Written by/Chen Dengxin
Editor/Gao Zhi
The chip market is half seawater, half flame.
A few days ago, Samsung disclosed that the operating profit of its chip business in the fourth quarter of 2022 was 270 billion won, down 96.9% year-on-year; SK Hynix turned from profit to loss in the fourth quarter of 2022, with an operating loss of 1.70 trillion won.
Earlier, Intel handed over the answer sheet for the fourth quarter of 2022: operating income for the quarter was $14.04 billion, down 31.6% year-on-year; Net income turned from profit to loss to -$664 million, recording the worst quarterly loss ever.
Correspondingly, the performance of AMD, TSMC, STMicroelectronics, etc. is in line with expectations.
This means that the chip market is in a situation where ice and fire coexist.
So, how serious is the global chip downturn? Under the trend of malaise, why is the track unevenly hot and cold? Chasing "new outlets", how much imagination does the domestic MUC?
Profitability is difficult, and layoffs have become the first choice for getting out of difficulties
In the chip market, the performance thunderstorm is not an isolated case.
For example, Texas Instruments, a leading foreign analog chip company, had operating income of US$4.67 billion in the fourth quarter of 2022, down 3.35% year-on-year; Net profit was US$1.962 billion, down 8.23% year-on-year.
To make matters worse, performance will remain sluggish.
According to official estimates, operating income for the first quarter of 2023 was $4.17 billion to $4.53 billion, and earnings per share were $1.64 to $1.90, compared to $2.13 in the fourth quarter of 2022.
For example, the domestic 100 billion market value chip leader Weier Co., Ltd. has a net profit of 800 million yuan to 1.2 billion yuan in 2022, down 73.19% to 82.13% from the same period of the previous year; Non-net profit was 90 million yuan to 135 million yuan, down 96.63% to 97.75% from the same period last year.
The performance of Weier shares is thunderous
It can be seen from the above that the chip industry can be described as a dark cloud.
Reflected in the capital market, it is voted with feet, and the Philadelphia Semiconductor Index fell by 35.93% in 2022, and the CSI All Index Semiconductor Products and Equipment Index fell by 37.3%
An industry insider told Zinc Scale: "Since 2022, due to the continued weakness of consumer electronics market demand, the highlight of chips is not there, the prosperity has declined significantly, and the industry has entered the stage of active destocking, which has dragged down the performance of related companies, and cost reduction and efficiency improvement have become the consensus of the industry." ”
In this context, layoffs have become the first choice for global chip companies to get out of trouble.
Intel laid off 176 employees from January 31, 2023, and another 167 from March 15, 2023; Micron will cut about 10% of its workforce by 2023, equivalent to a reduction of about 4,800 employees. Qualcomm laid off 153 people in San Diego at the end of 2022 and dozens of jobs in Israel in 2023; GF lays off as many as 800 jobs worldwide, or about 5.7% of its 14,000 employees worldwide...
In fact, the wave of layoffs is also transmitted to the upstream of the chip industry chain.
According to the "Science and Technology Innovation Board Daily", as chip manufacturers cut capital expenditures, the original equipment procurement plan was also affected, a number of semiconductor equipment industry insiders said that many orders were received in the first half of 2022, but after multiple delays, customers announced that they would reduce equipment investment by 50% in 2023 and continue to cancel orders.
As a result, the days of "selling shovels" enterprises in the chip field are not good.
Global chip-making equipment giant Lam Research will cut about 1,300 jobs worldwide to cut expenses amid a downturn.
Lam Research CEO Tim Archer expects the overall market size for chip-making equipment to fall to about $75 billion in 2023, down about $20 billion or more than 20 percent from last year.
From this point of view, the slump of chips is much more severe than the outside world thinks.
Domestic substitution accelerates, and Chinese enterprises buck the trend to increase their weight
Despite this, optimism remains, believing that chips may come out of the trough in 2023.
Liu Yang, manager of Chuangjin Hexin Software Industry Equity Fund, said: "After the drastic adjustment of the market in 2022, the bearish factors of the semiconductor track have been fully reflected in the stock price, and some high-quality chip companies that have been doing difficult and correct things are going through the most difficult period, and they are currently more optimistic about investment opportunities in the chip industry." ”
In fact, there are already signs of bucking the trend.
According to public information, the fund favors listed companies such as Zhuosheng Micro, SMIC, Sanan Optoelectronics, and Weier shares, taking Weier shares as an example, as of the end of the third quarter of 2022, a total of 81 funds from 36 fund companies held Weier shares, with a total of 66.1489 million shares and a market value of 5.301 billion yuan, and the fund showed signs of increasing positions in the third quarter.
Whether the above view is true is uncertain, but it is also an indisputable fact that the track is locally hot.
On the one hand, domestic substitution is in full swing.
Since 2018, the domestic substitution of chips has been continuously promoted, especially in the case of the complex and intensified international situation, and independent and controllable has become a must.
In this way, many Chinese chip companies have handed over quite beautiful answers.
SMIC expects revenue of RMB49.4 billion in 2022, a year-on-year increase of about 38%. NAURA expects a net profit of 2.1 billion yuan ~ 2.6 billion yuan in 2022, a year-on-year increase of 94.91% ~ 141.32%; Star Semiconductor expects a net profit of 812 million yuan ~ 825 million yuan in 2022, a year-on-year increase of 103.82% ~ 107.09%; Dongwei Semiconductor expects a net profit of 275 million yuan ~ 315 million yuan in 2022, a year-on-year increase of 87.20% ~ 114.43%......
SMIC's performance expectations
More importantly, global giants are cutting capital expenditures, while Chinese players are not afraid of the downward cycle, and still choose to buck the trend and overtake.
For example, SMIC plans to invest US$7.5 billion to build a 12-inch wafer fab in Tianjin, with a planned capacity of 100,000 wafers per month to produce mature 28nm~180nm chips.
Kong Xuebing of Jinxin Fund said publicly: "Now the market expectation is that localization is stagnant, mature process expansion is no drama, advanced process card neck, no new orders." This expectation is clearly overly pessimistic and does not stand up to scrutiny. ”
On the other hand, automotive chips continue to boom.
In fact, there are many chip subdivisions, some categories are sluggish, some categories continue to boom, and the steps are not consistent, among which automotive chips are the most typical.
In the past three years, the chip supply chain has been continuously impacted, and there has been a structural mismatch between the supply side and the demand side, coupled with the tide of new energy vehicles, making automotive chips a "hot commodity".
According to data from the China Association of Automobile Manufacturers, the demand for bicycle chips will increase from 600~700 fuel vehicles to about 1600 new energy vehicles.
As a result, the performance of related chip companies is beautiful.
In the case of STMicroelectronics, operating income in the fourth quarter of 2022 was $4.424 billion, up 24.4% year-over-year; Net profit was US$1.248 billion, up 66.4% year-over-year; Capital expenditures for 2023 were $4 billion, up 13.6% year-over-year.
Domestic MUC rises, what are the odds of breaking through?
Among many automotive chips, MUC is a well-deserved "Hua Dan".
According to Baidu Encyclopedia, MCU is the abbreviation of English Microcontroller Unit, that is, microcomputer, also commonly known as single-chip microcomputer.
For many years, domestic MUC has mainly focused on consumer and industrial grades, and there are not many automotive grades.
The reason for this is that the market has high technical barriers and demanding reliability requirements: from the parameter point of view, the life of automotive-grade MCU should reach more than 15 years, and it supports a wide temperature range of -40 °C ~ 155 °C, and the error rate is required to be close to 0.
Coupled with NXP, Renesas, STMicroelectronics, Infineon, and Microchip Technology to monopolize the market, domestic MUC has not been introduced for a long time.
Only BYD Semiconductor can get it.
BYD Semiconductor launched the first generation of 8-bit automotive-grade MCU chips in 2018 after many years of layout, and finally achieved zero breakthrough in localization.
Domestic MUC mainly focuses on consumer grade and industrial grade
It was not until recent years that the car "lacked cores" and it was difficult to find automotive-grade MCUs, and domestic MUCs ushered in key opportunities.
Players such as Fudan Micro, GigaDevice Innovation, NavInfo, Zhongying Electronics, Xinchi Technology, Xinhai Technology, Unigroup Guowei, Xihua Technology and other players have come to the end, covering low-end 8-bit, mid-end 16-bit, and high-end 32-bit automotive-grade MCUs, becoming an emerging force in the market.
However, domestic MUC is still in its infancy, and the challenges cannot be ignored.
Veteran players have a deep heritage, and the gap can be erased overnight; Domestic MUC mostly adopts the OEM model, and the supply chain security needs to be strengthened; Car companies have a long verification time and may miss the current "feast"...
All in all, today's global chip market is like a "siege", overseas companies are keen on open source to try to survive the winter, Chinese companies are bucking the trend, trying to seize the precious time window of leap.
Well, people in the city want to come out, people outside the city want to go in.