Just as domestic chips were making significant progress, a sudden report emerged that over 3,400 chip companies in the country collapsed in the first eight months of this year. Why did so many companies suddenly fail amidst the apparent prosperity of domestic chips?
According to statistical data, there were less than a thousand chip companies in the country around 2010. However, since the establishment of the integrated circuit industry fund in 2014, domestic chip companies have sprung up like mushrooms after rain, with over 20,000 chip companies now. Are so many chip companies truly growing based on market demand? Many of them likely came for the subsidies, trying to profit from the chaos.
This situation was also seen in the early years of the new energy vehicle industry, where some companies existed solely for subsidies, producing electric vehicles that ended up abandoned in junkyards, becoming graveyards for electric vehicles. These vehicles had ranges of only over 100 kilometers or even just a few dozen kilometers, lacking practical significance. Later, as the market opened up, these non-competitive new energy vehicle companies quickly collapsed.
However, this does not deny the significant role of subsidies in promoting the domestic new energy vehicle industry. With the support of subsidies, many competitive new energy vehicle companies rapidly emerged, with BYD surpassing American automakers to become the world’s largest new energy vehicle company. Today, BYD’s monthly sales have exceeded 200,000 units and are being exported to overseas markets. The new energy vehicle industry has also given rise to CATL, a giant power battery company, which has become the largest power battery manufacturer in the world for many years.
The chip industry is similar; under the temptation of subsidies, some chip companies lacking technological research and development capabilities emerged. Ultimately, the chip industry is highly competitive, and only those with sufficient strength and market recognition can grow and become proud members of the chip industry.
As the largest chip market in the world, China can indeed accommodate thousands or even tens of thousands of chip companies. However, the growth of chip companies cannot rely on subsidies in the long term. They must find their positioning in the market, identify their market, and design and produce chips that gain market recognition to survive.
Over the years, many chip companies that have emerged domestically have indeed broken the fear of domestic chips, with storage chips, RF chips, and analog chips gradually replacing imported chips, providing strong support for China’s self-reliance in manufacturing. However, the chip industry has now reached a point of survival of the fittest.
The chip industry is both high-tech and high-investment. Industry insiders point out that a single wafer run can cost millions of RMB, and the successful mass production of a chip may require several wafer runs to succeed. This demands that chip companies have sufficient strength to develop chips that meet technical conditions and avoid failures; otherwise, a single failure could mean the end for a chip company.
In this context, the elimination of some companies that lack market competitiveness is inevitable. The over 3,000 chip companies that collapsed may include those that were born to ride the wave, attempting to profit from subsidies. Their collapse undoubtedly strips away the facade of these “opportunistic” chip companies, indicating that it is time for non-competitive companies to exit the stage.
The changes in China’s chip industry are actually beneficial for those chip companies with sufficient competitiveness, as it means that truly competitive companies will have the opportunity to gain more resources and accelerate their development. After all, China’s chip self-sufficiency rate is currently only over 30%, and there is significant growth potential to achieve a 70% self-sufficiency rate by 2025. The strong will continue to grow stronger, which will be the future trend of the chip industry.