1. Semiconductors: the conflict between Russia and Ukraine continues. The two major neon suppliers in Ukraine have suspended their operations. The military conflict between Russia and Ukraine has lasted more than two weeks. InGas and cryoin, the two major neon suppliers in Ukraine, have suspended their operations. They supply 45% – 54% of the world’s semiconductor grade neon. After the supply interruption, it is feared that it will lead to tight supply and price rise of neon, At present, the mainstream price of China’s high-purity neon (100%) market has risen rapidly from about 27000 yuan / m3 in mid February to more than 35000 yuan / m3. Supplyframe said that companies outside Ukraine need to spend 9-24 months to significantly increase neon production capacity, which may lead to an increase in wafer manufacturing costs and exacerbate the global chip shortage crisis. At present, the inert gas supply chain is in a reasonable state. At this stage, there are a large number of inventories and multiple supply sources. We believe that the situation in Russia and Ukraine will not significantly impact the inert gas supply of manufacturers in the short term, but the subsequent impact may be further expanded. It is suggested to pay attention to the inert gas suppliers for semiconductors in China.
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. Undertake the new production capacity of domestic and downstream industries, and accelerate the transfer of domestic production capacity in China’s Fables 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: the overall trend of automobile retail in February was strong, and the penetration rate of new energy vehicles continued to increase. According to the data of the passenger car Federation, the retail sales of passenger car market in February 2022 reached 1.246 million, with a year-on-year increase of 4.2% and a month on month decrease of 40.0%. Among them, the retail sales of new energy vehicles reached 272000, with a year-on-year increase of 180.5% and a month on month decrease of 22.6%, which is less than the trend in February over the years. In terms of retail penetration rate of new energy vehicles, it reached 21.8% in February 2022, 13 percentage points higher than the penetration rate of 8.1% in the same period in 2021. The passenger Federation said that in 2022, consumers are more willing to travel by private cars, and the effect of the introduction of stable new energy vehicle consumption policy has been significantly improved. The scale of new energy passenger vehicles is expected to reach 5.5 million in 2022.
In 2022, we believe that the development of the intelligent driving industry chain will be accelerated in the next five years. Recommended attention: sensor, power device, connector, battery soft board, battery structural parts, display, lidar.
3. Consumer electronics: the short-term pressure does not change the long-term trend, and gradually enters the medium and long-term investment range
The consumer electronics sector fell – 6.91% this week, among which the leading companies Shunyu optics (- 14.10%), Luxshare Precision Industry Co.Ltd(002475) (- 6.45%), Goertek Inc(002241) (- 7.40%), Shenzhen Transsion Holdings Co.Ltd(688036) (- 11.93%) all retreated significantly. The sharp decline of the sector mainly reflects several factors: (1) under the Russian Ukrainian war, the global commodity futures such as oil, copper and aluminum and shipping freight rose sharply. Consumer electronics belongs to the midstream manufacturing industry, and the price rise of upstream raw materials significantly suppressed the cost; (2) The sanctions imposed by western countries on Russia and the “temporary delisting list” for zhonggai shares have raised concerns about some policy aspects of the apple industry chain, which is highly dependent on overseas major customers; (3) There have been outbreaks in many places in China recently, the interference to normal economic activities has increased, and the market is more worried about China’s economic recovery and downstream terminal demand; (4) The appreciation of RMB exchange rate brings uncertainty to the performance of Apple industrial chain. We believe that for the consumer electronics industry chain, it may be the most difficult stage at present, and the valuation has almost reached the lowest level at the end of 18 years. After the first and second quarters, the performance and valuation of the sector will be repaired. Therefore, we believe that the consumer electronics sector has gradually entered the medium and long-term investment range. From the perspective of time and amplitude, we believe that most of the decline has been completed or has been completed. It is suggested to gradually layout individual stocks from two ideas: 1. The leading platform companies are less negatively affected by the rise of costs, and the performance in the first quarter can be realized; 2. High growth segments with structural opportunities, such as folding screens.
4. Passive components: MLCC has strong medium and long-term demand, and Murata has invested 12 billion yen to expand production
In order to cope with the increasing demand for MLCC in the medium and long term (Murata said that the MLCC market growth rate will exceed 10% in at least the next three years), Murata subsidiary plans to invest about 12 billion yen to build a new plant in Shijian factory. The plant will start construction in March and is expected to be completed in April 2023. In addition, Murata also invested 12 billion yen to build a new MLCC plant in Thailand, which has been started in July 2021 and is expected to be completed in March 2023. According to Murata’s plan, by the first half of 2023, two new factories will be built, and MLCC capacity is expected to be further expanded. At present, with the industry inventory adjustment coming to an end, MLCC is expected to restart the upward trend. According to the 22q1 Market Research Report of iResearch electronics, the delivery date and price of Q1 MLCC show an upward trend, indicating that the market demand is picking up. For the whole year of 2022, it is expected that the demand of the consumer market will pick up in the second half of the year, supported by the strong demand of automobile, communication, industrial control and other markets, and the annual demand of MLCC market is expected to be strong and stable.
5. Investment suggestions:
Semiconductor: design and IDM: design and IDM: design and IDM ( 3Peak Incorporated(688536) ), materials ( National Silicon Industry Group Co.Ltd(688126) ), power semiconductors ( Hangzhou Silan Microelectronics Co.Ltd(600460) , Wingtech Technology Co.Ltd(600745) , Zhuzhou Crrc Times Electric Co.Ltd(688187) , Tianyue advanced); 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) ; Consumer electronics: Wuhu Token Sciences Co.Ltd(300088) , Shenzhen Everwin Precision Technology Co.Ltd(300115) , Luxshare Precision Industry Co.Ltd(002475) ; 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 terminal shipment is less than expected due to the shortage of components; Risk of rising raw material costs.
