Chip entrepreneurship, a thought of hell?

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Since this year, there have been good news about financing and listing in the domestic chip field, and not a few have failed in round A and B. For the industry, it is also a means to promote the sound development of China’s chip industry to trace back the past, find out the root cause and avoid risks.
Chip has been a hot topic of concern since the Sino-US trade war. The chip and science act 2022, which came into force recently, has pushed its popularity to a climax. At a time when the United States is trying to strengthen its industrial monopoly in the name of chip Sifang Alliance, Auto4, PC4, AI4, etc., and isolate China technically, the need for China to establish an independent chip supply chain is particularly urgent, and the R&D and manufacturing links of advanced chips have become a must.
Since this year, the dynamics of China’s chip entrepreneurship field are accelerating, and the “first share” in the chip segmentation field is frequent. Many large manufacturers have announced that they will cross the border to develop chips that meet their own requirements. However, there are also chip companies that have been in the stage of financing. “The chip industry has entered the shuffle period” has become the industry consensus.
These chip companies, who are alive and dead, suggest that the flow of market demand is changing, investors’ wallets are tighter, and the chaos of PPT financing may disappear in the chip field. What should entrepreneurs who are still climbing?
How do you get money to make chips?
Norlink Technology, which aspires to become “Qualcomm China”, has been exposed to be empty for some time, which can not help but make people sad. Norlink Technology was founded at the end of 2017, at a time of unprecedented entrepreneurial enthusiasm in the domestic chip field. The time span of more than three years is not long for the research and development in the field of chips, but it is enough to decide the life and death of startups. Although this is normal industrial metabolism, it is also cruel for entrepreneurs.
Kong Xiaohua and Wang Chengzhou, the founders of Norlink Technology, both graduated from Qingbei and are both Dr. Liuyang. The former has worked as a senior engineering director at Qualcomm, and the latter has worked in Meiman Electronics, Lexin, Qualcomm and other companies. After the establishment of Norlink Technology in 2017, the two people quickly formed a core team to focus on the chip design in the field of cellular IoT wireless communications.
In 2020, Norlink Technology completed a round B financing of 200 million yuan, and the team also expanded to 100 people. However, Kong Xiaohua, one of the founders, left the team and returned to the United States for family reasons in the same year. According to, Kong Xiaohua had a disagreement with Wang Chengzhou about product planning and management methods before leaving Norlink Technology. He did not take any employees, nor did he share any funds and shares when he left. Kong Xiaohua also said that when he left, Nuo Ling was full of ammunition, and the product had passed the stage from 0 to 1, and the personnel were neat.
Another key figure, Wang Chengzhou, said that most of the members of the Nuolung technology team were born in Qualcomm, so the company wanted to make “large and complete” products at the beginning, and almost all the designs were from scratch, not only the R&D investment was high, but also the R&D cycle was relatively long. He also mentioned that the fundamental reason for Norlink’s failure was that they spent too long in the small NB-IoT field, which led to the slow development of other products with market potential, such as Cat. 1, and finally dragged down the entire company.
In an interview with China Entrepreneur, the founder of Piren Technology once calculated that the starting price of a chip company is about $200 million, and thousands of software teams are needed after the completion of streaming, which should be calculated in billions; If we want to complete the ecosystem, the price of US $1 billion is not much less.
Norlink Technology streamed its first narrowband low-power wide-area Internet of Things NB-Lot chip NK6010 at the end of 2018, and achieved OTA in 2019. At the end of 2020, the chip has passed the mobile chip certification test and the telecom module warehousing test. However, in terms of revenue, Norlink Technology has almost no revenue in 2020 and only about 1.5 million yuan in 2021, which is completely unable to cover the R&D investment in the same period. The R&D investment of Norlink Technology will reach nearly 80 million yuan in 2020, and 160 million yuan in 2021.
The income is weak, and you can only rely on financing if you want to turn it around. Norlink Technology sought financing in the middle of 2021. Because of the high technical threshold of NB-IoT built-in GNSS, Norlink proposed a valuation of up to 2 billion. However, at that time, the NK6010, the main product of Norlink Technology, was shipped very little in the market. After the core figure Kong Xiaohua left, the investment company held a wait-and-see attitude towards Norlink.
From living beyond its means to breaking the chain of funds and then to the loss of people, the products polished by years of experience can not build “hematopoietic capacity” for the company.
Is the start-up company of “Daniel Plus” worth believing?
For startups in emerging industries, the aura of the company’s founder and core team was once a necessary condition for attracting money. When the investment and financing market enters a calm period, enterprises need more objective value demonstration basis to prove that they are high-quality enterprises with great development potential.
To some extent, the former chip entrepreneurship boom was also caused by the influx of capital with insufficient expertise. It focused on stories and resumes, but ignored products and markets, which led to blind promotion of projects in the field and overheated investment.
It can be seen from the two rounds of investment lineup of Norlink Technology that from angel round to B round, there is only one industrial capital injection in the semiconductor field. When the core figure leaves the company, it is conceivable that the investor will be given a cold shoulder. This point is fully reflected in the famous “100 billion fraud in the chip field” this year.
In June this year, Wuhan Hongxin Semiconductor was pointed out that there was a large capital gap and faced the risk of breaking the capital chain at any time. The company’s remaining investment of 112.3 billion yuan in the second phase of the project was difficult to declare within the year, and fell into a crisis of uncompleted debt. The company was founded in 2017, and formed an initial team of three people whose resumes were completely unrelated to the chip. It declared that it would “become a wafer factory next only to TSMC and Samsung”. At the beginning, it focused on 14nm and 7nm.
Only one year after its establishment, Hongxin has become a star project in Wuhan, and has received 6.5 billion yuan of investment from Wuhan Dongxihu District Government in early 2019. In order to create a technical background for the outside world, Hongxin tried to recruit 100 senior technicians in Taiwan and other places with a contract of 10 million yuan. Under the big pie painted by Hongxin, the former second leader of TSMC, Jiang Shangyi, joined the company as CEO. His joining attracted a large number of engineers to join the team.
With Jiang Shangyi’s face and the endorsement of the technical team, ASML provided Hongxin with a new DUV deep ultraviolet lithography machine, model NXT: 1980Di, which is known as “the only lithography machine capable of producing 7nm chips in China”. However, one month later, the lithography machine was mortgaged to Wuhan Rural Commercial Bank to obtain a loan of 580 million yuan.
According to 36 krypton, the Hongxin factory was directly copied from the drawings of the old factory building of SMIC International from a design institute by Cao Shan, a member of the Zanju Bureau. During the field survey, some professionals found that the factory of Hongxin had problems such as misalignment of the central axis, emergency power borrowing, and insufficient reserves. Since its establishment, Hongxin Company has announced in its profile that it has 14 nm and below nodes, FinFET (fin field effect transistor) advanced logic technology and wafer level advanced packaging technology experience. And the new model that is not the CIDM model has never appeared.
Another semiconductor star company, Qilingxin, founded in 2021, was also recently revealed to have stopped operation, which lasted only eight months from its establishment to its suspension. Not long ago, on May 18, Qilingxin announced that it had completed the angel round and round A financing of 600 million yuan. The angel round investors included the founders of many semiconductor enterprises such as SiliJet, WorldCom Technology, Weir Shares, Hengxuan Technology, and the round A investors included Speed of Light China.
The core team of Qilingxin is from the mainstream chip companies in China and the United States. The core personnel Lin Wei and Wang Qian have both worked in Alibaba Pingtou, with the rank of P10.
Among them, Lin Wei has 25 years of industry experience, and has participated in the development of Intel server CPU and Huawei HiSilicon Mobile CPU Kirin. Kailingxin is the CPU of ARM architecture. It is reported that the real boss behind the company is Wu Xiongang, the former head of ARM China. According to, it was revealed on the social networking platform that it was the complex relationship between Wu Xiongang and ARM that led to the difficulty of the CPU of the ARM architecture of Qilingxin.
In the eyes of many investors, whether the founder is an industry veteran is the first step to see whether the company is worth investing. The founder’s understanding of the industry determines whether he is prepared for potential risks before establishing the company, whether he has clear control over the company’s development, and whether he can quickly lead the team to make adjustments in the event of a crisis. All these are based on his understanding of the laws of the industry.
In the field of chips, it may take 20-30 years to make integrated circuits from materials to equipment to manufacturing process, or even longer. This needs to be repeatedly verified by key leaders and customers, and needs to have more experience in technology and process as the basis.
Where are the future opportunities of chip startups?
For the investment institutions in the primary market, the cooperation of the core team is one of the most important dimensions for the investment institutions to judge the start-up projects. The quality of an enterprise can be evaluated from several perspectives: technical barriers, business models, etc. For startups, innovation is important, but the combination of people and the distribution of benefits are also fatal.
The most fundamental reason for the setbacks of the above-mentioned companies is that there are no successful large-scale industrial practice results. Behind this is the problem of the distribution of interests of the founding team and the high investment in research and development. Despite this, chip companies have collapsed, but technical talents still exist, and the formed experience is also indelible.
Today, the inflation rate of consumer electronics products is rising, but the chips of industrial control and automotive products are still in shortage. Although many companies listed above have fallen into the financing stage, the investment market is still optimistic about the chip field.
Take the chip companies related to the Internet of Things as an example. In January this year, Mobile Core Communication, a cellular mobile communication chip enterprise, completed a round C financing of 1 billion yuan; In February, the Internet of Things communication technology company, Zonghang Technology, announced the completion of the B+round of financing of hundreds of millions of yuan; In May, the wireless Internet of Things transmission technology and solution company Daobion completed a round A financing of 100 million yuan; In June, IoT chip and solution provider Zhilian An Technology completed a round of financing of hundreds of millions of yuan; In August, the intelligent Internet of Things (AIoT) chip design company completed a round A and A+financing of 200 million yuan.
Just as Jiang Shangyi left Hongxin, he joined SMIC International and continued to make efforts for China to break through the technical blockade. There are also veterans of the semiconductor industry who have set up their own companies. These private enterprises also play a role in the training of basic talents and the formation of efficient linkage with scientific research organizations.
Also, as Kong Xiaohua and Wang Chengzhou said, it is not uncommon for chip companies to fail in entrepreneurship. In the future, many chip companies and Norlink Technology will face the same problems, which also means that there will be a wave of unprecedented M&A opportunities in the domestic semiconductor industry. In this wave, the grasp of time nodes is crucial.
It is important to learn from the explosion of chip startups, such as setting up special government agencies to manage the use of funds, and avoiding rent-seeking corruption and financial arbitrage. In terms of industrial support, we should rely on leading enterprises and companies with relatively mature technology to tackle key problems in key areas rather than flooding.

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