Warnings on chip projects
Technology drive requires rational investment
Amid industry zeal for technology advances in China's semiconductor sector, it is time to call for rational investment and top-down design by the government to avoid “expensive” failures, analysts told the Global Times on Monday.
The comments came as it emerged that a major chipmaking project of Wuhan Hongxin Semiconductor Manufacturing Co (HSMC), based in Wuhan, Hubei Province, has ground to a halt and may be abandoned for lack of funds.
HSMC, founded in November 2017, planned to make wafers with advanced logic technology in sizes of 7 nanometers and 14 nanometers. Each of the production lines was expected to make 30,000 pieces per month. The plan also called for a wafer-level advanced packaging production line.
According to Qixinbao, a database of Chinese enterprise information, HSMC's largest shareholder is Beijing
Guangliang Lantu Technology Co, with a 90-percent stake. Founder and chairman Li Xueyan reportedly has no semiconductor experience, and the actual paid-up capital is zero.
The remaining 10 percent was held by an investment group affiliated with Wuhan's Linkong Port Economic and Technological Development Zone. The latter investor is state-owned and backed by the province.
Domestic news outlet Caixin reported in November 2019 that the project ground to a halt after a local court suspended the company's landuse rights.
According to the “Wuhan Major Project Plan in 2020” released by the city government in April this year, the HSMC project ranked No.1 among all projects with the highest investment value of a total of 128 billion yuan ($18.7 billion). As of the end of 2019, it had completed an investment of 15.3 billion yuan ($2.34 billion), and the investment in 2020 was expected to be 8.7 billion yuan.
The project flopped due to shortfalls of cash and technology, said an industry analyst.
The US' “under-the-table” moves and the fallout of the pandemic have cast shadows on the industry's sales prospects, Ma Jihua, a veteran industry analyst, told the Global Times on Monday.
“The US conspiracy has made it difficult for Chinese companies to secure equipment that is critical to chip manufacturing. For example, the delivery of a chip-making machine, a lithography machine, could be delayed,” Ma said.
Industry observers said that China's chip industry, in particular ongoing projects, have often experienced similar misstep as the Wuhan situation.
An investment manager in the high-tech industry, who asked to remain anonymous, told the Global Times on Monday that the valuation of chip-related start-ups has risen amid industry hype, which is not a good sign.
The manager mentioned that “start-ups related to Huawei chip businesses have become very expensive.”