Event: on January 19, the website of Shanghai Municipal People’s government published the notice of Shanghai Municipal People’s Government on printing and Distributing Several Policies to promote the high-quality development of Shanghai’s integrated circuit industry and software industry in the new era (hereinafter referred to as the “policy”). According to the information on the government website, the policy was issued on December 21, 2021 and implemented on January 1, 2022.
Sorting out the provisions of the policy:
(1) related to enterprise product R & D: “for major integrated circuit equipment and materials projects that have made major breakthroughs in independent R & D such as parts and raw materials and achieved actual sales, the support proportion is 30% of the new investment of the project, and the support amount is not more than 100 million yuan in principle.” “Organize major municipal science and technology projects around key areas such as integrated circuit equipment and materials. Encourage enterprises to take the lead in undertaking national technical research tasks, and the city will provide supporting funds and other support in accordance with relevant policies.”
(2) related to enterprise financing: “the state-owned investment platform enterprises in this city and the development platforms of relevant parks jointly increase the fund-raising support for Shanghai IC industry investment fund and IC equipment and materials fund.” “Implement the special interest discount policy for medium and long-term credit with preferential interest rate for integrated circuits in this Municipality, and give special interest discount for long-term preferential interest rate credit loans to qualified enterprise M & A loans, bond financing, and bonds issued by enterprises to participate in the investment fund of integrated circuit industry and equipment material fund.”
(3) related to enterprise product verification: “strengthen the verification and application support for independent, safe and controllable equipment and materials. Give certain R & D subsidies to those whose integrated circuit production lines and pilot test lines provide verification services for the first set of equipment and the first batch of new materials of integrated circuits in the city.” “Support for the application and verification of independent, safe and controllable equipment and materials will be taken as the basic condition for the city’s new integrated circuit production line project to obtain government funding support.”
(4) related to enterprise capacity construction: “Accelerate the construction of Shanghai Electronic Chemicals zone. Support the construction of Shanghai Electronic Chemicals zone, give priority to the layout of major industrial projects in the field of integrated circuit materials, build public storage facilities for electronic chemicals dedicated to integrated circuits, and build Shanghai Electronic Chemicals Innovation Research Institute and school enterprise joint laboratory. The special development fund of Shanghai chemical zone further focuses on the manufacturing of integrated circuit materials For R & D and warehousing projects, certain subsidies shall be given. “
Interpretation:
Policy subsidies will be given throughout the process to effectively alleviate the financial pressure of enterprises. For semiconductor material enterprises, they need a lot of capital investment in their R & D, verification and capacity construction. However, due to the long verification cycle of semiconductor materials represented by photoresist, it is difficult for relevant enterprises to quickly obtain product sales revenue. Therefore, semiconductor material enterprises will face considerable capital pressure in all links. The above policy gives policy subsidies to semiconductor material enterprises in multiple stages of R & D, verification and capacity construction, which is expected to effectively alleviate the financial pressure of semiconductor material enterprises in various stages, promote the product verification and production progress of relevant enterprises, and promote relevant enterprises to obtain product sales revenue as soon as possible, Realize the positive feedback cycle of enterprise development.
Increase industrial fund support, broaden enterprise financing channels, and introduce special interest discount policies to reduce enterprise financing pressure. We mentioned in the “semiconductor photoresist in the New Era series report of China chemical industry” released on January 12 that domestic photoresist enterprises are facing a major opportunity due to the mature process and rapid expansion of mainland wafer foundries. Taking domestic photoresist enterprises as an example, the current operating cash flow of relevant enterprises is difficult to support the rapid growth of their capital expenditure, Therefore, most enterprises consider financing means to solve the capital problem. The fund-raising support of industrial investment funds and the special interest discount policy for medium and long-term credit of enterprises mentioned in the above policy broaden the financing channels of enterprises on the one hand and reduce the financing costs of enterprises on the other hand. It is conducive for semiconductor material enterprises to solve the capital problems in their own R & D and capacity expansion through financing.
Under the joint action of policy and market demand, we are optimistic about the rapid development of semiconductor material enterprises for a long time. The above policy is in line with the policy of “strengthening national strategic scientific and technological forces” mentioned in China’s 14th five year plan, and is conducive to China’s semiconductor material enterprises to break through the “neck” barrier as soon as possible and avoid being controlled by others. In addition, from the market demand side, according to the prediction of SIA and BCG, the growth rate of foundry production capacity in Chinese mainland will be the highest in 2020-2030 years, and the proportion of foundry production capacity in Chinese mainland will reach the world’s first in 2030. From the perspective of the wafer fabrication capacity, the existing foundry capacity in Chinese mainland and the new foundry production capacity in the short and medium term are mainly mature. Therefore, we think that China’s foundry production capacity of Chinese mainland is matched with the product structure of semiconductor materials companies in China. Under the current situation of tight supply in the global integrated circuit industry chain, the import progress of domestic semiconductor material enterprises’ products into the supply chain of wafer foundry will be significantly accelerated. With the synchronous improvement of product market penetration and product capacity of relevant enterprises, domestic semiconductor material enterprises will usher in a period of rapid development.
Investment suggestion: the introduction and implementation of industry favorable policies will help domestic semiconductor material enterprises accelerate product R & D, product verification and mass production line construction, so as to continuously promote the continuous improvement of semiconductor material localization rate and promote the rapid development of domestic semiconductor material enterprises. We suggest to pay attention to: (1) photoresist field: Red Avenue New Materials Group Co.Ltd(603650) , Crystal Clear Electronic Material Co.Ltd(300655) , Jiangsu Yoke Technology Co.Ltd(002409) , Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) ; (2) Wet electronic chemicals: Crystal Clear Electronic Material Co.Ltd(300655) , Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) ; (3) Electronic gas: Guangdong Huate Gas Co.Ltd(688268) , Haohua Chemical Science & Technology Corp.Ltd(600378) , Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) ; (4) Photosensitizer: Tianjin Jiuri New Materials Co.Ltd(688199) , Anshan Hifichem Co.Ltd(300758) (Shangyu Xinli).
Risk analysis: industrial policy landing risk, product R & D risk, product verification risk, and the construction of new capacity is less than expected.
