In 2024, the semiconductor industry is ushering in a new beginning.
According to data from the Semiconductor Industry Association (SIA), global semiconductor industry sales reached 49.1 billion US dollars in May, a month-on-month increase of 4.1% and a year-on-year increase of 19.3%.
John Neuffer, President and CEO of SIA, said: "In 2024, the global semiconductor market has achieved year-on-year growth every month, and the year-on-year growth rate in May has set the largest increase since April 2022."
Recently, as the mid-year report window opens, A-share semiconductor companies have also disclosed their mid-year performance forecasts one after another, further confirming the industry is gradually emerging from the trough and moving towards a positive trend of recovery.
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Mid-year report performance "good news"
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In the first quarter of this year, the performance of many A-share semiconductor-related listed companies collectively ushered in a recovery, especially for memory chip companies. Regarding the reasons for the expected increase in half-year performance, many chip companies mentioned key factors such as "recovery of downstream demand" and "restorative growth in the industry," which also indirectly confirms that the semiconductor industry is continuing to warm up.
In the blink of an eye, half of the year has passed, and the relevant enterprises in the A-share semiconductor sector once again presented a satisfactory mid-year report to the market with a series of eye-catching scores, injecting a strong stimulant into the overall market situation for this year.In the statistics of the 24 semiconductor companies listed above, the red font indicates that the performance revenue and net profit year-on-year have increased, while the green font indicates a decrease. It can be seen that only SiChuang Electronics has a year-on-year decline in net profit among the companies in the table, while the other 23 companies have all delivered satisfactory results, and some companies even have a year-on-year increase in net profit exceeding 500%.
Looking at the scale of net profit attributable to the parent company, among the 24 companies, a total of 5 companies have a net profit attributable to the parent company exceeding 500 million yuan, accounting for 20.8%; companies with a net profit between 100 million and 500 million yuan (inclusive) have 14, accounting for 58.3%; companies with a net profit between 0 and 100 million yuan have 2, accounting for 8.3%; companies with a net loss have 2, accounting for 8.3%, and there is 1 company, YongSi Electronics, that has not disclosed relevant data.
The companies with a net profit attributable to the parent company exceeding 500 million yuan are ZhaoYi Innovation, HaiGuang Information, WeiEr Shares, LanQi Technology, and North HuaChuang.
The companies with a net profit between 100 million and 500 million yuan (inclusive) are Shanghai BeiLing, LeXin Technology, BaiWei Storage, HuiDing Technology, QuanZhi Technology, RuiXin Micro, JiangFeng Electronics, TianYue Advanced, JingHe Integration, ChangChuan Technology, HuaHai QingKe, TongFu Micro-electronics, HuaTian Technology, and JieJie Micro-electronics.
The companies with a net profit between 0 and 100 million yuan are XinYiChang and HuaWei Electronics.
The companies with a net loss are SiChuang Electronics and ShiLan Micro.
Looking at the growth rate of net profit, among the 24 companies, there are 6 companies with a net profit attributable to the parent company increasing by more than 500%, accounting for 25%; there are 3 companies with a net profit attributable to the parent company increasing between 200% and 500% (inclusive), accounting for 12.5%; there are 2 companies with a net profit attributable to the parent company increasing between 100% and 200% (inclusive), accounting for 8.3%; there are 6 companies with a net profit attributable to the parent company increasing between 0% and 100% (inclusive), accounting for 25%;
There is only one company with a negative growth rate of net profit attributable to the parent company, which is SiChuang Electronics. The remaining 6 companies have not disclosed relevant data, but among them, Shanghai BeiLing, HuiDing Technology, TianYue Advanced, and JingHe Integration have all turned losses into profits, and ShiLan Micro has reduced the loss.
The companies with a net profit attributable to the parent company increasing between 0% and 100% (inclusive) are ZhaoYi Innovation, HaiGuang Information, JiangFeng Electronics, North HuaChuang, HuaHai QingKe, and XinYiChang.Companies with a net profit attributable to the parent company increasing by 100%-200% (inclusive) include Espressif Systems and JieJie Microelectronics.
Companies with a net profit attributable to the parent company increasing by 200%-500% (inclusive) include Biwin Storage, Tongfu Microelectronics, and Huatian Technology.
Companies with a net profit attributable to the parent company exceeding an increase of 500% include Weier Shares, Lianqi Technology, Quanzhi Technology, Rockchip, Changchuan Technology, and Huawei Electronics. It is worth noting that Changchuan Technology's net profit for the first half of 2024 is expected to increase by more than 10 times compared to the same period last year, reaching 876.62% to 1023.12%.
Regarding the reasons for the performance growth, many companies mentioned the continuous recovery of market demand and a significant increase in downstream customer demand.
Rockchip stated that market demand is gradually recovering, and AIoT (AI of Things) is experiencing growth.
Goodix Technology said that, benefiting from the growth in terminal customer demand, the company's shipments and operating income have achieved year-on-year growth. Coupled with the company's product iteration and the reduction in wafer costs, product costs have been optimized, and the gross profit margin level has gradually recovered.
ZTE Innovation indicated that after experiencing a sluggish market demand in 2023 and the gradual reduction of inventory, in the first half of 2024, the consumer and network communication markets have seen a demand rebound, driving an increase in the company's storage chip product sales and revenue.
Lianqi Technology stated that since the beginning of this year, the demand for memory interface chips has achieved a recovery growth, and the company's market share in the field of DDR5 memory interface chips has further expanded. In addition, the emergence of new products has also brought new growth points for performance.
Weier Shares said that in the first half of 2024, the company's product introduction in the high-end smartphone market and the continuous penetration of autonomous driving applications in the automotive market, at the same time, the company also optimized the product structure and supply chain structure, effectively improving the product's gross profit margin.
Earlier, companies such as Biwin Storage and the fast-charging chip leader Nanxin Technology also had good mid-year performance expectations. Biwin Storage is expected to achieve a year-on-year increase in operating income of 169.97% to 222.22% in the first half of 2024; net profit increased by 194.44% to 211.31%. The company mentioned that the change in performance this period is mainly due to the industry recovery.It is worth noting that although the net profit growth of many semiconductor companies has surged, it is partly due to the lower base in the same period of the previous year. For instance, in the first half of 2023, Demingli suffered a loss of 79.13 million yuan, Baiwei Storage lost 296 million yuan, and Huiding Technology lost 136 million yuan. These companies managed to turn losses into profits in the first half of 2024. However, companies such as Montage Technology, Rockchip, and Weier Shares, which did not suffer losses in the first half of 2023, also fell into a low performance period. So, has the semiconductor market really rebounded strongly? Next, the semiconductor industry will lead everyone to explore the performance of different tracks.
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Several highlights of the semiconductor industry recovery
Recovery of consumer electronics and strong demand for servers
In recent years, the semiconductor industry has achieved a transformation from a slump to a recovery. With the global economic recovery and the recovery of the consumer electronics market, the strong growth in server demand has brought new development opportunities for the semiconductor industry.
In the field of consumer electronics, the net profit of Weier Shares has increased significantly, and the innovation of Montage Technology has also promoted performance growth. At the same time, the performance of chip companies such as Huiding Technology, Shanghai Beijng, LeXin Technology, and Quanzhi Technology has also been improved.
In the server market, the development of cloud computing, big data, and artificial intelligence has led to an increase in the demand for data center construction, and the demand for servers has risen, driving the growth of product demand for semiconductor companies such as Haiguang Information, Zillion Innovation, and Baiwei Storage.
Recovery of wafer foundry demand
The wafer foundry industry, which has been silent for a long time, seems to be recovering rapidly.Recent market news indicates that TSMC is brewing a price increase for its advanced process technologies. After several quarters of low utilization rates, the capacity utilization rates of mainstream players seem to be on the rise.
In the performance communication period of the first quarter of this year, top wafer foundries including TSMC, SMIC, and Huahong all mentioned that the demand for some processes or size specifications is very strong.
However, it should be pointed out that the current price increase is more structurally significant, and it is based on the background of low capacity utilization rates over several previous quarters. Many manufacturers (especially those focusing on mature processes) have experienced multiple rounds of price reduction competition. The industry generally believes that the lowest foundry prices have been basically reached in the fourth quarter of 2023, and the foundry prices have now stabilized.
QuanZhi Consulting predicts that in the second half of 2024, the capacity utilization rate of Chinese mainland wafer foundries will show a relatively robust recovery trend. The order growth of 12-inch 55-nanometer to 90-nanometer processes is more obvious, but the possibility of a comprehensive price increase in wafer foundry is relatively low, and the market feedback in the third quarter still needs to be observed.
The wave of multi-category product price increases has started.
From the first quarter to the second quarter of this year, the price increase of storage chips began to spread to peripheral links, gradually forming the third wave that promotes the reversal of China's chip industry. Storage modules, NOR Flash, EEPROM, MCU, power chips (IGBT, MOSFET), etc., have all gradually shown a trend of price increases.
First, let's look at the storage field. On the one hand, the storage industry is facing a cyclical turning point. In the past few years, the memory market was sluggish, so some large storage manufacturers such as Samsung, SK Hynix, and Micron have adopted strategies to reduce production and maintain prices, stabilizing the price of DRAM particles by reducing supply. With the completion of inventory reduction and the gradual increase in demand from downstream industries such as consumer electronics, communications, and automobiles, product prices have re-entered the rising cycle.
On the other hand, DDR is an improvement based on the original SDRAM. SDRAM can only transmit data once in a clock cycle, while DDR can transmit twice, so it has a larger transmission bandwidth. With the development of technology, DDR has gone through multiple rounds of technical iterations, evolving into DDR2, DDR3, DDR4, and DDR5. With the development of generative artificial intelligence technology, the demand for high-bandwidth memory and DDR5 has surged.
Benefiting from the new demand from AI servers, the original factory is actively promoting the rapid ramp-up of DDR5 production capacity, expanding the supply of 32Gb DDR5 high-capacity particles. Combined with the production capacity of new processor platforms supporting DDR5, under the trend of overall technical iteration and product upgrade on the server side, the penetration rate of DDR5 servers in the second half of the year is expected to exceed 50%. Companies such as Montage Technology, which are involved in the memory interface chip business, are expected to benefit deeply from the volume of DDR5 memory interface chips and supporting chips.
With the support of two major factors, domestic storage manufacturers have stepped on the fast track this year.Let's take a look at power semiconductors. Power semiconductors are divided into three major categories: low power, medium power, and high power. Low power mainly includes small signal diodes and rectifier bridges, medium power encompasses a full range of MOSFETs, and high power includes IGBT single tubes, IPMs, and IGBT modules. The primary application markets for low power power devices are consumer, industrial, and automotive, medium power is mainly used in industrial, automotive, and consumer applications, while high power is primarily used in new energy, industrial, and consumer sectors.
Industry insiders have indicated that the prices of low power power devices hit bottom in Q3 of 2023 and began to rise, mainly due to a surge in demand in the consumer sector (especially the mobile phone industry), leading to a supply shortage. Last year, low power power devices experienced a general price increase, with some components uniformly increasing by about 10%.
The prices of medium power power devices were at a historical low last year, and although there was a tentative price increase, the market orders were insufficient. Some manufacturers have slightly increased prices for certain devices and customers, with an increase of 5-8%.
The prices of high power power devices are still at a medium to high level, and there is still an expectation of price increases in some periods this year. Recently, there have been rumors that the prices of high power power devices will rise again, but it has not been confirmed.
It is reported that starting from January 2024, various power semiconductor companies have successively adjusted their prices: Sanlian Sheng's entire product line increased by 10-20%, Blue Color Electronics' entire product line increased by 10-18%, Gaoge Core Micro's full line of products increased by 10-20%, and Jiejie Microelectronics increased by 5-10%, etc. In May and June, for some medium and low voltage products, power giants such as CR Micro and Yangjie successively had price increases/negotiations. The price increase of power semiconductors reflects the gradual recovery of downstream demand, and the power semiconductor market is improving at the margin.
Finally, let's look at MCUs. As 2024 enters the second half, the MCU chip market is shifting from a destocking cycle to a demand cycle. It is reported that Taiwan's MCU factory, Ying Guang, notified its agents at the beginning of this year to increase the price of OTP MCUs (blank MCUs that cannot be reprogrammed) from now on. The spot price of mainland Zhaoyi Innovation's 32-bit MCU also showed a slight rebound. The company stated that the biggest challenge for the company's MCU business in 2023 was the destocking of industrial customers, which had a significant impact on overall revenue. In 2024, the inventory of industrial customers will basically be destocked in succession and start to take normal orders.
For this price increase, industry insiders believe that due to the accumulation of inventory, many MCU factories almost sold at a loss to clear the inventory actively. The price of general-purpose MCUs has already reached a new low point, and in the first quarter of this year, the price quotes for some products began to rise, and some products also appeared in the urgent order super parts (HOT RUN) situation, and the market is expected to gradually return to normal. In general, the market has begun to appear that some manufacturers decide their pricing strategy according to their inventory situation and customer demand, and although the price increase is not universal, it is still a positive trend.
Some industry insiders predict that after the second quarter of next year, as inventory returns to a reasonable level and the order base is not high, the price of MCUs may rebound significantly.
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How will the market be in the second half of 2024?With the high growth performance of semiconductor companies, many institutions are optimistic about the future market prospects of the semiconductor industry.
Minmetals Securities pointed out that currently, the global and Chinese semiconductor cycles are at a turning point from passive destocking to active restocking. Lianfeng Securities believes that the AI wave is still the main driving force for the recovery of the semiconductor industry. The weak recovery on the product side is reflected in the improvement of the manufacturing side, and the utilization rate of manufacturing and packaging and testing continues to remain high, with a logic of both quantity and price increase.
Ping An Securities stated that currently, there are signs of improvement in semiconductor manufacturing, domestic substitution is in full swing, semiconductor equipment companies have ample orders, and the upward trend of the industry's prosperity is maintained. In addition, major manufacturers continue to invest in AI terminals, and chips with AI capabilities are continuously introduced, which is expected to drive a new round of replacement demand.
In addition, according to the Gangtise research data, the global semiconductor equipment sales in 2023 fell slightly by 1%, and it is expected to recover and grow to more than $100 billion in 2024, with an expected growth of over 18% in 2025. Therefore, 2025 will be a major growth turning point for global semiconductor equipment. Starting from the third quarter of 2023, the storage sector has seen a continuous price increase for four consecutive quarters, attributed to the price increase driven by supply-side control, and currently, the utilization rate of various manufacturers' production capacity has basically reached 80-90%. It is expected that the storage sector will be in a state of supply-demand balance in the second half of 2024, with potential structural shortages; by 2025, AI will drive a significant increase in storage demand, and the demand side will pull the storage to continue to rise in price.
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