The semiconductor market comes from two aspects:

oneThe prosperity of semiconductors (industryAlpha):Short-term inventory, medium-term innovation, and long-term domestic substitution

two, semiconductor stocks (industryBeta):Liquidity in the short term and chip structure in the medium term.

First of all, let's look at the prosperity of the fundamentals (α), which comes from three points:

oneShort-term inventory cycle:Due to the strong demand for power semiconductors in new energy innovation, the growth in demand for 12-inch digital chips in 5G mobile phones and AIOT, superimposed by the current rigid supply of new global production capacity, there is no substantial capacity supply in a short period of time. As a result, the whole industry is actively replenishing inventory in the volume and price rising phase within two years, which will continue to drive the performance of related companies.

twoMedium-term innovation cycle:At present, we are in a period of convergence of two major innovations: the energy revolution and the computing revolution. Trams + self-driving will bring continuous demand. The current popularity of trams driving the continuous shortage of eight-inch pieces only reflects energy innovation, while the follow-up self-driving demand for semiconductors is even stronger.

threeLong-term domestic substitution cycle:The great logic of the semiconductor industry is the domestic replacement of China's underlying hard technology, which is just beginning, and China's localization rate in most areas is still very low. In the future, the semiconductor chassis in the middle reaches of the Semiconductor Manufacturing International Corporation and Yangtze River storage will change the previous pattern of external circulation, and there will be internal and external circulation in the future. Internal circulation mainly refers to equipment, materials, key chip design, EDA, IP and other fields, which is the big logic of the entire Chinese semiconductor industry, and has not changed because of this round of decline.

To sum up, we can see that the semiconductor industry is in the early stage of the inventory cycle of rising prices, the first half of the new round is the energy revolution (lithium electricity + new energy) + computing revolution (self-driving), and the localization of the whole chain is still in the early stage. Therefore, the semiconductor industry will have a very definite industry growth in the future.

At present, the forecast of the first quarterly report of the semiconductor as a whole is beginning to be seen: Xin Jieneng (a quarterly growth rate of 199% to 207%), Tonfu Micropower (substantially turning around losses), Weir shares (102% and 143%), Central shares (86% and 118%), Shenzhen Technology (100% and 150%), Jingjiawei (73% and 96%) and Yangjie Technology (120% and 150%).

Let's take a look at the beta of the industry. It is still in the process of downward collation. There are three main points:

oneMassive reduction of holdings:Recently, there has been a continuous liquidation-style reduction of large funds and small financial non-pe institutions, which has significantly suppressed the valuations of related companies.

two, a large number of fixed increases:The supply of new chips has also suppressed the valuation of beta, and a large number of enterprises, such as China Micro, China Resources Micro, Shanghai Silicon and so on, are carrying out fixed growth.

three, relatively high valuation:Although valuations in the semiconductor sector have been relatively fully digested since the adjustment in July last year, the market favours relatively low valuations in a year when overall liquidity expectations are tight.

Based on the above strong fundamentals + continuously revised valuations, we believe that the future is a K-shaped reversal:

oneA small number of benchmarking faucets:With continued upward performance growth, there is no reduction of holdings by large funds and short-term financial PE institutions, and a small valuation premium can be enjoyed.

two, most other enterprises:With the valuation of the above benchmark leader as the upper limit, valuations will continue to be suppressed if there are significant reductions in holdings as performance growth fluctuates.

Based on fast-growing and well-defined industry fundamentals, and declining valuations (big funds and small non-holdings).

We recommend that in the future semiconductor K-type reversal, can become a segment of the industry valuation benchmark of a small number of leading enterprises.

Risk Tips:The trade friction between China and the United States has intensified; the domestic substitution of semiconductors is not as expected; and the progress of semiconductor research and development is not as expected.