Strange Out In Semiconductors

Entry into the semiconductor market is daunting, as the costs for doing so are prohibitively high.

- Ong Xiang Hong

An investment into a wafer fabrication plant can incur anything from US$8 billion to US$15 billion depending on the type of technologies and equipment required. In addition, specialist knowledge such as the behaviour of electrons at the subatomic level and silicon chemistry is required—not to mention having a sharp business acumen.

Therefore, the route most taken by startups in this field is to design chips and outsource their fabrication. These are known as ‘fabless’ manufacturers. The cost of becoming a fabless manufacturer is comparatively lower, and as a result fabless semiconductor entities have captured almost 40 per cent of the industry. This market penetration has been more apparent in the last 30 years.

Take Guangzhou-based Gowin Semiconductor for example. Founded in 2014, Gowin makes field-programmable gate array (FPGA) chips. Such chips are designed to be configured by a customer or a designer after manufacturing—hence the term ‘field-programmable’. They are used in sectors as diverse as automotive, video interfaces, electronics, telecommunications, defence and aerospace.

In 2018, Gowin expects to sell 10 million FPGA chips—in stark contrast to the company’s first order for just 10 chips in January 2017. Its big break came after the crisis over Chinese telecommunications firm ZTE, where the US banned American firms from selling to ZTE—including the mission-critical FPGA chips.

Gowin CEO Zhu Jinghui says, “Theoretically, FPGA can deliver all the functionality of other chips like CPU. If you can design an FPGA, then you can design all the other chips. So we can say that FPGA is the ‘crown jewel’ in semiconductor chip design. I think our FPGA chips can fully replace ones produced in the US. It's already been proven by our clients.”