Solving Chinese Chips from Policies and Systems

Since 2009, the government has introduced policies for the development of strategic emerging industries, allowing local governments that are dying for the chip industry to find a new "science and technology industry direction." The accumulation of integrated circuits such as photovoltaics, LED, and new energy, which has been integrated into the integrated circuits of the past and “have fewer investments, yield faster, and generate more profits” has become a new trend of local governments.

During the two sessions in 2010, representatives from the National People's Congress stated that the development plan of the central government's strategic emerging industries has not yet been introduced, and local governments have already moved forward. There are 18 provinces and districts proposed to build new energy bases, and nearly 100 cities put solar energy in As a pillar industry, wind energy has even been formulated by individual provinces and cities as a new energy industry plan with hundreds of billions of yuan and trillions of yuan in value.

In this process, the story of the chip industry is repeating itself: the temptation of local governments to be promoted by upgrading industries, improving employment, and increasing fiscal revenues, and taking great risks in pursuing the responsibilities of investors and even companies, similar to that of chips. Most of these industries are also high-risk industries where foreign capital occupies technology, market, and funds, and require large amounts of capital to invest.

In many areas that are being speculative, as key technologies are controlled by people, domestic companies can only compete at a certain point in the industry chain and cannot form complementary industries. For example, in the Internet of Things, many devices and applications with “domestic” signs are still using the core chips and sensors of foreign brands.

The intention of catching up with and catching up with strategic countries to develop strategic emerging industries is to achieve a catch-up strategy of realizing the adjustment of the industrial structure and the long-term development of the country’s overall strength through a new round of technological changes driven by science and technology. However, due to the influx of local will, the state has overtaken the country. The implementation of the strategy may evolve into the cause of distortion of the market.

“In the national economy of developing countries, there is likely to be greater and more frequent cyclical fluctuations and economic crises than in developed countries.” In a report completed in late 2009, Peking University’s experts at Beijing University stated that due to the large number of investment by developing country companies, Industries that have matured in developed countries, have relatively stable technologies, and have already existed in the product market, have "advantages in later developments" that have enabled them to analyze the existing technologies and market conditions in the developed industries in the developed countries, making it easy for the prospects of the industry. Properly predicting and reaching consensus, and triggering a large influx of businesses and capital into industries with good prospects, there has been a “surge of investment”.

“Developing countries often use investment to stimulate the economy, and the sources of investment are relatively dispersed, which further increases the scale of investment and exacerbates the difficulty of estimating and coordinating other investment situations,” the report said.

This phenomenon has appeared in the chip industry and is now erupting in strategic emerging industries.

Another problem is that, due to the industry's influx, the state's support resources for the industry are diluted, or because the interests are difficult to balance and continue to push back, so as to miss the prime time for industrial development.

In this regard, some experts believe that a viable model is that the government can first let the company perform a round of market elimination, and then choose its winners to give support. Another advantage of this move is that it can circumvent the lack of direct market support for the enterprise.

However, the current situation is that in technology and strategic emerging industries, industrial support is still more limited to “better benefits” and early support “one-hit sales”. When the company develops to a larger scale, it needs to face international competition. When the opponent’s market represses and capital infiltrates, the country lacks systematic protection and support.

An expert said that the national ministries and finances at all levels often in fact subsidize the industry, but these subsidies are too scattered and the amount is generally less, and for start-up companies may be timely rain, but for the most thirsty high-investment industries and Leading companies in the industry, such subsidies are very tasteless.

During the interview, a local government official had a lot of emotion: Looking at the investment in China's high-tech industry, from Shen Tian Ma, SVA, BOE to SMIC, these companies in the core industrial chain card position may have already fallen, or rely on Local governments and enterprises are struggling with their own efforts and fighting with international competitors can only be alone.

The policy is not as good as the market. However, whether the state's support for strategic emerging industries can be more diversified is worth looking forward to.

Previously, a question worth paying attention to was why are the same investment projects driven by local governments and enterprises. The domestic auto industry in China has seen many successes, but the chip industry has been stagnant so far?

Analysts believe that one of the important reasons is that China’s huge domestic demand market has boosted the growth of many domestic automakers. In the chip field, the largest PC, communications and memory markets, and a large number of high value-added high-end markets have been Occupied by foreign companies, they can only survive in the cracks, with a slight positive resistance, that is, they will be severely cleaned.

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