Which Model Is Suitable for China's IC Industry

In the field of industrial manufacturing, IC, that is, integrated circuit, is a method of miniaturizing semiconductor equipment and passive components on the surface of semiconductor wafer. With the development of technology, the application range is wider, such as computer, mobile phone, digital electrical products, modern computing, communication, manufacturing and transportation system, Internet and other industries. It can be seen that the development of IC industry tends to be mature. The IC industry chain is divided into three links: upstream, middle and downstream. According to the business links involved in the enterprise, it is divided into IDM, fabless and foundry, as well as the emerging Fab lite and CIDM operation modes. So, which model is more suitable for China?

IDM mode

IDM, the international integrated component manufacturer, was widely used by enterprises in the early stage, but few enterprises use it at present. It refers to a semiconductor vertical integration company that does everything from design, manufacturing, packaging and testing to sales of its own brand IC. IDM mode is more comprehensive, especially in IC design, manufacturing, sealing and testing. The products cover a wide range and occupy a very high market share. Similarly, such an operation mode also brings certain disadvantages, such as large enterprise scale, high management cost, high operating expenses, low return on capital, etc.

Fabless model

This mode is called the factory free chip supplier mode. Enterprises only need to be responsible for IC design and sales, and outsource IC manufacturing, packaging and testing. Because the initial investment scale under this mode is small and the subsequent management cost does not need to be too high, it has been favored by many asset light IC design enterprises. The chip itself is a high-precision device. Although this mode can reduce the cost, it also has to bear the risks of manufacturing process quality, market problems and so on.

Foundry mode

That is, the OEM mode is only responsible for IC manufacturing, sealing and testing, and does not involve IC design. Compared with IC design, OEM only focuses on manufacturing, which belongs to the middle and downstream links of IC industry. There is no need to worry about risks such as inaccurate Market Research and IC design defects. However, the IC market has a huge demand for components, so enterprises in this mode should also work hard on advanced manufacturing equipment and production lines, and the market competition pressure is great.

In addition, IDM mode has evolved two new modes: Fab Lite mode and CIDM mode.

Fab Lite mode

This model is a strategy for enterprises to reduce investment risk, such as retaining only profitable departments. At present, Fab Lite mode is becoming popular in the global IC industry, especially in Europe. Such as Texas Instruments, NXP, STMicroelectronics, Infineon, Freescale, etc.

CIDM mode

This model is a shared "old renovation" model. 10-15 individual enterprises jointly invest in the design, R & D, production, packaging, testing, marketing • sales and final product assembly of semiconductors to form a semiconductor production platform, and all participants work together to build a win-win relationship. It can not only realize resource sharing, but also reduce the risk of investment.

Why is CIDM more suitable for China?

At present, the semiconductor market is growing due to strong demand and other factors. The Chinese market alone accounts for more than one-third of the global market share. However, China's IC import is four times that of its export, so China must ensure that the IC industry is self-sufficient and eliminate the trade deficit. Fabless and foundry models are the two most lacking models in China's IC industry model. Driven by new digital technologies, independent and controllable IC products such as digital IC and analog IC are far less than those of foreign enterprises, so independent research and development needs to be strengthened.

Based on the current development process, IDM model is the most suitable for China's development. As this model involves the whole link of the industrial chain, we must do a good job in products and win the market. However, due to the lack of competitiveness of products, there is an inventory phenomenon, which brings certain risks to enterprises. Therefore, adopting this model, Chinese enterprises will face the challenge of coexistence of profit and risk. Due to the large number of enterprises participating in CIDM mode, it is necessary to coordinate the products of these enterprises to avoid market competition. It is very important to improve the collaborative ability.