1. Semiconductor: the joint venture production line of Western Digital and Kaixia is polluted, and the price of 3D NAND Q2 is bullish
Two NAND flash plants jointly invested by Western Digital and Kaixia had raw material pollution accidents. Western Digital and Kaixia found problems in the wafers produced in mid January, and gradually investigated the chemical raw materials used in the wet etching process. At the end of January, they decided to stop the operation of the production line, and it is expected to resume production as soon as mid March. The plant mainly produces 3dnand and is expected to be in a state of zero production for at least three weeks. The impact on the supply side is mainly concentrated in Q1 and Q2. Trendforce expects that the supply loss of Q1 ~ 2 accounts for about 3.7% in the two quarters and 1.7% in the whole year. The annual growth rate of storage bit output of Western Digital / armor man has plummeted from 27.4% to 21.2%, The annual output growth rate of the storage industry decreased from 32.0% to 30.0%. At the same time, trendforce predicts that q23d NAND will change from the original oversupply to supply shortage, and its price will decrease by 5 ~ 10% and increase by 5 ~ 10% from the previous revision; The price of Q3 increased by 3 ~ 8% (originally flat); Q4 prices were flat (originally down 0 ~ 5%). This event accelerated the destocking progress of NAND. Although the price of memory chips (including DRAM, NAND and other niche storage) is still in a downward trend, the downward cycle is shorter than expected, and the demand and price trend of memory chips are better than expected.
At present, although the demand for semiconductors has some structural differentiation, it is still in a state of high vision and tight supply and demand. It is expected that the overall production capacity will remain tight in 2022, and there will still be structural shortage and price rise. The original stock market demand is stable, the application upgrading of new energy vehicles, wind power photovoltaic, 5g, industry, servers and other applications brings incremental demand, and the semiconductor content of single terminal is increased. Local foundry and IDM continued to expand production, undertake China’s fabless transfer and new capacity demand, accelerate localization, and fully benefit the upstream and downstream links of the industrial chain. It is recommended to pay attention to the following main lines: localization (materials, equipment, FPGA, simulation), prosperity (materials, equipment, IGBT, MCU), application upgrading (IGBT, memory interface, CIS, storage).
2. Automotive electronics: Huaqin and Wentai enter into automotive tier 1 suppliers, and the growth of automotive electronics can be expected
This week, Huaqin technology signed a contract Shanghai Lingang Holdings Co.Ltd(600848) for the project of “automotive electronics port R & D headquarters” and “intelligent manufacturing base”, focusing on the field of automotive electronics and consumer electronics, and creating a trinity comprehensive service of hardware R & D, software services and high-end manufacturing. Huaqin’s automotive electronics business mainly focuses on four business modules: intelligent cockpit, intelligent Internet connection, intelligent driving and intelligent vehicle control, providing customers with customized software and hardware solutions. Previously, another ODM leader in China Wingtech Technology Co.Ltd(600745) has announced the comprehensive layout of automotive electronics business. Relying on the automotive chip capability of ANSYS semiconductor, it has comprehensively laid out software and hardware solutions, striding forward from vehicle specification semiconductor manufacturers to automotive tier 1 suppliers. China’s intelligent hardware ODM leaders such as Huaqin technology and Wingtech Technology Co.Ltd(600745) have actively expanded automotive business, Promote the independent, controllable and large-scale development of the automotive electronics industry. We believe that the electric and intelligent development speed of the automobile industry will exceed expectations, and intelligent driving, intelligent cockpit and intelligent vehicle networking will become a new breakthrough. Continue to recommend relevant targets in the automotive electronics sector, focusing on power semiconductors, on-board optics, connectors, central control screens, structural parts, etc.
3. Consumer electronics: glory won the second place in China’s market share, and Android manufacturers gradually recovered their pace of pulling goods
This week, according to the latest report data of counterpoint, Q4 smartphone shipments in China fell by 11% year-on-year in 2021. Apple achieved a market share of 21.7% with the good performance of iPhone 13 series, with a year-on-year increase of 13%. Glory jumped to the second place with a market share of 16.7% for the first time, and the annual share increased by 9.2pct. The rapid increase of glory’s share is mainly due to the hot sales of medium and high-end models. Among the models with a price of $200-599, glory has maintained the sales champion for several consecutive months. Counterpoint expects glory’s shipments to maintain strong growth in 2022. Although the Android mobile phone market still faces the pressure of stock competition and homogenization this year, manufacturers such as glory, Xiaomi, oppo and vivo continue to enter the high-end, promote differentiated selling points such as folding screen, and actively layout in overseas markets. We expect that with the alleviation of the lack of core in the upstream, the inventory level of the whole machine will gradually decline, the rhythm of goods pulling in the upstream of Android will return to normal, and the performance of the industrial chain will also be significantly improved and increased.
4. Passive components: the inventory of the industry continues to decline, and the demand for high-end applications is strongly supported
Since 21q3, the three MLCC leading manufacturers have reduced the production of standard products to varying degrees, and the inventory level of the industry has continued to decline. Taiwan channel business Xinhua trade said that it is optimistic about the recovery of demand after the Spring Festival. 5g infrastructure, vehicle, new energy, industry and other high-end applications still have strong support. It is expected that this round of de inventory will continue until the end of 22q1. If the chip shortage is alleviated in 22q2, the passive components are expected to restart growth.
In the long run, the demand for Internet of things, 5g infrastructure and application, new energy vehicles and industry has increased, the volume and price of single terminal passive components have risen, and localization has continued to advance. China’s leading production capacity of passive components has increased significantly, and has been gradually launched in the past two years. Moreover, the products have expanded to high-end models and high-end applications, which is expected to increase market share and upgrade application structure.
5. Investment suggestions:
Semiconductor: design and IDM ( 3Peak Incorporated(688536) , Sg Micro Corp(300661) , Wuxi Chipown Micro-Electronics Limited(688508) , Montage Technology Co.Ltd(688008) , Amlogic (Shanghai) Co.Ltd(688099) , Gigadevice Semiconductor (Beijing) Inc(603986) ), equipment ( Advanced Micro-Fabrication Equipment Inc.China(688012) , Wuhan Jingce Electronic Group Co.Ltd(300567) , Hangzhou Chang Chuan Technology Co.Ltd(300604) ), materials ( National Silicon Industry Group Co.Ltd(688126) );
Consumer electronics: Wuhu Token Sciences Co.Ltd(300088) , Shenzhen Everwin Precision Technology Co.Ltd(300115) , Luxshare Precision Industry Co.Ltd(002475) ;
Automotive electronics: Electric Connector Technology Co.Ltd(300679) , Suzhou Dongshan Precision Manufacturing Co.Ltd(002384) , Lianchuang Electronic Technology Co.Ltd(002036) , Will Semiconductor Co.Ltd.Shanghai(603501) , Wingtech Technology Co.Ltd(600745) , Zhuzhou Crrc Times Electric Co.Ltd(688187) , Tianyue advanced; Passive components: Chaozhou Three-Circle(Group) Co.Ltd(300408) , Shenzhen Sunlord Electronics Co.Ltd(002138) , Guang Dong Fenghua Advanced Technology (Holding) Co.Ltd(000636) .
6. Risk tips:
Risk of escalation of Sino US trade / science and technology friction; 5g application is less than expected; The expected delivery of components is less than that of the terminal; Risk of rising raw material costs.
