From import substitution to world-class, China's first listed chip design company

Among the first 25 companies listed on the Science and Technology Innovation Board, which opened in 2019, there are 5 chip companies. In the following two years, Chinese chip companies ushered in a wave of listings. By the second anniversary of the opening of the Sci-tech Innovation Board on July 22, 2021, 32 chip companies have been listed on the Sci-Tech Innovation Board, with a total market value of more than 1 trillion.

On August 4, 2021, the sci-tech innovation board ushered in another chip company that created many of China's No. 1 chip companies-Fudan Microelectronics.

Fudan Microelectronics is the first domestic IC design company of an initiation joint-stock company, the first domestic chip design company to be listed on the Hong Kong capital market, and the first IC layout design registration company.

On August 4, 2021, Fudan Microelectronics was successfully listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange, stock code: 688385.SH, forming an "A+H" capital structure

Surprisingly, the founder of the company reached the intention of forming Fudan Microelectronics in only 5 minutes. It was successfully listed two years after its establishment. Today, 23 years later, it has launched an FPGA that is at the top level in the world.

From the development history of Fudan Microelectronics, we can see the persistence of Chinese chip people and the feelings of home and country, and we can see the microcosm of the difficult journey of hundreds of Chinese chip design companies from import substitution to catching up with or even surpassing the world's top chip companies. We can also see the changes and future trends of China's chip industry in decades.

The story of Fudan Microelectronics starts with Professor Xie Xide, a famous physicist in my country who enjoys a world-renowned reputation.

Three generations of hard work, 5 minutes decided to establish

Professor Xie Xide, who returned from the United States in the 1950s, pioneered the basic research of semiconductor physics at Fudan University and trained Professor Zhang Qianling, a key figure for the establishment of Fudan Microelectronics.

Another key figure in the establishment of Fudan Micro is Professor Ye Yanglin. When he visited foreign scholars, he not only saw that the emergence of foundries will affect the global semiconductor industry but also saw China’s semiconductor industry and the world’s leading level. gap. After returning to China, Professor Ye Yanglin loaned 1 million yuan to Fudan University and established the State Key Laboratory of Application Specific Integrated Circuits and Systems of Fudan University in 1985 with Professor Zhang Qianling and others.

Laboratories can train talents, but if you want to retain talents attracted by foreign chip companies, you have to rely on companies. As a result, Professor Ye Yanglin had the idea of ​​establishing a company to retain talents and develop the domestic chip industry. But setting up and managing a company is not what Professor Ye is good at, and funding is also a big issue.

In 1994, Professor Ye talked with Shi Lei, who worked in Shanghai Agricultural Investment, about his idea of ​​starting a company.

Shi Lei is closely related to Chip and Professor Ye. He was admitted to the Department of Management Science of the University of Science and Technology of China in 1985. The University of Science and Technology of China treats every student as a scientist. The department took the physics circuit class together and learned a lot about integrated circuits. When he was a graduate student in the Department of Management at Fudan University, Shi Lei had a good relationship with the people in Professor Ye’s laboratory. After graduation, he went to the investment company and still maintained close contact with Professor Ye. This is also where Professor Ye will talk to Shi Lei about setting up a company. The key to the idea.

Unfortunately, Professor Ye died of a sudden illness in 1995, and the establishment of a chip company was also shelved. However, Shi Lei has never forgotten Professor Ye's wish to set up a chip company to retain talents. In 1997, he moved from Shanghai Agricultural Investment to Shanghai Commercial Investment and began to find funds for the establishment of a chip company.

"The leaders of the investment company don't know much about integrated circuits, but they know that the country needs chips and chip talents, so they agreed to invest 3 million yuan." Shi Lei told, "After getting 3 million investment, I will go to At that time, Yu Jun, deputy director of the State Key Laboratory of Application Specific Integrated Circuits and Systems of Fudan University, talked for 5 minutes and reached the intention of establishing Fudan Microelectronics."

Within Fudan Microelectronics, this is jokingly called the "5-minute resolution. "

After three generations of hard work, in July 1998, 12 outstanding young people with higher education, practical work experience, and high reputation in the domestic semiconductor industry gave up the opportunity to go abroad, inspiring the lofty ideal of serving the country, and full of catching up with the world. With the ambitions of the commanding heights of the microelectronics industry, Shanghai Fudan Microelectronics was established in a courtyard of Fudan University by the Huangpu River.

Due to insufficient funds, the 12 young people also put out their savings and collected more than 6 million yuan to establish the first joint-stock company in China's integrated circuit design industry. Shi Lei served as the managing director of Shanghai Fudan Microelectronics Co., Ltd.

The newly established Fudan Microelectronics started the design of its first chip in a small room measuring 50 square meters in Fudan University.

Started to replace imported chips, raise 100 million Hong Kong dollars at the critical moment of life and death

Like most Chinese chip companies, the newly established Fudan Microelectronics also started from import substitution. "At that time, the Philips TEA 1062 chip used in telephones was in great demand. It happened that the production line of this chip was in Caohejing, Shanghai, and it was open to the outside world. After studying this chip, according to the characteristics of high noise in the Chinese market, Designed a chip that is more in line with the Chinese market and started selling it.” Shi Lei said.

In just one year, this chip sold 2 million units. In this way, the 12 members of the founding team of Fudan Microelectronics were divided into two or three analog chip project groups to design chips according to market demand.

However, the integrated circuit industry is a high-investment industry, and Fudan Micro's only more than 6 million yuan when it was established is far from enough.

During that period of time, EDA software, a tool needed for chip design, could only be bought cheaply, test equipment could only be repaired with what others didn't use, and the office environment was also very difficult. In 2000, seeing that Fudan Micro's funding was about to bottom out, an opportunity appeared.

Before the opening of the Hong Kong Growth Enterprise Market in 2000, an exchange meeting between the Growth Enterprise Market and the Hong Kong Stock Exchange was held in Shanghai. "The night before the exchange meeting, I went on the radio with Director Cai Minyong, who was in charge of the exchange meeting. After the meeting, Director Cai told me that there will be a Hong Kong Growth Enterprise Market exchange meeting tomorrow. 50 companies have already been set up and asked if I would be the 51st. Companies alternate to participate.” Shi Lei was impressed.

On the second day, Shi Lei represented Fudan Microelectronics alternates to participate in the exchange meeting of the Hong Kong Growth Enterprise Market. Since Fudan Micro is a joint-stock company, it does not require restructuring to go public. In addition, Fudan Micro, which has only been established for two years, has no historical burden and is conducive to the listing. After solving many challenges, Fudan Microelectronics finally succeeded in listing on August 4, 2000. It was listed on the Hong Kong Growth Enterprise Market and successfully raised 100 million Hong Kong dollars.

Fudan Microelectronics, which received 100 million Hong Kong dollars, solved the urgent need for funding. The team size has also increased from 12 to more than 50, and it continues to develop in the direction of import substitution. In early 2002, Fudan Microelectronics succeeded in issuing additional H shares and received another 100 million Hong Kong dollars.

"With four years of experience in product definition, customer resources, and 200 million Hong Kong dollars in financing, our survival is basically guaranteed, and we will start to switch from reverse design to forward design." Shi Lei said, "If we don't define ourselves Chips, designing very large-scale integrated circuits, will never become a first-class company."

In 2002, Fudan Microelectronics had successfully designed the high-performance embedded 32-bit microprocessor Shenwei I, which represented the highest level of domestic CPU research and development at that time, with completely independent intellectual property rights, and was successfully taped out at one time. This is a product that can be loaded into the history of Chinese chips.

Since 2003, Fudan Microelectronics has entered the stage of self-defining chips, choosing to design various types of chips starting from smart cards with relatively low technical thresholds.

After several years of development and the smart card business has achieved good results, Fudan Microelectronics is preparing to enter the more difficult large-scale integrated circuit. Around 2006, the state encouraged the development of core basic technologies, especially the four general-purpose chips CPU, GPU, FPGA, DSP, and memory chips. These chips are the most difficult and are monopolized by foreign chip giants, but autonomy and China's huge market size also bring opportunities for Chinese chip companies.

Shi Lei proposed a set of "Rules of the Jungle". To seize the market share of large foreign companies, one must become a "wolf" and put oneself in the position of the strong to have the qualifications for survival and dialogue.

As a result, Fudan Microelectronics, whose team size has reached hundreds of people, took advantage of the trend and entered the field of storage and high-performance FPGAs dominated by masters.

Turn setbacks into product genes and launch world-class FPGAs

To succeed in the continuous and rapid iteration of the chip field, technical strength and strategy are more important. The FPGA project jointly launched by Fudan Microelectronics and Fudan University has achieved remarkable success. It has successively developed the first million-gate FPGA, tens of millions of FPGAs, and billions of FPGAs in China, filling the gap in domestic high-end FPGAs. FPGA is called Field Programmable Logic Gate Array in Chinese. The more gates there are, the higher the performance will be, and more complex processing tasks can be completed.

The success is not all smooth sailing. Fudan Microelectronics also encountered a huge setback in the field of FPGA at the beginning. Due to inexperience, Fudan Microelectronics's first-generation FPGA in 2007 has high performance, but it is difficult to use it in practical applications because it does not have the support of the supporting software tool chain.

"The performance of a chip is sometimes an unimportant parameter. It is even more challenging to make the chip work well with the software." Shi Lei said, "If you want to design a high-end chip, the methodology is very important."

In the second-generation FPGA, Fudan Microelectronics has absorbed the painful experience of the first-generation products, fully considered the combination of software and hardware, and finally successfully launched the second-generation FPGA chip that has been used on a large scale.

Since then, the integration of software and hardware has been written into the product genes of Fudan Microelectronics. Like the world's leading chip giants, it has maintained the competitiveness of its products with a combination of software and hardware products and ecology. MCUs that use a combination of hardware and software have also gained a lot in the MCU market.

In the process of moving towards high-performance high-end chips, Fudan Microelectronics has also successfully realized the transformation. Before 2007, Fudan Microelectronics had been in a state of loss or meager profit. Around 2011, Fudan Microelectronics began to turn to profit, and its profitability was growing rapidly. "Forbes Asia" magazine selected Fudan Microelectronics as the "Best Small and Medium-sized Listed Company" in 2011, which is also a recognition of Fudan Microelectronics' successful transformation.

Shi Lei recalled that Fudan Microelectronics had several key points in its revenue. It took us four to five years to achieve revenue of 100 million, and then it took another four to five years to achieve after-tax profit of 100 million.

In January 2014, Fudan Microelectronics transferred from Hong Kong’s Growth Enterprise Market to the Main Board, and sales have also maintained rapid growth. Sales revenue in 2016 was 1.2 billion yuan, and sales in 2017 exceeded 1.4 billion yuan. The first half of 2018 also maintained a good momentum of growth. The sudden trade war in half a year changed the momentum of growth. In 2019, competition in the FPGA market becomes more intense, and Fudan Microelectronics is facing tremendous competitive pressure.

But even under such pressure, Shi Lei and the company's management are still determined to continue to invest in research and development. In 2019, the investment in research and development exceeded 500 million yuan. The outside world is full of doubts and incomprehensible voices.

Obviously, continuous high R&D investment has also become Fudan Microelectronics' genes. For the high-tech industry, this is a positive incentive. The continued high R&D investment has allowed Fudan Microelectronics' overall gross profit margin to be higher than that of its peers in the industry.

Shi Lei introduced that the important use of Fudan Microelectronics' high R&D investment in 2019 is the R&D of 14/16nm 1 billion gate-level FPGA and PSoC. One billion gate FPGA is already the world's top level, and PSoC is the direction of FPGA evolution.

In 2020, Fudan Microelectronics' annual sales will reach nearly 1.7 billion yuan, which is one of the best ways to respond to outside doubts .

"The shape of FPGA continued development will change." Shi Lei believes, "The industry has seen the advantages of combining FPGA and AI. Therefore, the combination of FPGA and various dedicated accelerators, such as the integration of AI accelerators into a computing platform, is the future trend. We And foreign leading FPGA companies are developing in this direction. This is a new form. We currently name this chip PSoC."

"When our products reach the top level in the industry and the chip form changes, customers know the uses and advantages of PSoC better than we do."

Shi Lei revealed to "Our current achievements are the seeds planted four or five years ago. Fudan Microelectronics' PSoC is currently only in the sample stage, but it has received very good market feedback. The new round of rapid growth has only just begun. At the beginning, we will continue to innovate and continue to maintain our leading position in the industry."

In Shi Lei's mind, the goal of Fudan Microelectronics, or the success of Chinese chip companies, is to design brand-new chips that will make the world look at Chinese chip companies with admiration.

Just as the success of a great man cannot be copied, neither can a successful company.

Fudan Microelectronics was established in 1998 with a fund of more than 6 million yuan. By 2021, the market value will exceed 40 billion yuan. In 23 years, from a start-up of 12 people to a team of more than 1,400 people, it has developed 5 series 200 with independent intellectual property rights. A variety of products.

The 12 young people of Fudan Microelectronics who dare to think and act and have a sense of family and country, under the help of national strength, opportunities of the times, capital, and the persistence of their original aspirations, they take the development of China's microelectronics business as their own responsibility and are committed to Let all domestic electronic products have a Chinese core.

The development process of Fudan Microelectronics is the epitome of the development of many Chinese chip companies. They started from replacing imported chips, cutting in from simple analog chips, grasping the opportunities of the times, using the power of capital, and shifting from reverse chip design to independent research and development. After years of continuous high investment and losses, the company successfully developed large-scale integrated circuits, and finally entered the ranks of high-end chips.

"Don't think that many domestic chips are not advanced enough." Shi Lei said, "Uncompetitive chips cannot be sold. As long as customers buy them, they deserve to be respected."

This is Shi Lei's attitude towards domestic chips. The real power of domestic chips is not to design the most powerful chip along the existing product form, but to design a new soft and hard fusion chip to meet the needs of users.

He also believes that after decades of hard work, the development of the domestic chip industry has not been vulnerable, but it is still necessary to maintain an open and cooperative attitude. With the entry of more capital, the entry of a large number of talents, and the acceptance of domestic chips by more people, in the post-Moore's Law era, it is possible for the Chinese to carry forward the chips.

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