Today's world is experiencing great changes that have not happened in a century, and one of the fundamental problems in the research of the semiconductor industry is:

Where will China Semiconductor go?

We put aside the fog and sort out the three major directions of Chinese semiconductors in the future:

1、From the simple pursuit of advanced technology-> Return to mature process("new 55nm" is much larger than "old 7nm")

2、By external circulation-> Inside and outsideDouble cycle(de-A, not localization)

3、Make up the deficiency board by the dry technology-> root technology (design and manufacturing are not root technology)

1. Return to furnace for reengineering of mature process.

Semiconductor Manufacturing International Corporation's entry into the entity list illustrates one truth: it is entirely based on7nm of American equipmentIts practical significance is far less than that based on55nm of domestic equipmentThe wafer foundry is not the bottom technology of semiconductors, but the integrator of equipment, materials and processes.

The main contradiction of Chinese semiconductors has shifted from the lack of advanced technology to the lack of domestic semiconductor equipment and materials.

Equipment is the starting point of chip manufacturing, there is no chip production capacity, chip design is rootless wood.The seven major equipment of the previous process as an example, DUV has been able to achieve 0.13um to 7nm process manufacturing, andLithography machineCompletely monopolized by Europe and the NetherlandsAt present, it is not stuck in China and is in normal supply.. So the key pointThe urgent task is to replace the etching machine, PVD, CVD, ion implanter, cleaning machine, oxidation annealing equipment and other fields controlled by American manufacturers.。

China lacks advanced 14/7/5nm technology, but China also lacks mature 90/65/55nm technology.From the perspective of the current industry, China can achieve a comprehensive domestic replacement of photovoltaic, LED and LCD panels, and mature process chips can be produced by domestic equipment, materials and processes. With the advantage of root technology, American manufacturers will continue to attack other countries and control the chip manufacturing of high-end processes and advanced processes, and this situation will not be reversed in the short term.

We expect that the process of domestic substitution at low latitudes will continue and China will dominate pan-semiconductor technology from the bottom up. Before great progress is made in the field of root technology, such as equipment and materials.First do a good job of mature process return to furnace recycling, and then gradually overcome advanced process barriers, spiral development.

Returning to the mature process reengineering based on domestic equipment is the most realistic task for Chinese semiconductors in the future.7nm of American equipmentIts practical significance is far less than that based on55nm wafer factory for domestic equipment.

2. From simple external circulation to double circulation of science and technology.

The global science and technology pattern will be reshuffled, showing a state of atavism against globalization. Even if it is as strong as the United States, it only participates in a small part of the semiconductor industry. China, Europe, Japan, the United States, South Korea and Taiwan each occupy an indispensable part of the industrial chain.

Semiconductor is a fully global division of labor industry, no country can achieve all the internal cycle alone, so the key to China's scientific and technological pattern in the future is to achieve the security and control of the supply chain.

Therefore, the semiconductor industry does not have the so-called full-link localization, but only in some key areas to achieve de-beautification, the basis of de-An is the combination of European and Japanese equipment and materials, as well as South Korea, Taiwan Province of China's manufacturing.

On the other hand, the United States is based on high-end manufacturing and makes up for its shortcomings downward. The third quadrant refers to Japan (materials), South Korea (storage), Europe (equipment) and Taiwan Province of China (OEM). Relying on its leading edge in the subdivision industry, it independently circulates outside China and the United States.The intermediate medium for the external circulation of the global hard technology market.

According to the resource endowment of self-development and the distribution of elements, the global hard science and technology is divided into three quadrants:

First quadrant: led by the United States

Second quadrant: led by Chinese mainland

Third quadrantDominated by South Korea, Japan, Taiwan Province of China and Europe (intermediate medium)

Based on the objective laws of the global industry, we believe that the external circulation of science and technology between China and the United States will continue in the following links:

1, equipment:As the last trump card of US science and technology leadership, Applied Materials Inc, Lam and KLA of the United States will all rely on the huge Chinese market to support their huge turnover and research and development.

2, chip:As the United States is no longer involved in terminal manufacturing, its Qualcomm Inc and Intel chips will rely on China's XIAOMI, OV and Lenovo to achieve global distribution and ecological growth of their chips.

3, software：Mainly Google/ Microsoft Corp's OS, plus Cadence and CAD industrial software, all rely on the huge Chinese market and China's whole industry chain to supplement its ecology and R & D expenditure. Under the pressure of external environment, China's local Fabless and Fab are facing the crisis of upstream supply chain, but the path of China's independent development will not be changed because of external pressure. With the introduction of the internal circulation policyIn the future, China will take mature Fab as its foundation and carry out external circulation with the third quadrant.。

Therefore, in the future, China will maintain the lowest internal circulation in mature processes to carry out independent innovation of underlying root technologies (equipment, materials, EDA/IP), and review the development of pan-semiconductors in China. In the next few years, we think that the greatest opportunity for Chinese semiconductors is to achieve full-link domestic substitution in mature processes.

3. Go to the root technology to make up for the deficiency

The long board is the spear, which determines how far to go and is the basis of the highest external circulation; the short board is the shield, which determines the basis of the lowest internal circulation of the bottom line. In the field of semiconductor science and technology, after more than 10 years of counter-cyclical investment, China has three major industrial growth boards + one major deficiency board: long board:Chip design (Fabless)、Semiconductor energy (photovoltaic), semiconductor lighting (LED) + third generation semiconductors, semiconductor display (LCD); short board: integrated circuit (equipment, materials, EDA/IP, manufacturing).

We divide technology into four levels:

1. Root technology: semiconductor equipment, materials, OS

2. Dry technology: wafer foundry, IDM, EDA\ IP

3. Branch technology: chip design, AI, 5G, cloud computing

4. Leaf technology: Internet platform, mobile terminal, website and APP

Root technologyAll the core areas are controlled by the United States, which has the lowest-level core technology controlled by giants such as Microsoft Corp, Applied Materials Inc, KLAC and Cadence, thus giving the global giants, Japan and Europe a leading edge in the field of materials and equipment.

Dry technologyControlled by Samsung, Hynix, LG of South Korea and Taiwan Semiconductor Manufacturing Co Ltd of Taiwan Province of China, they have built the world's largest storage IDM and the most advanced foundry Fab based on technology from the United States, Japan and Europe.

Branch technologyBased on the large-scale integration of 5G and the design of chips, Huawei Hayes is globally competitive in the field of chip design, while China leads the world in 5G integrated innovation.

Leaf technologyChinese Internet platforms (Tencent, BABA, Meituan, Toutiao) lead the world in the fields of e-commerce, entertainment, taxi hailing and takeout. In addition, they are also global leaders in the field of terminal manufacturing (Huawei, XIAOMI, OPPO, Lenovo).

在Among the four pan-semiconductor fields, China has achieved the first place in the world in the fields of photovoltaic, LED and LCD.Leading position in the worldSupported the security of its supply chain.. Based on the great success in the pan-semiconductor field, the focus of Chinese semiconductors will shift to short boards (integrated circuits) in the future.

The two trump cards of the United States are equipment and software, and China will replace them in the low dimension.Therefore, China will maintain the lowest internal circulation in the future.Mature process for independent innovation of underlying root technology (equipment, materials, EDA/IP)Reviewing the development of pan-semiconductors in China, in the next few years, we think that the greatest opportunity for Chinese semiconductors is to realize the domestic substitution of full-link in the mature process.

Suggest to pay attention to

1. Based on semiconductor active inventory replenishmentPrice increase cycle链；

2. Based onDomestic substitutionSemiconductor Manufacturing International Corporation upstream supply chain based on web

3. Based onInnovation cycleDesign of digital and analog chip based on DSP

Specifically:

Upstream equipment:North Huachuang, Yitang Semiconductor, Shengmei Semiconductor, China Micro Corporation, Wanye Enterprise, Precision testing Electronics, Huafeng Measurement and Control, Changchuan Technology, Core Source Micro, Zhi Chun Technology, Shanghai Micro Group, Huahai Qingke, Huazhuo Jingke

Upstream material:Central shares, Lionwei, Shanghai Silicon Industry, Shengong Co., Jiangfeng Electronics, Shanshan Co., Anji Technology, Jacques Technology, Dinglong Co., Shanghai Xinyang, Jinhong Gas, Nanda Optoelectronics.

EDA/IP：Core original shares, Huada nine days, core and semiconductors, core Huazhang

Mature process manufacturing:Hua Runwei, Wentai Technology, Hua Hong Semiconductor, Shilan Wei, Jie Jie Micro Power, Yang Jie Technology

Pan-semiconductor field:TCL Technology, BOE A, San'an Optoelectronics

Risk hint

The risk that terminal demand is lower than expected; the risk that the relaxation of Sino-US relations brings domestic substitution is less than expected; and the risk that product research and development is not as expected.