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Chen Zhibin, partner of Yuanhe Puhua

Many members of the Puhua team are from the semiconductor industry, and we have done a beautiful job in return. In the eyes of many people, we are a very sentimental institution. We start from the industry, and sometimes choose to sacrifice some short-term benefits in exchange for getting things done.

In 2011, we firmly invested in Zhaoyi Innovation. At that time, Zhaoyi Innovation had been established for a long time and was in a transitional period. In the capital environment at that time, almost no one invested in semiconductors. Perhaps because of the brand endorsement after we led the investment, many institutions followed up the investment.

In 2012 or so, when we shared projects with our peers, we often encountered doubts. We felt that the valuation of this project was not high, but they might wonder, is this company worth so much money? After the investment results come out, often the single project we lead can get a hundredfold return. For some funds, one project makes the return of the entire fund.

Feelings are not a pie we draw for ourselves. We can keenly discover the value of an enterprise in the industry chain. This value may not be reflected in financial statements or figures, such as how to measure an entrepreneur the spirit of? How to measure a certain level of competition threshold formed by a company? We can capture this kind of enterprise and recognize its value. This is a professional judgment and a sentiment, which will definitely be reflected in the financial return.

Investment is a lonely industry, and it should not receive so much attention today, such as investment in the semiconductor field. Silicon Valley’s VCs are very mature. Silicon Valley was originally named after silicon, but now there is no “silicon” in Silicon Valley, and there are no companies in this direction. The single investment in this industry is very large, the capital required by enterprises is intensive, the return on investment is not high at the beginning, and the investment cycle is also very long.

Hardware companies will have a leader in a subdivision track, but there will also be people competing with it, and sometimes there will be “anti-network effects.” Unlike Facebook or Alipay, as the scale increases, it turns out that there is no one else in the competition. Not in the semiconductor field, because products are provided to customers, and customers always have the motivation to find the next cheaper, faster, and better solution. Therefore, the semiconductor industry is not like the Internet or software, where a company or a product with a market share of 60% can dominate the world.

Under the superposition of various factors, many hardware companies have not grown up. So from a certain point of view, it makes sense that the semiconductor industry is not paid attention to by mainstream VCs. Many organizations will directly say that they do not invest in semiconductors. This is not lack of insight. Foreign investment must create returns for LP, but semiconductor investment is really a lonely and professional thing. A lot of hot money is pouring into the semiconductor field, but this does not actually change this. While studying in the United States, I was fortunate to join the nanotechnology research and development center of the school, under the tutelage of Professor Taylor, the research direction is linked to semiconductors, and when I graduated, I became the student who completed the PhD in the shortest time under Professor Taylor.

In the 7 years I worked at McKinsey, I spent 5 years doing semiconductors. I participated in the merger of Fujitsu and AMD’s flash memory division, the spin-off of Spansion from AMD, the spin-off of AMD from GF, the spin-off of NXP from Philips, and the establishment of Applied Materials’ R&D center in Xi’an.

One of the cases that I am most impressed by is to improve NEC’s Fab (fab) in Kyushu, Japan. The Japanese are often dissatisfied with the American company’s guidance. I asked the other party for a piece of equipment and observed the operation for several hours. Then tell the other party that there are ways to increase the efficiency by 8%. Then, workers were arranged on the spot to perform the operation, and the results confirmed that the method I said was correct. Many years later, the person in charge told me, “Yang Sang (Mr.), the project we worked on was the most successful in the history of Japanese manufacturing, and it saved Japan’s semiconductor industry.

Yang Lei, Partner of Northern Light Venture Capital

After leaving McKinsey, I started my investment journey. In 2010, he joined Northern Light Venture Capital, which focuses on early technology. I always believe that chip investment is a good direction. If investment institutions can focus on the chip field and penetrate the industry to become more professional, there is still a good chance.

In 2018, after seeing a lot of money raised by some companies in the industry, I became more anxious. This is something that has never happened before in the Chinese semiconductor industry. I am very worried that if the huge capital power comes in and spends money to recruit people, it will be able to make products to occupy the market. But in 2019, I gradually realized that no matter how much money was spent, it was useless. The model of hiring a bunch of people with money alone could not beat real entrepreneurs and entrepreneurs. The industry can outperform for more than ten years. Industry veteran.

Looking back at the entire development process of chip investment, we have experienced the process of big dining table-small dining table-conference hall. From the first ten institutions, there were not a few left in the middle, and now basically the institutions are in Investing in chips, the entire chip market has gone through several stages of no one cares about, freezing, and frenzy.

In the early days, China’s chip industry fell into a “low-end trap”: there were a lot of low-end, a little mid-end, and almost no high-end in chip supply. not onlyHowever, if you divide for a long time, you must unite, and if you combine for a long time, you must divide. In the future, the global market will eventually open. The current development of China’s chip industry is very hot. But I don’t think we should build a complete Chinese-style industrial chain. We don’t need to replace the United States, Europe, and Japan. What we should do more is to seize the “toll gates” on the highways of the future technology industry and find digital infrastructure. “Core Node”.

Everyone is talking about the current “core nodes”, such as lithography machines, but don’t ignore the key nodes in the future. Otherwise, even if I seized the lithography machine to solve today’s problems, but because it did not pay attention to the key points of the future, it was found that it was behind again when it was “long-term integration”. If you want to win when “the split is a long time”, you have to bet at the future node today.

Sometimes we need to rely on others to provide win-win possibilities and opportunities, and others will rely on you. If you don’t rely on others at all, others will shut you out. Even if we want to establish China’s semiconductor system, it must be established on the basis of open cooperation with the world. Integrate yourself into the global industrial chain and seize the “core nodes” that cannot be replaced in the future technology industrial chain. By persisting in openness and marketization, we can lead the future.

For semiconductor entrepreneurs, it is necessary to look up to the stars and to be down-to-earth. The goal can be to become a leading company in the industry, but the first step is to do a good job of the first product. Persistence is very important. While persevering, we must accumulate core competitiveness. After the release, we will accumulate new core competitiveness. With such a continuous cycle, we will finally have a chance to stand out. Chip investment is very professional. If investment institutions can focus on the chip field and become more professional, they must be psychologically prepared to invest more than ten years.

Zhongke Chuangxing Yuan Bo: the feelings that cannot solve the pain points of the industry are empty slogans

Four years ago, I started to invest in the semiconductor field. Because I had a communication background before, I was in contact with investment in the communication field at the beginning. When sorting out the communications industry at that time, I found a problem: products in the semiconductor segment, such as chips, are too dependent on imports. At that time, the country’s chip imports exceeded oil imports. It can be seen that in this field, compared with some “chip powers”, our country is in a relatively weak position.

This is also the starting point for Zhongke Chuangxing to focus on investment in the semiconductor field. “Hard technology” is the background color of Zhongke Chuangxing, and investment and incubation based on the underlying core technology is our purpose. We have always been committed to promoting the development of China’s underlying core technology through the power of capital.

“Hard technology” investment sounds sexy, but the investment process is not sexy. Even in the past few years, he would be regarded as a liar.