“Science and Technology Innovation Board Daily”, April 12 (Reporter Wu Xuguang) On the evening of April 11, Tianyue Advanced, a leading company in silicon carbide materials, revealed its 2023 performance report.

During the reporting period, the company achieved revenue of 1,251 billion yuan, an increase of 199.90%; net profit loss to mother of 457.205 million yuan, loss of 176 million yuan for the same period last year; loss of 113 million yuan after deducting non-net profit, and loss of 258 million yuan for the same period last year.

Regarding changes in the company's performance, Tianyue Advanced said that overall, 2023 benefited from a continuous increase in the company's production capacity and output of conductive products, increased product delivery capacity, increased operating income compared to the same period last year, increased product gross margin, and net profit attributable to shareholders of listed companies and net profit after deducting non-recurring profits and losses narrowed year-on-year losses.

Looking at specific revenue by quarter, Tianyue Advanced achieved revenue of 193 million yuan, 245 million yuan, 387 million yuan, and 426 million yuan respectively in the first to fourth quarters of 2023; corresponding net profit to mother was -28.16 million yuan, -43.9 million yuan, 3.8023 million yuan, and 22.25329 million yuan, respectively.

The “Science and Technology Innovation Board Daily” reporter noticed that starting from the third and fourth quarters of 2023, the company switched to quarterly profits, and net losses narrowed throughout the year.

In response, Tianyue Advanced said that it mainly benefited from the expansion of the overall silicon carbide market size and the smooth rise in production capacity after the delivery of the company's Lingang plant, which increased both revenue and profit.

An institutional analyst analyzed the “Science and Technology Innovation Board Daily” reporter that Tianyue Advanced Shanghai's Lingang plant is currently in a phase of climbing capacity and is expected to reach full production by mid-2025. Subsequently, with the commissioning and operation of the Shanghai Lingang Plant and the continuous increase in production capacity, its profits may be released.

Regarding the latest production capacity construction progress, Tianyue Advanced said that the company's Shanghai Lingang Smart Factory will begin product delivery in mid-2023, laying the foundation for its long-term capacity and output increase. At the same time, the Shanghai Lingang Plant achieved a rapid rise in production capacity and output. The original plan for the Lingang Plant's production capacity of 300,000 conductive substrates in 2026 was realized ahead of schedule, and the company will continue to push forward the second phase of the production capacity increase plan.

Tianyue Advanced is a semi-insulated silicon carbide substrate faucet. Since there is room for demand for conductive silicon carbide substrates in fields such as new energy vehicles and photovoltaics, it is also regarded as the company's next high-potential product.

In 2023, the company increased production capacity for conductive silicon carbide substrates and signed a new cooperation agreement with Infineon, a leading international power electronics and automotive electronics manufacturer, to provide it with 6-inch silicon carbide substrates and crystal rods, and help Infineon transition to 8-inch silicon carbide wafers. In addition, during the reporting period, Tianyue Advanced also signed a long-term supply agreement with Bosch Group, a well-known global automotive electronics company.

The “Science and Technology Innovation Board Daily” reporter noticed that as Tianyue's advanced overseas business continues to grow, its share of overseas revenue continues to rise.

From 2022 to 2023, Tianyue Advanced's overseas revenue accounted for 13.80% and 37.85% respectively, with significant increases. It is worth mentioning that in 2023, the company's overseas revenue was 411 million yuan, up 822.26% year on year; domestic revenue was 675 million yuan, up 139.72% year on year.

During the reporting period, the sales of Tianyue Advanced's top five customers accounted for 51.16% of total sales in 2023, and the customer concentration was high.

In response, the aforementioned agency analyst told the “Science and Technology Innovation Board Daily” reporter that Tianyue Advanced specializes in silicon carbide substrates, and the downstream is mainly epitaxial film and IDM manufacturers. There are about 5-7 large-scale enterprises for internal and external extension films in China, and there are less than 20 IDM manufacturers, and the market is relatively concentrated. On the other hand, judging from the revenue structure of enterprises at this stage, major customers account for relatively high revenue because their downstream customers are the absolute leaders in the industry and have a high monopoly on the market. “Under this situation, it has been determined that the company's top five customers account for more than 50% of sales, which is a normal phenomenon.”

Tianyue Advanced said that silicon carbide substrate products are mainly used in fields such as new energy, next-generation information and communication, microwave radio frequency, etc. The concentration of leading downstream companies in related fields is relatively high, and the demand for substrates is high. “If the company does not rely on these customers for business expansion in the future, or if the expansion of new customers falls short of expectations, it will adversely affect the company's expansion of operations.”

In addition to high market concentration, insufficient downstream market penetration rate is also one of the important factors limiting the current expansion of the silicon carbide market.

The industry generally believes that compared to mature silicon wafer manufacturing processes, silicon carbide substrates will still face the challenges of difficult and expensive preparation in the short term. For example, at present, the price of silicon carbide power devices is still several times that of silicon-based devices, and downstream applications still need to balance the relationship between the high price of silicon carbide devices and the overall cost reduction due to the superior performance of silicon carbide devices.

In response, Tianyue Advanced said that the high cost of silicon substrates limits the risk of downstream application development. The yield of silicon carbide substrates is generally low in the short term, making it difficult to reduce costs. As a result, the penetration rate of silicon carbide devices falls short of expectations, which may adversely affect the company's operations.