A reporter from the Financial Associated Press observed that the 8-inch wafer manufacturing capacity is the most in short supply this year, and the main reason is the higher-than-expected growth in market demand for 5G, automotive electronics, and AIoT. In response to the question of whether to expand production due to the current shortage of production capacity, Peng Jin, senior vice president of global sales and marketing of SMIC, said at the ICCAD2020 summit forum that after the production capacity is opened, whether the market exists is a question worth thinking about, and the capacity expansion still needs to be faced. The pressure of capital, talent and back-end technology, IP and customer accumulation also makes many companies have concerns when expanding production capacity.
Status: Fab capacity shortage visibility expected to continue into Q2 2021
The research reports of many securities companies such as CITIC Construction Investment Securities and Soochow Securities (601555, stock bar) believe that 8-inch wafer manufacturing has a wide range of application scenarios, and under the continuous development of the intelligent terminal market, the demand for mature processes such as 8-inch It will break out in the short term and remain stable in the long term. A professor in the field of chip design told the Financial Associated Press that most products such as smart homes do not require very advanced manufacturing processes. The 6-inch and 8-inch production lines are cost-effective for the Chips required for the increasingly popular smart home and other equipment. , so these production lines will have corresponding market space for a considerable period of time. Another senior practitioner, who did not want to be named, also held the same view and said: “Many 8-inch equipment has been depreciated, and it is possible to pursue low input and high output while ensuring product performance.”
Zhao Haijun, co-CEO of SMIC, said at the company’s Q3 performance law meeting that it is expected that until the first half of 2021, the mature production capacity of the entire industry will be relatively tight. Through interviews, exchanges and public information, the reporter found that this time is expected to be recognized by many relevant senior practitioners and industry analysts. The prediction of China Securities Construction Investment Securities is even bolder. In its research report, it pointed out that the mature process is in short supply or will continue until 2022. A technician working on the 8-inch line of China Resources Micro’s Chongqing plant revealed that the order for the 8-inch line where he is located in 2021 is close to saturation, and the company has to strategically abandon some small customers.
Under the tight production capacity and the panic of price hikes, some companies are stocking up and replenishing inventory and making additional orders. Some market voices pointed out that this may lead to the risk of high inventory levels in the future. Chen Ruowen, senior vice president of Qualcomm and chief operating officer of the CDMA business unit, believes that since 5G demand is expected to continue to grow in 2021, if there is an inventory adjustment, the impact will not be too severe. Overall, the semiconductor market is expected to grow healthily in 2021. year. Major domestic wafer foundries include SMIC, Hua Hong Semiconductor, China Resources Micro, Silan Micro (600460, shares) and Huawei Electronics (600360, shares). Peng Jin, senior vice president of global sales and marketing of SMIC, said that SMIC will add 25,000 pieces/month of 8-inch capacity in 2020, with a total capacity of 250,000 pieces/month, and 12-inch new capacity of 30,000 pieces/month. The total production capacity is 127,000 pieces/month. “The construction of production capacity is far from keeping up with the demand. SMIC will continue to expand production capacity to meet customer needs.” At the same time, public information shows that SMIC, JTA Semiconductor and Huawei Electronics, etc. The company has 8-inch Fab projects planned or under construction; SMIC, Tsinghua Unigroup and Wuhan Xinxin also have 12-inch Fab projects under construction.
Trend: The localization rate of upstream equipment and materials continues to increase
SEMI’s 2020 End-of-Year Total Equipment Forecast report expects global sales of semiconductor manufacturing equipment to increase 16% in 2020 from $59.6 billion in 2019 to a new record of $68.9 billion. The global semiconductor manufacturing equipment market is expected to continue to grow, reaching $71.9 billion in 2021 and $76.1 billion in 2022. According to the research report of CITIC Construction Investment Securities, the next three years will be the construction period of many wafer production lines in mainland China, and the average annual equipment demand will be 100 billion yuan. The related equipment companies involved include North Huachuang (002371, stock), Zhongwei Corporation (688012, stock), Zhichun Technology (603690, stock), Changchuan Technology (300604, stock), Jingce Electronics (300567, stock), Huaxing Yuanchuang (688001, shares), Xinyuan Micro, Wanye Enterprise (600641, shares) and Shanghai Microelectronics, etc.
The website of the U.S. Department of Commerce recently announced that the U.S. BIS will add SMIC to the “entity list”, which will strengthen the urgency of domestic equipment to achieve autonomy and control. According to relevant rules, entities included in the list must obtain prior permission from the U.S. Department of Commerce when it involves the export, re-export and transfer of U.S. products and technologies. In the circular, the U.S. Department of Commerce specifically pointed out that export applications for unique items required to produce semiconductors in 10-nanometer processes or below will be presumed to be denied. An executive of a domestic equipment manufacturer revealed to the Financial Associated Press that SMIC has been accelerating the stockpiling of overseas equipment, but due to the long and delayed equipment manufacturing delivery, it is too late to stock up, so the company has accelerated domestic equipment since August. The verification speed is significantly accelerated.
In addition to equipment, there are market views that consumables such as photoresist, Electronic special gas, and polishing liquid are more affected by sanctions, because production equipment such as lithography machines and etching machines have a long service life, and semiconductor materials are due to Its own characteristics are unlikely to produce large quantities of goods. In this regard, the above-mentioned executives agreed. However, the aforementioned practitioners pointed out that semiconductor materials have the characteristics of large industrial scale, many sub-sectors, high barriers to entry and rapid upgrading. At present, my country’s self-sufficiency rate is low, market share is monopolized by leading manufacturers, and chemical manufacturers have to enter The supply chain needs to be strictly certified by customers, which usually takes 1 to 3 years. Therefore, it is extremely difficult to achieve domestic substitution, or it can be imported from Japan to solve the urgent need. Domestic listed companies related to semiconductor materials include Jacques Technology (002409, stock), Dinglong (300054, stock), Anji Technology (688019, stock), Nanda Optoelectronics (300346, stock) and Shanghai Xinyang (300236, stock), etc. .
Benefiting from the tight fab capacity and expansion plans, the capacity utilization rate of the downstream packaging and testing links will also remain high. “It takes about 3 to 6 months for the production capacity of the wafer fab to be transferred to the packaging and testing end. Considering the existence of IDM, it is expected that the ratio of production capacity to the packaging and testing factory will be about 60%.” The aforementioned practitioner added. At the same time, domestic packaging and testing manufacturers represented by Changdian Technology (600584, shares), Tongfu Microelectronics (002156, shares) and Huatian Technology (002185, shares) have plans to expand production. In August this year, Changdian Technology announced that it planned to increase 5 billion yuan for high-end packaging construction; Tongfu Microelectronics completed the fixed increase in November, raising a total of about 3.3 billion yuan for high-end packaging and testing construction; Huatian Technology in 2018 Started to invest in the construction of Nanjing packaging base.
Future: Breakthroughs in memory and analog chip products are worth looking forward to
At the academician roundtable meeting of the Shanghai Integrated Circuit Innovation Summit on December 17, Ye Tianchun, the head of the national 02 special expert group, said that memory may be the first breakthrough field in the future, and analog products may also have a lot in the next few years. Elevation is worth paying attention to. The Nor Flash market has generally risen by about 30% recently, but relevant practitioners and agents all said that the main reason for this price increase is that the production capacity of Nor Flash has been reduced after the manufacturer’s production capacity has been reduced, resulting in a shortage. It is not because of strong demand. Expansion is unlikely. In terms of analog chips, the demand is expected to continue to increase thanks to the further increase in the penetration rate of 5G mobile phones, smart cars, smart wearables, and the Internet of Things. The wafer manufacturing of analog chips mainly comes from 8-inch production lines, which further explains the tight production capacity of 8-inch wafers.
A previous UBS research report predicted that NAND will continue to be oversupplied in 2021, while DRAM may be in short supply. It is expected that mobile DRAM demand will increase by 23% year-on-year in 2021, of which smartphone DRAM sales will increase by 8% year-on-year, and server DRAM demand will increase by 32%. Although Samsung, Hynix and Micron have production expansion plans in 2021, supply growth is limited, so there is room for DRAM price increases. Wu Yanlin, director of business development and publicity of Changxin Storage, also pointed out in the technical sub-forum of the above-mentioned summit that DRAM is the largest single category of chips, and the self-sufficiency rate of domestic DRAM is almost zero. The demand is huge and urgently needs to be developed. According to public information, Changxin Storage 19nm DRAM is currently in the initial mass production state, and the planned production capacity of the project is 125,000 pieces/month.
Regarding the recent frequent occurrence of unfinished semiconductor projects, Zhang Suxin, chairman of Huahong Group, pointed out at the academician roundtable that independence does not mean working behind closed doors, but emphasizing controllable, systematic development, and serving the industry. Huahong Group is fully committed to Support local enterprises to become part of the global industrial cooperation system, but not to separate business from international industries, but to form a reasonable distribution of supply shares within a limited scale. It is neither rational nor realistic to blindly advocate the replacement of all domestic products, and it is necessary to be alert to the waste of resources caused by overheating investment following the trend. In recent years, many places across the country have exposed the risk of stagnant or even unfinished construction of integrated circuit projects, which is a huge consumption and waste of resources for researchers, investors, local governments and even at the national level. The capital market should treat integrated circuit projects rationally, prudently assess risks, make professional investments, and allow capital to flow to enterprises and projects with real materials, serve the development of industries, and achieve a win-win situation for finance and industry.
A reporter from the Financial Associated Press observed that the 8-inch wafer manufacturing capacity is the most in short supply this year, and the main reason is the higher-than-expected growth in market demand for 5G, automotive electronics, and AIoT. In response to the question of whether to expand production due to the current shortage of production capacity, Peng Jin, senior vice president of global sales and marketing of SMIC, said at the ICCAD2020 summit forum that after the production capacity is opened, whether the market exists is a question worth thinking about, and the capacity expansion still needs to be faced. The pressure of capital, talent and back-end technology, IP and customer accumulation also makes many companies have concerns when expanding production capacity.
Status: Fab capacity shortage visibility expected to continue into Q2 2021
The research reports of many securities companies such as CITIC Construction Investment Securities and Soochow Securities (601555, stock bar) believe that 8-inch wafer manufacturing has a wide range of application scenarios, and under the continuous development of the intelligent terminal market, the demand for mature processes such as 8-inch It will break out in the short term and remain stable in the long term. A professor in the field of chip design told the Financial Associated Press that most products such as smart homes do not require very advanced manufacturing processes. The 6-inch and 8-inch production lines are cost-effective for the chips required for the increasingly popular smart home and other equipment. , so these production lines will have corresponding market space for a considerable period of time. Another senior practitioner, who did not want to be named, also held the same view and said: “Many 8-inch equipment has been depreciated, and it is possible to pursue low input and high output while ensuring product performance.”
Zhao Haijun, co-CEO of SMIC, said at the company’s Q3 performance law meeting that it is expected that until the first half of 2021, the mature production capacity of the entire industry will be relatively tight. Through interviews, exchanges and public information, the reporter found that this time is expected to be recognized by many relevant senior practitioners and industry analysts. The prediction of China Securities Construction Investment Securities is even bolder. In its research report, it pointed out that the mature process is in short supply or will continue until 2022. A technician working on the 8-inch line of China Resources Micro’s Chongqing plant revealed that the order for the 8-inch line where he is located in 2021 is close to saturation, and the company has to strategically abandon some small customers.
Under the tight production capacity and the panic of price hikes, some companies are stocking up and replenishing inventory and making additional orders. Some market voices pointed out that this may lead to the risk of high inventory levels in the future. Chen Ruowen, senior vice president of Qualcomm and chief operating officer of the CDMA business unit, believes that since 5G demand is expected to continue to grow in 2021, if there is an inventory adjustment, the impact will not be too severe. Overall, the semiconductor market is expected to grow healthily in 2021. year. Major domestic wafer foundries include SMIC, Hua Hong Semiconductor, China Resources Micro, Silan Micro (600460, shares) and Huawei Electronics (600360, shares). Peng Jin, senior vice president of global sales and marketing of SMIC, said that SMIC will add 25,000 pieces/month of 8-inch capacity in 2020, with a total capacity of 250,000 pieces/month, and 12-inch new capacity of 30,000 pieces/month. The total production capacity is 127,000 pieces/month. “The construction of production capacity is far from keeping up with the demand. SMIC will continue to expand production capacity to meet customer needs.” At the same time, public information shows that SMIC, JTA Semiconductor and Huawei Electronics, etc. The company has 8-inch Fab projects planned or under construction; SMIC, Tsinghua Unigroup and Wuhan Xinxin also have 12-inch Fab projects under construction.
Trend: The localization rate of upstream equipment and materials continues to increase
SEMI’s 2020 End-of-Year Total Equipment Forecast report expects global sales of semiconductor manufacturing equipment to increase 16% in 2020 from $59.6 billion in 2019 to a new record of $68.9 billion. The global semiconductor manufacturing equipment market is expected to continue to grow, reaching $71.9 billion in 2021 and $76.1 billion in 2022. According to the research report of CITIC Construction Investment Securities, the next three years will be the construction period of many wafer production lines in mainland China, and the average annual equipment demand will be 100 billion yuan. The related equipment companies involved include North Huachuang (002371, stock), Zhongwei Corporation (688012, stock), Zhichun Technology (603690, stock), Changchuan Technology (300604, stock), Jingce Electronics (300567, stock), Huaxing Yuanchuang (688001, shares), Xinyuan Micro, Wanye Enterprise (600641, shares) and Shanghai Microelectronics, etc.
The website of the U.S. Department of Commerce recently announced that the U.S. BIS will add SMIC to the “entity list”, which will strengthen the urgency of domestic equipment to achieve autonomy and control. According to relevant rules, entities included in the list must obtain prior permission from the U.S. Department of Commerce when it involves the export, re-export and transfer of U.S. products and technologies. In the circular, the U.S. Department of Commerce specifically pointed out that export applications for unique items required to produce semiconductors in 10-nanometer processes or below will be presumed to be denied. An executive of a domestic equipment manufacturer revealed to the Financial Associated Press that SMIC has been accelerating the stockpiling of overseas equipment, but due to the long and delayed equipment manufacturing delivery, it is too late to stock up, so the company has accelerated domestic equipment since August. The verification speed is significantly accelerated.
In addition to equipment, there are market views that consumables such as photoresist, Electronic special gas, and polishing liquid are more affected by sanctions, because production equipment such as lithography machines and etching machines have a long service life, and semiconductor materials are due to Its own characteristics are unlikely to produce large quantities of goods. In this regard, the above-mentioned executives agreed. However, the aforementioned practitioners pointed out that semiconductor materials have the characteristics of large industrial scale, many sub-sectors, high barriers to entry and rapid upgrading. At present, my country’s self-sufficiency rate is low, market share is monopolized by leading manufacturers, and chemical manufacturers have to enter The supply chain needs to be strictly certified by customers, which usually takes 1 to 3 years. Therefore, it is extremely difficult to achieve domestic substitution, or it can be imported from Japan to solve the urgent need. Domestic listed companies related to semiconductor materials include Jacques Technology (002409, stock), Dinglong (300054, stock), Anji Technology (688019, stock), Nanda Optoelectronics (300346, stock) and Shanghai Xinyang (300236, stock), etc. .
Benefiting from the tight fab capacity and expansion plans, the capacity utilization rate of the downstream packaging and testing links will also remain high. “It takes about 3 to 6 months for the production capacity of the wafer fab to be transferred to the packaging and testing end. Considering the existence of IDM, it is expected that the ratio of production capacity to the packaging and testing factory will be about 60%.” The aforementioned practitioner added. At the same time, domestic packaging and testing manufacturers represented by Changdian Technology (600584, shares), Tongfu Microelectronics (002156, shares) and Huatian Technology (002185, shares) have plans to expand production. In August this year, Changdian Technology announced that it planned to increase 5 billion yuan for high-end packaging construction; Tongfu Microelectronics completed the fixed increase in November, raising a total of about 3.3 billion yuan for high-end packaging and testing construction; Huatian Technology in 2018 Started to invest in the construction of Nanjing packaging base.
Future: Breakthroughs in memory and analog chip products are worth looking forward to
At the academician roundtable meeting of the Shanghai Integrated Circuit Innovation Summit on December 17, Ye Tianchun, the head of the national 02 special expert group, said that memory may be the first breakthrough field in the future, and analog products may also have a lot in the next few years. Elevation is worth paying attention to. The Nor Flash market has generally risen by about 30% recently, but relevant practitioners and agents all said that the main reason for this price increase is that the production capacity of Nor Flash has been reduced after the manufacturer’s production capacity has been reduced, resulting in a shortage. It is not because of strong demand. Expansion is unlikely. In terms of analog chips, the demand is expected to continue to increase thanks to the further increase in the penetration rate of 5G mobile phones, smart cars, smart wearables, and the Internet of Things. The wafer manufacturing of analog chips mainly comes from 8-inch production lines, which further explains the tight production capacity of 8-inch wafers.
A previous UBS research report predicted that NAND will continue to be oversupplied in 2021, while DRAM may be in short supply. It is expected that mobile DRAM demand will increase by 23% year-on-year in 2021, of which smartphone DRAM sales will increase by 8% year-on-year, and server DRAM demand will increase by 32%. Although Samsung, Hynix and Micron have production expansion plans in 2021, supply growth is limited, so there is room for DRAM price increases. Wu Yanlin, director of business development and publicity of Changxin Storage, also pointed out in the technical sub-forum of the above-mentioned summit that DRAM is the largest single category of chips, and the self-sufficiency rate of domestic DRAM is almost zero. The demand is huge and urgently needs to be developed. According to public information, Changxin Storage 19nm DRAM is currently in the initial mass production state, and the planned production capacity of the project is 125,000 pieces/month.
Regarding the recent frequent occurrence of unfinished semiconductor projects, Zhang Suxin, chairman of Huahong Group, pointed out at the academician roundtable that independence does not mean working behind closed doors, but emphasizing controllable, systematic development, and serving the industry. Huahong Group is fully committed to Support local enterprises to become part of the global industrial cooperation system, but not to separate business from international industries, but to form a reasonable distribution of supply shares within a limited scale. It is neither rational nor realistic to blindly advocate the replacement of all domestic products, and it is necessary to be alert to the waste of resources caused by overheating investment following the trend. In recent years, many places across the country have exposed the risk of stagnant or even unfinished construction of integrated circuit projects, which is a huge consumption and waste of resources for researchers, investors, local governments and even at the national level. The capital market should treat integrated circuit projects rationally, prudently assess risks, make professional investments, and allow capital to flow to enterprises and projects with real materials, serve the development of industries, and achieve a win-win situation for finance and industry.
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