2. The general trend of replacement by homemade products

The level of the semiconductor industry is a sign of national strength. Leading in the chip field will create advantages in science and technology, economy, politics, military and many other fields. China is currently lagging behind Europe, the United States, Japan and South Korea due to its late start, low investment of resources and insufficient support of national strength, but it is also the largest consumer of ICs and has a huge market volume, so domestic semiconductor enterprises have a bright future, and the general trend is replacement by homemade products. The vast majority of high-end chips used in China are imported, the self-sufficiency rate is less than 20%. Although this is a bottleneck, it is a great opportunity for the development of GD, Slkor, Silan, Kinghelm and other strong and forwarding-looking domestic enterprises.

Leading Enterprises in Various Nodes of China's Semiconductor Industry Chain

Domestic semiconductor enterprises are developing rapidly and shortening the gap between China and Europe and the United States. They have reached the world's advanced level in terms of assembly and test, their chip design capabilities are not bad, and the gap between them and international manufacturers lies in EDA tools and IP kernel. Huawei Hisilicon was ranked in the top ten chip manufacturers before being sanctioned. Because of the lack of Dutch-made ASML high-end lithography machines and the supporting cutting-edge technology talent, and the international advanced level there is a large gap in chip manufacturing between domestic chip manufacturers and international ones. In the fields of supporting materials and equipment, e.g., EDA software, high-purity silicon wafers, photoresists, special gases and target materials, there is a large gap and a large arbitrage space. Long-term growth and development will be achieved by hard work.

There are lots of offices and agents of IC factories around the world in the buildings around Huaqiangbei and at Chegongmiao and Nanshan Science and Technology Park near Huaqiangbei, and procurement and sales networks covering the world. They constitute Huaqiangbei’s channels and ecology. If making good use of them, Huaqiangbei will thrive again! Both Slkor and Kinghelm emerged from Huaqiangbei, having the gene that has the courage to fight, having been on the fast track to development. Slkor has opened two directly-owned stores in Huaqiangbei, and Kinghelm has placed a large antenna connector ad banner in Huaqiangbei!

Slkor Store I at Huaqiangbei Electronics Market Visited by Lots of Customers

3. Advantages of private enterprises

Vendors working hard at Huaqiangbei are characterized by small, fast and nimble. Their business sense is sensitive, they work hard and never say die, many of them got rich with the help of the rapid growth of China's economy.

The Pearl River Delta and Shenzhen are paradises for private enterprises. As of the end of 2022, there are 2,379,000 private enterprises in Shenzhen, accounting for 97 per cent of the total number of enterprises in the city, contributing 55.9% of Shenzhen’s GDP, and 62.1% of Shenzhen’s imports and exports, and about 70% of Shenzhen’s tax revenue. Shenzhen Municipal Government promulgated 31 Regulations concerning private enterprises on July 19, 2023, which was dubbed by netizens "issuing document instead of handing out money or coupon". Both the central government policies and the public opinion also showed goodwill to private enterprises. The society has gradually reached a consensus that SOEs are suitable for developing projects that stabilize the fundamentals of the economy and provide public services within the scope of the planned and command economy, characterized by high resources occupation rate, large scale, long cycle, slow payback, with low efficiency, lack of innovation, rampant corruption, lack of competition or weak competition and other drawbacks, while the private sector has such advantages as low resources occupation rate, more innovation, high efficiency, high vitality and incentives, suitable for developing the areas that require continuous innovation and have fierce market competition, but it faces the problems such as operating beyond the boundary and out-of-control supervision. In terms of job creation, for every one percentage point of GDP created, SOEs create 1.85 million job opportunities, while private enterprises create as many as 6.36 million. Huawei, BYD, Tencent and Kinghelm are all representatives of private enterprises in Shenzhen. With SOEs as economic ballast, private SMEs can develop rapidly and efficiently innovate to find new growth points and promote technological innovation and social development. Shenzhen is the city where private enterprises develop best, leading in efficiency, innovation, market response and growth rate. For decades, state-owned auto makers adopted the “market for technology” strategy, giving up market access tickets and market share, but haven’t grasped the technology yet. On the contrary, BYD, Xiaopeng Automobile, Geely Automobile and other private enterprises win victory in terms of both technology and market.

BMW 4S Store Replaced by BYD 4S Store

"Carbon Neutral" and energy storage battery is the hot spots in these two years. The global energy storage battery shipments reached 142.7 GWh in 2022, an increase of 204.3% over the previous year. CATL, BYD and SUNGROW POWER accounted for 80% of the global market. As long as the Russian-Ukrainian war continues, the new energy market will keep soaring. These outstanding private enterprises are competitive in the international market. They defeat the rivals with their wide range of products, of which the supporting electronic components are competitive products of Huaqiangbei. Given Shenzhen's environment of rapid development, a favorable atmosphere for private enterprises and the fighting gene, both Huaqiangbei companies and Huaqiangbei will develop as long as they find the industries that can grow.

To be continued...