Key investment points:
Market review: from February 1, 2022 to March 16, 2022, Shenwan Semiconductor Index rose or fell by - 1.31%, and the overall performance was better than the major market indexes. Discrete devices are significantly better than other sub sectors, with a range of 19.67%; IC packaging and testing increased by - 5.66% in each sub sector. From the perspective of the overall valuation level, the overall valuation PE of Shenwan semiconductor sector is 53.66 times, and the valuation is in the post historical quantile of 21.80%; The median valuation PE is 71.71 times, and the valuation is in the last 32.50% quantile.
Demand side: the shortage of supply chain is alleviated, and PC / mobile terminals will move towards the stock market in 2022. According to the monthly revenue of industrial chain companies and the tracking of third-party data, mobile phone sales were weak at the beginning of 2022. The outlook for server shipments is optimistic, and major overseas cloud computing manufacturers are taking practical actions for metauniverse. BMC service provider Xinhua's revenue fell 13.14% month on month in February, maintaining a high level as a whole. Looking forward to next year, overseas cloud manufacturers have a positive outlook on capital investment. Meta (Facebook) expects the growth rate of capital expenditure to exceed 50% in 2022, and Dell'Oro expects the global data center capital expenditure to increase by 17%. The new generation servers sapphirerapids and amdepycgenoa launched by server CPU suppliers Intel and AMD respectively have been greatly improved compared with the previous generation products. AI, unmanned applications, metauniverse and cloud excellence will drive the growth of underlying hardware devices.
Wafer foundry and semiconductor equipment: in the first half of the year, the production capacity was limited, the capital expenditure was not greatly affected by regulation, and the industry turned to structural shortage. From the monthly revenue changes of Taiwan stock companies of wafer foundry and the operating data of Semiconductor Manufacturing International Corporation(688981) first two months, although the supply and demand in the consumer electronics field are gradually balanced, the demand for mature process 40 / 55nm is still strong. Combined with the differentiation of monthly revenue of IC design companies, there is no growth decline in application fields such as IOT / vehicle / simulation. In the first half of the year, the revenue of mature process foundry enterprises is still guaranteed when it is difficult for wafer foundry enterprises to expand new production capacity. Looking forward to the capacity release of major wafer foundries in 2022, the capacity expansion rate of overseas liandian, lijidian and world advanced 2022h1 is about 10000 pieces, ranging from 7% to 10%. It is expected that semiconductors will be in short supply at least before the first half of next year, and large-scale capacity release will have to wait until 2023. Semiconductor Manufacturing International Corporation(688981) capital expenditure in 2021 is about USD 4.5 billion, including USD 2.13 billion in 2021q4, which is close to 50% of the whole year. It is estimated that the capital expenditure in 2022 will be about USD 5 billion (taking into account the delivery date of equipment), and the capacity increment is higher than that of last year. Huahong semiconductor is expected to complete the capacity expansion of about 30000 pieces by the end of 2022. It shows that in the field of mature process, China's main wafer foundry is not affected by regulation, and its production expansion plan is still advancing steadily. Corresponding to the revenue recognition policy of semiconductor equipment, the revenue from winning the bid of some semiconductor enterprises is expected to be deferred to the first half of 2022.
Investment suggestion: as the semiconductor sector has stopped falling in the near future, the performance and valuation cost performance have increased. Based on the summary of the operation of enterprises in the semiconductor industry from January to February 2022, the overall operation of the industry in the first two months was good, and the revenue of most enterprises increased by more than 50% year-on-year. Among them, semiconductor equipment providers benefited from the gradual recognition of revenue, and their revenue doubled year-on-year. Corresponding to the gradual production and climbing of subsequent semiconductor materials, the performance of the industry continued to boom in the first half of 2022, and the performance and valuation cost performance increased. We maintain the rating of "leading market" in the industry. Focus: 1 Semiconductor equipment manufacturers under the superposition of "domestic substitution" and "capital expenditure super cycle" still deserve special attention; 2. The demand for servers driven by traffic will continue to grow in 2022. At the same time, server updates at the hardware level and windows11 launched six years later will also bring innovation opportunities. It is suggested to pay attention to Montage Technology Co.Ltd(688008) and Giantec Semiconductor Corporation(688123) , which benefit from the switching from DDR4 to ddr5; 3. It is suggested to pay attention to Will Semiconductor Co.Ltd.Shanghai(603501) , Yangzhou Yangjie Electronic Technology Co.Ltd(300373) etc. to benefit from the target of increasing the penetration rate of downstream industries.
Risk tip: trade friction intensifies, demand is lower than expected, and domestic substitution slows down.
