The Millennium Semiconductor Survival Guide.

Chapter 194 Hua Hong Semiconductor

Hu Zhengming is not only good at scientific research in the field of integrated circuits, but also a top scientist in this field. He also has a deep understanding of the chip industry and his own thinking.

Because Hu Zhengming has been studying for a Ph.D. in Berkeley since 69, and returned to Berkeley after working as an assistant professor at MIT for just three or four years. It can be said that he spent half of his life in Berkeley and witnessed the development of Silicon Valley.

Fairchild Semiconductor Company, which cannot be bypassed in the early history of Silicon Valley, was once the largest semiconductor manufacturer in the world. In the year before 69, all eight scientists in the founder team of Fairchild Semiconductor left Fairchild, and Silicon Valley was opened. entrepreneurial boom.

In the year when Hu Zhengming arrived at Berkeley, at the Semiconductor Engineers Conference held in Sunnyvale, among the 400 attendees, there were less than 24 engineers who had not worked in Fairchild.

Hu Zhengming has watched Silicon Valley go from the semiconductor boom to the rise of personal PCs to the Internet wave in the last decade, but his focus is more on the changes brought about by the underlying technological progress.

Zhou Xin said: "I know that Dr. Yu Youcheng joined CAAS after the establishment of CAAS, and I have been in touch with him.

I have some understanding of TSMC's development path. Huaguo's semiconductor industry wants to catch up, and cooperation with Intel is the fastest and most convenient way. "

Yu Youcheng is the vice president of Intel, a Ph.D. in electrical engineering from Stanford, and joined Intel since 1972.Yu Youcheng was recruited by the aforementioned Intel chairman Andy Grove.

Yu Youcheng left Intel in 1977 to form a company called Video Brain, focusing on the manufacture of home computers.At that time, Video Brain was founded because he believed that computers would enter the home sooner or later, but because of the wrong timing of the launch, it eventually closed down, and Yu Youcheng returned to Intel.

Yu Youcheng, like Hu Zhengming, was born and raised in mainland China, then went to study in American and stayed in American.Many engineers in the semiconductor field follow this growth path. If the mainland can have the same conditions, a large number of talents in the field of integrated circuits can also emerge in the mainland at that time.

Hu Zhengming: "Different from the Internet industry, the development of the integrated circuit field cannot rely on the ingenuity of a few people. It requires many talented engineers to burst out sparks of inspiration in each segment, and finally promote technology through hard work. improvement.

Even though Huaguo, as a chaser, has a clear path ahead, and all technical principles can be found in public information, it is still not that simple to achieve something in the field of integrated circuits.

In fact, I have never been worried about your talent. I was just worried that you succeeded too easily and too quickly, and underestimated the difficulty of development in the field of integrated circuits.

Do you know why I have not promised you?I knew I was going to help you with the work, but in the end it didn't work out, and you definitely couldn't bear to see me, a teacher, starve to death. "

Hu Zhengming showed a sly smile when he said the last sentence, Zhou Xin thought for a while and said, "Is it because the difficulty is too high?"

Hu Zhengming nodded: "Yes, the difficulty of this is far beyond your imagination.

Integrated circuits, that is, the chip industry, are different from all previous industries, because the chip industry is a civilian industry, and the most important thing is profitability.

Technical feasibility is second, and commercial profitability is the essence of this matter.

And this kind of profit not only means that the company wants to make a profit, but also means that the company sells its products to other companies, and other companies can also realize profits by using your products.

Why is Nikon willing to sell you two generations of lithography machine technology in packages, because Nikon knows that even if you build a lithography machine, no manufacturer will choose to use a new core lithography machine.

The earliest commercial lithography machine was American’s GCA company. At that time, it should be an exposure machine to be precise. In the 60s, GCA was able to sell dozens of exposure machines every year.

Later, GCA began to ask Nikon for help, Nikon became GCA's lens supplier, and Philips Physics Laboratory, the predecessor of ASML, found Zeiss as their lens supplier.In the early 80s, Philips' lithography machine was still in its infancy, while GCA's annual sales had exceeded 1 million US dollars, a tenfold increase in three years.

None of the lithography machines in the Philips Physics Laboratory were sold, and then the board of directors of Philips Semiconductors planned to sell the Philips Physics Laboratory. ASM originally wanted to buy it, but Philips thought that ASM was too small to afford the price.

Finally, under the leadership of Cruyff, the technical director in charge of the lithography machine business, Philips and ASM jointly established the current ASML. Cruyff and I usually chat at the IEEE every year. He has a great understanding of technology. With an unusually keen sense of smell, he keenly discovered the great prospects of lithography machines.

Nikon was originally a supplier of GCA, and later discovered that there was a leader in the field of lithography machines, and they also began to enter this field.Backed by the neon chip industry chain, Nikon took off rapidly, and it only took five short years from zero to compete with GCA in the lithography machine market.

Nikon and Canon, which are backed by the neon chip industry chain, can develop by relying on the neon chip industry chain.

However, ASML has technical advantages. Both Nikon and GCA’s lithography machines have an accuracy of more than 1 micron. They use lead screws to move the wafer stage, and the accuracy of image detail positioning will be greater than 1 micron. ASML can achieve less than 1 micron.With the help of this technical advantage, ASML was able to overtake on the curve and catch up.But even so, in the early days, ASML still relied on the R&D grants and subsidies from the Dutch government to survive.

Later, it was not until TSMC, IBM, and Samsung respectively made ASML their suppliers that ASML's technical advantages began to play a role.

As for how GCA was surpassed by Nikon and Canon, the strength of the neon semiconductor industry chain is one reason. After GCA entered the field of lithography machines for Nikon, they changed their lens supplier to Zeiss. The problem with Zeiss lenses is another. The reason is that under the combination of the two, GCA was quickly squeezed out of the market by Nikon, and finally went bankrupt.

What Nikon is facing now is that GCA was facing the same dilemma at that time. Their market in lithography machines is constantly being squeezed by ASML, and their profits and revenue are decreasing.Nikon will sell you their backward technology, also because ASML puts too much pressure on them.

Selling backward technology to Xinxin can make the financial report of the lithography machine business look better. The more important reason is that Nikon does not think that Huaguo companies can pose any threat to them in the field of lithography machines.

From the market level, Huaguo's chip industry chain is extremely weak and cannot support Huaguo's lithography machines to enter the production link. Failure to enter the production link means that there will never be room for progress, and technological progress will not be produced.

From a technical point of view, Huaguo does not have enough talent reserves, and Nikon does not believe that Huaguo has a unique technology similar to ASML's breakthrough in the past.

The lithography machine is only one link in the chip industry chain, what about other links?Huaguo has too many lessons to make up.

I promise you, but I need time to think about what to do after I go to form a positive cycle as soon as possible.

Profit is too important for the chip industry. SMIC, which is also a Huaguo company, would not use Xinxin lithography machines. I would not consider it if I were the person in charge of SMIC.

Why?With Nikon or ASML equipment, the yield rate is above 95%, and the engineers of the original lithography machine factory can help me repair any equipment problems in three days or even less. If a new core lithography machine is used, The good product rate may only be 80%, and it needs to be slowly run-in and adjusted to increase the good product rate to 95%.Once the equipment fails, the time required to repair it is far longer than that of mature manufacturers' products.

This in turn is related to the profitability of chip foundries. With Nikon’s lithography machines, the profit margin is 50%. Taking into account product depreciation and capital costs, the profit of chip foundries is very thin, less than 10%.The reason why TSMC’s market value is so high is because they have already formed a scale effect. Even if equipment depreciation and capital costs are included, the profit margin can reach 14%. Last year it was not as good as it seemed to be only 10% last year.

And using the new core lithography machine, excluding product depreciation and capital costs, manufacturers will even lose money, which is obviously unacceptable to them. "

This is also the fundamental reason why Huaguo's semiconductor industry will never develop if American does not take a series of measures to stop it.

Foreign equipment is so easy to use, who would use domestic equipment?Not to mention that the semiconductor field is all private enterprises, not state-owned enterprises. There is no such thing as a political mission, and everyone is pursuing profit.

American's methods have instead given the domestic semiconductor industry chain a lifeline.

Zhou Xin said: "I know that the Xinxin lithography machine is now doing prototype testing at Hua Hong Semiconductor. They are a state-owned chip manufacturing company in Huaguo. Testing the Xinxin lithography machine is a political task for them, so they can promote it.

But there is also an exchange of benefits, because the chip production line of Huahong Semiconductor was built with the help of Neon, and they originally used Nikon's lithography machine, so it is very difficult to get started when testing the new core lithography machine.

Therefore, the cooperation between Xinxin Lithography Machine and Hua Hong Semiconductor has natural advantages.Moreover, the process of the Xinxin lithography machine is 220nm, while the most advanced process of Hua Hong Semiconductor is only 0.35 microns, which means that Hua Hong can help us test the lithography machine and at the same time promote its technological progress.

Moreover, the cooperation between Xinxin Technology and Huahong as a whole also has natural advantages. .

Professor, do you know Huaguo's Project 908 and Project 909? "

Hu Zhengming fell into memory. He was ten years older than Yang Chonghe. Yang Chonghe had a long chat with him before returning to China. The conversation was about why the 908 project failed and how to promote Huaguo’s chips after returning to China. develop.

(Yang Chonghe mentioned in Chapter 60, the founder of Xintao Technology and Montage Technology)

Hu Zhengming has stayed in Silicon Valley for so many years, and Yang Chonghe is the first batch of semiconductor people who returned to China.In this era, it is very difficult to obtain a doctorate degree, and it is very valuable. Returning to China is purely pioneering wasteland. Not many people are willing to go back. Most of them return to China and finally come back.

So Hu Zhengming was very impressed with Yang Chonghe.

"I know that the final result of the 908 project is not satisfactory. It can be said to be a failure. It seems that they lost 2.4 million yuan in the first year. They are too slow. It took seven years from project approval to production. These seven years The chip industry has changed over time, and the situation is completely different from the pre-research period of the project.

Later, the 909 project was launched. The 909 project did not adopt the same vertically integrated manufacturing model as the 908, but adopted a split model, that is, the chip foundry and chip design were separated.The reason why such a model was chosen was precisely the result of Yang Chonghe's persuasion after a long talk with the minister of the Ministry of Electronics Industry at that time.

Yang Chonghe seems to have established a chip design company, which has received investment from a group of investment companies from Silicon Valley, Neon and Wanwan. "

The company founded by Yang Chonghe is called Xintao, which is the first chip design company in China to receive an order from a developed country. They received an order from Panasonic in 1999.

Zhou Xin said: "The Xintao company he established has been acquired, because there are too many investors behind it, the founder team lost control, and was finally acquired by American IDT."

The price of IDT's acquisition is 8500 million US dollars, and venture capital institutions have made a lot of money.

Zhou Xin continued: "When Xintao was acquired, Uncle Guan wanted to recruit Yang Chonghe. Uncle Guan believed that Yang Chonghe was very capable, and he was a rare talent in Huaguo who knew both technology and management.

Unfortunately, the agreement signed by Yang Chonghe stipulates that he must work for IDT for three years, which means that he can join Xinxin Technology after three years. "

After hearing this, Hu Zhengming sighed: "So there are good and bad venture capital, which is a double-edged sword.

Sometimes taking too much money from venture capital is not necessarily a good thing.

Now that I think about it, it was because I took too much money from your investment company that I had to go to Shenhai to work for you in my final career. "Hu Zhengming finally teased.

Zhou Xin said: "Professor, if you don't want to, I can't force you.

Let’s go back to Project 909. Project 909 is just like what you just said. Hua Hong Semiconductor is a chip foundry, that is, a manufacturer. They mainly made memory chips before.

You know that from the second half of last year to the first half of this year, with the bursting of the Nasdaq bubble, it led to a depression in the semiconductor industry.

This has led to the dumping of chips from American, Neon, and Korea at low prices, and the price of memory chips is less than one-tenth of the previous price.Hua Hong Semiconductor lost 7 million yuan in the first half of this year. "

A loss of 7 million yuan in half a year is obviously unacceptable to Hua Hong Semiconductor, and it is even more unacceptable that the 100 project, which invested 909 billion yuan by the state, failed again.

Later, Hua Hong withdrew from the field of memory chips, and then YMTC returned to the field of memory chips.This is a reincarnation. If you didn't persist in the past, you will have to pay a greater price later.

Huahong Semiconductor's huge loss, to be honest, there are also reasons why Neon has dug a hole in it.Nihong took Huaguo's foreign exchange to help build a chip production line, and then guaranteed the exclusive sales of the products.

However, Neon’s underwriting product condition is to underwrite the product at the market price, and because of the cooperation with Neon, the memory chip has become the only product of Huahong Semiconductor. The price of the memory chip has dropped from 20 US dollars to 2 US dollars. Hua Hong regrets that it is too late up.

(End of this chapter)