As the most mature link in the local semiconductor industry chain, the main domestic packaging and testing factories are currently "rushing" advanced packaging technology.
According to the data of China Semiconductor Industry Association, the sales of the domestic integrated circuit industry in 2021 will be 1,045.83 billion yuan, an increase of 18.2% year-on-year, of which the sales of design, manufacturing and packaging and testing links will be 451.9 billion, 317.63 billion yuan and 276.3 billion yuan respectively, and the revenue of the packaging and testing link will account for about 26%. The China Commercial Industry Research Institute expects that the sales of the domestic sealing and testing link will reach 319.7 billion yuan in 2022.
An MCU industry source told First Finance that the packaging and testing cost of some chips accounts for 40% of the total cost of chips. "It mainly depends on how many items are tested, and if the test is more, the cost will be very high." With the release of the A-share sealed test "Four Little Dragons" 2021 eye-catching financial report, its layout and competitiveness in the field of advanced packaging have become the focus of investors' attention.
The global packaging and testing market is growing steadily, and advanced packaging is becoming a trend
Packaging and testing is located in the downstream of the chip industry chain, which is divided into two links: packaging and testing. Among them, packaging refers to the production and processing of the wafer for cutting, wire welding and sealing, so that the circuit and external devices to achieve connection, and to provide mechanical protection for semiconductor products, so that they are from physical, chemical and other environmental factors loss of the process; testing refers to the product function and performance testing, testing is mainly divided into two types: middle test and final test.
There are two main types of packaging and testing factories, one is the packaging and testing department of IDM Company, which mainly completes the packaging and testing links of the company's semiconductor products, which belongs to the internal business; the second type is the outsourced packaging and testing manufacturer OSAT (Global Outsourced OEM Packaging and Testing), which undertakes the packaging and testing of semiconductor design companies as an independent packaging and testing company.
The global packaging and testing market is in a long-term and steady growth state. According to Yole data and China Industry Information Network, under the caliber of OSAT manufacturers, the global packaging and testing market size increased from 45.5 billion US dollars in 2011 to 59.4 billion US dollars in 2020, during which the average annual compound growth rate (CAGR) was 3.0%.
Chinese mainland market, according to the data of China Semiconductor Industry Association, the scale of the packaging and testing market increased from 97.57 billion yuan in 2011 to 250.95 billion yuan in 2020, and the CAGR was about 11.1%, and the growth rate was significantly higher than the global level in the same period.
With the repair of the global supply chain and the increase in market demand brought about by emerging applications such as 5G communications, HPC, automotive electronics, and smart wearable devices, the growth rate of the Chinese mainland sealing and testing market scale may usher in an upward inflection point.
The Prospective Industry Research Institute predicts that by 2026, the Chinese mainland market size will reach 442.9 billion yuan, and the CAGR in 2021-2026 will be about 9.9%, higher than the 7.0% in 2019-2020.
Under various major trends such as 5G, AI, HPC, and the Internet of Things, the chip size is getting smaller and smaller, but with the slowdown of Moore's Law, 3D packaging and SiP packaging have become one of the best choices for continuing Moore's law, and advanced packaging has also become a must for major packaging and testing factories.
Traditional packaging and testing is a labor-intensive industry, and the price of packaging and testing is lower, the difficulty of advanced packaging technology is higher, and the price is higher. Taking Changdian Technology as an example, the average price of advanced packaging is more than 10 times that of the average price of traditional packaging, and the gap continues to expand.
According to Yole's data, the global market size of advanced packaging in 2020 is 30.4 billion US dollars, accounting for 45%; it is expected that the global advanced packaging market size will reach 47.5 billion US dollars in 2026, accounting for 50%, and the CAGR in 2020-2026 will be about 7.7%, compared with the overall packaging market (CAGR= 5.9%) and the traditional packaging market in the same period, the growth of the advanced packaging market is more significant, which will contribute to the main increase of the global packaging and testing market.
According to the data of Micro Consulting, in 2020, China's advanced packaging output value will reach 90.3 billion yuan, and the proportion of advanced packaging will continue to increase, reaching 36%, and it is expected that in 2023, China's advanced packaging output value will reach 133 billion yuan, accounting for about 39% of the total packaging market.
The value of advanced packaging is higher, and in the future, as the proportion of advanced packaging continues to increase, the profitability of the industry will also be further improved. We believe that advanced packaging will become one of the main sources of performance increment for major packaging and testing plants in the future, and it is also an important driving force for raising valuations.
Boom, the performance of mainland packaging and testing manufacturers in 2021 has increased vigorously
Packaging and testing is a link with a high level of production in China's semiconductor industry chain in the mainland. From the perspective of the scale of the packaging and testing industry, Taiwan, Chinese mainland and the United States occupy the main market share, among the top ten OSAT manufacturers, there are five in Taiwan with a market share of 40.72%; there are three Chinese mainland with a market share of 20.08%; one in the United States, with a market share of 13.5%; and one in Singapore, with a market share of 3.2%.
Chinese mainland occupying three of the world's top ten outsourced packaging and testing factories are Changdian Technology, the third, and tongfu microelectronics (002156. SZ) and Seventh Huatian Technology (002185.SZ). In addition, Jingfang Technology (603005. SH) ranks among the "four little dragons" of A-share packaging and testing with ITS CHIPS, and more than 85% of its products are wafer-level packaging and testing products, mainly corresponding to CIS and fingerprint recognition chips.
Overall, the A-share sealing and testing "Four Little Dragons" have achieved good performance growth in 2021. Changdian Technology has the largest revenue scale, and Tongfu Microelectric has the largest increase in performance.
According to the financial report, in 2021, Changdian Technology achieved operating income of 30.502 billion yuan, an increase of 15.26% year-on-year; net profit attributable to the mother of 2.959 billion yuan, an increase of 126.83% year-on-year, and deducted non-net profit increased by 161.22%.
In 2021, Tongfu Microelectronics achieved operating income of 15.812 billion yuan, an increase of 46.84% year-on-year; net profit attributable to the mother was 957 million yuan, an increase of 182.69% year-on-year, and non-net profit increased by 284.35%.
Huatian Technology's revenue in 2021 was 12.097 billion yuan, an increase of 44.32% year-on-year; the net profit attributable to the mother was 1.416 billion yuan, an increase of 101.75% year-on-year, and the non-net profit increased by 106.96%.
Jingfang Technology's revenue in 2021 was 1.411 billion yuan, an increase of 27.88% year-on-year; the net profit attributable to the mother was 576 million yuan, an increase of 50.95% year-on-year, and the non-net profit was 43.24% year-on-year.
In terms of gross profit margin, the "four little dragons" have all improved, and Changdian Technology, Tongfu Microelectric, Huatian Technology and Jingfang Technology have increased by 2.98, 1.96, 2.77 and 2.75 percentage points respectively.
The improvement of profitability, on the one hand, stems from the lack of cores, the high prosperity of the sealing and testing industry, and the strong demand for orders. It is reported that Changdian Technology, Tongfu Microelectric and Huatian Technology will increase the urgent order quotation of package mature chips by 20%-30% in the second half of 2021; on the other hand, the proportion of revenue of advanced packaging has increased, which has also improved the bargaining power and profitability of packaging and testing factories.
The "Four Little Dragons" rushed for advanced packaging, and the expansion of production capacity accelerated
At present, the domestic advanced packaging is mainly concentrated in the above-mentioned leading enterprises. According to Jiwei Consulting, the advanced packaging output value of the top four leading enterprises accounts for 30.5% of China's total packaging output value. With the completion of the new production line, the proportion of production capacity will be further expanded.
In recent years, JCE TECHNOLOGY has focused on the development of advanced packaging technologies such as system level (SiP), wafer level and 2.5D/3D, and realized large-scale production. Changdian Technology said that at present, advanced packaging has become the company's main source of revenue, advanced packaging production of 34,812.86 million, accounting for 45.5% of all packaging types, of which mainly from system-level packaging, flip-fit and wafer-level packaging and other types.
In addition, for Chiplet heterogeneous integration applications, Changdian Technology announced in 2021 that it officially launched XDFOI's full range of extremely high-density fan-out packaging solutions. The packaging solution is a new silicon-free through-hole wafer-level extremely high-density packaging technology, compared to the 2.5D through-silicon via (TSV) packaging technology, with higher performance, higher reliability and lower cost and other characteristics, has completed ultra-high density wiring, into the customer sample process, is expected to be mass production in the second half of this year. Key application areas include high-performance computing applications such as FPGAs, CPUs/GPUs, AI, 5G, autonomous driving, and smart medical care.
Tongfu Microelectronics said that in 2021, in terms of advanced packaging, the company has mass-produced Chiplet products, 7nm products have been mass-produced, and 5nm products have completed research and development and are about to be mass-produced.
Huatian Technology has mastered advanced packaging technologies such as 3D, SiP, MEMS, FC, TSV, Bumping, Fan-Out, and WLP. In 2021, the company completed the process development of large-size eSiFO products, and passed chip-level and board-level reliability certifications. Mass production has been achieved in 3D eSinC products, Mini SDP, 1 master + 16 layers of NAND stacked eSSD, SSD based on 176 layers of 3D NAND process, MCP, Micro SD, and silicon-based GaN packaging products. Completed the development of a single large-size HFCBGA and a large-size FCCSP product based on the Open Molding process. 5G FCPA integrates multi-chip SiP and other 5G RF modules to achieve mass production, complete EMI process technology research and development and product introduction, and have mass production capabilities.
Huatian Technology said that in 2022, it will adhere to market-oriented technological innovation and carry out research and development of advanced packaging technologies such as 2.5D Interpose FCBGA, FO FCBGA, 3D FO SiP, as well as 3D Memory packaging technology based on TCB process, Double Side molding RF packaging technology, vehicle-mounted lidar and vehicle-grade 12-inch wafer-level packaging.
The growth logic of Jingfang Technology is different from other three small dragons, and the company binds Howey Technology and focuses on the field of CIS chip packaging. CIS chips are the most important products in image sensor solutions, and can integrate image acquisition units and signal processing units into the same chip, which is a core part of mobile phone camera systems.
Even if it focuses on special tracks, Jingfang Technology is also moving towards advanced sealing. The company said that in 2021, the company will continue to strengthen the research and development and innovation of integrated circuit advanced packaging technology (wafer-level TSV packaging technology, Fan-out wafer-level technology, SIP system-in-package technology, etc.), and has developed and improved the industry-leading integrated circuit packaging technology such as wafer-level packaging technology based on heterogeneous structure, MEMS wafer three-dimensional packaging technology, biomedical imaging chip wafer-level packaging technology, etc., and the company has also integrated the development of wafer-level micro lens array (WLO) production technology. And in The first in China to achieve mass production.
It is worth noting that due to the more focused on the special and high-tech CIS chip packaging and testing, the gross profit margin level of Jingfang Technology is significantly higher than that of the other three xiaolonglongs. In 2021, the gross profit margin of Jingfang Technology was 52.28%, and the gross profit margin of Huatian Technology, Changdian Technology and Tongfu Micro electric was 24.61%, 18.41% and 17.16% respectively.
Overall, as a domestic packaging and testing leader, Changdian Technology is still at the forefront in the field of advanced packaging. In 2021, the company also invested 500 million US dollars to set up a production-oriented wholly-owned subsidiary, Changdian Microelectronics (Jiangyin) Co., Ltd., in Jiangyin to expand high-end advanced production capacity.
Tongfu Microelectric and Huatian Technology are also increasing their production capacity construction. Tongfu Microelectric has successively built factories in Chongchuan, Nantong Nantong, Nantong Sutong Science and Technology Industrial Park, Anhui Hefei, Fujian Xiamen, at present, the company has 3 production bases in Nantong, and has also carried out production layouts in Suzhou, Penang, Hefei and Xiamen.
Huatian Technology will also raise more than 5 billion yuan in 2021 to expand production and improve its advanced packaging and testing process level and advanced packaging production capacity.
This article does not constitute any investment advice, investors act accordingly, all consequences are at their own risk. The market is risky and investments need to be cautious.
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