In the past two years, there has been a trend among domestic chip design enterprises. The design companies that previously focused on storage, simulation, power supply, radio frequency and even AI began to adjust their direction to get involved in MCU business. Some companies choose the general MCU, more are based on the original functional chip to do MCU integration.
Based on this phenomenon, a certain degree of industry insight and case analysis on domestic MCU were made from the perspective of industry, hoping to be helpful to domestic practitioners, upstream and downstream manufacturers, capital market and other relevant decisions and judgments. It is expected that the domestic MCU can get more high-quality development and go more smoothly on the road of catching up with and surpassing the international top MCU manufacturers.
The importance, complexity and growth of MCU
MCU is also called microcontroller, is the CPU, memory (RAM and ROM), a variety of analog peripherals, digital peripherals, a variety of I/O and interface integration in a chip, the formation of a chip level computer. 32-bit MCU is widely used in industrial control, home appliances, automobiles, digital electronics and other products, is the core parts of electronic equipment. The Chinese market alone has an annual industry size of over 40 billion RMB.
As a seemingly ordinary chip based on traditional wafer manufacturing processes, it is as strategically important as any other type of chip, whether it is more sophisticated AI chips, high-end chips such as GPUs, or even more massive analog chips. Aside from the impact of scarcity due to recent period shortages, the strategic importance, complexity, and growth potential of the MCU have been severely underestimated.
The supply of MCU is related to China’s electronic information manufacturing industry
As small as a headset or as big as a car, there can be as few as one or as many as hundreds of MCUs in any electrified device. None of them can be made into a product or shipped out. China is a major electronics manufacturer, but imports more than 90 percent of the MCU used in products it makes. Domestic MCU accounted for most of the low-end and homogenized market. The risk of artificial cut off supply always exists, even if the current stage of the inhuman shortage, also caused an irreversible impact on many related downstream manufacturers. For downstream manufacturers, one of the biggest lessons of this shortage is to learn and get used to supply chain forecasting, which is also a lesson MCU chip manufacturers should learn. And we are still in the process of being educated. European and American MCU manufacturers will be forced to lock in the next 2 years of wafer production capacity through part of the advance payment, the intention is very obvious.
Completion of a highly reliable and scalable MCU is no easy task
Deceptively simple MCU chip, from digital to analog integrated with at least 50 core IP. Every IP needs to be polished like a craftsman. Long time of a large number of simulation, continuous adjustment of circuit and parameters, continuous flow, continuous iteration, development without any shortcut.
MCU is seemingly simple, but due to its versatility, it is very diverse and unpredictable in application scenarios. And a large number of shipments require high consistency of products and a very low rate of defects. This requires that the design of the circuit needs to have better tolerance, tolerance of a certain process deviation, tolerance of different temperature and humidity and electromagnetic working environment, tolerance of a variety of peripheral combination of the stability of the work, and even need to consider the peripheral application design fault tolerance. This is the basic requirement for high reliability and high quality MCU products.
And to truly commercialize it on a large scale, other ecology-related construction cannot be less. Easy to use development board, perfect software tool chain, rich application notes and documents, mature SDK development kit, timely and effective online and offline technical support, popular community forum, sound offline technical training mechanism and comprehensive sales channel system all play a pivotal role.
The growth of the MCU is many times faster than the growth of the end product and is accelerating
The continuous popularity of electronic products has increased the absolute number of MCU demand, while the intelligence of electronic products and the Internet of Things make the number of MCU required by unit product continue to rise, resulting in the demand for MCU far beyond the linear growth rate.
This “Double-Davis” growth has been a great thing for the MCU industry, but it has also been accompanied by a lack of capacity. In particular, a significant number of MCUs are based on traditional process nodes and processes, based on an 8-inch wafer production line that continues to shrink. This requires collaboration and consensus between the upstream and downstream of the industry, long-term and scientific demand forecasting and capacity planning, and more importantly, top-level design’s recognition of the strategic importance of MCU and policy support.
This is not only related to the rise of domestic MCU, but also related to the safety of the survival and development of China’s electronic information manufacturing industry. For the capital market, it means a huge investment opportunity.