological semimetals.

Previously, Huawei's EP2 could only supply units per day. However, after the production capacity increased in the fourth quarter, the quantity of units per day was enough to meet the market supply.

Other mobile phone manufacturers have launched self-developed chip projects, among which OPPO has made the fastest progress. After all, they have the foundation of Zheku and are expected to start tape-out in the first quarter of next year.

Xiaomi ranks second. Although Pengpai was difficult to give birth, at least it has experience in making SoC.

Domestic manufacturers have started to increase their topological semi-metal production capacity, with Qualcomm and Apple being the most nervous.

Once Chinese mobile phone manufacturers stop using Qualcomm chips, their revenue will drop by at least two-thirds.

Qualcomm CEO Amon directly stated in an interview with Columbia TV's "60 Minutes":

"You are right. China's chip technology breakthrough will have very serious consequences for Qualcomm. We cannot accept this consequence. We must prevent such a nightmare from happening."

However, when the host asked him: "What should Qualcomm do to prevent such a future from happening?"

Amon did not shy away from saying, "I think America should unite with its allies. Mobile phones equipped with China's self-developed chips should not be allowed to be imported into these countries."

Amon's words clearly mean that we can no longer win in the business competition and we have to use some unconventional tactics.

"Oh, I think that would be a good idea, but what if our allies don't accept it? It doesn't look like our European allies will listen to our opinions on this matter," the host asked.

The host didn't think there was anything wrong with what An Meng said. The Chinese Internet has always advocated the American business spirit, but within their country it is full of the jungle law of the survival of the fittest.

When I have an advantage, free competition, market economy, open door policy and protection of private property are my creed and the holy grail for me to defeat my opponents. But when I don't have an advantage, these are shit and my will is the rule.

From executives to the media, American's actions clearly demonstrate this.

"This is Washington's business. They have to find a way. Once all Chinese mobile phones are equipped with 1nm chips made in China and sold to the world, it will have a fatal impact on the American economy, and it will not only affect Qualcomm.

Can you imagine how Apple will compete with Chinese mobile phones that have better performance, richer features and cheaper prices?

Can you imagine how Intel and Nvidia will compete with cheaper and better performing Chinese chips?

If this is not stopped, the best of Silicon Valley will be destroyed, and this is the foreseeable future.”

Qualcomm's stock price has fallen by half since Huawei's extraordinary master went public.

Originally benefited by the positive impact of smart cars, which use a large number of Qualcomm chips, Qualcomm has occupied a major position in this market. Coupled with the recovery of the mobile phone market, Qualcomm has emerged from the trough, its stock price has doubled, and its market value has reached 200 billion US dollars.

The emergence of Extraordinary Master dealt a fatal blow to Qualcomm. The stock price, which had doubled in a year, fell back directly. The capital market even believed that the stock price was overvalued.

Taking the 2023 financial report as an example, the region that contributes the most revenue to Qualcomm is China, which contributes a total of US$220 billion in revenue. Once Chinese companies no longer purchase Qualcomm chips, their revenue will drop sharply to one-third of the original.

The Wall Street Journal's commentary directly pointed out this matter:

"When Qualcomm's stock price returned to $100, I knew many people said that Wall Street overestimated the impact of China's chip technology breakthrough on Qualcomm, and Qualcomm can still occupy a place in the Chinese market.

I know that those who say this are Qualcomm investors, and they cannot accept the reality that their shares have been cut in half in just one month. However, the reality is that if Washington does not intervene, Qualcomm will lose the entire Chinese market faster than expected.

There is no need to question China's production capacity, and China's will to develop the chip industry. China has finally seized this once-in-a-lifetime opportunity. Will they give it up? Are people who hold such thoughts too much underestimating the will of a country that can become the world's second largest economy in just 30 years?

The most pessimistic future is that Qualcomm will not only lose the Chinese market, but they may also lose the global market.

Chinese mobile phone manufacturers have begun to develop their own chips, using them to drive Samsung out of the global market. Only Apple and Chinese domestic brands are left in the global market share, and Qualcomm chips will have no room for survival.

If this becomes a reality, Qualcomm will not even be able to support a market value of $100 billion.”

This hearing held on Capitol Hill was different from the last one. Not only the CEOs of Intel and Texas Instruments were invited, but also the CEOs of semiconductor technology giants.

Pat, the former CEO of Intel, who attended the hearing and vowed that it would be impossible for the Chinese to master topological semimetal technology in a short period of time, is not qualified to attend this hearing.

He provided incorrect intelligence for the federation's strategic decision-making, resulting in major misjudgments, and his title of CEO was added with a prefix.

However, he is still on Intel's board of directors, just not the CEO.

Inside the conference room on Capitol Hill, you can clearly see Washington's iconic building, the Washington Monument, from the tall floor-to-ceiling windows.

Inside the conference room, the classical wood decorations and chandeliers with intricate patterns are full of historical sense, but no one pays attention to them at the moment.

A lot of people came, and people from all walks of life gathered together. China's breakthrough in semiconductors was not only unacceptable to Washington, but also made these semiconductor companies uncomfortable.

Because everyone’s business will be affected.

The director of the Federal Semiconductor Industry Council opened the speech:

"Gentlemen, you are all the elites in the semiconductor industry of the Federation, and we have made a major mistake in our semiconductor strategy.

After China achieved a breakthrough in basic materials, it was the first to reach 1nm in advanced processes. This was also the first time that the Federation was surpassed in semiconductor technology.

We need your constructive feedback.”

Room-temperature superconductivity made the Federation a little nervous, but there is currently no sign of large-scale application of room-temperature superconductivity, and its scientific significance is greater than its industrial significance.

Topological semimetals are different. This will have a fatal impact on the Federation's technology industry. Once the technological advantage is broken, the power in the financial field may no longer be controlled.

TSMC Chairman Liu Deyin wore a dark suit, an exquisite tie, and his hair was combed meticulously. As an outsider, he attached great importance to this hearing.

If TSMC cannot convince Washington to take action, it will be on the verge of death amid internal and external troubles.

He sat at the conference table, with some TSMC executives behind him, all listening quietly.

When Qin Yongpei heard the conference host say that everyone was the elite of the Federation, he couldn't help but complain in his heart, "We are not like that. We came to the Federation because we were forced to do so."

"We are currently combining all possible forces to advance the research of topological semimetals.

China's first breakthrough is a good thing for us in a sense."

After Liu Deyin finished speaking, federal lawmakers at the conference table began to whisper to each other. Everyone was confused as to why he was talking about a good thing.

Liu Deyin did not panic: "Before the official application of topological semimetals, the academic community has always had different opinions about future semiconductor materials.

Now, Chinese companies have helped us choose the right path, and we just need to develop along the right path.

I believe that with the concerted efforts of the world's advanced semiconductor forces, it won't take long for us to catch up.

But before we catch up, we need to have adequate measures in place to prevent the federal semiconductor industry from losing its current market share.

We need to have stable revenue and profits to support our investment in research and development.

I think it is appropriate to impose restrictions on China's semiconductor industry.

Such restrictions need to be sufficiently targeted. Chinese products cannot be exported to the world after transiting through Mexico or Annan as in the past.

In addition, there is a need to provide certain financial support to semiconductor companies to help them increase their investment in research and development.”

Everyone understood what Liu Deyin meant by the last sentence.

Two years ago, the federal government used high subsidies to attract TSMC to build a factory in the federal government, and TSMC invested $400 billion.

The total amount of subsidies was more than 32 billion US dollars. Intel received 21%, Micron received 14%, Texas Instruments received 7%, and how much did TSMC receive? Less than %.

This is pure humiliation. Not to mention a biological son, even an adopted son is not as good as him.

And this 7% subsidy has to be repaid later. Liu Deyin also expressed his dissatisfaction with this matter calmly.

(End of this chapter)