What are the challenges faced by domestic chips?

What are the challenges faced by domestic chips? Why can't high-end chips be made in China?

The status quo of the domestic chip industry: the self-sufficiency rate of high-end general-purpose chips is almost zero. On the whole, the current composition structure of domestic and imported chips is about this: the proportion of chip localization is very low, less than 20%, most of which need to be purchased abroad, and there are about more than 40 leading chip companies in general and key components in the world.

There is a large trade deficit in the import and export of integrated circuits. In 2016, China's imports of integrated circuits reached US$227.07 billion, exceeding US$200 billion for four consecutive years, making it the most valuable import. In the same period, exports of integrated circuits were 61.38 billion US dollars, a decrease of 11.1%, and the trade deficit was as high as 165.7 billion US dollars. It is expected that in the next few years, the import value of integrated circuits will remain high.

Domestic chips focus on a few areas, such as some communication chips, display processing chips, power management chips, discrete devices, MCU, positioning and navigation, etc., most of which belong to the low-end, low unit price of chips, low profit margins, and high-end performance chips and key devices are basically monopolized by foreign manufacturers. From the perspective of the whole process of the chip industry, domestic enterprises are not weaker than foreign manufacturers in the field of packaging and testing, some digital chip design fields are not lagging behind foreign manufacturers, analog chip design is still far behind foreign countries, and chip manufacturing equipment and processes are still lagging behind foreign IDM or OEM processing enterprises 1-2 generation technology.

Domestic chip manufacturers are facing four major problems

1. Accumulation and high tolerance for long-term R&D investment. It is reflected in the microarchitecture design, the lack of design capabilities of the underlying operating system, and the lack of its own microarchitecture for general-purpose CPUs (most domestic PC/server operating systems are still based on Linux, in these aspects, foreign manufacturers such as ARM actually broke out after more than 20 years of R&D accumulation), or quickly introduced and grabbed top chip design talents.

2. Realize the positive cycle of heavy capital investment and high output.

3. In the short term, the performance and stability surpass foreign opponents.

4. Cultivation of hardware developer ecology. Intel and MS have developed curriculum systems, certification systems, and ecological cultivation systems in domestic colleges and universities for many years, and domestic enterprises rarely have such cross-level strategic operations.

Why can't China design a chip with strong performance?

At present, the domestic integrated circuit industry design, manufacturing, packaging three industries at the same time, manufacturing can go to foundry, packaging and testing and United States gap is not very large.

The biggest gap lies in the design, and now the domestic chip design is mainly dependent on foreign countries. An expert from a university research institute in Beijing told Xinzhiyuan that in fact, it is not that China cannot design chips, but because there are no conditions for chip iteration at present.

"Large companies like Intel and ARM are difficult to use in the first generation of chips they design, but they can be iterated and finally there will be easy-to-use chips."

Looking back at China: it is difficult for our domestic chips to survive, mainly because the industry will not give the opportunity to iterate. This is because, on the one hand, chips already exist on the market with superior performance and even low cost. On the other hand, people do not have the patience to wait for domestic chips to iterate, which directly limits the improvement of China's chip design capabilities.

"Originally, there were many people who could actually design very good chips, but because the ecology of the market does not give you the opportunity to iterate on domestic chips, and selectively ignores domestic ones, domestic companies cannot and do not give engineers the opportunity to 'sacrifice', which is our problem."

On the other hand, insufficient R&D investment is also the reason why high-end general-purpose chips cannot be produced. In addition to major national science and technology projects, other national science and technology plans basically do not have integrated circuit-related projects and funding. In 2008, the two major national science and technology projects of "core electronic devices, high-end general-purpose chips and basic software products" and "very large-scale integrated circuit equipment and complete sets of processes" were launched in 2008, with an average annual R&D investment of only 4 billion to 5 billion yuan in the field of integrated circuits, which was less than 5.2%~7.7% of Intel's R&D expenses.

This situation is similar to the inability to make SLR cameras in China, and it is hoped that the process of chip localization may not be as far away as imagined.