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Wayne Shiong, partner at China Growth Capital and seasoned venture capitalist, predicts tremendous demand for chip and semiconductor technology due to break-through in artificial intelligence. Traditionally, the R&D investment cost for chips technology is high and the return cycle is long; however, Mr. Shiong holds a different view.
"This is because we have seen substantial applications of AI so far," says Shiong. "The field of Application Specific Integrated Circuits (ASIC) is totally different from the storage, memory or CPU markets previously because ASIC is totally domesticated."
AI applications necessitate the simultaneous development of basic hardware products, which creates opportunities for the chips industry. China's new development in AI in the areas of security, image analysis, transport management and electronic vehicles puts more pressure on core technology developments in the chip and semiconductor industry.
"We are already leading the world at the application level, now we need to make up in the core technology level," says Shiong.
China Growth Capital Invests in Semi-Conductor Chip Start-Ups
In the past two years, top Chinese venture capital firm China Growth Capital, has paid close attention to the industry. The firm has invested in two chips companies: Chinese start-up DeePhi Tech and US start-up ScaleFlux. DeePhi Tech has developed a DPU chip and acts as a supplier for AI firms. ScaleFlux is a technology company that engages in I/O acceleration based on its storage solutions.
"Nowadays, the investment cost of the chips industry is not very high," says Shiong. "Today, I think sharing economy burns too much money. How can a bike lease business costs 3 billion US dollars?" The chips industry also benefits from economies of scale. The cost of one piece of semiconductor is USD200, but the cost for 100,000 pieces of semiconductor is 1 cent per piece.
The government has been encouraging private capital to enter the chips industry, but it's obviously not enough. Mr. Shiong suggests that the future development of semiconductor still relies on the generous preferential policies on tax subsidies and talent introduction, as well as smart investment moves by VC firms.
About Wayne Shiong
Wayne Shiong is a partner at China Growth Capital and a contributing author to "Future Layout" by MIT Technology Review. Since joining the firm in 2012, he has orchestrated VC investments in Aibee, Jingchi Technology, DeePhi Tech, Mech Mind, Sobot Tech, Tezign etc.
About China Growth Capital
China Growth Capital is a leading early-stage venture capital firm in China with an extended interest in Silicon Valley. The firm funds seed to Series B in fintech, enterprise tech and Internet consumer sectors. Since its founding in 2006, China Growth Capital has grown to manage 6 Billion RMB (approximately 1 Billion USD) in asset under management across its different RMB and USD funds and has 229 portfolio companies as of 2017.
