Under the short-term disturbance, the domestic alternative long logic is strengthened, and the demand for independent control of semiconductors is highlighted again. In the short term, although Russia and Ukraine are one of the main suppliers of special gases for semiconductors, considering that 1) special gases account for a low proportion of the total cost of semiconductor materials; 2) Downstream manufacturers have abundant raw material reserves and diversified supply. We believe that the marginal impact of the conflict between Russia and Ukraine on the semiconductor industry chain is controllable as a whole. On the other hand, the "black swan" incident represented by the conflict between Russia and Ukraine, covid-19 epidemic, China US trade war and so on is reshaping the semiconductor supply chain system. In the long run, geopolitical uncertainty is escalating, and the sanctions imposed by various countries on Russia highlight the urgency of mastering the autonomy of the electronic industry chain, so it is urgent to achieve security and control in key areas such as semiconductor underlying technology.
EDA, equipment, materials and high-end chip design are the main neck areas, and localization is marching forward.
1) EDA: the United States almost monopolizes the EDA software market, and China still has a gap in ecology, technology and R & D reserves. Chinese EDA enterprises have stepped into the wave of listing, which is expected to develop with the help of capital power and make a breakthrough in localization from point to area.
2) equipment: the overall technology is still catching up, and the degumming equipment has basically realized localization. The localization rate of etching, cleaning, PVD and other equipment is 10% - 20%. It has entered the stage of large-scale performance and accelerated growth, and the lithography and gluing development equipment is expected to achieve "0 breakthrough". The substantial expansion of downstream manufacturers provides soil for the localization of upstream equipment, and the localization rate can be improved.
3) materials: as the main material, the localization rate of silicon wafer is about 20%, and the localization rate of large-size silicon wafer is still low. ARF photoresist only Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) passes the customer verification, and EUV photoresist can not be mass produced by Chinese manufacturers. The localization rate of other materials such as polishing materials and wet electronic chemicals is also low, and there is a wide space for domestic substitution.
4) chip design: Chinese enterprises have achieved a leap from growth to leadership in some subdivided fields such as memory interface chip, aiot chip and CIS. However, high-end logic chips such as CPU, GPU, DRAM and nandflash rely heavily on overseas manufacturers, and localization has a long way to go.
With the continuous support of the government, China's semiconductor industry has ushered in a golden period of development. In addition to the continuous support in taxation, R & D and other aspects, the state also established a large fund to invest in the semiconductor industry and "direct blood transfusion" to promote the development of industrial chain companies. Phase I raised a total of 138.7 billion yuan, leveraging more than 500 billion social funds. The second phase of the large fund established in 2019 has a registered capital of 204.1 billion yuan. From the perspective of investment flow, more than half of the funds in phase I are invested in the field of IC manufacturing, and the funds in phase II are clearly inclined to the upstream equipment, materials and other fields of the industrial chain. So far, more than 20 enterprises have been invested. We believe that with the two-way support of government policies and funds and the concerted efforts of the industrial government, more potential semiconductor enterprise segmentation leaders are expected to continue to benefit, and China's semiconductor industry has ushered in a golden period of development.
Investment proposal and investment object
In the current environment where the demand for independent control of semiconductors has reached a new height, we are optimistic about the long-term development of China's semiconductor industry, especially the prominent growth attribute of the "neck" link. Suggestions on key links of China's semiconductor industry:
1) EDA: China's leading EDA enterprises, such as GuLun electronics, Huada Jiutian, guangliwei, silson, etc.
2) equipment: globally competitive etching equipment manufacturer Advanced Micro-Fabrication Equipment Inc.China(688012) , domestic equipment leading enterprise Naura Technology Group Co.Ltd(002371) , glue coating and developing equipment leader Kingsemi Co.Ltd(688037) , Chinese cleaning equipment leading enterprise shengmei Shanghai, etc.
3) materials: silicon wafer enterprises Hangzhou Lion Electronics Co.Ltd(605358) , National Silicon Industry Group Co.Ltd(688126) -u, Thinkon Semiconductor Jinzhou Corp(688233) , etc.
4) design: China's leading semiconductor design companies Montage Technology Co.Ltd(688008) , Amlogic (Shanghai) Co.Ltd(688099) , Ninestar Corporation(002180) , Will Semiconductor Co.Ltd.Shanghai(603501) , Unigroup Guoxin Microelectronics Co.Ltd(002049) , Shanghai Fudan Microelectronics Group Co.Ltd(688385) , Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) , Longxin Zhongke, haiguang information and Aojie technology.
Risk tips
Geopolitical uncertainty, risk of escalation, lower than expected downstream demand, lower than expected progress of domestic substitution, and restrictions on the import of upstream core components.
