Semiconductor materials have the logic of short-term shortage and long-term growth. On March 16, 2022, the magnitude 7.4 earthquake off Fukushima, Japan, caused power outages in many parts of Japan, and some semiconductor industry chains need to be inspected before resuming production. As an important global producer of electronic components, Japan has a great influence on the industrial chain in the supply of automotive chips, semiconductor materials, components and other fields. Under the background of global core shortage and production expansion, upstream semiconductor materials have become an important factor restricting the industrial chain. Semiconductor materials such as photoresist, silicon wafer and gas are not only affected by short-term geopolitics and natural disasters, but also the production expansion plan is relatively conservative, resulting in a gap between supply and demand. A large number of semiconductor wafer factories have been built in mainland China, and the localization rate of upstream materials in China is still very low, so there is great room for development.
The breakthrough of material manufacturers is supported by the acceleration of domestic substitution. With the capacity expansion of domestic wafer factories and the gradual improvement of Technology / process, various domestic material manufacturers entering mass production and supply have emerged in the upstream. In all aspects of wafer manufacturing, domestic material manufacturers have gradually achieved breakthroughs and ushered in rapid revenue growth. Key recommended materials: Red Avenue New Materials Group Co.Ltd(603650) , Hubei Dinglong Co.Ltd(300054) , Shenzhen Fastprint Circuit Tech Co.Ltd(002436) , National Silicon Industry Group Co.Ltd(688126) , Anji Microelectronics Technology (Shanghai) Co.Ltd(688019) .
Photoresist: the industry barrier is high, and every overseas supply chain fluctuation is more conducive to accelerating the verification and introduction of Chinese manufacturers. Photoresist is the core material of semiconductor lithography, which is difficult to develop, with many subdivision types and complex certification process. Japan has the advantages of technology and production scale in the field of photoresist. In the context of global core shortage and unstable overseas core photoresist supply, Chinese photoresist companies have gradually opened domestic alternative windows with years of technology accumulation and industrial chain integration in recent two or three years Red Avenue New Materials Group Co.Ltd(603650) as the first leading manufacturer of all photoresist category layout in China and the leader of KrF in China, it is accelerating the introduction into wafer factories and actively expanding production. In the future, it will rapidly increase the quantity and realize domestic substitution.
Silicon wafer: a new round of silicon wafer scissors will last at least until the end of 2023. The world is in the fourth cycle of rapid increase of silicon content. In 2022, the capital expenditure of global and Chinese wafer factories continues to increase. The top five silicon wafer suppliers have successively announced the expansion of production since the second half of 2021, but the expansion cycle is close to two years. In 2021, the inventory and turnover rate of silicon wafers in downstream wafer factories have declined for 12 consecutive months, the price of silicon wafers has increased, and the proportion of long-term cooperation has increased. Chinese silicon wafer enterprises have gradually increased their production capacity and introduced core customers. National Silicon Industry Group Co.Ltd(688126) , Hangzhou Lion Electronics Co.Ltd(605358) , Tianjin Zhonghuan Semiconductor Co.Ltd(002129) , Thinkon Semiconductor Jinzhou Corp(688233) , etc. have gradually realized domestic substitution in the field of silicon wafers.
Gas: electronic special gas is a key material that needs to be used in many links of manufacturing and processing in the pan semiconductor industry. It is subject to large price fluctuations in the short term by the supply chain. The scale of China’s integrated circuit industry continues to expand and the technology changes rapidly, resulting in greater gas demand. The unstable gas supply in some overseas regions has led to short-term fluctuations in gas supply, demand and price. Under the continuous demand of China’s gas, it is expected to accelerate the trend of domestic substitution Guangdong Huate Gas Co.Ltd(688268) , Suzhou Jinhong Gas Co.Ltd(688106) , Hunan Kaimeite Gases Co.Ltd(002549) and other major Chinese special gas manufacturers are gradually increasing their downstream customers.
Attach great importance to the unprecedented reconstruction and change of China’s semiconductor and automobile industry pattern, as well as the leader of consumer electronics segment:
1) semiconductor core design: industrial opportunities such as optical chip, storage, simulation, RF, power, FPGA, processor and IP;
2) semiconductor OEM, packaging and testing and supporting service industry chain;
3) core target of intelligent vehicle;
4) VR, miniled, panel, optics, battery and other subdivision tracks;
5) core leading company of Apple industrial chain.
See investment suggestions on the last page for relevant core targets
Risk warning: downstream demand is less than expected; Sino US trade friction.
