Chips are the core components of today's information age, and they are also an important symbol of the country's scientific and technological strength and competitiveness. However, for a long time, China has been in a state of backwardness and dependence in the field of chips, facing a technological blockade and market monopoly by the United States. In order to break this situation, China and all sectors of society are increasing investment and support for the chip industry, cultivating and developing a number of chip start-ups, and striving to achieve independent innovation and self-sufficiency in chips.
Recently, according to the American Quartz Finance **1 report, in terms of computer chip venture capital, the gap between the United States and China has never been so large. According to the report, a recent report by market research firm Project Proposal data shows that in 2023, the United States will account for only 11% of global semiconductor start-up financing, while China will account for 75%. 2
This data undoubtedly shows the strong momentum and active momentum of China's chip start-ups, and also reflects China's determination and confidence to catch up and surpass in the chip field. So, what are the secrets behind the financing of China's chip start-ups far exceeding that of the United States? The main points are as follows:
Guidance and support of national policies.
China attaches great importance to the development of the chip industry, regards it as an important part of the national strategy, and has formulated a series of policies and measures to provide strong guidance and support for chip start-ups. For example:
In 2014, the "National Integrated Circuit Industry Development Promotion Outline" was issued, which put forward the goal of achieving the international leading level of the chip industry by 2030, and set up a national integrated circuit industry investment, providing huge financial support for the chip industry. 3
In 2017, the "New Generation of Artificial Intelligence Development Plan" was released, which put forward the goal of achieving the world's leading level of artificial intelligence by 2030, taking chips as one of the core technologies of artificial intelligence, and increasing support for the research and development and application of chips.
In 2020, the "Several Opinions on Accelerating the High-quality Development of the Integrated Circuit Industry and the Software Industry" was issued, which put forward the goal of realizing the independent controllability and international competitiveness of the chip industry by 2025, and introduced a series of preferential policies in terms of taxation, finance, talent, and market, providing more comprehensive support for the chip industry.
These national policies have created a good development environment for chip start-ups, provided sufficient funds, stimulated innovation vitality, enhanced market confidence, and promoted the rapid development of the chip industry.
Active participation and investment of social capital.
In addition to the guidance and support of national policies, the active participation and investment of social capital is also an important reason why the financing of Chinese chip start-ups far exceeds that of the United States. With the increasing importance and prospects of the chip industry, more and more social capital, including venture capital, private equity, listed companies, Internet giants, etc., have poured into the chip field, providing rich funding channels and cooperation opportunities for chip start-ups. For example:
Venture capital: Venture capital is the main financing for chip start-ups** and an important driving force for the chip industry. According to statistics, in 2023, Chinese chip start-ups will complete about 300 venture capital investments, involving a scale of about $20 billion, including many large investments with a single financing of more than $100 million. These venture capitals not only provide sufficient funds for chip start-ups, but also provide them with guidance and assistance in technology, market, management and other aspects to help them grow and expand rapidly.
Private placement: Private placement is another important financing for chip start-ups, and it is also an important support force for the chip industry. According to statistics, in 2023, Chinese chip start-ups will complete about 100 private equity investments, involving a capital scale of about $8 billion, including a number of medium investments of more than $50 million in a single investment. These private placements not only provide stable funding for chip start-ups, but also provide them with cooperation and resources in terms of strategy, brand, and channels to help them enhance their competitiveness and influence.
Listed companies: Listed companies are important partners of chip start-ups and important participants in the chip industry. According to statistics, in 2023, Chinese chip start-ups will complete a total of about 50 investments in listed companies, involving a scale of about $4 billion, including many small investments with a single investment of more than $10 million. These listed companies not only provide favorable funds for chip start-ups, but also provide them with synergies and supplements in terms of products, technologies, and markets to help them expand their business and improve their efficiency.
Internet giants: Internet giants are important customers of chip start-ups and an important demander of the chip industry. According to statistics, in 2023, Chinese chip start-ups will complete a total of about 20 investments in Internet giants, involving a scale of about $2 billion, including a number of medium investments of more than $50 million in a single investment. These Internet giants not only provide a huge market demand for chip start-ups, but also provide them with guidance and driving in innovation, applications, and scenarios, helping them achieve technological and business breakthroughs.
February**Dynamic Incentive Plan These social capitals provide chip start-ups with diversified funding and cooperation opportunities, forming a good ecosystem and promoting the development of the chip industry.