BUSINESS
16 | Tuesday, July 30, 2019 CHINA DAILY
By MA SI
[email protected]
More capital is needed to bolster
the development of chip manufac-
turing in China, as the nation
strives to reduce reliance on foreign
technologies in case of a wider US
export ban on the sector, investors
and analysts said.
Ding Wenwu, president of China
Integrated Circuit Industry Invest-
ment Fund Co Ltd, said currently,
money is flowing into the chip
design segment, which has a lower
technological threshold and quick
investment returns, but more
efforts are needed to bankroll the
chip material, equipment and man-
ufacturing segments.
“Currently, investors are interest-
ed in the chip industry, but it is
important to ensure the right
investment direction. It is impor-
tant not to put all the money into
semiconductor design. China is lag-
ging behind advanced countries in
chip material, equipment and man-
ufacturing, all of which need heavy
resource inputs,” Ding said.
According to him, only with a bal-
anced growth in all of the above areas
can China’s domestic semiconductor
industry achieve sustainable develop-
ment. The China Integrated Circuit
Industry Investment Fund Co Ltd was
established in 2014 with its first phase
of capital exceeding 138.7 billion yuan
($20.2 billion) from State and private
investors. The fund is now raising the
second round of capital.
Ding’s comments came after Chi-
na’s chip industry notched up
impressive strides in the past dec-
ade. In 2018, the country’s indige-
nous chip sector recorded 653.
billion yuan in sales revenue, up
20.7 percent from a year earlier,
faster than the global average, data
from the China Semiconductor
Industry Association show.
But as the world’s largest semi-
conductor market, China still
spends more on importing chips
than it does on crude oil imports
in recent years. In 2018, its chip
imports exceeded $300 billion for
the first time, up from $260 bil-
lion in 2017, according to data
from the Ministry of Industry andChipmakers bank on ‘white
knights’ to move up the ladder
Experts: More steps needed to boost
financing for equipment segment
Information Technology.
Diao Shijing, co-president of
Tsinghua Unigroup, the leading
chipmaker in China, said semicon-
ductor manufacturing is highly
capital-intensive and requires
superlong investment cycles.
“The government should help
attract more money into chip man-
ufacturing and let investors know
that it is a profitable business,
though it is not like chip design
where money comes and goes fast-
er,” said Diao, who was also a
former senior official with the Min-
istry of Industry and Information
Technology, the country’s top
industry regulator.
The homegrown industry’s
efforts to make some high-end
processors for computers, servers
and other electronic products was
also put into the spotlight after Chi-
nese telecom major Huawei Tech-
nologies Co was banned in May
from buying US technologies with-
out special government approval.
Huang Qing, China managing
director of Walden International, a
US venture capital company
focused on cross-border invest-
ments, said there are many weak
points in China’s chip industry
including raw materials, equip-
ment and chip design tools.
Manufacturing is the core of a
semiconductor, but so far China
has made no contributions to
Moore’s Law, a key rule that has
affected the integrated circuit sec-
tor for a long time, Huang said.
But as the US government moves
to tighten control of key technolo-
gies including premium process-
ors, China is facing anunprecedented opportunity to
build up its chip capabilities.
China has the world’s leading
system integration companies in
mobile phones, 5G communica-
tions, security and other areas.
They traditionally tend to cooper-
ate with European and US suppli-
ers. But as the US government
moves to impose export controls on
Chinese technology firms, they
have begun to feel the urgency of
working with domestic semicon-
ductor companies, Huang said.
“By serving such tech giants, Chi-
nese chip companies have an
unprecedented opportunity to
grow into global players,” Huang
said, adding that the country now
consumes more than half of the
world’s semiconductors.
Sun Yingtong, chairman of
Nationz Technologies Inc, a major
chip company in China, said talent
is what the industry lacks the most.
“We don’t have enough people, not
just those who excel in semiconduc-
tor technologies, but also those who
have an innovative mind and are
willing to spend years on research
and development of projects.
“Openness is the soul of the semi-
conductor industry,” Sun said.
“Despite the sophisticated interna-
tional situation, we still need to
have an open and inclusive mind.
No matter what happens, we have
to work hard to make ourselves
leaders in technologies.”
Nationz is a top supplier of semi-
conductors in the electronic bank-
ing market, and one of the top three
suppliers of integrated circuit chips
to all government issued ID cards
and travel documents.CNPC completes oil well drilling work in Tarim
By ZHENG XIN
[email protected]
China National Petroleum
Corp (PetroChina), the country’s
biggest oil and gas company, said
on Monday that it has achieved a
significant technological break-
through, after successfully com-
pleting drilling work on the
deepest oil well on land in Asia at
its Tarim oilfield in the Xinjiang
Uygur autonomous region.
The Luntan One well, with a cur-
rent depth of 8,882 meters, broke
the previous record of 8,588 meters
set by Sinopec in February 2019,
according to PetroChina Tarim Oil-
field Co.
The company, which started to
drill in June 2018, has overcome
the difficulties posed by ultra-
high-temperature and ultra-high-
pressure conditions, said Cai
levels, and is an integral part of Chi-
na’s exploration process for deep
drilling and increasing reserves
and stabilizing productivity for oil
and gas.
There has been an absence of
geologic information for the Lun-
tan One well, and the deep loca-
tion, ultra-high pressure, ultra-
high temperature and sulfur
content have all made the drilling
more challenging, said Li Li, ener-
gy research director at ICIS Chi-
na, a firm tracking China’s energy
market.
As the country’s reliance on gas
imports has been climbing in
recent years and reached 45 per-
cent last year, China’s oil and gas
companies are determined to
increase their domestic output in
recent years, and the exploration of
Luntan One well is a significant
step, she said.China remains highly depend-
ent on oil and gas imports in
recent years. As the country’s
major oil companies have been
stepping up domestic oil explora-
tion, the country produced 95.
million metric tons of crude oil
during the first half of this year, a
year-on-year increase of 0.8 per-
cent, according to the National
Bureau of Statistics.
“However, whether the techno-
logical and capital investment will
meet the oil and gas output
remains to be observed, and it
remains challenging to achieve
energy self-sufficiency consider-
ing the high dependency on oil
imports under the current situa-
tion.”
It’s a long-term plan and the suc-
cess of the exploration of Luntan
One well is a major step toward it,
she added.Lab-made meat
firms make hay from
China’s green efforts
By REN XIAOJIN and
ZHENG YIRANArtificial meat may not exactly be
the gourmet choice as most people
see it as something that goes against
the norm of eating meat. And that
opposition intensifies if one were
told that the meat has been devel-
oped in laboratories through cell
culture. But all of that may change
soon as vegan meat, developed from
plant protein, is increasingly finding
acceptance with Chinese customers
as a viable alternative.
Evidence to this were the crowds
thronging a tasting event in Shang-
hai in May featuring various egg-re-
lated dishes like the traditional
Chinese tomato and egg stir fry, the
Japanese egg cake tamagoyaki to
egg sandwiches, all of which were
made without cracking a single egg-
shell. All the products, however, had
one thing in common — vegan egg,
an egg substitute developed by a Sil-
icon Valley based food-tech compa-
ny using plant protein extracted
from mung beans.
Josh Tetrick, CEO of Just, a
US-based firm, said plant-based
foods are becoming increasingly
popular with Chinese consumers,
judging by the excellent response to
its vegan eggs.
“We have been receiving great
reports about the product’s taste,
texture and functionality from Chi-
nese consumers,” he said.
Like fake meat (or egg), plant pro-
tein-based products are slowly
emerging as viable food alternatives
in the global market, experts said.
In the mass consumption sector,
plant protein is used to make dairy
drink substitutes or nutrition sup-
plements. But the most discussed
application at the moment is vegan
meat — using the protein from peas
or beans to mimic the texture and
taste of meat, fish, dairy or egg.
After the US startup Beyond
Meat, a company that makes plant-
based meat substitutes, went public
this May, the plant protein industry
has caught the fancy of the invest-
ment community. Switzerland-
based UBS, a global investment
firm, expects the global market for
plant-based protein and meat alter-
natives to rise from $4.6 billion in
2018 to $85 billion by 2030.
The report said such business
modes would be successful in the
next decade as the technology can
mimic meat, fish, egg and dairy
without slaughtering animals and
reduce the carbon footprint.
Yantai Shuangta Food, a Chinese
plant protein maker, has already seen
its shares surge on the Shenzhen
Stock Exchange due to rising demand
for its products. The company has
said that researching and developing
man-made meat will be one of its
major thrust areas in the future.
Startups from home and abroad
have shown commitment to tapping
into China’s market, as part of the
ongoing efforts to reduce food dis-
parities and carbon footprint.
“China produces about 435 billion
eggs every year and demand for pro-
tein is increasing. Urbanization,
population growth and higher
incomes are accelerating that
demand, yet available arable land is
diminishing,” said Tetrick, who
believes that the more environmen-
tally friendly vegan eggs will
become popular in China as sustain-
able eating is gradually gaining
ground nationwide.
Cyrus Pan, Just China general
manager, said its current targets are
Chinese consumers who are affluentindividuals who pay attention to
healthy and more sustainable eating
habits, but in the future, it would
target wider and more diverse dem-
ographics.
Beyond Meat is also planning to
enter China this year, and its major
rival Impossible Foods Inc is set to
tap the mainland market in two
years as it has been selling products
in over 150 restaurants in Hong
Kong.
“The Chinese market for vegan
foods is not big now, but as the
entire industry benefits from the
consumption upgrade and growing
health awareness, it will see a rela-
tively big development,” said indus-
try expert Zhu Danpeng.
Zhu said the demographics for
man-made meat in China are still
small, which means it will not create
any shock to the traditional pork
market.“Currently the vegan industry is
export-oriented, for example, Shu-
angta Food’s major food market is
based abroad,” he said, adding that
domestic companies see man-made
food as one single product instead of
a complete industry.
However, he predicted the indus-
try will see fast growth in the next
five years.
In the beverage sector, where
plant protein — from soy beans,
peanuts, oats, coconuts, walnuts
and many more is widely used to
make dairy substitutes, it is seeing
stable momentum.
According to Qianzhan Industry
Research Institute, by 2020 the plant
protein beverage market is expected
to top 258.3 billion yuan ($37.5 bil-
lion), almost a quarter of the coun-
try’s entire beverage business.
In March, Six Walnuts, a listed
subsidiary of Hebei Yangyuan Zhi-
hui Beverage that makes walnut
drinks, said net profit reached 2.
billion yuan in 2018, up 15.92 per-
cent year-on-year.
Oatly, a Swedish oat milk brand,
has also been gaining popularity in
China among the boutique coffee
shops. According to its China gener-
al manager Zhang Chun, the oat
milk had quickly entered over 1,
coffee shops in China by the end of
2018 from 52 in April that year.
However, Zhu said the growth
pace of the plant protein market in
China is slowing down, from a vast
leap between 2013 and 2016, to a sta-
ble but slowing increase over the
past two years.
“The major Chinese players in the
plant protein drink industry have all
been facing problems due to their
outdated products. To ensure
healthy development, the sector
badly needs innovation,” he said.Contact the writers at
[email protected]China produces
about 435 billion eggs
every year and
demand for protein is
increasing.
Urbanization,
population growth
and higher incomes
are accelerating that
demand ...”Josh Tetrick, CEO of JustAn employee holds up a container with lab-grown steak as she
works in a laboratory at Aleph Farms, an Israeli company producing
steaks from cow cells.REUTERSA worker checks the status of assembled semiconductors at a factory in Southwest China’s Chongqing municipality.XINHUA
Currently, investors
are interested in the
chip industry, but it is
very important to
ensure a right
investment direction.
It is important not to
put all the money on
semiconductor
design.”
Ding Wenwu, president of
China Integrated Circuit Indus-
try Investment Fund Co LtdZhenzhong, head of the company’s
resource exploration department.
“We have basically drilled a
depth of Qomolangma under-
ground,” said Qiu Bin, manager of
the company’s exploration division.
Tarim Basin is the largest petrol-
iferous basin in China and one of
the most difficult to explore due to
its harsh ground environment and
complicated underground condi-
tions.
Analysts said the success of Lun-
tan One well exploration illustrates
China’s technology of ultra-deep
drilling has reached world leading8,
meters
the current depth of the Luntan
One well completed by China
National Petroleum Corp