Core views
On May 27, the company's official website announced that the 8-inch silicon carbide project was successfully rolled off the line on April 20. It is expected that samples will be officially delivered to customers in the fourth quarter, and large-scale mass production will begin in 2025.
As of December 2023, the company's 6-inch SiC MOSFET production line has achieved a monthly output of more than 5,000 pieces. We expect the company's silicon carbide production capacity to expand to 10,000 wafers/month by the end of 2024, and the overall revenue of silicon carbide will exceed 1 billion yuan in 2024, an increase of more than 170% over the previous year. In 2023, the company relied on an ecological innovation model to deeply bind car enterprise customers. The share of revenue in the automotive application sector surged from 25.51% in 2022 to 46.97% in 2023, up 128.42% year on year, driving the company to grow 15.59% year on year to 5.324 billion yuan under the downward trend of the industry in 2023, and achieved an EBITDA of 925 million yuan for the whole year, an increase of 14.29% year on year. Q1 revenue continued to grow in 2024, up 17.19% year over year, and EBITDA reached 482 million yuan, up 111.97% year over year. The company is building a new growth curve - a high-voltage BCD technology process platform, which can provide the scarce domestic BCD 120V vehicle G0 process platform and 55 nm BCD process platform. The compound revenue growth rate of the company's analog IC business is expected to reach 200% in 2023-2026.
Considering the company's leading position in the MEMS and power device foundry field and the growth momentum brought to the company by the explosion in silicon carbide (SiC) demand, I am optimistic about the company's long-term growth, and for the first time, coverage gave it a “buy” rating.
occurrences
On May 27, the company's official website published the latest developments in silicon carbide products. The 8-inch silicon carbide engineering batch was successfully rolled off the line on April 20, marking the official entry of the domestic silicon carbide industry into the 8-inch era.
Brief review
Focusing on automotive and industrial high-voltage power devices, the first in China to achieve 8-inch silicon carbide wafer connections
The company's 8-inch silicon carbide engineering batch has been successfully rolled off the line. It is expected that samples will be officially delivered to customers in the fourth quarter, and large-scale mass production will begin in 2025. The company not only became the first domestic manufacturer of 8-inch power semiconductors to start mass production, but globally, the company is also one of the world's top two manufacturers to achieve 8-inch production lines. As of December 2023, the company's 6-inch SiC MOSFET production line has achieved a monthly output of more than 5,000 sheets, and the company's silicon carbide business revenue for the full year of 2023 will reach 370 million yuan. We expect the company's silicon carbide production capacity to expand to 10,000 pieces/month by the end of 2024, and the overall revenue of silicon carbide will exceed 1 billion yuan in 2024, an increase of more than 170% over the previous year. At present, the performance of the company's latest generation SiC MOSFET products has reached the world's leading level. SiC MOSFET devices and modules for automotive main drive inverters will also be mass-produced in 2023. It is expected that in 2025, the company will mass-produce new groove-shaped silicon carbide chips, achieving global leadership.
Ecological innovation creates a new model of system foundry, and is not afraid of industry headwinds to achieve continuous high growth in 2023. The company collaborates with upstream and downstream partners in the industrial chain, deeply binds downstream terminal customers, and extends the upstream industrial chain to achieve vertical integration of the industrial chain. Unlike the traditional foundry model, in order to better meet the customized requirements of automotive terminal customers for modules such as IGBT/SiC, the company can not only provide wafer foundry services, but also provide chip design and module packaging services. Using one-stop system manufacturing capabilities, it has achieved curve overtaking in the field of power semiconductors. In 2023, the company relied on an ecological innovation model to deeply bind car enterprise customers. The company's revenue share in the automotive application sector surged from 25.51% in 2022 to 46.97% in 2023, an increase of 128.42% over the previous year, driving the company to achieve 15.59% growth in 2023, reaching 5.324 billion yuan under the downward trend of the industry. The company achieved an EBITDA of 925 million yuan for the whole year, an increase of 116 million yuan compared with the same period last year, and an increase of 14.29% over the previous year. Q1 revenue continued to grow in 2024, up 17.19% year over year, and EBITDA reached 482 million, up 111.97% year over year.
Building a high-voltage analog IC platform has become the third growth curve, focusing on AI server power management chips and computing centers. The company is building a new growth curve - a high-voltage BCD technology process platform, which can provide scarce domestic BCD 120V vehicle specification G0 process platforms and 55 nm BCD process platforms. At the same time, the company has integrated process technology platforms unique to the industry: BCD+eFlash (SST) and IPS (BCD+MOS) to provide complete high voltage/high current and applications in automobiles, data centers, and high-end industrial control Simulation and power solutions for high-altitude technology. Take AI server power supplies as an example. The multi-phase power supply composed of a multi-phase controller+DRMOS is the mainstream power supply form for GPUs. The power management chip in an AI server is 3 to 10 times that of an ordinary server, and DRMOS accounts for 80% of the overall value. The company's 55nMBCD24V applications cover Al server power supply chip-integrated DRMOS to achieve higher density power management solutions and meet high current switches. The intelligent switch platform IPS (16/24V) can integrate BCD with power devices to provide an efficient high and low side drive switch solution for server applications. In 2024, 12-inch foundry revenue was only 50 million yuan. As large-scale mass production of the company's BCD platform begins, the compound revenue growth rate of the company's analog IC business is expected to reach 200% in 2023-2026.
Profit forecasting and investment advice
8-inch silicon-based power wafer foundry business: Considering the company's IGBT and MOSFET production capacity is relatively stable in the next three years, the company's 8-inch silicon-based power devices (IGBTs and MOSFETs) are expected to grow 10% in 2024. The MEMS process platform has many new products such as automotive motion sensors, consumer multi-axis sensors, and automotive lidar scanners completed customer samples last year. The growth rate is relatively rapid in 2024-2026. It is expected to contribute more than 30% to the overall 8-inch silicon-based business revenue growth. Revenue increased 12.32% year on year to 4,549 billion yuan, and in 2025 to 2026 to 5.382 billion yuan and 5.917 billion yuan respectively, the year-on-year growth rates were 18.31% and 9.94%, respectively, and the CAGR for the next three years was 13.47%.
6-inch and 8-inch SiC business: The company's 6-inch silicon carbide production capacity is expected to grow from 5,000 pieces/month to 10,000 pieces/month by the end of the year. With the delivery of a large number of automotive projects, the unit price of wafers will also increase significantly. This year's silicon carbide revenue will increase sharply from 370 million yuan last year to 110 billion yuan, a year-on-year increase of nearly 200%. Starting in 2025, mass production and delivery of the company's 8-inch silicon carbide wafers will begin. The unit price of wafers is expected to increase further. According to the 2023 report of industry leader Infineon on the SiC industry It is estimated that from 2025 to 2030, Infineon's silicon carbide revenue is expected to grow from 1 billion euros to 7 billion euros, with a compound growth rate of 47.58%. The estimated 2025-2026 integrated revenue is 1,760 billion yuan and 2,450 billion yuan respectively, with growth rates of 60.00% and 39.20% respectively, and a CAGR of 87.78% for the next three years.
12-inch silicon-based analog IC foundry business: In 2023, the company's high-voltage BCD process platform completed the installation and commissioning of the pilot line project, and completed the design production capacity of 10,000 pieces per month. Currently, all of its IGBT, SJ, HVIC, and BCD platforms have entered the large-scale mass production stage, and production is climbing. Revenue in 2023 was only 50 million yuan. The business is expected to enter a rapid expansion period in 2024. Revenue is expected to reach 120 million yuan, an increase of 140% year on year. In the future, analog IC foundry production capacity will continue to expand. Revenue is expected to reach 550 million yuan and 1,350 million yuan respectively in 2025 and 2026, respectively, with year-on-year growth rates of 358.33% and 145.45% respectively.
IGBT/SiC module packaging business: The company's module business revenue in 2023 was 390 million yuan, up 34.48% year on year. Since the company's silicon carbide business entered an explosion period in 2024, the value of silicon carbide module packaging is higher than the previous IGBT module. Normally, the value of a single silicon carbide module is more than 3 times the value of the IGBT module. Therefore, the company's module business is expected to grow 65.13% year over year in 2024, with revenue reaching 644 million yuan, and revenue for 2025-2026, respectively With 1,597 billion yuan, the compound growth rate for 2024-2026 was 59.99%.
R&D services and other businesses: The revenue for R&D services in the next three years will be 55 million yuan, 62 million yuan, and 70 million yuan, respectively. Other businesses will gradually decrease in the future, and are expected to be 300 million yuan, 200 million yuan, and 90 million yuan respectively in the future.
The company's revenue for 2024 to 2026 is estimated to be 6.767 billion yuan, 8.887 billion yuan and 11.499 billion yuan respectively, with year-on-year growth rates of 27.09%, 31.33% and 29.39%, respectively, gross margins of 12.50%, 19.00% and 27.00%, respectively. Net profit to mother is estimated to be -859 million yuan, -357 million yuan, and 657 million yuan respectively. Considering the company's leading position in the MEMS and power device foundry field and the growth momentum brought to the company by the explosion in silicon carbide (SiC) demand, I am optimistic about the company's long-term growth, and for the first time, coverage has given a “buy” rating.
Revenue continued to grow in the first quarter of 2024, and EBITDA increased 112% year over year
The company maintained high revenue growth in 2023 and the first quarter of 2024, with revenue of 5.324 billion yuan in 2023, an increase of 16% year over year, and revenue of 1,353 billion yuan in 2024Q1, an increase of 17% year on year. Dragged down by depreciation and amortization, the company's net profit for the first quarter of 2023 and 2024 was still in a loss state, but the 2024Q1 net profit loss was 242 million yuan, a year-on-year decrease of 51.54%. Excluding the impact of depreciation and amortization, the company's EBITDA grew rapidly, reaching an EBITDA of 925 million yuan in 2023, an increase of 14.29% year over year, and 2024Q1 achieved EBITDA of 482 million yuan, an increase of 111.97% year on year.
Automotive business revenue more than doubled in 2023, and SiC and high-voltage analog IC platforms achieved breakthroughs
In terms of downstream applications, 46.97% of the company's main revenue in 2023 came from automotive applications, up 128.42% year on year; 29.46% of main revenue came from industrial control applications, up 26.63% year on year; 23.56% of main revenue came from high-end consumer sector, which was affected by consumer market sentiment, down 36% year on year. Silicon carbide and 12-inch high-voltage analog IC business platforms have been added to the foundry business. Silicon carbide foundry revenue reached 370 million yuan, 6-inch silicon carbide wafers shipped 25,700 pieces, the unit price was 14,400 yuan/piece, and the 12-inch analog IC business achieved a breakthrough. The 2023 revenue was 50 million yuan, the 12-inch wafer sales volume was 5962 pieces, and the unit price was 8,386 yuan/piece.
Three new product lines of SiC MOSFET, HVIC (BCD), and VCSEL will be added in 2023, and the monthly production capacity of 6-inch SiC MOS products will reach 5000 pieces
The company's main product lines are IGBT chip foundry, MOSFET chip foundry, MEMS foundry, and IGBT module packaging. In 2023, the company's product line grew to 7, and 3 new product lines were added: SiC MOSFET, HVIC (BCD), and VCSEL. By the end of 2023, the company had built two 8-inch silicon-based wafer production lines, with a total monthly output of 170,000 wafers, including 80,000 wafers for IGBT products, 70,000 for MOSFET products, 15,000 for MEMS products, and 50,000 for HVIC (8-inch) products. The average annual capacity utilization rate of the company's 8-inch foundry products exceeds 80%. In 2023, the unit price of 8-inch foundry products increased 4.59% year-on-year to 2,895 yuan/piece. In addition, the company produces 5,000 pieces per month for 6-inch SiC MOS products, 10,000 pieces for 12-inch silicon-based products, and 330K per month for automotive-grade IGBT and silicon carbide module products.
Risk analysis
The company was founded in 2018. Since the foundry industry in which it is located is a technology-intensive and capital-intensive industry, it requires large fixed asset investment and continuous R&D investment to maintain product technology leadership, so early R&D investment and fixed asset depreciation amounts are high. During the reporting period, the company as a whole was in a period of climbing capacity, and the scale effect was not fully evident. At the same time, the company's product structure was not optimal, so the company was in a state of loss and there is a risk that losses may continue in the future; due to the special nature of the semiconductor industry, the company will still face the risk of too fast product iteration, long R&D cycle, and large capital investment; if the company fails to respond in a timely and effective manner to management problems caused by the company's scale expansion, it may face certain management risks; the risk of technological gaps with leading international manufacturers; industry cycle risks; the future will continue The risk of huge capital investment; high concentration of major raw material suppliers and raw material supply risks; intellectual property risks; if the macroeconomy weakens in the future, demand in the terminal application market, especially incremental demand, will decline, customers will reduce product procurement, and the industry will face a certain risk of fluctuations.
The revenue growth rate of the company's 8-inch silicon-based power foundry business is expected to account for a large share of revenue from 2024-2026 to 12.32%, 18.31%, and 9.94%, respectively. The total revenue is 67.67, 88.87, and 11.499 billion yuan respectively, up 27.09%, 31.33% and 29.39% year-on-year. The revenue growth rate of the 8-inch silicon-based power foundry business in the report's revenue forecast split is a key indicator. The above indicators are affected by the industry climate and competitive landscape. If one or more of the above two occur, the company's revenue may fall short of expectations. We quantitatively assumed that the revenue growth rate of the company's 8-inch silicon-based power foundry business in 2024-2026 fell short of expectations, and measured the impact on the company's total operating income from slightly lower than expected to extreme cases.