Core view: the substitution process of domestic semiconductors is deepened, and automotive electronics leads the demand growth
1. Global semiconductor market: demand growth is superimposed and capacity is gradually released. It is expected that the prosperity of the semiconductor industry will remain high in 2022. In terms of market scale, according to WSTS data, it is expected that in 2022, the sales of the global semiconductor industry will continue to grow by 10.1%, reaching US $606.5 billion, and the growth rate will drop by 15 PCTs, but it is still a historical high. In terms of industry segments, memory (18.4%), logic circuit (8.7%) and analog circuit (6.8%) are expected to grow rapidly in 2022.
2. Downstream market demand: it is expected that the performance of emerging semiconductor downstream fields will continue to strengthen in 2022. According to evtank data, the global sales volume of new energy vehicles may exceed 10 million in 2022, with a year-on-year increase of 35%. According to trendforce data, global AR / VR device shipments will reach 12.02 million units in 2022, with a year-on-year increase of 26.4%. In terms of the traditional consumer electronics market, the smartphone market will benefit from the cyclical replacement demand and the new demand from emerging countries in 2022. According to trendforce data, the annual output is expected to reach 1.386 billion, a year-on-year increase of 3.8%. We believe that in 2022, with the growth of demand in emerging fields such as smart electric vehicles and meta universe, the smartphone market is expected to pick up, and the new production capacity is expected to be released in the second half of next year. The tight relationship between supply and demand in the industry will not be relieved until at least the third quarter of next year.
3. China’s semiconductor industry: breakthroughs in many fields and deepening the process of domestic substitution. In the first half of 2021, the sales volume of China’s semiconductor industry was 410.29 billion yuan, with a year-on-year increase of 15.9%. Among them, the fastest growth rate was 21.3% in manufacturing industry, 18.5% in design industry and 7.6% in packaging and testing industry respectively. According to the calculation of China Semiconductor Industry Association, the industrial scale is expected to increase to 1183.9 billion yuan in 2022, with a year-on-year increase of 15.9%, higher than 15.4% in 2021. At the domestic substitution level, according to icinsights data, the self-sufficiency rate of China’s integrated circuit industry will rise from 15.9% in 2020 to 19.4% in 2025.
4. Performance of listed companies: performance support superimposed valuation correction, and the semiconductor industry has investment value. In terms of performance, in the first three quarters of 2021, the net profit attributable to the parent of all companies in Shenwan semiconductor industry reached 38.325 billion yuan, a year-on-year increase of 174%. Quarterly, the net profit attributable to the parent company of Shenwan semiconductor industry in 2021q3 reached RMB 16.946 billion, a year-on-year increase of 110%. At the valuation level, by the end of November 2021, the rolling P / E ratio of A-share semiconductor sector was 72.85x, lower than the ten-year valuation average of 74.08x, at the historical quantile of 53.48%. In the second half of 2021, the market’s attention to semiconductors decreased, and the valuation gradually returned to a relatively low level. With the disclosure of the third quarterly report, the performance of enterprises in the semiconductor sector is excellent, and the valuation has returned to a more reasonable level. The semiconductor sector has investment value.
5. Investment opportunities: in the post semiconductor business cycle, we are optimistic about the semiconductor segments further deepened in the domestic substitution process, including power semiconductors ( Wingtech Technology Co.Ltd(600745) , Wuxi Nce Power Co.Ltd(605111) , China Resources Microelectronics Limited(688396) , Hangzhou Silan Microelectronics Co.Ltd(600460) ), analog chips ( Sg Micro Corp(300661) ) and aiot chips ( Allwinnertech Technology Co.Ltd(300458) ).
Risk tips:
(1) Covid-19 epidemic repeatedly blocked production capacity (2) downstream demand was less than expected (3) the production capacity landing time of wafer manufacturing plant was less than expected
