Investment events:

SameMicroelectronics announced on August 13 that its holding subsidiary Xyrex (Beijing) signed a “Strategic Cooperation Framework Agreement” with Egerminth and Wuhan Minsheng. The parties decided to cooperate and invest in the field of 8-inch wafer foundry for “RF filter chips” to jointly build customized dedicated production capacity that can meet the OEM requirements of RF filter chips, including implementing the equipment list required for the production line and the decoration layout of the ultra-clean room. At the same time, the framework agreement clarifies details such as cooperation methods, orders and fees, scope of cooperation and division of responsibilities, and intellectual property rights. In addition, the partners Yigemins and Wuhan Minsheng are all subsidiaries of Oriental Silver Star (600753).

Comment:

The Xelex (Beijing) production line has gone one step further, helping to commercialize and industrialize domestic BAW filters. The first phase of Celex (Beijing)'s 8-inch MEMS foundry line project was completed in June 2021 and mass production officially began. The performance and yield met the design requirements, and were comparable to the company's Swedish FAB products, and mass commercial production and delivery officially began. This cooperation was a landmark event after the Beijing production line began mass production, entering the filter market, the most valuable segment among RF front-end chips, to a high standard. The filter industry has a high market concentration, and Japanese and American manufacturers have absolute market share. Among them, the company plans to enter the BAW filter field, and the leading company Broadcom (Avago) has a market share of 90%. Although the overall process of localizing filters is in the early stages, a large number of local manufacturers are striving to accumulate technology and technology based on supply chain security and the increasingly urgent demand for domestic replacement of filters from downstream end customers. This cooperation will make up for the shortfall in production capacity of local manufacturers, absorb the technological and technological advantages of local manufacturers, and accelerate the transition of BAW filters from laboratories to commercial mass production.

The company's competitive barriers to production capacity and good industrial chain outreach capabilities are reflected. The Internet of Everything has spawned huge demand for MEMS chip foundry, but the release of pure Foundry's OEM production capacity is limited. The company has seized the good window of industrial capacity construction in the past few years, integrated semiconductor equipment resources globally, and formed 10,000 MEMS chip foundry production capacity per month. Considering the background of the increasing difficulty of integrating semiconductor equipment resources in the current international political situation and the MEMS chip foundry line investment and construction cycle, the existing MEMS chip foundry production capacity will form a core competitive barrier for the company and push the company to cooperate with upstream and downstream enterprises in the industrial chain. At the same time, this cooperation reflects the company's long-term accumulation of MEMS acoustic structures and piezoelectric materials. The unique role in the industry chain will also help the company's business alert deeper risks: production capacity falls short of expectations, asset depreciation, and product verification cycles are longer