On October 27, Marvell withdraws its R&D Technology, a major Silicon Valley chip manufacturer in the United States, confirmed that it would abolish the company’s R&D team and other personnel in China, which caused a shock in the industry. Observers said that the effect of the Biden administration’s sanctions on China’s chips continues to ferment and expand, which will exacerbate the shortage of Chinese chip talent. Moreover, since the start of the US-China chip war, China has been beaten all the way, and it has no weight to fight back.
Marvell Technology (also known as Marvell Electronics) is the largest hard disk supplier in the world. In the second quarter of this year, its revenue has just achieved nine consecutive quarters of growth, reaching US$1.517 billion, and its gross profit rate has exceeded 51.8% in one fell swoop. Ranked sixth in the list of global IC design companies.
While the revenue outlook is looking good, Marvell said last Thursday (October 27) that it will conduct large-scale layoffs in China.
Stacey Keegan, the company’s vice president of corporate marketing, said in a written reply to Reuters: “In China, our R&D investment will focus on local customers and the Chinese market…In this restructuring, Multiple business divisions and units announced adjustments to their global positioning strategies, resulting in job cuts in China.”
Marvell, an American company, lays off workers in China
Marvell did not specify the size of the layoffs, but according to internal company documents obtained by Weibo, a Chinese online media collection, according to Weibo, the company’s information technology (IT) department engineering team, part of the infrastructure team and three other design departments will be located in Shanghai. In addition, the two departments located in Chengdu will also be cut down, which means that most of the R&D teams will be cut down. The total number of Marvell’s Chinese employees once approached 1,000, and the international R&D centre in Shanghai also had more than 800 R&D personnel, making it the third largest R&D centre after the US headquarters and Israel.
Although the total number of employees is unknown, employees revealed that Marvell withdraws its R&D specific compensation plan is N+3, that is, compensation for N months’ salary for N years of service, plus three months’ salary. In this regard, Chinese netizens said that this is not a very generous compensation package for layoffs.
Marvell is the third major U.S. chipmaker to lay off workers in China this year as the U.S. and China compete for geopolitical and technological supremacy. American memory maker Micron disbanded its Shanghai DRAM design department in January this year, with a total of more than 100 people, and Texas Instruments also abolished the Marvell withdraws its R&D team of its Chinese microcontroller department (MCU) in May this year. The R&D line moved to India.
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China may become a forbidden place for chip investment and talent flow
Regarding the development momentum, three semiconductor industry experts interviewed by Voice of America all said that the United States sanctions on China’s chip talent that came into force on October 12 prohibit American citizens or permanent residents with green cards from continuing to work for China’s semiconductor factories. Directly pinching the weakness of China’s shortage of chip talent will intensify the short-term development of China’s local talents in the future.
Abishur Prakash, co-founder of the Canadian Centre for Innovating the Future (Centre for Innovating the Future) and geopolitical futurist, said that in the past month, the Biden administration has actively allied the world to contain China. The executive circle of global chip manufacturers has gradually realized that the era of globalization, which allows free global expansion and free flow of talent, has come to an end, especially as China has become a forbidden place for investment and talent.
“China will surely be at a loss when faced with American corporations like Marvell withdraws its R&D readjusting their manpower structure, because China has not yet reached the same level of sophistication,” said Abhishek Prakash. level as the United States, Britain, or even Israel. The same level of chip talents can be cultivated.”
Abishul Prakash has published 5 books, including the new book “The World Is Vertical: How Technology Is Remaking Globalization”. He said that before completely withdrawing from China, foreign technology companies will adopt an “insulation” strategy to avoid being dragged down by the geopolitical hegemony between the United States and China. Therefore, there may be a domino effect in the future, and there will be more foreign chip manufacturers It will follow in the footsteps of Marvell withdraws its R&D and begin to lay off more employees in China.
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The domino effect of layoffs in foreign-funded chip factories may continue to ferment
Abishul Prakash said: “The worst is yet to come, as China will be forced to respond as the new order of globalization emerges. American companies are at the tipping point of transformation, and in the future, they will Withdraw from China, and no longer actively enter China.”
He claimed that there are three significant issues that face the world’s semiconductor producers. First, because they rely on the United States for technology and equipment, they are forced to choose sides and side with the United States. Second, too many countries are competing with China to become a regional chip powerhouse, including the European Union, Japan, South Korea, and even Saudi Arabia. This leads to the third problem: How do these foreign-funded chip factories still operating in China maintain the profitability of their Chinese business?
To do this, “(they) will pursue a dual-track plan” (to maintain profits in China). One track will be made exclusively for Chinese customers and the other will be made for customers outside of China,” said Abishur Prakash. In fact, not only dual-track but also multi-track in the future, because there are too many countries (to make their own chips), not only China.”
Lin Zongnan, a professor of the Department of Electrical Engineering at National Taiwan University in Taipei, also said that the expansion of US sanctions against China will reduce the business volume of American companies in China. He believes that this is the main reason behind Marvell’s layoffs.
He said that in order to develop semiconductors in China, in addition to capital and talent, it also needs production equipment. As the United States blocks China from multiple channels such as chips, technology, talents, and equipment, China’s domestic chips and talents have been blocked one.
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Chinese local chip talent development is challenging.
Lin Zongnan said: “When the source of these high-level semiconductor talents is limited with the expansion of the Sino-US technological war, it (China) high-level talents (cultivation) is a big problem. Of course, basic semiconductor production In terms of talent can be trained locally. However, this is limited to relatively low-level mature manufacturing talents Marvell withdraws its R&D.”
“Economic Information Daily” once quoted Kou Xufeng, a professor at the School of Information, Shanghai University of Science and Technology, as pointing out that the most advanced chip manufacturing process has reached 3-5 nanometers, but Chinese university textbooks are still at the micron level, which is a thousand times lower. There is a significant lag between theory and practise because most academics have not kept up with the most recent changes in the field.
Lin Zongnan also said that generally speaking, schools cannot quickly update semiconductor equipment, so they can only teach theory, and there is still a long way to go before students enter the factory and go online for practice.
Lin Zongnan said: “Actually, depending on the qualifications of the students, that is to say, one or two years of familiarity with the initial operation cannot be lost. It will take longer if the technology needs to be more advanced or even needs more research and development with Marvell withdraws its R&D.
Although China has established a wide range of disciplines to cultivate chip talents, it still needs a process from the establishment of disciplines to the supply of talent. “Economic Information Daily” quoted Zhao Zhanxiang, managing director of Shanghai-based Yunxiu Capital, as saying, “It takes ten years to train a mature chip engineer.”
In addition, although China’s semiconductor industry has a talent gap of more than 200,000, the report also quoted Xu Wei, secretary-general of the Shanghai Integrated Circuit Industry Association, saying that based on salary incentives, only about 30% of microelectronics graduates from some universities Entering the chip industry has exacerbated the tense situation of talent supply in the industry.
Li Fang, the senior partner of Beijing-based Blue Ocean Capital, believes that the Biden administration has firmly blocked China’s chip industry from the perspective of supply and talent.
Li Fang said: “It (the Biden administration) has interrupted the supply channels of American companies to China. This is a direct impact. Indirectly, it is also very detrimental to the cultivation of Chinese talent, because for so many years, Whether it is an American chip manufacturer or a Taiwanese chip manufacturer, building factories in the mainland is actually training a lot of talents for the mainland. Talents are also cut off at the same time.”
Although pessimistic in the short term, Li Fang believes that there are many Chinese talents in the semiconductor industry. If China’s political ecology can change the currently closed situation, adhere to the tone of opening to the outside world, and have peaceful exchanges with the West, it will help China to poach talents or talents from abroad. return to China. He believes that 20-30 years later, based on China’s patents and advantages in 5G and even 6G mobile chip standards, it may turn around in the future and even break the monopoly of the United States.
The U.S.-China Chip War China is beaten all the way, lacking the weight to fight back
Li Fang also quoted the “Beijing Daily” report that the Chinese company Zhongke Xintong is expected to bypass the Dutch company ASML’s lithography machine next year and build the first mass production of photonic chip production lines. If it comes to pass, the Americans won’t be able to control the mainland chip sector, he declared, and other countries will advance..
The chip war between the United States and China has been going on for many years, Prakash said, and China has not taken any countermeasures so far. He is worried that if China goes to extremes and announces that it will expel chip factories that comply with the US ban from the Chinese market, executives from Silicon Valley and Wall Street may knock on the door of the White House to lobby Biden to relax the ban on China.
Shanghai-based Xinmou Research analyst Gu Wenjun also posted a post on Weibo last week, calling on China to “introduce measures to deal with US sanctions”, but was ridiculed by netizens. A netizen left a message saying: “The writing is meaningless. What measures can be introduced? Can counter-sanctions be achieved?Another user of the internet expressed pessimism about China’s capabilities. Bloggers “overestimate the competence of little children” (students in primary school), he wrote.
In this regard, Li Fang of Blue Ocean Capital also bluntly said that China lacks countermeasures. Regarding the countermeasure proposed by someone to “restrict foreign-funded enterprises from setting up factories in China”, he believes that this is a “bad idea” that is counterproductive, and it is in the arms of the United States!
“In the realm of chips, the mainland does not have much weight,” Li Fang stated. It is different from the trade war. During the (US-China) trade war, the United States stuck with our tariffs, which means that the mainland’s past products will use tariffs. Contrary to you, the mainland will also be stuck with American products, which can be equal. But the United States has been in chips for so many years, after all, it is very advanced in technology. Conversely, the mainland is lagging behind in this respect, otherwise, it would not be the same as the United States. As soon as we made a move, Huawei was stuck. Therefore, I think the biggest problem is that we don’t have many countermeasures and we don’t have weight in our hands.”
