IC big **: investment or money

Since last year, the State established an IC support fund and has so far completed seven investments:

1. 10 billion investment in Ziguang's chip business;

2.31 billion Hong Kong dollars participated in SMIC's issuance of 11.58% of shares;

3, 150 million US dollars investment + 140 million U.S. dollar loan investment long-term acquisition of Xingke Jinpeng;

4,480 million yuan investment in micro semiconductors;

5. Investing in A-Peck, a listed A-share company;

6. Investment Guoke Microelectronics Co., Ltd.;

7.483 billion yuan investment Sanan Optoelectronics;

According to public information, the major funds were initiated by companies such as China Development Bank, China Tobacco, Yizhuang State Investment, China Mobile, Shanghai Guosheng, China Electronics, Ziguang Communications, and Huaxin Investment.

Looking back at the international mergers and acquisitions that have taken place over the past year or two in mainland China:

1. After Ziguang’s acquisition of Spreadtrum for US$1.7 billion, it acquired RDA for another US$900 million;

2. Pudong Branch invested 690 million U.S. dollars to acquire Shanghai Qiqi Technology;

3. Huatian Technology acquired US FlipChip for US$42 million;

4. Changdian acquired Xingke Jinpeng for US$780 million;

5. Wu Yuefeng acquired DRAM maker Core Semiconductor (without final confirmation) for US$640 million;

6. Qingxin Huachuang acquired the camera maker Omnivision for US$1.9 billion;

7. Jianguang Capital purchases NXP RF Power for US$1.8 billion;

8. Dongxin acquires a 25.3% stake in Fidelix, a well-known Korean semiconductor manufacturer;

9. Xingsen Technology acquires Xcerra Semiconductor Test Board assets;

Comparing the national major fund's investment in the industry with the international mergers and acquisitions of private capital, with the exception of the National Fund, which invests in Ziguang and Changde, the acquisition of other private capital funds is rarely seen. Even investing in Ziguang and Changjiang are basically stable investments.

Objectively speaking, the private capital acquisition cost of overseas capital is very high. If it can not be listed in the short term, there may even be a large loss. Although the national funds have invested in seven companies so far, most of them are listed on the A-share market except for Ziguang. The probability of the company’s future investment losses is very low, combined with the introduction of national policies to foster integrated circuit industry, it has roused investors’ enthusiasm for investing, especially among mainland investors. A-share companies that have joined forces with the National Large Funds are even more icing on the cake, and have increased their appreciation of the stock price. Without harm, it can be expected that the National IC Funding Fund will receive huge profits in the coming years, and the size of the fund will also increase dramatically.

It is not wrong for big funds to invest funds in areas such as integrated circuit design, foundry, packaging and testing, and upstream equipment. This overly conservative approach certainly has no harm in the industry, but compared to the international mergers and acquisitions of private capital, the country’s largest The risk of the fund's investment strategy is much smaller, and even to put it plainly there is no risk, but on the contrary can certainly benefit, and it must be a huge profit. It is said that the National Fund has visited the vast majority of good IC listing and quasi-listing The company hopes to participate in the investment and guess correctly. The 120 billion largest national fund will also invest in these companies, and it will increase significantly with the growth of the wealth of these companies. The problem is that this kind of investment is promoting the national integrated circuit industry. Is development still gaining wealth for the country or its shareholders?

The world has known that the mainland is going to vigorously develop the IC industry. In the past year alone, the FBI in the United States has had many anti-espionage incidents against the mainland. Taiwanese industries have also been shocked by the rise of the mainland supply chain. Overseas acquisitions have occurred. However, it is the global industry’s crazy premium on mainland capital. The direct result is that mainland international M&A risks have skyrocketed. Such development will continue. Once the mainland stock market PE declines, most of the international mergers and acquisitions that were carried out before will fall into losses, and private capital will be lost. The resulting blow will be devastating, and the enthusiasm for investment in the integrated circuit industry that will finally be lifted by the country will be frozen.

It is recommended that the relevant national authorities introduce relevant policies to foster the IC industry as soon as possible. The major fund is not a panacea for the integrated circuit industry, and policy support can really play a guiding role. Otherwise, the flame that is finally lit will be extinguished by various forces. The revitalization of integrated circuits will become unattainable.