Diversified expansion in downstream application fields, continuous shortage of chip capacity and semiconductor materials
With the significant increase in chip demand in downstream 5g communications, smart cars, smart appliances, the Internet of things and other fields, as well as the impact of the global covid-19 epidemic on suppliers in all links of the semiconductor industry chain, global chip supply has been in continuous shortage since 2020, and many semiconductor enterprises around the world have raised product prices. Taking the wafer foundry as an example, according to the daily news of science and innovation board, TSMC will increase the prices of some 8-inch and 12 inch processes by 10% - 20% in early 2022, liandian will increase the quotation of full product wafer foundry by 5% - 10% since March 2022, and Samsung plans to increase the foundry price by 15% - 20% in early 2022.
At the same time, due to the overall supply shortage of the semiconductor industry chain, the prices of relevant semiconductor materials are also rising. In addition, force majeure and related political reasons also have an additional impact on the supply of some important semiconductor materials. At the beginning of 2021, affected by the Japanese earthquake, the production line of Xinyue chemical, the world's largest KrF photoresist manufacturer, was polluted, and the relevant KrF photoresist production line has not resumed production, which has a great impact on the global KrF photoresist supply. Recently, the continuous fermentation of geopolitical conflicts between Russia and Ukraine has also brought great uncertainty to the supply of some sub varieties of electronic gas. According to the report released by market research organization techcet on February 1, the global supply share of neon (NE) in Ukraine reaches 70%, while the global supply share of krypton (KR) and xenon (Xe) reaches 40% and 30% respectively. These rare gases can be used in the production of excimer laser light sources in ARF and KrF lithography machines and semiconductor etching respectively. If the subsequent conflict between Russia and Ukraine further escalates, it is likely to cause a shortage of relevant rare gases.
China's foundry capacity of wafers has increased rapidly, and the construction and import of domestic semiconductor materials have accelerated
According to SIA and BCG data, the growth rate of China's foundry capacity will be the fastest in the world from 2020 to 2030. At the same time, in the medium and short term, the existing capacity and new capacity will be dominated by mature processes of 28nm and above. In this context, Chinese semiconductor material enterprises are also continuously expanding their production capacity, and the import process of related products is also accelerating. Taking the representative enterprises Crystal Clear Electronic Material Co.Ltd(300655) and Red Avenue New Materials Group Co.Ltd(603650) in the field of semiconductor materials in China as an example, the phase I capacity of Crystal Clear Electronic Material Co.Ltd(300655) G5 high purity sulfuric acid project has been completed. At the same time Crystal Clear Electronic Material Co.Ltd(300655) announced on February 17 to start the construction of "Meishan phase II project with an annual output of 1200 tons of key electronic materials for integrated circuits", which is expected to be completed and put into operation in October 2022. The project will add 1200 tons / year of negative photoresist production capacity for semiconductors and 1000 tons / year of photoresist intermediate production capacity. Beijing Kehua, a holding subsidiary of Red Avenue New Materials Group Co.Ltd(603650) , announced a cooperation plan with DuPont in semiconductor photoresist in November 2021. In addition, Red Avenue New Materials Group Co.Ltd(603650) Tongcheng electronics, another wholly-owned subsidiary of Red Avenue New Materials Group Co.Ltd(603650) , invested and constructed in Shanghai Jinshan Chemical Industry Park. The project with an annual production capacity of 11000 tons of photoresist is also expected to be gradually completed and put into operation in 2022. The project will add 10000 tons / year of panel photoresist, 1000 tons / year of semiconductor photoresist and 20000 tons / year of supporting reagent production capacity.
We believe that the current expansion rhythm of China's foundry capacity matches the product demand structure, and the expansion rhythm of domestic semiconductor material enterprises matches the product supply structure. Under the background of continuous tight supply in the current semiconductor industry chain and limited supply of some semiconductor materials, with the continuous expansion of China's foundry capacity, the process of product introduction and capacity release of domestic semiconductor materials is expected to be significantly accelerated, which is conducive to domestic semiconductor material enterprises to accelerate the improvement of market share and enter a virtuous circle of semiconductor material business development.
Investment suggestions: we suggest paying attention to (1) semiconductor photoresist: Red Avenue New Materials Group Co.Ltd(603650) (Beijing Kehua), Crystal Clear Electronic Material Co.Ltd(300655) , Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) ; (2) Wet electronic chemicals: Crystal Clear Electronic Material Co.Ltd(300655) , Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) ; (3) Electronic gas: Guangdong Huate Gas Co.Ltd(688268) , Haohua Chemical Science & Technology Corp.Ltd(600378) , Jiangsu Yoke Technology Co.Ltd(002409) , Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) ; (4) Semiconductor precursors: Jiangsu Yoke Technology Co.Ltd(002409) , Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) ; （5）CMP： Hubei Dinglong Co.Ltd(300054) ， Anji Microelectronics Technology (Shanghai) Co.Ltd(688019) 。
Risk analysis: the verification progress of domestic semiconductor material products is less than expected, product R & D risks, the implementation of China's favorable policies is less than expected, and Sino US trade frictions.
