Under the attack of the United States on both sides, the revenue soared and the profit doubled, SMIC how to do?| think things inside


Smic is one of the world’s leading IC foundry companies and a leader in IC manufacturing in Mainland China with advanced manufacturing capabilities.In December 2020, SMIC was added to the ENTITY list by the United States, which on the one hand prohibited SMIC from acquiring chip manufacturing equipment and on the other hand prohibited American capital from investing in SMIC.However, in this context, SMIC’s 2021 revenue “bucked the trend” and grew by $5.4 billion, up 39% from the same period last year, making 2021 the fastest growth among global peers.For this issue’s smart reference, we recommend THE report “SMIC: Mature processes regain historical growth opportunities” by Futu, which discusses the secrets of SMIC’s rising trend.As the foundation and core of the global information industry, integrated circuit is known as “the food of modern industry”, and its application fields are wide.In the history of semiconductor development, the driving forces behind the development are different in different historical periods.At present, with the saturation of permeability, the role of smart phones as the first application terminal of chips in promoting the industry is declining, while 5G, HPC, AIOT, new energy vehicles and other new industries are becoming new driving forces for industrial development.Historically, semiconductor is an industry with both growth and cycles, and growth is the main theme.Since 1975, the output value of semiconductors has increased from $5 billion to nearly $500 billion, an increase of nearly 100 times.From the perspective of the cycle, 2019 was the trough of the last round of semiconductor industry cycle. This round of business cycle started in the second half of 2020 and is now in a new round of upward cycle.IC Insights data show that the global foundry industry revenue in 2021 is $110.1 billion, up 26% year-on-year.Over the past half century, Moore’s Law has been leading the world semiconductor industry to achieve the goal of lower cost, stronger performance and higher economic benefits.However, as semiconductor technology approaches the size limit of silicon process, the original Moore’s law that “the integration degree of IC will double every 18 months, and the performance will also double” will be challenged.Therefore, ITRS organization (international semiconductor technology roadmap)) for the semiconductor industry long-term development challenge, on the technical route to develop, put forward two development way choice: 1, the digital logic chips, such as CPU, GPU, along the Moore’s law scaled direction, continue to use the advanced lithography technology, the pursuit of advanced process, in order to achieve the best performance.2, analog/RF, high voltage power supply, MEMS sensor, biochip technology and system-level packaging (SiP) and other non-digital logic chips, using 3D packaging technology, to achieve the best cost-effective.And, with the development of advanced packaging technology, so that part of the original industrial chain downstream profits began to swim chip manufacturing.Since 3Q20, serious chip shortage has occurred in the global semiconductor industry, such as automobile, mobile phone, security and other industries.The sudden “chip shortage” made the United States, Japan, the European Union and other countries began to guide the chip production through legislation, to a large number of subsidies.At the same time, the IC enterprises through long-term cooperative orders locked capacity, and there is a supply chain transfer to local production preference.Strong demand overlapping policy good, around the world to open new fabs construction boom.According to SEMI, 19 new high-volume fabs are expected to break ground globally in 2021 and 10 in 2022.By region, the Chinese mainland and Taiwan each had eight in 2021-2022, followed by the Americas with six, Europe/Middle East with three, and Japan and South Korea with two each.IC Insights data show that in 2021, global conductor capex increased by 36% to a total of us $153.9 billion, among which CAPex increased by more than 40% year-on-year, accounting for one third of the largest proportion.IC Insights forecasts that global capEX will continue to grow by 24% to $190 billion in 2022.In addition, China’s semiconductor industry has fully benefited from the technology innovation board registration system, and design companies have grown rapidly.According to China semiconductor industry data (citing Wind data), China’s IC industry continues to grow at a high rate.IC industry value in Mainland China, 100 million YUAN ii. Contract manufacturing leader, growth rate in 2021Is the world’s leading integrated circuit wafer foundry enterprise, one of China’s mainland IC manufacturing industry leader, has a leading technology manufacturing capability, capacity, service facilities, to provide global customers 0.35 microns to 14 different nanometer technology nodes of wafer foundry and technical services, including logic chip, mixed signal/rf transceiver chip, high voltage driver chip,System chip, flash chip, EEPROM chip, image sensor chip, power management chip, etc.Global operations: Shanghai, Beijing, Tianjin, Shenzhen, Hong Kong, Taiwan, Japan, USA and Europe.Production facilities: Three 8-inch fabs and three 12-inch fabs in Shanghai, Beijing, Tianjin and Shenzhen;There are 12 – inch fabs under construction in Shanghai, Beijing and Shenzhen.Smic has a global manufacturing and service base.It has a 300mm and a 200mm fabs and a holding 300mm advanced process fabs in Shanghai.It has a 300mm wafer fab and a holding 300mm advanced process wafer fab in Beijing.Two 200mm fabs in Tianjin and Shenzhen;There is a holding 300mm convex block processing joint venture in jiangyin.Smic’s wholly-owned production bases are located in Beijing, Shanghai, Tianjin and Shenzhen, including 8-inch and 12-inch production lines, two 12-inch factories in Beijing and one 8-inch factory in Tianjin and Shenzhen.Smic’s technology and processes cover 14nm advanced logic process, 28nm~0.35μm mature logic process, including analog chips, power management, mixed signal/frequency, automotive electronics, NVM, IGBT, DDIC and other special processes.Smic’s main businesses fall into two categories, namely integrated circuit wafer foundry and supporting services.From the revenue data released by SMIC in recent years, it can be seen that IC foundry is its main business, accounting for more than 90% of the average revenue.Since its establishment, SMIC has been engaged in the integrated circuit manufacturing business in the mode of wafer foundry. Relying on independent research and development, the company has gradually broken through a number of technical nodes, and now has the capacity of mass production of 0.35μm-14nm.The development of the company mainly experienced the following stages: foundation period: 2000 ~2004: in 2000, the company started construction in Pudong, Shanghai, and was the first IC foundry enterprise in Mainland China to provide 0.18 micron technology node.In 2001, the company completed the construction of Shanghai 8-inch production base;In 2002, the company achieved 0.18 micron comprehensive technical certification and mass production.In the same year, the company held a groundbreaking ceremony for its 12-inch production base in Beijing.In 2003, the company successively achieved the comprehensive technical certification and mass production of 0.35 micrometer ~0.13 micron, marking the completion of the initial accumulation of IC foundry technology.Accumulation Period: 2004 ~2015: Since 2004, the Company’s Beijing 12-inch production base has been gradually put into production, marking that the company has become an enterprise with both 8-inch and 12-inch IC foundry business.The company successfully achieved the upgrade and mass production of 90nm, 65/55nm and 45/40nm in 2006, 2009 and 2011 respectively.High-speed development period: from 2015 to present: In 2015, the company became the first enterprise in Mainland China to achieve the mass production of 28 nanometers.In 2019, the company made significant progress, realizing the mass production of 14-nanometer FinFET, and the second-generation FinFET technology entered the customer import stage.The WAFER foundry industry is a technology, capital and talent intensive industry with high market concentration and stable oligopoly.At present, the world’s leading wafer foundry enterprises include TSMC, Samsung FOUNDRY, UMC, Glofonde, SMIC, etc.According to the latest data released by TrendForce in March 2022, the top five fabs accounted for nearly 90% of the global market by the fourth quarter of 2021.TSMC accounted for 52.1% of the global foundry market, accounting for half of the global foundry market.Samsung’s market share of contract manufacturing is about 18.3 percent, with an obvious upward trend in recent years.Umc and Grofonde accounted for 7.0% and 6.1% of the market respectively.Smic’s global wafer foundry market share is about 5.2%, ranking fifth globally and first in mainland China.The next five are Huahong Semiconductor, LJIC, Advanced World, High Tower Semiconductor and Crystal Convergence. The combined market share of the top 10 oems accounts for 97.6 percent of the global market.Global WAFER foundry Market Pattern (by 2021Q4) Market share of the world’s top ten WAFER foundry enterprises (by 2021Q4) According to the advanced process R&D of the world’s major semiconductor companies released by IC Insights, at present, only Samsung Electronics and TSMC can provide the 7nm and below mass production process.Samsung and TSMC have upgraded to 5nm process from 28nm in recent years, and 3nm is expected to be mass-produced in 2022.Intel completed development of the 7nm process in 2021 and expects mass production by 2023.Grofonde and UMC have announced that they will abandon advanced processes below 7nm and withdraw from the track of advanced processes.Smic, which ranks fifth in terms of market share in the FOUNDRY industry, has already achieved mass production of the 14nm process and has developed the 12nm process and expects to achieve mass production in the near future.Smic is the only enterprise in Mainland China to achieve the mass production of 14nm FinEFT. Although the research and development of advanced manufacturing process has slowed down due to the sanctions imposed by the United States, smIC still represents the most advanced level of independent integrated circuit research and development in Mainland China in terms of comprehensive capital volume, advanced technology and talents in the long run.Smic’s capacity is still far behind that of TSMC and UMC, but far ahead of Huahong Semiconductor, the second largest foundry in Mainland China. In 2021, SMIC’s wafer output will be about twice that of Huahong semiconductor, making smIC a leader in wafer capacity in Mainland China.According to the company’s financial statements, in the case of full utilization of wafer capacity, TSMC will rank first in 2021 with 31.9 million wafer capacity, UMC 9.86 million wafer capacity, SMIC 6.76 million wafer capacity and Huahong 3.33 million wafer capacity.Smic’s 2021 expansion exceeds expectations. The company originally expected that the growth of 12 inches in 2021 will be 10,000 / month, and the growth of 8 inches will be 45,000 / month. The actual growth of 12 inches and 8 inches will both exceed expectations, totaling 100,000 / month 8-inch equivalent.Total production is expected to grow 130-150,000 wafers/month 8-inch equivalent in 2022, with capacity growth exceeding last year.By the end of 2021, SMIC’s monthly capacity is 620,000 pieces (equivalent to 8 inches), an increase of 100,000 pieces compared with 2020.In 2022, SMIC is expected to invest $5 billion in Beijing, Shanghai and Shenzhen to expand the 12 inch mature process at the same time, and it is expected to reach production in 2024, when the SMIC capacity will be more than doubled than now.Smic’s 12-inch mature process is mainly oriented to 90nm-22nm. At present, the main production capacity is 40nm and 55nm. Specialty memory, MCU, WiFi5, WiFi6, high-voltage drive IC, TDDI and other 40nm products are most out of stock.55nm high voltage products, medium screen display driver IC, Speatialty Memory, CMOS are out of stock.Smic said in its 21Q4 earnings report that 40nm is now very competitive and there is a structural gap, as there is not much 40nm construction globally in the first 10 years.Smic’s new 12-inch fabs profile 2, mature process continue to overweight, over the next three annual production capacity is expected to grow more than 1 times in juyuan smic is founded in 2014, chip equity investment institutions, the company focus on the integrated circuit industry related fields, of the material in the industrial chain, design, equipment, IP and service quality enterprises to invest,And provide comprehensive value-added services for the invested enterprises.On the one hand, with the opening of the A-share science and Technology Innovation Board, SMIC chip equity investment can be better “realized”; on the other hand, SMIC can achieve better integration of the upstream and downstream of the industrial chain through equity investment.In 2021, SMIC won the “Best Investment Institution award” awarded by China Semiconductor Investment Alliance.2021 more than 70 years the core source of new investment projects, investment amount and investment total record highs, juyuan has already had more than ten home core enterprise in 2021 completed a will or listed, including the east core semiconductor, wei jie chong core, HuaHaiQing, “wei and jing technology, core micro, micro east segment domains such as semiconductor, good at electronic head enterprise.Tianyan data show that SMIC Has successfully invested in over 190 companies in the semiconductor field. The following are some of them:Core source of part of the investment projects in 28 nm chip production line 3, domestic breakthrough is expected to promote smic valuations back influenced by American sanctions, investors worried about 14 nm smic not only cannot be advanced capacity under construction, even more than 28 nm mature process equipment also is cut off, leading to smic’s valuation is far lower than the umc, huahong, etc.With the localization of all 28nm chip production equipment in the future, smIC is expected to become a catalyst for mean regression of international valuation.Domestic semiconductor coverage situation of the zhi Thing that in the past two years, the US government for Chinese high-tech enterprises issued a “entity list”, “temporary export restrictions” and a series of suppression policies, once let the outside world smIC development prospects full of concerns.In the face of the crisis, SMIC chose to rise to the challenge and focus on the mature process, which not only lifted the survival crisis, but also opened a new situation of the company’s development.From the beginning of 2018, UMC and Grofonde have announced their withdrawal from the exploration of higher process, and TSMC, Intel and Samsung are the only players below 10nm process.As a result, SMIC is the only company in the second tier still playing catch-up with advanced processes.It also leaves hope for the future of China’s semiconductor industry.

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