At this point, manufacturers with a higher proportion of advanced wafers in the customer structure are expected to achieve the performance expected by the EPS market in the next few years, and manufacturers with low localization rates are expected to achieve mass production breakthroughs in the new wave of localization.
The Zhitong Finance App learned that Open Source Securities released a research report saying that the revenue growth of domestic semiconductor equipment companies in 2018-2022 mainly benefited from the expansion of mature processes and the increase in the localization rate of production line equipment. Starting in 2023, the recruitment of advanced domestic fab factories began to accelerate marginally. The slowdown in the year-on-year growth rate of some leading equipment manufacturers in 2024Q1 is mainly due to more new products being introduced by customers, which shows that advanced domestic fabs are increasing their power to verify domestic equipment. At this point, manufacturers with a higher proportion of advanced wafers in the customer structure are expected to achieve the performance expected by the EPS market in the next few years, and manufacturers with low localization rates are expected to achieve mass production breakthroughs in the new wave of localization.
Beneficiaries: China Micro Corporation (688012.SH), Beifang Huachuang (002371.SZ), Tuojing Technology (688072.SH), Xinyuan Micro (688037.SH), Huahai Qingke (), Zhicheng Technology (DAB), and Wanye Enterprise (). 688120.SH 603690.SH 600641.SH Recommended target: Saiteng shares (603283.SH).
The main views of Open Source Securities are as follows:
2024 is expected to be an inflection point in the global semiconductor market cycle
The semiconductor industry has both cyclical and growth characteristics. From a cyclical perspective, the year-on-year growth rate of global semiconductor monthly sales peaked and declined in the 2021-Q4 period, and a downward cycle began. November 2023 was the first time since August 2022 that the year-on-year growth rate was negative for 15 consecutive months. By March 2024, global semiconductor sales had achieved a positive year-on-year growth rate for 5 consecutive months, indicating that industry sentiment is expected to bottom out and rise. TSMC believes that the current smartphone, PC, and traditional server markets are still recovering slowly, but AI-related demand is very strong, which indicates that the global semiconductor market will experience a moderate recovery in 2024. ASML also believes that 2024 will be a year of recovery for the semiconductor market, while guiding the industry to usher in stronger demand growth in 2025.
AI upgrades and industrial safety jointly drive the growth of advanced fabs CapEx and the increase in the localization rate of equipment
From a growth perspective, the development of generative AI will be the core driving force for the doubling of total global semiconductor sales in 2030 compared to 2023. AI upgrades require more computing power and high-bandwidth storage (HBM), driving global fabrics' investment to reach 9.3% in 2023-2027. According to Open Source Securities, the chip self-sufficiency rate in mainland China is only about 12% in 2023. In a situation where overseas OEM of high-end chips is restricted and import regulations for high-end semiconductor manufacturing equipment are strict, if China's semiconductor industry wants to keep up with the pace of global development, it is necessary to improve the local manufacturing capacity of high-performance processors and memories and speed up the localization of core equipment. According to Open Source Securities estimates, semiconductor equipment sales in mainland China are expected to grow from 36.6 billion US dollars in 2023 to 65.77 billion US dollars in 2027, with a CAGR of 15.8% based on the increase in capital expenditure of advanced storage and logic fabs and an increase in the localization rate of production line equipment.
Advanced storage and logic chip manufacturing has led to a sharp rise in the volume and price of equipment for etching, thin film, inspection, and bonding
The investment scale of advanced storage and logic devices per 10,000 pieces has increased significantly compared to mature process segments, mainly reflected in the increase in the total usage of core equipment and the value of a single device. Advanced process logic device manufacturing has higher demand for various equipment such as etching, thin film deposition (especially ALD, EPI), measurement, and heat treatment compared to mature manufacturing processes, and the competitive advantage of platform equipment companies is more obvious. The upgrade to a three-dimensional structure is a major change in advanced memory, making high depth-to-width ratio etching and thin film deposition the core equipment. After completing the manufacture of advanced DRAM particles, HBM adopted 2.5D+3D advanced packaging, which led to an increase in demand for equipment such as bonding, measurement, and etching.
Risk warning: Domestic advanced fab production expansion progress falls short of expectations, and the increase in equipment localization rate falls short of expectations.