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According to Jiwei Network, the import and export data released by the General Administration of Customs of China in January and February this month show that in the first two months of this year, the mainland imported 91.95 billion integrated circuits, a decrease of 4.6%; the value was 438.56 billion yuan, an increase of 16.6%. This is the first year-on-year decline in integrated circuit imports since the outbreak of the epidemic in 2020, can we see some signals from it?
1. Has domestic substitution worked?
The Sino-US trade conflict and the ensuing global epidemic have seriously disrupted the global semiconductor industry chain, and the problem of missing cores has begun to break out from the second half of 2020 and entered 2022, and the pattern of missing cores is still difficult to say, and the evolution of supply and demand will be more complicated.
With the multiple help of the market, policies and capital, China Core ushered in a once-in-a-lifetime opportunity, and the downstream procurement demand gradually shifted to the domestic market, creating opportunities for "domestic substitution". The latest statistics of the China Semiconductor Industry Association show that in 2021, the sales of China's integrated circuit industry exceeded one trillion yuan for the first time, reaching 1,045.83 billion yuan, an increase of 18.2% year-on-year. Among them, the sales of the design industry were 451.9 billion yuan, an increase of 19.6% year-on-year; the sales of the manufacturing industry were 317.63 billion yuan, an increase of 24.1%; and the sales of the packaging and testing industry were 276.3 billion yuan, an increase of 10.1% year-on-year.
However, can it be judged that the domestic substitution has achieved remarkable results due to the slight decline in the number of imports in the previous two months? The answer is clearly no.
At present, most of the domestic alternative tracks are still me-too ideas, using low-price strategies to push the market. In the high-end general field, the localization rate of processors, memory, FPGAs, high-end analog chips, GPUs and other fields is less than 5% or even less than 1%. The gap in semiconductor manufacturing equipment, materials, EDA tools, etc. is still very significant, about 70% of the manufacturing equipment of 28nm and above comes from Us manufacturers, and nearly 50% of the parts used involve US technology.
According to Gartner's forecast, China has achieved about 10% of the global market share in the field of cellular baseband chips and consumer electronics chips such as CIS, AP, smart cards, etc., and in the next three years, advanced packaging will also achieve this achievement, NAND storage will take five years, and DRAM, MPUs for computers and servers, advanced processes, semiconductor equipment/materials/equipment components, and EDA tools may take a decade.
Analysts expect the proportion of domestic chips to increase from 15.9% in 2020 to 19.4% in 2025, with slow progress. To this end, the domestic substitution effect will not be seen so quickly. Aiji micro consulting business department general manager Han Xiaomin analysis that usually integrated circuit import product categories are divided into processors and controllers, memory, amplifiers, converter function modules and other five categories, although the data of 1-2 months has not been released details, but the reason for the decline in import data may be the increase in the number of processor imports, some cheaper products are reduced, coupled with the factors of chip price increases, there is a decline in the number of each other and a sharp increase in the total amount.
2. Is the boom cycle about to reverse?
Although the shortage will continue until 2022, it will not be as severe as in the fall of 2020 or 2021, nor will it affect all chips. In mid-2021, there will be a shortage of multiple semiconductor supplies, customers will have to wait 20-52 weeks, production will be delayed or even stopped, and tens of billions of dollars will be lost in revenue. Deloitte predicts that by the end of 2022, the chip lead time will be close to 10-20 weeks; by the beginning of 2023, the industry will reach a basic balance. But the judgment about when the semiconductor boom cycle will peak is fraught with growing doubts.
Reviewing the changes in the terminal market, it can be seen that the "home economy" began to recede to a certain extent in the second half of last year, the demand for consumer electronics weakened, and the prices of memory, panel drive chips, LED chips and other fields fell. According to data from the China Academy of Information and Communications Technology, in January 2022, the domestic market mobile phone shipments were 33.022 million units, down 17.7% year-on-year; domestic brand mobile phone shipments were 25.652 million units, down 24.0% year-on-year, and the listed new models also fell sharply.
Zhao Yi, research director of Aiji Micro Consulting, pointed out that mobile phones and several key terminal products have declined in shipments and sales in the past period of time, and January and February are also the traditional off-season, coupled with the fact that major mobile phone OEMs have stockpiled a lot of inventory last year, and the demand for related chips will inevitably decrease. For example, industry chain sources revealed that mobile phone brands including OPPO and vivo have lowered their shipment forecasts this year, and MediaTek's mobile phone processor inventory level has increased from the usual 100 days to 160-180 days.
However, this does not mean that the prosperity has peaked, TSMC recently reported that in the third quarter, it will again raise the 8-inch mature process FOUNDRY quotation, and the 12-inch mature and advanced process is under evaluation; UMC is also rumored to raise the price on the new long contract with Samsung that will take effect soon, and also announced the expansion plan of the 28nm and 22nm processes in Singapore. SMIC's just-announced results show that net profit in the first two months increased by 94.9% year-on-year. In the "traditional off-season", its performance can nearly double, which shows the high prosperity of the chip industry and the rapid momentum of corporate profitability.
As of today, 189 Listed Chip companies in China have disclosed their 2021 performance forecasts, with a pre-happy ratio of up to 70%, and 13 companies have experienced several times the performance. Han Xiaomin said that the dislocation and shortage in the past two years have caused a lack of cores, and the current shortage of chips is still continuing, but mobile phone chips may be partially alleviated in the second half of the year.
Overall, the lack of cores in the field of consumer electronics has eased, but the lack of cores in emerging areas such as automobiles and new energy is still continuing, and the state of chip supply in short supply may be maintained for a long time, as SMIC CEO Zhao Haijun said, the global foundry industry has entered from "comprehensive core shortage" to "structural core shortage".
3. What is the impact of the epidemic in Hong Kong?
Since February, the epidemic in Hong Kong and Shenzhen has continued to escalate, the former as an important chip transit place in the world, the latter as an important center in the domestic electronic information industry, the impact of the epidemic can not be ignored.
According to the statistics of relevant agencies, the average trade volume of Hong Kong in 2020 will account for 38% of China's total chip imports, which shows the important position of Hong Kong in China's chip supply chain. Since February, the epidemic situation in Hong Kong has continued to escalate, and the total number of confirmed cases as of March 10 has exceeded 550,000 after the number of confirmed cases in a single day exceeded 1,000 for the first time on February 9. Therefore, the decline in the number of integrated circuit imports in the first two months may also be related to this.
Mr. Li (Ace), who is engaged in semiconductor logistics and transportation services, told Jiwei Network that the situation of the epidemic in Hong Kong surprised everyone, customs clearance at ports was extremely difficult, and the delivery of semiconductor customers' goods was also affected. "Due to the great impact of the escalation of epidemic prevention measures on logistics, it has put some pressure on Hong Kong's import and export business in the short term. Cross-border goods need to be disinfected layer by layer, and the entry process of cross-border drivers is more stringent, which naturally lengthens the logistics time. He said, "Now the transportation market is that there are fewer drivers and less venue codes, resulting in logistics obstruction, and the freight changes are not large." ”
Photo of the truck killing provided by Mr. Lai
Ace explained that the site code is a "pass" for a factory or a company, which requires the driver to declare himself, and nucleic acid testing is carried out every day, and the site code can be transported and connected to the Business of China and Hong Kong. Each car must be disinfected at least half an hour to reach the connection point, and now the driver cannot get off the car. "At present, there has been a situation of chip cargo accumulation, and now the chip delivery time is already very tight, so that the cycle is further extended."
"The epidemic is relentless, and the transportation and delivery of every box of goods is paid and responsible by the team. We hope to overcome the difficulties of the times, race against time, and deliver chips to customers as soon as possible. Ace stressed.
epilogue
A 4.6 percent drop in China's integrated circuit imports is a modest change, but the biggest challenge for the semiconductor industry may be how to avoid falling into the industry's well-known ups and downs. Historically, every shortage has been followed by a supply glut that has led to a continuous decline in prices, revenues, and profits. The cyclical fluctuations of the past 25 years have been as large as a roller coaster that no one wants to take the initiative to take! From 1996 to 2021, chip revenue soared by more than 20% year-on-year at least seven times, and the year-on-year plunge of nearly 20% in the same period also reached five times, of which the decline in 2001 was particularly alarming, with revenue falling nearly 50% from the previous year.
Fortunately, the overall trend of the semiconductor market has always been upward growth, driven by the digital transformation of all aspects of social life and the continuous demand for "double carbon", whether the chip is scarce or surplus, the share of semiconductor revenue in global economic output will continue to expand. As for when the inflection point will occur, it is a test of whether decision makers and enterprises can make accurate judgments. (Proofreading/Mike)