As the largest and most advanced chip foundry company in mainland China, SMIC has received widespread attention in recent years. Not only has the 14nm process been mass-produced, it will also be listed on the Science and Technology Innovation Edition. After three days of lightning inquiry, it set a new record for IPO review. SMIC has become a "Internet celebrity" company in the chip industry, and its every move to return to A-shares has attracted much attention. But this "Internet celebrity" is actually 20 years old, and its precipitation and growth over the past 20 years are also a microcosm of China's chip development history. Let’s learn more about SMIC with Global TMT.
chip (chip) is a general term for semiconductor component products. It is the carrier of an integrated circuit and is divided into wafer . A small chip requires multiple procedures during the manufacturing process, and these procedures may involve multiple companies. One of these companies is called "foundries", which mainly produces chips based on integrated circuit design solutions provided by customers. is represented by TSMC, SMIC, GROFOND (Global Core), and UMC. , but don’t think that “foundry” means low technical content and low profit. Unlike the general foundry industry, the technical content behind the foundry in the chip industry is very high, and the evaluation standard is mainly the level of process technology.
Zhang Rujing Shanghai Chuang "core"
Zhang Rujing
On August 1, 2000, a chip manufacturing company laid the first pile on the land of Shanghai Pudong Zhangjiang High-tech Park. This company is different from the chip manufacturing factory that was invested by the state and adopted a nationalized system. Instead, a 52-year-old electronic engineer raised funds and brought more than 400 relevant talents from Taiwan, the United States, Europe and South Korea to create a brand new sample of a chip manufacturing factory in the mainland. This chip manufacturer is "SMIC", and the leader is Zhang Rujing.
Zhang Rujing, born in Nanjing in 1948, graduated from Taiwan University, and later obtained a master's degree in engineering from Buffalo State University of New York, and a doctorate in electronic engineering from Southern Methodist University. In 1977, he joined the American semiconductor giant Texas Instruments and worked as an engineer. It is worth mentioning that TSMC founder Zhang Zhongmou also worked at Texas Instruments until 1985, while Zhang Rujing worked at Texas Instruments for 20 years. In 1997, because Texas Instruments gave up its DRAM industry, Zhang Rujing decided to retire and return to Taiwan. Zhang Rujing also founded the foundry manufacturer Side Semiconductor in Taiwan, but at that time, Taiwan had formed two major mountains, TSMC and UMC. Side Semiconductor was eventually bought by TSMC for US$500,000, which was 2,000.
After this, Zhang Rujing decided to return to the mainland, when mainland China was encouraging the development of the semiconductor industry. In the second month of the acquisition of World University, Zhang Rujing raised US$1.48 billion to register SMIC in Cayman Islands . The first investment list includes Shanghai Industrial, Peking University Bluebird, Goldman Sachs , Handing Asia Pacific and Temasek. After investigation, Zhang Rujing determined to build a factory in Shanghai. Zhang Rujing, who was named "factory building maniac" during Texas Instruments, maintained a decisive style. It usually takes one and a half years to build a wafer factory, while SMIC's factory only took 13 months. Since then, SMIC has built three eight-inch chip factories in Shanghai and two 12-inch chip factories in Beijing, and then acquired an 8-inch chip factory in Motorola in Tianjin. Accelerated expansion has enabled SMIC to develop rapidly. SMIC, which was founded in 2004 for only four years, went public in the United States and soon entered the leading position in the semiconductor foundry industry.
However, there are also some hidden dangers in it. Continuously building factories requires more investment. Since 2008, the market price of memory chips has begun to fall, and SMIC has been under tremendous pressure on profits. Zhang Rujing decided to choose state-owned enterprises to inject capital, and eventually Datang Telecom became the largest shareholder of SMIC, and it still occupies 19.14% of SMIC's equity. But the disaster never came singular. In November 2009, the California District Court ruled that SMIC illegally used 61 of its 65 controversial patent projects, and TSMC asked SMIC to compensate $1 billion.Faced with high compensation, SMIC hopes to settle with TSMC, on the condition that TSMC can acquire 8% of SMIC's equity, plus 2% of the equity. During the settlement negotiations, Zhang Rujing chose to resign. He said, "I took the initiative to resign. I felt that the lawsuit with TSMC exhausted me, and I tried my best." Zhang Rujing finally withdrew from SMIC as an "old man of vicissitudes" and also withdrew from the entire chip industry.
SMIC achieved profitability
Qiu Ciyun
After Zhang Rujing resigned, Jiang Shangzhou, chairman of SMIC, soon found his second CEO Wang Ningguo. But in 2011, SMIC experienced great turmoil. Two senior executives, Wang Ningguo and , Yang Shining, , resigned one after another, and Qiu Ciyun returned to SMIC to serve as CEO.
Qiu Ciyun, born in 1956. Received a PhD in Electrical Engineering from UC Berkeley and a Master of Business Administration from Columbia University. In 2001, Qiu Ciyun followed Zhang Rujing to Shanghai to establish SMIC and served as the company's senior vice president of operations. However, because his "seeking stability" corporate operation and management opinions were contrary to Zhang Rujing's idea of rapid expansion, Qiu left SMIC in 2005. Since then, he has worked in Huahong NEC and Malaysian wafer foundry Silterra.
After returning to SMIC, Qiu Ciyun still adheres to the business philosophy of maintaining stability and maintaining performance, advocating "let go down, slow down, and take steady steps." This is reflected in not pursuing the most advanced processes but focusing on more mature processes; maintaining good yields with high productivity; and focusing on the domestic market. Facts have proved that Qiu Ciyun's strategy has really worked. Only 20% of SMIC's revenue came from China in 2009 to 50% of its revenue from China in 2016. Net profit turned from loss to profit, and its market value also increased several times. Qiu Ciyun allows SMIC to stabilize and make continuous profits after internal and external troubles. In 2015, he was judged as the third best CEO of the semiconductor industry in the "Asian High-tech Company Management Ranking".
can be said that at this time SMIC needs to change its strategy, and its main contradiction is no longer "survival" but "progress". As foreign capital expenditures have been controlled, SMIC has widened its distance from TSMC in the research and development of new equipment, new production lines and new technologies. In 2016, TSMC's 10-nanometer process had already achieved mass production, while SMIC's wafer production capacity was mainly concentrated in 180-150 nanometers and 65-40 nanometers. The shipment of 28-nanometer process wafers accounted for only about 2% of the overall wafer sales. On May 10, 2017, Qiu Ciyun resigned from the CEO of SMIC for personal reasons and was appointed as the non-executive vice chairman of the board of directors of SMIC and transferred to the non-executive director.
closely follows TSMC
Zhao Haijun Liang Mengsong
Replace Qiu Ciyun is an old man from SMIC, Zhao Haijun (left), who once served as chief operating officer. Zhao Haijun received his Bachelor of Science and PhD in the Department of Electronic Engineering from Tsinghua University in Beijing and his Master of Business Administration from the University of Chicago. He joined SMIC in October 2010, and in April 2013 he served as executive vice president and chief operating officer. In July of the same year, he served as general manager of SMIC Northern Joint Venture. Some industry insiders once described him as a typical northern personality, straightforward and strict requirements. Since leading Beijing companies to rectify and adjust middle and senior management, he has made his subordinates nervous.
In October 2017, Liang Mengsong (right) also joined SMIC and also served as CEO. Zhao Haijun is responsible for manufacturing and Liang Mengsong is responsible for research and development, thus opening up the dual CEO model of SMIC. Liang Mengsong studied under the professor of Berkeley University in the United States, Hu Zhengming, and served as the senior R&D director at TSMC. He participated in the chip manufacturing process of every generation of TSMC from beginning to end. He has since worked in Samsung , helping Samsung to break through from 45 nanometers to 16 nanometers between 2011 and 2013. It was also after Liang Mengsong came to SMIC that SMIC began to abandon 20 nanometers and then developed a more advanced 14 nanometers.
14 nanometer process orders are in short supply In September 2019, SMIC successfully achieved mass production of China's first generation 14-nanometer FinFET process chips on its production line in Pudong, Shanghai.At the 20th anniversary dinner, SMIC distributed Huawei Honor Play4T mobile phones with its 14nm process foundry Kirin 710A processor to the participating employees, which means that its 14nm FinFET foundry mobile chips have truly achieved large-scale mass production and commercialization.
htmlOn the evening of June 7, SMIC delivered the first round of inquiries on the Science and Technology Innovation Board, which was only 4 days after receiving inquiries on the 4th. SMIC disclosed that last year its 14-nanometer process product revenue was 57.0615 million yuan, accounting for 0.29% of the overall OEM revenue, mainly serving end customers in the fields of mobile phone application processors and other fields. In the first quarter of this year, the process revenue reached 72.1542 million yuan, accounting for 1.26%, and the existing production capacity showed a situation of huge demand and insufficient supply. According to SMIC's previous plan, the production of 14-nanometer and subsequent advanced processes will be expanded to 4,000 tablets/month and 9,000 tablets/month in March and July this year, respectively, and will be expanded to 15,000 tablets/month by the end of 2020. Due to strong demand, SMIC announced additional annual capital expenditure of US$1.1 billion to US$4.3 billion.About 40% of the funds raised by SMIC's Science and Technology Innovation Board IPO will be used for the 12-inch chip SN1 project (SMIC South Phase I). SMIC South is a 12-inch wafer factory, mainly built to meet the R&D and mass production plans of SMIC's advanced process nodes of 14 nanometers and below. Its current production capacity has reached 6,000 pieces per month, the target production capacity is 35,000 pieces per month, and the total investment is US$12.04 billion.
Science and Technology Innovation Board provides a "stage" for chip companies
In 2019, China's semiconductor industry growth rate remained at around 20%, China's traditional chips have increased globally, and AI chips have also gained development opportunities. The opening of the Science and Technology Innovation Board gives some hard-working chip companies the opportunity to get into people's vision. At present, there are nearly 10 chip concept companies listed on the Science and Technology Innovation Board, such as China Micro Corporation, Lanqi Technology, Shanghai Silicon Industry, etc., and more companies are eager to try.
In addition to SMIC, artificial intelligence chip company Cambrian, MEMS sensor chip research and development and design company Minxin Co., Ltd., optical communications industry manufacturer Shijia Photonics Technology Co., Ltd., full signal chain chip design company Xinhai Technology, and Tsinghua Lihe integrated circuit chip company Lihe Microelectronics are also promoting the IPO process of the Science and Technology Innovation Board.
is the 20th anniversary of its founding. The "blood, sweat and tears" in SMIC's development carry the spirit of continuous research and innovation among some Chinese chip people. In the current environment, chip technology is being paid more attention to. SMIC and many chip companies will stand in the spotlight of the historical stage and shoulder the important task of the development of national chip technology. Although the road is long and difficult, the future is promising.
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