1. Changchuan Technology: A leading enterprise in the integrated circuit testing equipment industry in China Changchuan Technology: a leading enterprise in the field of integrated circuit testing equipment in China. Since its establishment, the company has always focused on the field of integrated circuit testing equipment and has mastered the core technology related to integrated circuit testing equipment. Currently, it has more than 700 domestic and international patents, and has been recognized as a software enterprise, high-tech enterprise research and development center in Zhejiang Province, a provincial high-tech enterprise research and development center, and a Hangzhou enterprise high-tech research and development center. The company's products have been used and approved by many first-class integrated circuit companies such as Changdian Technology, Huatian Technology, Tongfu Microelectronics, Silanwei, China Resources Microelectronics, and Sun Moon Light. Self-developed products have replaced some imports of testing machines and sorters.
The company mainly provides testing equipment for integrated circuit packaging and testing companies, wafer manufacturers, chip design companies, etc. Currently, the company mainly sells products such as testing machines, sorters, automation equipment, and AOI optical inspection equipment.
The testing machines produced by the company include high-power testing machines, analog testing machines, digital testing machines, etc.; sorters include gravity sorters, translational sorters, all-in-one measurement and editing machines; automation equipment includes automated production equipment in the fields of fingerprint modules, camera modules, etc.; AOI optical inspection equipment includes wafer optical appearance inspection equipment, circuit packaging optical appearance inspection equipment, etc.
Products such as integrated circuit testing machines and sorters produced by the company have been used and approved by many first-class integrated circuit manufacturers such as Changdian Technology, Huatian Technology, Shilanwei, China Resources Microelectronics, and Sun Moon Light. Among them, Changdian Technology, Huatian Technology, and Tongfu Microelectronics are leading packaging testing companies in China, and China Resources Microelectronics and Silanwei are well-known domestic IDM manufacturers. The products of STI, a subsidiary of the company, are sold to well-known semiconductor companies such as Riyueguang, Anjiao, Silicon Products, UTAC, Licheng, Texas Instruments, Renesas, ST, and Micron.
The company's revenue and net profit to mother for 2022 were 2,577 million yuan and 461 million yuan; revenue and net profit to mother for the first three quarters of 2023 were 1,299 million yuan and 01 million yuan.
2. Large space for semiconductor testing equipment
According to Teradyne, a leading global semiconductor test equipment company, the global market space for digital testing machines and storage testers will be around $3.9 billion and $950 million in 2023. Teradyne expects revenue of $45.0-5.55 billion in 2026, with a CAGR of 9%-15% for the year 2022 to 2026.
3. The digital testing machine business has strong competitiveness
Changchuan Technology's D9000 digital tester provides solutions including wafer testing and final testing solutions for microcontrollers, wireless devices, and cellular communication chips, and is widely favored by leading semiconductor manufacturers and packaging manufacturers in the industry. The D9000 testing machine has reached the leading domestic level in terms of test quality, test efficiency, and test cost control, and has significantly narrowed the technical gap with world-class equipment suppliers. The D9000 tester achieves higher throughput and more simultaneous measurements at a lower cost, shortens single-station test time, and greatly improves parallel testing efficiency.
The D9000 tester can be widely used in the automotive and consumer electronics fields, providing leading SoC and MCU device testing solutions, and many of its performance indicators are already at the leading level in the industry.
1. The digital board has a higher channel density: 256 digital channels on the single board; 2. The digital board Vector Memory has an advantage: the vector depth of one channel reaches 1G vectors, and supports sharing the VM with other channels;
3. The power board channel density is higher: the single board supports 128 power channels, and supports more cross-board Ganged mode current output (up to 1000A);
4. The power board has more rich working modes: general VI resources, each channel supports AWG and DIG functions;
5. It has industry-leading mixed signal testing capabilities;
6. Achieve more integrated and higher throughput RF testing capabilities within a single test head, without the need for external instruments;
7. Support mainstream debugging tools in the industry to improve engineering debugging efficiency.
Automotive semiconductor suppliers can obtain reproducible and reliable chip test results on the D9000 test machine using Changchuan Technology's acclaimed Phoenix software to verify test procedures critical to the automotive market. The D9000 test platform is gradually becoming an important reference standard for semiconductor manufacturers in their quest for zero-defect and multi-station testing. In addition, the Phoenix software platform also plays a critical role in rapid program development. Based on the Windows system, the form-filling development interface is very simple and easy to understand and use. The underlying code encapsulates science, and supports users to perform instrument operations through the API. The platform can be automatically expanded to support multi-station testing, saving users a lot of development time and costs. Compared with other ATE software systems, it is highly user-friendly and has high development efficiency.
4. Epitaxial mergers and acquisitions layout AOI business and sorter business
From 2022 to 2023, the company acquired the EXIS brick tower sorter business with an additional purchase of 276.7 million yuan to complete the full product coverage of gravity sorters, translational sorters, and turret sorters. The company passed the approval to issue shares to purchase assets to acquire Changyi Technology (Malaysia Exis) in 2022, and completed the asset transfer in 2023. EXIS is mainly engaged in R&D, production and sales of integrated circuit sorting equipment. Its core products are mainly turret sorters. EXIS has accumulated rich experience in the turret sorter segment. After the transaction was completed, EXIS's high-quality assets and business entered the company, which helped the company to diversify product types, achieve full product coverage of gravity sorters, translational sorters, and turret sorters. Through synergy between the company and EXIS in terms of sales channels, R&D technology, etc., the company's profitability and sustainable development capabilities were enhanced.
EXIS customers are mainly large semiconductor manufacturers and semiconductor package testing companies. Downstream customers include well-known semiconductor companies such as Broadcom (Broadcom), MPS (MPS), NXP Semiconductors (NXP), and BYD Semiconductors, as well as integrated circuit sealing and testing companies such as UTAC (UTAC), Tongfu Microelectronics, and Huatian Technology.
In 2018-2019, Changchuan Technology purchased 90% of Hangzhou Changxin Investment Management Co., Ltd.'s shares at a consideration of 490 million yuan to achieve 100% ownership and successfully set up the AOI business. Changchuan Technology completed the acquisition of Changxin Investment and its subsidiary STI in 2019. Through the acquisition of STI, the company has formed complementary advantages and healthy collaboration with STI in terms of technology research and development, customers and sales channels. In terms of technology research and development, STI's 2D/3D high-precision optical inspection technology (AOI) is at the forefront of the industry. Through in-depth cooperation between the company and STI in R&D, STI can provide strong support for the company's probe stations and other products to break through technical problems in the field of optics; on the customer side, STI has established long-term and stable cooperative relationships with many international IDM and packaging manufacturers such as Dezhou Instruments, Anjiao, Samsung, Sun & Moon, Micron, and Licheng, etc., which provides strong support for the company to enter the supply system of internationally renowned semiconductor companies; in terms of sales channels, STI is It has 3 subsidiaries in Malaysia, South Korea, and the Philippines, and also has dedicated service teams in mainland China and Thailand. It can provide efficient, fast and high-quality sales, product maintenance and customer response services to local customers at any time, and can collaborate with the company's sales layout to help the company expand overseas business.
The main operating asset invested by Changxin is STI, a Singaporean integrated circuit packaging and testing equipment manufacturer. STi is an integrated circuit package inspection equipment manufacturer that develops and produces optical inspection, sorting, and taping functions for chips and wafers. 2D/3D high-precision optical inspection technology (AOI) is STI's core competency, and STI has more than 150 patented technologies.
AOI equipment produced by STI mainly obtains images of objects to be tested through optical imaging, processed and analyzed by specific algorithms, and compared with standard template images to obtain defects in the tested object. AOI optical automatic inspection equipment has now become an important inspection tool and process quality control tool for the semiconductor manufacturing industry to ensure product quality.
STI stood out from thousands of suppliers in 2006 and 2016, becoming one of the 50 outstanding global equipment suppliers awarded by Texas Instruments.
5. The National Capital Fund holds 5.05% of Changchuan Technology's shares and 33.33% of Changchuan Technology's subsidiary Changchuan Manufacturing
The company held the 21st meeting of the 2nd board of directors on December 18, 2020 to review and pass the “Proposal on Joint Capital Increase and Related Transactions with Related Parties and Newly Introduced Investors on the Capital Increase and Related Transactions of the Wholly-owned Subsidiary Hangzhou Changchuan Intelligent Manufacturing Co., Ltd.”, and the newly introduced investor Hangzhou Paradise Silicon Valley Hangshi Equity Investment Partnership (Limited Partnership) to sign a total of 89,000 yuan in cash for the total amount of the wholly-owned subsidiary Hangzhou Changchuan Intelligent Manufacturing Co., Ltd. Additional registered capital of $89,000 million.
Among them, Changchuan Technology subscribed Changchuan Manufacturing's additional registered capital of 340 million yuan with its own capital of 340 million yuan, the second phase of the National Industrial Fund subscribed Changchuan Manufacturing's additional registered capital of 30,000 yuan with 30,000 million yuan, and Paradise Silicon Valley used 250 million yuan to subscribe Changchuan Manufacturing's additional registered capital of 250 million yuan.
After the capital increase was completed, the registered capital of Changchuan Manufacturing was changed to 90 million yuan, of which the company held 38.89% of Changchuan Manufacturing's shares, the second phase of the National Industrial Fund held 33.33% of Changchuan Manufacturing's shares, and Tiantang Silicon Valley held 27.78% of Changchuan Manufacturing's shares. Changchuan Manufacturing will change from a wholly-owned subsidiary of the original company to a holding subsidiary. It is still included in the scope of the company's consolidated statements, and will not have a significant impact on the company's financial and operating conditions.
6. Investment advice
Profit forecast, valuation and rating: Taking into account the global semiconductor industry's decline starting in 2023 and the decline in subsequent capital expenditure, we revised the company's net profit for 2023-2025 to 0.56, 7.04, and 1,022 billion yuan (down 92.89%, 32.95%, 24.85% from the previous forecast), corresponding to the current PE valuation of 391X/31X/21X. The company is currently at a low point in performance, but the company continues to explore the middle and high-end market, and the back-end testing equipment platform is becoming more and more complete. As new high-end products related to the company's digital testing machines continue to be launched, the order volume is growing rapidly, and it is expected to return to the growth trend, so it maintains a “buy” rating.
Risk warning: Downstream demand falls short of expected risk; inventory cannot absorb expected risk; new product development or customer introduction progress falls short of expected risk; industry competition increases risk.