Core view
Semiconductor: Chinese mainland sealed up the city or affected the shipment and demand of products.
Chinese mainland is still closed to the city or consumer demand, and demand for vehicle, HPC and IoT chips is still booming. Computer mobile phone chairman Liu Deyin, chairman of TSMC, attended the Taiwan Semiconductor Industry Association (TSIA) general meeting in March 30th. The Chinese mainland has already affected the demand for consumer PC such as personal computers (PCS), smart phones and televisions. In addition, semiconductor manufacturers are worried about the increase of supply chain costs, and the final price rise will be transmitted to end consumers. However, TSMC also said that the global demand for automotive, high-speed computing (HPC) and Internet of things chips remains strong, and semiconductor manufacturers hope that costs and inflation can be effectively controlled.
Shanghai closed the city or impacted the shipment of semiconductor manufacturers. Shanghai covid-19 pneumonia epidemic prevention and Control Leading Group Office released the news: from 5:00 on March 28, nucleic acid screening will be implemented in batches in Shanghai with the Huangpu River as the boundary. In the first batch, Pudong New Area and other places implemented sealing and control first, carried out nucleic acid screening, and unsealed at 5:00 on April 1. At the same time, the key areas in Puxi continue to implement sealing management. The second batch, from 3:00 on April 1, sealed and controlled Puxi area, carried out nucleic acid screening, and unsealed at 3:00 on April 5. Shanghai's previous attempt to "seal and control in turn" for nearly 20 days ended and entered the "semi closed city" mode to ensure the dynamic clearing of the "epidemic situation". According to China Semiconductor forum, in order to maintain normal production, Shanghai semiconductor manufacturers such as TSMC, riyueyue and Hejing have arranged for production line employees to live in the factory. Although this can maintain normal production, product shipments may be impacted.
Semiconductor Manufacturing International Corporation(688981) , the performance of Huahong semiconductor increased significantly in 2021. On March 30, Semiconductor Manufacturing International Corporation(688981) released the annual report of 2021. In 2021, the revenue was US $5.443 billion, a year-on-year increase of 39.3%. The increase in revenue was mainly due to the increase in the number of wafers sold in 2021, the increase in average selling price and the change of product portfolio. The number of wafers sold increased from 5.699 million equivalent 8-inch wafers in 2020 to 6.747 million equivalent 8-inch wafers in 2021, a year-on-year increase of 18.4%. The average price increased from US $610 in 2020 to US $738 in 2021. In 2021, the net profit was US $1.702 billion, a year-on-year increase of 137.8%. On March 29, Huahong semiconductor released its annual report for 2021. In 2021, the revenue reached a record high of US $1.631 billion, with a year-on-year increase of 69.6%. Under the dual pressure of rising raw material costs and depreciation provision of 12 inch production line, Huahong achieved a gross profit margin of 27.7% through cost reduction and efficiency management and product value upgrading, with a year-on-year increase of 3.3pcts. Among them, the three 8-inch production lines of Huahong semiconductor in Shanghai continued to give full play to their traditional advantages and exceeded the gross profit level of 40% for the first time in the fourth quarter of 2021. In 2021, the net profit was US $231 million, with a year-on-year increase of 593.3%.
We believe that in the first quarter of 2021, the global semiconductor industry chain experienced the impact of black swan events such as earthquakes, geographical conflicts and repeated epidemics, and the supply side remained in short supply. However, with the upgrading of the Chinese mainland's epidemic situation, besides the supply side's attack, the demand side's downstream applications or consumer products tend to be weak, and the upstream price increases gradually to consumers, and consumers' purchase intention or decline. The decline in demand may lead to the reduction of orders by terminal manufacturers. It is necessary to be vigilant against the phenomenon of cutting orders by consumer electronics manufacturers. However, the demand for vehicle, HPC and IoT products is still strong. Chinese mainland semiconductor manufacturers gradually expand the category of high-end products, and have already achieved some domestic substitution in the semiconductor subdivision manufacturing field. Therefore, we are firmly optimistic about automotive and IoT semiconductor manufacturers.
Risk tips
The downstream demand of semiconductor is lower than expected; Repeated outbreaks pose the risk of capacity disruption.
Related subject matter
Semiconductor design: [ Will Semiconductor Co.Ltd.Shanghai(603501) ] [ Allwinnertech Technology Co.Ltd(300458) ] [ Gigadevice Semiconductor (Beijing) Inc(603986) ] [ Sg Micro Corp(300661) ] [ Maxscend Microelectronics Company Limited(300782) ]; Wafer Foundry: [ Semiconductor Manufacturing International Corporation(688981) ] [Huahong semiconductor]; Semiconductor materials: [ Red Avenue New Materials Group Co.Ltd(603650) ] [Jingrui shares]; Power semiconductor: [ Wingtech Technology Co.Ltd(600745) ] [ China Resources Microelectronics Limited(688396) ] [ Hangzhou Silan Microelectronics Co.Ltd(600460) ] [ Starpower Semiconductor Ltd(603290) ] [ Wuxi Nce Power Co.Ltd(605111) ] [ Shenzhen Minde Electronics Technology Ltd(300656) ]
Consumer electronics: [ Goertek Inc(002241) ] [ Sunwoda Electronic Co.Ltd(300207) ] [ Avary Holding (Shenzhen) Co.Limited(002938) ] [ Luxshare Precision Industry Co.Ltd(002475) ]; Smartphone: [Xiaomi group] folding screen: [ Jiangsu Gian Technology Co.Ltd(300709) ] [ Wuhu Token Sciences Co.Ltd(300088) ]
