The semiconductor concept stock has exploded, and the pattern of this key field has changed. Should domestic substitution be carried out at a high speed?

On March 3, the concept stocks of semiconductor equipment rose sharply, and Changchuan Technology, Zhongwei Company, North Huachuang, Xinyuan Micro, Huafeng Measurement and Control, Huaya Intelligent, Tongfu Microelectronics, Anji Technology, Shengbang Shares, etc. performed well.
On the news, Vice Premier Liu He of the State Council investigated the development of integrated circuit enterprises in Beijing on the 2nd and hosted a symposium. Liu He stressed that the government should formulate integrated circuit industrial policies in line with the national conditions and the new situation, set pragmatic development goals and development ideas, help enterprises coordinate and solve difficulties, play a good organizational role in the field of market failure, and guide long-term investment.
Today, domestic semiconductor equipment companies have made great achievements in various segments. Is there any opportunity for them to further change the industry structure?
Semiconductor equipment mainly refers to the equipment used in integrated circuit manufacturing and packaging and testing. Therefore, it can be subdivided into wafer manufacturing equipment and packaging and testing equipment. The value of manufacturing equipment accounts for up to 86%, which is the core component.
Technical barriers, market barriers, and customer recognition barriers, three major problems have led semiconductor equipment to gradually move towards a monopolistic competition pattern, and market share has accelerated to focus on leading enterprises in the past few years.
According to the statistical data of VLSI Research, the industry CR5 will be about 84% in 2021, up nearly 20 percentage points from 65% in 2019.
In terms of subdivision, semiconductor manufacturing equipment mainly includes film deposition equipment, etching equipment, photolithography machine, cleaning equipment, CMP, ion implantation equipment, heat treatment equipment, coating development, etc. Among them, the value of film deposition, etching and photolithography is the highest, reaching 27%, 22% and 20% respectively.
Each segment is firmly controlled by giants.
For example, thin film deposition equipment mainly includes CVD, PVD and ALD, which have been basically monopolized by AMAT, Lam Research and TEL. In the CVD field, the total market share of the three cities reached about 70%; In the PVD equipment market, applied materials account for 85%; The market share of ALD equipment, applied materials and Tokyo Electronics is 60%.
Etching equipment is still owned by the above three giants. According to Gartner’s data, Ram Research, Applied Materials and Tokyo Electronics accounted for 47%, 27% and 17% of the global etching equipment market in 2020.
It is needless to say that lithography machines are almost all from three enterprises, namely Asma, Nikon and Canon. Among them, Asma enjoys the high-end lithography machine market and has no rivals in the EUV field.
In the field of CMP equipment, applied materials and Ebara of Japan occupy more than 90% of the global market.
Even more despairing is that the United States, Japan and other countries have been promoting the establishment of an exclusive “semiconductor industry alliance” in recent years, trying to add artificial barriers on the basis of industrial congenital barriers.
The leader’s circle culture strengthens the Matthew effect of the supply chain, and with the patent blockade, the latecomers are falling behind step by step. In the field of semiconductor equipment with high customer stickiness and high certification barriers, this problem is infinitely magnified.
However, even in such a difficult situation, Chinese enterprises still show great resilience.
In April 2022, in the new round of mainland semiconductor equipment bidding, domestic enterprises won 67 sets, with a localization rate of 62%. According to the annual data, the localization rate of semiconductor equipment in 2021 will be 27.4%, significantly higher than the 16.8% in 2020.
This means that domestic substitution, which has lasted for many years, has entered a centralized cash-in period.
In the past, the mainstream concept in China was that “manufacturing is better than buying”, and the local wafer factories are basically inclined to purchase mature equipment from overseas leading enterprises, which can reduce the certification cycle and cost as much as possible, and then quickly complete the production line construction in a round of semiconductor boom cycle.
However, semiconductor equipment cannot be developed independently and needs to be developed jointly by wafer manufacturers. Due to the lack of verification and import opportunities, mainland semiconductor equipment companies have been stagnant for a long time.
Domestic wafer manufacturers, represented by SMIC International, are facing increasing risk of supply failure in the field of equipment and raw materials, forcing relevant companies to start supporting local suppliers and large-scale domestic substitution officially started.
Today, domestic semiconductor equipment companies have made great achievements in various segments.
In the field of film deposition equipment, North Huachuang and Tuojing Technology are the main two leading enterprises, among which North Huachuang has achieved a breakthrough in 28nm/14nm technology, covering all fields such as PVD, CVD and ALD.
In the etching equipment segment, the main domestic participants include China Microelectronics Corporation, North Huachuang and Eton. Among them, the etching equipment of the company includes CCP and ICP. At present, the CCP has broken through 7-5 nm, and is also progressing smoothly below 5 nm. In 2021, the company produced and delivered a total of 298 chamber CCP etching equipment, with a year-on-year increase of 40%.
In the photolithography process, Shanghai Microelectronics has taken the lead, and has fully realized localization in 90nm, 110nm, 280nm and other manufacturing processes. In February 2022, Shanghai Microelectronics delivered the first 2.5D3D advanced packaging lithography machine. According to the previous plan, the 28nm lithography machine will also be delivered within the year.
The domestic participants in the field of CMP equipment are mainly Huahai Qingke and Beijing Shuoke Precision Electronics. Among them, Huahai Qingke is the only enterprise in China that has achieved the mass production of 12-inch CMP equipment. The company’s 12-inch series of CMP equipment products have completed the mass application, and the manufacturing process has also begun to push forward to 14nm. At present, it has entered the verification stage.
The “Made in China 2025” plan points out that by 2025, domestic semiconductor core basic parts and key basic materials should achieve 70% of independent guarantee.
Compared with the localization rate of less than 30% in 2021, there is still much room for the future. As long as domestic enterprises can achieve technological breakthroughs, orders are fully guaranteed. However, compared with the replacement of the stock market, the incremental market brought by the chip business cycle is more worthy of attention.
Since 2020, due to the sharp increase in downstream demand for smart phones, data centers, artificial intelligence, and new energy vehicles, a “core shortage tide” has been set off around the world, which has not been alleviated, but has intensified, and all indicators can confirm this.
For example, the median inventory of semiconductor products in 2019 is about 40 days, but by 2021, there will be less than 5 days left.
Another example is the delivery cycle. By February 2022, the average delivery cycle of 16-bit processor general products has increased by 44 weeks, an increase of 15 weeks compared with October 2021.
Now, there is no solution to the problem of chip shortage in the short term. According to the data in the 2022 Global Semiconductor Industry Survey, nearly 60% of senior executives of chip companies believe that the chip shortage will not be solved until 2023.
Under the high business cycle, wafer factories have expanded production to lock in profits, and capital expenditure continues to rise.
In 2021, the capital expenditure of TSMC, the world’s leading OEM manufacturer, was as high as US $30 billion, and the capital expenditure of SMIC International also increased to US $4.5 billion.
In 2022, the wafer factory will continue to increase its investment. TSMC will increase its capital expenditure to US $40-44 billion, while SMIC will increase to US $5 billion.
IC Insights forecasts that the scale of capital expenditure of the global semiconductor industry will exceed US $190.4 billion in 2022, with a year-on-year increase of 24%.
According to previous industry statistics, 70% – 80% of the capital expenditure of the wafer factory is used to purchase equipment. That is to say, the order volume of semiconductor equipment enterprises will still have great growth space in 2022.
In general, domestic semiconductor equipment has broken the monopoly in the mature manufacturing process. Under the resonance of stock substitution and incremental expansion, it is likely that the rate will enter the stage of commercialization and high volume expansion.
Disclaimers
This article deals with the content of listed companies, which is the author’s personal analysis and judgment based on the information publicly disclosed by listed companies according to their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms); The information or opinions in this article do not constitute any investment or other business suggestions, and Market Value Observation does not assume any responsibility for any actions arising from the adoption of this article.
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