We should be the force to save ourselves, but it is also our own actions that may lead to our destruction.
At the 2023 China Anxin Network Integrated Circuit Design Industry Annual Conference, Professor Wei Shaojun, Chairman of the Integrated Circuit Design Branch of the China Semiconductor Industry Association, pointed out in his keynote speech \"Enhancing the Competitiveness of Chip Products\" that the number of domestic chip design companies continues to grow, reaching 3451, with the number of companies with sales exceeding 100 million yuan also increasing. Although the entire semiconductor industry is in a downward cycle, these data show some vitality.
However, to evaluate whether these companies can survive, Anxin Technology Innovation needs to consider many factors. Although the data on sales growth may seem encouraging, it is also important to note the intense competition in the industry, rapid technological updates, and pressure on funding and talent. Therefore, whether domestic chip companies can survive and when they will face elimination depends on whether they can cope with these challenges and continuously improve their competitiveness and innovation capabilities.
According to data and analysis provided by Texas chips, the domestic chip design industry is facing polarization and profitability challenges. In terms of sales, 20% of domestic chip design companies account for 80% of sales, while the remaining 80% of companies face increasing challenges in competition. Meanwhile, from the perspective of the profitability of listed companies, a considerable proportion of them are in a state of loss, with a downward trend in gross profit margin and net profit. This is mainly due to factors such as intensified industry competition and price competition.
In this situation, the pressure on profits may be greater for domestic semiconductor chip design companies that are not yet listed. According to your estimation, at least 3000 domestic chip companies are in a loss making state. This means that these companies need to take measures to change the status quo, otherwise profitability will become increasingly difficult.
Possible solutions include technological innovation, optimization of marketing strategies, improvement of cost management, and cooperation with other enterprises. Only through continuous efforts and improvements can domestic component chip design companies survive and achieve sustained profits in a fiercely competitive environment.
Three solutions have been proposed to address the challenges faced by domestic chip design companies:
Secondary market: Seeking listing and injecting funds into the company through financing in the secondary market. However, currently the Science and Technology Innovation Board is tightening, and the Beijing Stock Exchange has also raised the listing threshold, making it more difficult for chip startups to go public. Despite technological progress, profitability remains at a low level, and many listed chip companies are in a loss making going public itself a problem.
Primary market: Although there is huge potential in the field of chip entrepreneurship, it is difficult for investors in the primary market to obtain financing. This is mainly because chip entrepreneurship requires long-term research and development, and there is technological uncertainty. Many investors are unwilling to wait for the long term to obtain returns, which makes primary market financing difficult.
Product Market: Require chip companies to obtain funding from the product market. The author believes that mid to low end chip companies cannot rely solely on product profitability, therefore they must have the determination to achieve first place in product or niche markets. Only in this way can the company gain an advantage in market competition and achieve profitability. However, this also requires chip companies to have a deep understanding of market demand and focus on meeting customer needs, rather than focusing too much on financing or domestic substitution.
In summary, chip startups need to comprehensively consider technological innovation, market demand, fund management, and other aspects to find suitable development strategies to address challenges. Self rescue is the solution.