There is a clear cyclical ity in the semiconductor industry, with the semiconductor market at a low level in 2019, and the impact of the trade war, and the loss of memory chip prices has also cost Samsung the number one position in the semiconductor industry. However, Chairman WangHong Electronics expects a strong recovery in the market in 2020. He also points out that even if China invests heavily in the semiconductor industry, it will take at least 20 years to develop talent and build up technology.
Macronix, a major supplier of memory chips to Nintendo, Sony, Huawei and Apple, predicts that storage chip prices will rebound in 2020 and demand will recover steadily.
“We think 2020 will be a relatively strong year, and given the supply and demand situation, we think there is room for a rebound in memory prices,” Wu Min, chairman and chief executive officer of Macronix, told the Nikkei Asia Review. He also said, “As a leading indicator, the chip industry is like a duck in a river, knowing before anyone else that spring is coming.” ”
Mr Wu’s comments come as many market watchers note that China continues to invest heavily in the chip industry. China’s chip industry is closely related to national security and is the core of the Sino-US science and technology war. China has launched the second phase of the “Big Fund”, known as the China Integrated Circuit Industry Investment Fund, at Rmb204bn ($29.2bn), which in 2014 introduced its first Rmb138.7bn seed fund.
The fund supports a number of Chinese chip projects, including Yangzi Storage, the NAND flash memory chip provider that challenges Samsung Electronics and Micron, and GigaDevice, a smaller rival, which has a 230 per cent rise in its share price in 2019. In line with the trend of wireless headsets, including Apple’s AirPods.
Wu min said government subsidies will help promote the entire semiconductor industry, but still require a lot of time and effort to develop talent and build up technology.
“From the semiconductor industry’s point of view, It still takes about 20 years for China to develop a pool of qualified engineering talent and build its own technology. He added that the Sino-US technological war was a wake-up call in China. China believes its chip technology is still far behind the world’s leading leader.
But if Chinese companies try to catch up, there is little that companies, including Samsung, Micron andSK Hynix, can do. “Given China’s huge domestic market, existing chip companies may not survive in 20 years. ”
Shanghai-based research firm CINNO says Macronix, founded in 1989, is a market leader in dedicated NOR-Flash, a 21 percent market share that is an essential storage component in almost all electronic devices.
Macronix’s customers include Nintendo, Microsoft, Huawei, Sony, Apple, DJI, etc. Macronix also offers specialized NAND flash memory chips, but does not compete directly with global storage giants such as Samsung,SK Hynix, Micron and Kioxia Holdings (formerly known as Toshiba Memory).
Min Wu is an industry veteran with a master’s degree in materials science engineering from Stanford University and has worked at Intel for many years. He was one of the pioneers who helped bring Taiwan back from overseas three decades ago and build its semiconductor industry, the world’s second-largest semiconductor industry (after the United States), with about T$2.6 trillion ($86.5 billion).
Wu says his company doesnot receive any government funding, but has a clear strategy to allow it to survive the extreme turmoil in the memory chip manufacturing market even if many of its peers, such as Elpida and Qimonda, go bankrupt over the past three decades.
“We only serve the markets and customers we have the ability to serve, not gamble or join the price war to get orders,” he said. ”
Macronix sees industrial, automotive and medical applications as the three main growth drivers for the next three years, and the huge mid- to low-end consumer electronics market will no longer be the focus, given price competition.
Revenue from the Taiwan-based storage chip maker in 2018 rose 8.1 percent year-on-year to T$37 billion, and net profit jumped 63 percent to nearly NT$9 billion, the company’s second-highest on record. However, As trade conflict dragged down the market downturn, Macronix reported a 7% drop in revenue in the first 11 months of 2019.
“Looking ahead to 2020, we think demand will pick up, but we haven’t seen a significant impact on the market,” said Sean Yang, an analyst at CINNO. ”
“Storage chip prices will also pick up, especially in the second half of 2020, when most smartphone makers, including Apple, will launch 5G phones and all telecommunications infrastructure will be ready,” Yang said. But the technical and trade war between China and the United States remains a huge uncertainty. “