Rating: OUTPERFORM (maintain)
Semiconductor stocks had a good run last week, significantly outperforming the main indexes. The SWS Semiconductor Index rose 8.34% and the ChiNext Index fell 0.86%. The Shanghai Composite Index fell 4.31%, the Shenzhen Composite Index fell 3.70%, the SME board index fell 3.77% and Wind A-Shares fell 3.56%.
Weekly industry view
The manufacturing, material and equipment segments were among the top performers in the semiconductor industry, and we are optimistic about a valuation recovery opportunity in the industrial foundry segment. Among the semiconductor segments in the past week, manufacturing rose 14.7%, materials rose 12.2%, equipment rose 11.3%, packaging and testing rose 6.0%, discrete devices rose 5.8%, IC design rose 4.9%, while the other segments rose 2.5%.
Equipment, materials growing; we anticipate valuation recovery in wafer foundries
In PB terms, SMIC Hong Kong and Hua Hong Semiconductor are at relatively low valuation levels. SMIC (both A and H shares) and Hua Hong have underperformed chip ETFs since 2Q21. As of 30 July 2021, SMIC-H share PB was only at 1.80x, the lowest PB among global wafer foundry assets. Hua Hong’s PB was low at 3.22x while SMIC-A’s PB was at 5.07x.
Price and UTR rises, and better product structure and fundamentals lifted manufacturing gross profit margin in 1Q21; we expect 2Q21 to keep growing
Semiconductor manufacturing capacity was in short supply and it became a seller's market. Related products such as 5G, HPC, PMIC, DDIC and automotive ICs were in strong demand in 1Q21, intensifying competition in the global foundry segment. Among A-shares, China Resources Microelectronics, Hangzhou Silan Microelectronics and SMIC raised the prices of some products in different ranges in 1Q21. Amid full capacity utilization, each company prioritized large and long-range orders, high-end orders, which optimized the product structure and raised gross profit margin qoq.
Future trends for mainland China fabs
Demand drivers include the Internet of Everything and domestic substitution, while technology growth benefits from a continuous increase in the yield of advanced processes. Short-term expansion in wafer capacity in mainland China was affected by a series of external factors such as US export controls, but it did not change long-term semiconductor market trends. Silicon wafer fabrication for the upstream segment of the supply chain benefits from the widespread popularity of new applications, as represented by AIOT, spawned by 5G.
SMIC and Hua Hong on expansion track as Sino-US rivalry focuses on foundries; we expect growth to continue in the next five years
Wafer fabrication is the most asset-heavy segment in the industry. It drives the development of semiconductor equipment materials in the upstream and affects the product capabilities of design companies in the downstream. It has attracted much attention in the Sino-US trade conflict. Amid the continuous global digitalization process, the importance of foundry capacity has gained prominence and become a strategic asset. Based on Gartner data, TSMC accounted for 55.5% of global foundry capacity in 2019. SMIC and Hua Hong combined accounted for 6.5% of the global market, so the mainland foundry self-sufficiency rate is still low, suggesting rich potential growth.
Large gap between foundry supply and demand in mainland China; we are optimistic about foundry assets and a valuation restoration
In the short term, current price increase cycles are led by a foundry capacity shortage. We would expect foundry companies to take the opportunity to optimize their product mix, and raise their ASP and gross margin. In the long run, growth rates would be prioritized over industry cycle considerations. We are optimistic about the development of local foundry lead companies such as SMIC.
Recommendations
Wafer foundries
Semiconductor Manufacturing International Corporation (SMIC) (688981 CH, BUY)
Semiconductor equipment materials
Naura Technology Group (002371 CH, BUY), Jiangsu Yoke Technology (002409 CH, BUY), Advanced Micro-Fabrication Equipment Inc China (688012 CH, BUY), Wuhan Jingce Electronic Group (300567 CH, BUY), Beijing Huafeng Test & Control Technology (688200 CH, BUY)
Semiconductor design
Unigroup Guoxin Microelectronics (002049 CH, BUY), Gigadevice Semiconductor (Beijing) Inc (603986 CH, BUY), Amlogic (Shanghai) (688099 CH, BUY), Allwinner Technology (300458 CH, BUY), Rockchip Electronics (603893 CH, BUY), Sino Wealth Electronic (300327 CH, BUY), Maxscend Microelectronics Company (300782 CH, BUY)
SG Micro Corp (300661 CH, BUY), StarPower Semiconductor (603290 CH, BUY)
Other related companies (not rated)
Hua Hong Semiconductor, Shanghai Sinyang Semiconductor Materials, Hangzhou Changchuan Technology, Grinm Advanced Materials, Jiangyin Jianghua Micro-electronic Materials, Shanghai Fudan Microelectronics Group, Shanghai Fullhan Microelectronics, Will Semiconductor Shanghai, Wuxi Nce Power, Montage Technology
Risks include: worsening of the pandemic; adverse impact of the US-China trade war; and demand being less than expected.
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評級：強於大盤(維持)
半導體類股上週表現不錯，表現明顯優於主要股指。SWS半導體指數漲8.34%，創業板指數跌0.86%。滬綜指跌4.31%，深證成指跌3.70%，中小板指數跌3.77%，Wind A股跌3.56%。
每週行業觀點
製造、材料和設備部門是半導體行業中表現最好的部門之一，我們對工業代工部門的估值回升機會持樂觀態度。過去一週半導體板塊中，製造業上漲14.7%，材料上漲12.2%，設備上漲11.3%，封裝測試上漲6.0%，分立器件上漲5.8%，IC設計上漲4.9%，其他板塊上漲2.5%。
設備、材料不斷增長；我們預計晶圓代工廠的估值會有所回升
以PB計，中芯香港和華虹半導體的估值水平相對較低。自21年第二季度以來，中芯國際(A股和H股)和華虹的表現遜於芯片型ETF。截至2021年7月30日，中芯國際H股PB僅為1.80倍，是全球晶圓代工資產中PB最低的。華虹的市盈率較低，為3.22倍，而中芯A的市盈率為5.07倍。
價格和UTR上漲，產品結構和基本面改善提振了2011年第一季度製造業毛利率；我們預計2Q21將繼續增長
半導體制造能力供不應求，成了賣方市場。2011年第一季度，5G、HPC、PMIC、DDIC和汽車IC等相關產品需求強勁，加劇了全球代工領域的競爭。在A股中，華潤微電子、杭州思蘭微電子和中芯國際在21年第一季度上調了部分產品的價格，幅度不一。在充分利用產能的情況下，各公司優先考慮大批量、長距離、高端訂單，優化了產品結構，提高了毛利率Qoq。
中國大陸晶圓廠的未來發展趨勢
需求驅動因素包括萬物互聯和國內替代，而技術增長受益於先進工藝成品率的不斷提高。中國大陸晶圓產能的短期擴張受到美國出口管制等一系列外部因素的影響，但並未改變半導體市場的長期趨勢。供應鏈上游部分的硅片製造受益於5G催生的以AIOT為代表的新應用的廣泛流行。
隨着中美競爭集中在代工領域，中芯國際和華虹走上了擴張的軌道；我們預計未來五年將繼續增長
晶圓製造是該行業中資產最密集的領域。它帶動了上游半導體設備材料的發展，影響了下游設計公司的產品能力。在中美貿易衝突中，它備受關注。在不斷的全球數字化進程中，鑄造能力的重要性日益凸顯，成為一項戰略性資產。根據Gartner數據，2019年台積電佔全球代工產能的55.5%。中芯國際和華虹合計佔全球市場6.5%，因此大陸晶圓代工自給率仍然較低，暗示潛在增長潛力豐厚。
中國大陸鑄造供需缺口大，對鑄造資產和估值恢復持樂觀態度
短期內，當前的提價週期是由鑄造產能短缺導致的。我們期望代工企業抓住機會優化產品結構，提高ASP和毛利率。從長遠來看，增長率將優先於行業週期考慮。我們看好中芯國際等本土代工龍頭企業的發展。
建議
晶圓代工廠
中芯國際(中芯國際)(688981通道，購買)
半導體設備材料
諾拉科技集團(002371 CH，買入)，江蘇軛科技(002409 CH，買入)，中國先進微製造設備有限公司(688012 CH，買入)，武漢精策電子集團(300567 CH，買入)，北京華豐測控科技(688200 CH，買入)
半導體設計
Unigroup Guoxin Microelectronics (002049 CH, BUY), Gigadevice Semiconductor (Beijing) Inc (603986 CH, BUY), Amlogic (Shanghai) (688099 CH, BUY), Allwinner Technology (300458 CH, BUY), Rockchip Electronics (603893 CH, BUY), Sino Wealth Electronic (300327 CH, BUY), Maxscend Microelectronics Company (300782 CH, BUY)
SG Micro Corp (300661 CH, BUY), StarPower Semiconductor (603290 CH, BUY)
Other related companies (not rated)
Hua Hong Semiconductor, Shanghai Sinyang Semiconductor Materials, Hangzhou Changchuan Technology, Grinm Advanced Materials, Jiangyin Jianghua Micro-electronic Materials, Shanghai Fudan Microelectronics Group, Shanghai Fullhan Microelectronics, Will Semiconductor Shanghai, Wuxi Nce Power, Montage Technology
Risks include: worsening of the pandemic; adverse impact of the US-China trade war; and demand being less than expected.
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This message is intended only for the individual or entity to which it is addressed. It may contain legally privileged and/or confidential information. TF International Securities Group Limited and its affiliates and subsidiaries (「TF Group」) does not accept liability for the unauthorized use, disclosure, distribution and/or alteration of any information it contains or the consequences thereof. If you are not an intended recipient, please inform TF Group and destroy this message immediately. Thank you.
