In recent years, Chinese semiconductor equipment manufacturers have continuously passed the production line validation of major fabs and entered the commercial supply stage. Along with 2022, SMIC Lingang 12-inch wafer foundry production line project successfully topped out, the start of Shanghai Jaeta advanced vehicle grade chip expansion project, China Resources Microelectronics Chongqing 12-inch wafer manufacturing production line and advanced power packaging base to achieve through line and other wafer projects continue to advance. Domestic semiconductor equipment suppliers have seen good growth in corporate revenue and equipment winning bids.
01
Net profit collective explosion
The golden wave of domestic replacement of semiconductor equipment has been opened, and the wave of fab expansion has also led to a number of equipment manufacturers’ bright business performance in FY2022.
On January 11, North Huachuang announced that it expects net profit of 2.1 billion to 2.6 billion yuan in 2022, an increase of 94.91%-141.32% year-on-year. The announcement shows that in FY2022, the company overcame the impact of adverse factors such as the supply chain, ensured the normal operation of production and operation, achieved orderly delivery of customer orders, and achieved sustained growth in the operating results of both electronic process equipment and electronic components business for the year. The main business of North Huachuang includes electronic process equipment and electronic components. Electronic process equipment is mainly used in integrated circuits, advanced packaging, semiconductor lighting, new displays and other fields.
On January 30, Shengmei Shanghai released an earnings forecast, expecting to achieve net profit attributable to owners of the parent company of RMB 600 million to 720 million in 2022, an increase of approximately RMB 334 million to 454 million compared with the same period of the previous year, representing a year-on-year increase of 125.35% to 170.42%. 170.42%. The main reasons for the change in results were the continued growth in sales orders due to the increasing demand for equipment in the semiconductor industry in China, the success of new customer expansion and new market development, and the steady growth in orders as new products were recognized by customers. Shengmei Shanghai’s main business is semiconductor cleaning equipment.
January 19, Changchuan Technology disclosed 2022 annual performance forecast, the company expects to achieve net profit attributable to shareholders of listed companies in 2022 450 million yuan – 520 million yuan, an increase of 106.20% – 138.27%. The main reasons for the increase in the company’s operating results over the same period last year include: the steady expansion of business scale and the optimization of the revenue structure of various products, and the continued increase in the proportion of revenue from high-end categories. Changchuan Technology’s main products include testers, sorting machines, probe tables, AOI equipment and automation equipment.
Ltd. announced on Jan. 30 that the company expects to achieve net profit attributable to owners of the parent company of 1.08 billion yuan to 1.2 billion yuan in 2022, an increase of 6.78%-18.64% year-on-year. The announcement said that the company’s plasma etching equipment continues to gain more customer recognition and increasing market share at home and abroad, and has achieved multiple volume sales in the most advanced international 5nm chip production lines and next generation more advanced production lines. SMIC’s main business is to focus on the R&D, production and sales of key equipment such as plasma etching equipment, deep silicon etching equipment and MOCVD equipment used in the field of micro devices such as integrated circuits and LED chips.
On January 19, Huahai Qingke released a performance forecast, the company expects to achieve net profit attributable to the owners of the parent company of 437 million – 517 million yuan in 2022, compared with the same period last year, an increase of about 239 million – 319 million yuan, an increase of 120.4% – 160.75%. 160.75 percent. The report shows that the company has achieved continuous growth in CMP equipment and supporting services, wafer regeneration business, etc. throughout the year. Huahai Qingke main business includes CMP equipment, thinning equipment, liquid supply system, wafer regeneration, key consumables and maintenance services.
Semiconductor equipment manufacturers have been able to increase their net profits last year, mainly benefiting from the good development trend of the domestic semiconductor industry and the increase in demand for equipment in the domestic semiconductor industry. SMIC, for example, currently has a 12-inch wafer fab under construction in Shanghai, Beijing, Shenzhen and Tianjin. SMIC fab expansion, nearly 80% of the capital expenditure will be used to purchase equipment. In addition, with the innovative chip process drive, unit capacity investment will gradually increase, 14nm technology node line investment is about 3.3 times that of 90nm, 3nm technology node line investment is about 3.4 times that of 14nm. These driving factors have brought new incremental markets for domestic semiconductor equipment and materials, and listed companies with mature products have seen strong growth opportunities.
02
Winning bid results are bright
According to Guangfa Securities statistics, 2022 bidding volume scale is remarkable, to accumulate the tower, Hua Hong, Yan Dong bidding mainly. 2022, the statistical sample of wafer production line total bidding 1060, of which, accumulate the tower, Hua Hong, Yan Dong equipment bidding volume in the top three. On the whole, the bids are mainly for measurement equipment, deposition equipment and etching equipment. In 2022, Centaur will tender for 502 items, mostly measurement, deposition and etching equipment; Hua Hong will tender for 263 items, mostly measurement, testing and heat treatment equipment; SMIC will tender for 148 infrastructure projects; and Changxin will tender for 12 infrastructure projects.
In terms of winning bids, in 2022, the wafer production line in the statistical sample won a total of 1,040 equipment bids, with the majority of measurement, deposition, heat treatment equipment; domestic equipment overall winning ratio of about 30%, of which, wafer regeneration, gas-liquid systems, debinding, wet etching, PVD equipment, the proportion of domestic winning bids is higher.
In 2022, the domestic semiconductor equipment manufacturers won a total of 231 units of equipment, North Huachuang, Chuang Microelectronics, Microelectronics Corporation, Wanye Enterprise won the leading bid, respectively, 64 units, 28 units, 22 units, 21 units of equipment. 2022, the domestic semiconductor equipment manufacturers won a total of 26% of the corresponding process link in the proportion of winning bids. In 2022, the proportion of bids won by domestic semiconductor equipment manufacturers in the corresponding process is 26%.
So it seems that the major domestic semiconductor equipment manufacturers are making progress in project promotion, equipment delivery and new product development, and are charging forward on the road to improve the domestic rate.
03
Equipment localization is charging
According to SEMI data show that in 2022, the localization rate of semiconductor equipment for Chinese foundries is significantly higher than in 2021, from 21% to 35%. Domestic manufacturers in the detection equipment, etching equipment, PVD and CVD equipment, oxidation diffusion equipment, etc. has achieved partial local substitution, especially the detection equipment substitution rate is faster. The domestic adoption rate of debinding equipment has reached 91%. Eitang shares a dominant position in the domestic semiconductor debinding equipment field.
In terms of etching equipment, SMIC has entered TSMC’s 7nm/5nm production line, and is the only domestic etching equipment manufacturer to enter TSMC’s production line; North Huachuang has significant advantages in ICP etching, covering 8″ and 12″ 55-28nm processes, and has entered SMIC’s 14nm production line verification stage; Eitang’s dry etching equipment can be used for 65nm-5nm. Equipment can be used for 65nm-5nm logic chips.
In terms of cleaning equipment, the domestic replacement rate is about 20%. Mainly Shengmei Shanghai, North Huachuang, to pure technology, core source micro contribution to the equipment revenue share.
Thin film deposition equipment, domestic manufacturers staggered development, Tuojing technology to lead the localization of PECVD, has carried out 10nm and below process product verification test. North Huachuang PVD has significant advantages, and SMIC’s MOCVD equipment share is among the top three in the world, which together benefit from the increase of localization rate.
The current lithography and coating development equipment localization rate is close to 0. Shanghai Microelectronics and Core Source Micro are the only domestic suppliers at present.
The barriers of ion injection equipment are very high and the localization rate is very low, mainly relying on Wanye Enterprise (Kaishi Tong) and CCS, both companies currently have ion injection machine into the customer verification, is expected to make up for the shortcomings of the domestic semiconductor equipment industry. 2022 January-October Huahong Wuxi and Jaeta Semiconductor bidding, the localization rate of ion injection machine is only 3%, the domestic replacement space is large. Replacement space is large.
By process, SEMI data show that, at present, in the field of 28 nanometers and above, Chinese semiconductor equipment manufacturers have basically achieved full coverage, the localization rate reached more than 80%. And in the 14nm process, China’s semiconductor equipment manufacturers, also achieved more than 50% coverage, the localization rate may reach more than 20%. At present, below 14nm, the localization rate is still very low, probably only about 10%. The lack of Chinese semiconductor equipment in the middle and high process capabilities is still relatively serious.
04
Bigger opportunities to meet bigger challenges
Domestic semiconductor equipment manufacturers face not only opportunities, behind this there are greater challenges.
From the perspective of the world pattern of semiconductor equipment, it is almost monopolized by the U.S., Japan and the Netherlands, and the Top3 market share of core equipment such as photolithography, etching, PVD, CVD, oxidation/diffusion, etc. is generally above 90%. However, recently, the United States, the Netherlands and Japan national security officials held high-level negotiations to reach an agreement on restricting the export of some advanced chip manufacturing equipment to China, which will extend some of the export controls adopted by the United States in October 2022 to companies such as Asmac of the Netherlands, Tokyo Electron and Nikon of Japan. Specific details have not been made public.
The localization of China’s semiconductor industry is “easy to know and difficult to do”. In addition to the technology gap and U.S. restrictions, China faces great challenges in terms of investment, talent, market competition, strategic determination and patience. However, Chinese semiconductor equipment components manufacturers are currently small revenue scale, is continuing the growth path of overseas leading manufacturers of product categories and applications expansion, with the rapid growth of domestic semiconductor equipment manufacturers, and through access to overseas semiconductor equipment manufacturers supply chain. Although the current domestic semiconductor equipment components companies in the early stages of domestic substitution, but the domestic semiconductor equipment components manufacturers are expected to continue to grow at a high rate in the future.