A vital industry weathers virus relatively unscathed
Recent visitors to a chip-design industry park in the Pudong New Area had to circle around the parking lot for at least 15 minutes to find a parking space.
He Dajun, general manager of the Shanghai Zhangjiang High-Tech Park Development Co, wasn’t the least bit surprised. The industry is thriving, despite the coronavirus epidemic.
“Zhangjiang’s chip-design firms are still expanding and growing,” said He. “Of course, some people choose to drive to work instead of taking public transportation during the epidemic.”
The park hosts more than 180 chip-design firms spread over a 3-square-kilometer area. Zhangjiang is often called the Shanghai version of California’s Silicon Valley.
Why has chip design coped so well in an era when the virus has crippled so many industries?
Perhaps because chip design is the “brain” of the whole integrated circuitry industry, a vital part of the entire electronics industry chain. The industry designs, produces, tests and assembles chips used in smartphones, TVs, cars and other electronics that have become integral parts of our lives.
Last year, revenue in Shanghai’s integrated circuit industry rose by double digits to 170.6 billion yuan (US$24.4 billion), or 20 percent of the national total. The city has attracted some 40 percent of industry talent.
Four of China’s top 10 chip design firms — Unisoc, Willsemi, Galaxycore and Huada Semiconductor — all operate facilities in Zhangjiang.
Galaxycore was the first Chinese company to develop “complementary metal oxide semiconductor (CMOS) image sensor” chips. The chips are used in smartphones, multimedia and other devices. As more cameras are used in smartphones, such as Huawei’s latest P40 six-camera model, more of the specialty chips are required.
The company is still recruiting engineers in Shanghai, seeking to almost triple its workforce to 1,500. It will additionally need up to 4,000 employees when its new US$2.2-billion factory starts operation in two or three years in Shanghai, said Lu Jian, assistant to general manager of Galaxycore.
Another startup in Zhangjiang park, NextVPU, develops artificial intelligence chips with computing vision, which can be used in security systems, access control, 3D facial recognition, automotive electronics, robots and drones. The startup’s founders and engineers come from industry giants like AMD, Qualcomm, Huawei, Intel, Nvidia and Marvell.
NextVPU employs more than 200 people and is “rapidly recruiting and expanding,” said Alan Feng, founder and chief executive of the company.
Feng proudly points visitors to a wall displaying patents the company has received, even if many people can’t comprehend the technology jargon they contain.
“The most important thing in the chip-design industry is talent,” said park general manager He.
To attract talent, Zhangjiang provides over 2,000 apartments offering rent subsidies and other amenities to the most sought-after professionals.
The park is divided into specialty sectors, including electronics design automation, field programmable gate array, 5G, artificial intelligence and Internet of Things. All of them need both talent and capital, according to He.
NextVPU raised 300 million yuan in its latest round of financing, which brought its aggregate investment to more than 500 million yuan since the company was founded in 2016.
The new investment supports expansion of both staff and business, with new artificial intelligence chip development in the pipeline. In the autonomous driving realm, the company has been involved with the eco-system development of Internet giant Baidu, Feng said.
Galaxycore is preparing its initial public offering on the Shanghai Stock Exchange’s STAR Market, a Nasdaq-style board launched last year to support innovation and technology development.
Revenue from the IPO is expected to help Galaxycore improve research capabilities, especially in the high-pixel CMOS chip segment. That would make it competitive with giants like Sony, analysts said.
Unisoc, another premier company based in the park, said it has received 5 billion yuan of investment ahead of its initial public offering. The company has developed telecommunications chips spanning the 2G to 5G eras.
On the Chinese mainland, only Huawei and Unisoc can develop 5G baseband chips for smartphones. In 2020, several dozen 5G smartphone models using Unisoc-designed chips are scheduled to hit the market.
The park has created a fund of over 2 billion yuan to invest in the chip industry, according to He.
“The chip-design industry, with no production factories, has been relatively unaffected by coronavirus,” research firm TrendForce said in a recent note. “These firms can design and verify the whole process in the cloud environment.”
But no industry is an island. Chip design still needs facilities and people, and lockdowns have affected the ability of people to go to work.
In February and March, Zhangjiang waived rent for its companies and has helped firms buy face masks and temperature detection devices to use as they resume full operation, He added.
NextVPU has also developed chip solutions used for touchless facial and temperature detection devices, which are used on the front line in the fight against the virus spread, according to Feng.
By 2025, revenue of the integrated circuit industry is forecast to hit 400 billion yuan in the Pudong New Area, triple the current level. By then, the chip-design park is expected to host more than 1,000 companies, said He.