By Kate Yuan

(JW Insights) Sep 29 -- China's semiconductor industry has made significant progress, and investment should focus on differentiation and implementation possibility of projects, said Yin Botao, managing director of China’s leading IC investment institution Hua Capital (元禾璞华) at a late September industry future summit held by media outlet 36Kr.

“In terms of differentiation, when a particular sector is in the spotlight, it will attract numerous capital investments. This sector may become crowded or even "overheated," hence differentiation is crucial as it adds value. As for implementation, given the current economic environment, the semiconductor industry's cycle may be longer than before. Therefore, investment projects should have strong implementation capabilities, allowing early-stage projects to generate revenue,” Yin explained.

Founded in 2018, Suzhou-based Hua Capital primarily focuses on semiconductors. Its core members have years of industry experience. So far over 40 its invested companies have been listed, covering the entire semiconductor industry chain, including design, equipment, components, materials, packaging, and manufacturing.

“The cooperation between companies and investment institutions will play a significant role whether in the present or the future, as both parties complement each other. Companies’ industry resources, such as orders and suppliers, are more directly accessible, while institutions are more professional in investment with broader industry resources,” he said.

Yin pointed out that in recent years, China's semiconductor industry has accelerated its development and made significant progress in mature process stages such as design, equipment, components, and materials. However, there are still gaps in advanced processes, particularly in equipment such as lithography and ion implantation, as well as high-precision key components.

In the process to achieve more domestic substitution in semiconductors, Chinese companies demonstrate strong service capabilities and maintain close connections between upstream and downstream sectors.

For example, design companies and system companies, as well as component companies and equipment companies, are closely related which allows for advantages in customization. At the same time, China's semiconductor industry can address issues through a system-based approach, such as utilizing chiplets and advanced packaging to compensate for the shortcomings of advanced processes.

Yin emphasized1mm that Hua Capital is a market-oriented investment institution where financial returns are the primary value. However, in addition to financial returns, Hua Capital also attaches great importance to fulfilling social responsibilities. It hopes to help in certain bottleneck areas or areas with low investment returns.