"Lack of core" is a hot word throughout 2021, especially in the automotive field.
According to the latest data from automotive industry data forecasting company AFS (AutoForecast Solutions), as of February 13, the cumulative production reduction in the global automotive market this year was about 527,400 units due to chip shortages, a significant increase of 42% from the cumulative production reduction (370,500 units) as of February 6.
The consumer electronics industry can not escape the impact of lack of cores, Huawei, true self, glory, millet mobile phones of a number of hot models are in a state of shortage. On January 23, changying precision (300115. SZ) announced its 2021 results forecast, and the net profit is expected to lose more than 650 million yuan. The company said that some production and manufacturing bases have been affected by the epidemic and the shortage of customer chips, and the decline in capacity utilization and the rise in production costs are one of the reasons.
Will there still be a shortage of cores in 2022? When will the lack of cores be alleviated? What opportunities can emerge?
2021 "missing core" begins and ends
The factors that cause the "lack of core" in 2021 are manifold.
At the press conference of the State Council's new office on January 20, Luo Junjie, spokesman of the Ministry of Industry and Information Technology and director of the Operation Monitoring and Coordination Bureau, said that there are two main reasons for the shortage of chips: first, with the continuous improvement of the degree of social intelligence, the demand for chips as the most critical component of smart devices continues to grow; second, the global epidemic spreads, and individual countries unreasonably sanction and suppress enterprises in other countries, which has caused a serious impact on the global semiconductor supply chain. In addition, there are a variety of factors superimposed, objectively causing the emergence of the "lack of core" problem.
Why is the "lack of core" in the automotive sector the most serious?
"The lack of cores is first manifested in the large-scale discontinuation of automotive electronics, mainly due to the lack of related EPS and ETC chips." Zhou Weifang, vice president and secretary of the board of directors of Wanye Enterprise, previously told First Finance that Huawei purchased 180 billion yuan of chips in 2020, grabbing the production capacity share of major chip factories, and the foundry also gave production capacity mainly to these head companies, resulting in small and medium-sized chip design factories not being able to get production capacity. The volume of automotive electronics manufacturers in traditional chip factories accounts for only about 5%, so in the absence of cores, the production capacity of automotive electronics is first affected.
According to Zhou Weifang's description, unlike mobile phone chip design companies that lack production capacity and communicate directly to the fab, automotive electronics does not directly place orders to the fab, and its procurement mechanism is transmitted layer by layer: first the automobile factory discharges production capacity, orders are placed to the integrated factory, the integrated factory then places an order to the module factory, the module is then to the chip, and the industrial chain is longer. "Therefore, the perception of terminals by mobile phone manufacturers will be about two months earlier than that of automotive electronics."
Xu Chao, vice president of automotive semiconductor company Xinchi Technology, said in an exclusive interview with First Finance that on the one hand, the global new crown epidemic has caused the main engine factory to lower its production capacity expectations in the second half of 2020, and the production capacity allocated to the automobile industry in the chip industry has been greatly reduced, and various crisis events and natural disasters have caused the overall production capacity of semiconductor manufacturing and packaging and testing to decline.
For example, Malaysia has had a secondary epidemic after the global epidemic eased, which has caused a great impact on the car specification chip. Taiwan in 2021 is the year with the least precipitation in 30 years, in addition to the Texas blizzard in the United States, typhoons in Southeast Asia, earthquakes, etc., these things add up together, which has a direct impact on the supply of production capacity.
Xu Chao said that on the other hand, the recovery of China's auto market is faster than expected, the demand for chips has increased sharply, and the procurement cycle of chips generally takes more than half a year, and there is a time gap between the climbing of automobile production capacity and the inability to quickly achieve supply balance.
"So we can see that if there is a lack of communication between the automotive industry and the semiconductor industry, the lack of core will exist in stages, but the epidemic has further magnified this matter." Xu Chao said that in addition, there are human factors, and many agents and dealers viciously hoard and speculate.
Chip demand in 2022 is optimistic
Overall, the market is optimistic about chip demand in 2022.
TSMC, the global foundry leader, said at a performance exchange meeting on January 13 that the industry trend of 5G and HPC (high-performance computer group) related applications has supported the long-term structural growth of semiconductor demand.
Wei Zhizheng, CEO of TSMC, said that for the whole of 2022, the entire semiconductor market (excluding memory) is expected to grow by about 9%, the growth of the foundry industry will be close to 20%, and TSMC's foundry revenue is expected to achieve more than 20% growth (in US dollars).
IC Insight recently updated the global semiconductor market demand growth rate for the whole year of 2022, which is about 11%, compared with 25% growth in 2021. "2017 is a big year for semiconductors, the whole semiconductor (supply) is very tight, that year the global demand growth was about 13%, 2022 is close to the 13% high growth in 2017." A chief analyst in the electronics industry said.
The analyst believes that semiconductor demand is looking at the incremental market, mainly the three blocks of automobiles, IoT and mining machines.
The automotive market demand is mainly concentrated in 8-inch power semiconductors. About 30 percent of the 8-inch wafer downstream is in the automotive sector, and this share is expected to grow to 60 percent in the future. Due to the large demand for cars, the demand for 8 inches will be tight for a long time.
Xu Chao believes that the requirements of smart cars for electronic and electrical architecture are getting higher and higher, in addition to the automotive semiconductor stock market, intelligent cockpit and automatic driving and other chips in terms of performance, computing power, stability is also increasingly strong.
According to Strategy Analytics, the compound annual growth rate (CAGR) of the automotive semiconductor (including sensors) market is expected to exceed 17.5% from 2020 to 2025. Excluding semiconductor sensors, automotive semiconductor demand CAGR is expected to be higher, at more than 18.3%. It is predicted that the global automotive semiconductor market size will reach $85.5 billion by 2025 and $104.6 billion by 2028 (including semiconductor sensors).
The IoT market requires MCU, norflash, WiFi Bluetooth, etc., corresponding to a mature 12-inch process (28~65nm). "Looking forward to 2022, we are more optimistic about some companies that can achieve better competitiveness through product upgrade iterations. And the overall trend of domestic substitution demand has been (such as MCU domestic substitution demand). ”
The analyst believes that the demand for mining machines is mainly concentrated in the 12-inch advanced process. In the early stage, due to the state's investigation and punishment of cryptocurrencies, the entire network computing power of the entire mining machine fell to 1/3 of the peak, and now it is basically fully restored. These are basically new computing power, because it is difficult to transport mining machines out of the country, resulting in the general overseas construction of factories to use newly purchased mining machines to build factories. The manual process and the mining process overlap, due to the recent demand for mining machines, squeezing the mobile phone processor, resulting in some 4G and low-end 5G processors are very nervous.
"On the whole, the three downstream emerging applications correspond to three different processes. Among them, 8-inch, 12-inch IoT demand has also risen from the bottom. The above analyst said.
On the supply side, major fabs have expanded production significantly
On the supply side, major fabs around the world are vigorously expanding production in 2021.
In April 2021, TSMC said it would spend $2.887 billion to expand the 28nm mature process of the Nanjing plant, expanding the monthly production capacity by 40,000 pieces, and in November of the same year, it announced the construction of a 12-inch fab in Japan with a monthly production capacity of about 45,000 units, and the establishment of 7nm and 28nm fabs in Taiwan, both to be completed in 2024.
TSMC said at the performance exchange meeting on January 13 that in 2022, TSMC's capital budget is 40 billion to 44 billion US dollars, of which about 70%-80% is used for advanced processes, including 2nm, 3nm, 5nm, 7nm, about 10% of the funds are used for advanced packaging and mask manufacturing, and 10%-20% of the funds are used for advanced technologies.
Samsung, UMC, Intel, and GF have also announced expansion plans in 2021.
(Table source: Global Semiconductor Watch)
At the same time, IC Views statistics show that in 2021 Chinese mainland Semiconductor Company invested a total of 190 billion yuan in production lines, and SMIC and Huahong Semiconductor, as wafer foundries, are vigorously expanding production, of which SMIC has a layout in Beijing, Shanghai, Zhejiang, Guangdong and Tianjin, with a total investment of more than 76 billion yuan.
SMIC Co-CEO Zhao Haijun said at the company's fourth quarter 2021 results briefing on February 10 that in terms of production capacity, SMIC's 8-inch wafer growth in 2021 exceeded 45,000 units, and 12-inch wafers also exceeded 10,000 units. The final overall growth is about 8 inches equivalent to 100,000 pieces. It is expected that the production capacity will be equivalent to 8 inches in 2022, 130,000-150,000 pieces, and the total shipment will increase by about 20%. "But this year there are more advanced processes, and ASP will be higher."
SMIC said that in order to continue to promote the expansion of existing old factories and three new plant projects, 2022 is still the peak investment period, capital expenditure is expected to be about 5 billion US dollars, and the capacity increase is expected to be higher than last year. SMIC's capital expenditures for 2021 are approximately $4.5 billion.
Zhao Haijun said, "At the beginning of 2022, the Shanghai Lingang project has broken ground, and the two projects in Beijing and Shenzhen are steadily advancing, and are expected to be put into production by the end of 2022." When the three new projects are fully produced, the company's total production capacity will be doubled. ”
Huatai Securities expects that in 2023, SMIC's production capacity will increase to 916,000 pieces/month (equivalent to 8 inches) from 605,000 pieces/month in 2021, with a capacity expansion of 51.4%.
Huahong Semiconductor is Chinese mainland leading wafer foundry enterprise focusing on characteristic processes, with a leading position in the field of embedded flash memory and power semiconductors, and is also the largest 8-inch wafer foundry in Chinese mainland. As of November 2021, the company operates three 8-inch production lines with a production capacity of about 180,000 pieces/month, and a 12-inch production line with a production capacity of about 65,000 pieces/month, which is the world's first 12-inch power device foundry production line.
The lack of core in the second half of the year or alleviated, some design factories have to breathe
On the whole, in 2022, the demand for semiconductors is optimistic, and the production capacity under the vigorous expansion of wafer foundries is also gradually released, and the "lack of cores" is expected to usher in a relief.
A number of analysts told First Finance that in the first half of 2022, the problem of lack of cores still exists. "When the economy is operating normally, it will ease in the second half of the year."
Wei Chun, manager of Qianhai Open Source Fund, previously told First Finance and Economics that it is expected that the tight global semiconductor production capacity will be fully alleviated in 2022, but the impact of factors such as the epidemic on the global supply chain should still be observed in the follow-up. In 2022, global semiconductor supply and demand will gradually converge, the general shortage situation will not reappear, and the price of most products will gradually fall.
However, most analysts still believe that if the impact of the epidemic is serious, the time for the lack of core to alleviate will continue to be delayed. Structural lack of cores in the second half of the year may still exist, and automobiles are still the most scarce areas.
For the lack of cores in the automotive field, Xu Chao said that from the perspective of the semiconductor cycle, it is expected that the second quarter of 2022 will return to a normal state, but there will be a lack of cores in the future, but as the exchanges between the main engine factory and the chip company are getting deeper and deeper, this situation will be easier and easier to handle.
Chen Penghui, fund manager of Zheshang Fund, told First Finance and Economics that from the perspective of wafer foundry, the best time may have passed. The cycle attribute of wafer foundry is stronger, and for chip design companies, the cost has reached the highest level, and the follow-up will only be reduced.
However, foundry prices are still rising.
At present, TSMC, UMC, LCC, World Advanced and other fabs have all released price increase plans for the first quarter of 2022. For the price increase of wafer foundries in 2022, Digitimes predicts that the price increase trend from the second quarter of 2022 may converge, and the follow-up needs to pay attention to whether the leading enterprise TSMC will have a price increase plan in the next step.
Of course, the market also has a more cautious view of "the lack of core in the second half of the year".
The CEO of Grofond Semiconductor said that the company's chip production capacity until the end of 2023 has been fully ordered, and he predicts that the "lack of core" problem cannot be completely solved in the next 5 to 10 years, and the global semiconductor supply chain may be in a tight supply situation for a long time.