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Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

author:Foresight Library

(Report Producer/Analyst: Essence Securities, Ma Liang, Guo Wang)

01 Lithography machine: the core equipment for chip process upgrading

1.1. The lithography machine transfers the circuit pattern to the silicon wafer, which is the core equipment for chip process upgrading

The lithography machine is the core equipment of chip manufacturing. The main function of the lithography machine is to transfer the pattern from the photomask to the substrate (usually silicon wafer) with high precision, it is also known as the mask alignment exposure machine, exposure system, lithography system, etc., which is the core equipment for manufacturing chips. The lithography machine transmits the beam through a mask with a circuit diagram through a series of light source energy and shape control methods, compensates for various optical errors through the objective lens, and maps the circuit diagram to the silicon wafer after scaling it down. The image is then developed using chemical methods to obtain a circuit diagram (i.e., the chip) engraved on the silicon wafer.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Core lithography machines play a key role in chip process upgrades. One of the main goals of chip process upgrades is to achieve smaller feature sizes on semiconductor devices. Lithography machines with advanced technology, such as extreme ultraviolet (EUV) lithography, allow for shorter wavelengths of light, enabling the creation of smaller patterns and higher resolution.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Photolithography is one of the core technologies for manufacturing chips, and it is a precision microfabrication technology. It uses a photo-like technique to transfer the circuit pattern to a silicon wafer or dielectric layer to realize the portrayal and reproduction of the circuit pattern. The working principle of the lithography machine is to use ultraviolet light with a wavelength of 2000~4500 angstroms as the image information carrier, and use the photoetching agent as the intermediate (image recording) medium to realize the transformation, transfer and processing of the pattern, and finally transmit the image information to the wafer (mainly referring to the silicon wafer) or the dielectric layer. The lithography process directly determines the manufacturing level and performance level of the chip, which takes half of the entire manufacturing process and accounts for one-third of the cost of chip production. The general lithography process needs to go through the silicon wafer surface cleaning and drying, priming, spin coating photoresist, soft drying, alignment exposure, post-baking, development, hard drying, laser etching and other processes. After a photolithography, the chip can continue to be glued and exposed. The more complex the chip, the more layers of the circuit diagram and the more sophisticated the exposure control process is required.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The principle of lithography machine technology is based on optical projection technology, through a specially designed lens system and a precise optical system, the circuit pattern on the mask is transferred to the photoresist on the silicon wafer with high precision. Lithography machines require advanced lens technology, high-precision alignment technology, and more to achieve higher resolution and more precise pattern transfer. In addition, lithography machines need to adopt a series of key technologies to improve the resolution and accuracy of pattern transfer, such as optical proximity correction (OPC) technology, which can compensate for adjacent image aberration and nonlinear effects, so that the actual projected image is closer to the ideal image.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

1.2. The main technical indicators of the lithography machine include resolution, lithography machine accuracy, and production capacity

The performance of the lithography machine is evaluated based on the following key performance indicators, which are the resolution of the lithography machine, the accuracy of the lithography machine (including coverage accuracy and alignment accuracy), and the production capacity. According to the Rayleigh criterion, the resolution formula is R= k1 * λ/NA, λ represents the wavelength of the light source, NA represents the numerical aperture of the objective, and k1 represents the lithography process factor. Resolution is a key indicator of a lithography machine's ability to accurately define fine features and patterns.

For EUV lithography, the wavelength of the EUV light source is a critical performance parameter. Shorter wavelengths allow for smaller feature sizes and better resolution. High resolution also requires larger diameters, more objective combinations, and more advanced objective techniques.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Accuracy: Accuracy includes coverage accuracy as well as alignment accuracy. Coverage accuracy measurement machines align and accurately position multiple mask layers on a silicon wafer and are critical for the precise alignment of different layers of semiconductor devices. Alignment accuracy measures the alignment accuracy of the lithography machine to the mask and substrate. In the case of the optical dual workpiece table system, the yield can only be guaranteed by the synchronous movement of the workpiece table and the mask table. Its accuracy is measured by a laser interferometer to ensure that its error is within a controllable range. Generally, the laser interferometer accuracy of 10nm can support a 90nm lithography machine, and 1nm can support a 7nm lithography machine. ASML's EUV lithography machine has an effective displacement measurement resolution of 38pm for laser interferometers.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Capacity: Capacity is measured by throughput. Primarily referring to the speed at which a lithography machine processes wafers, measured in wafers per hour (WPH), is critical to the overall efficiency of semiconductor manufacturing, with higher throughput allowing for faster production and lower cost per chip. The wafer of the lithography machine needs to be measured, aligned, and exposed in a step-by-step manner, so the capacity of the lithography machine is limited to a certain extent. Since the beginning of the 21st century, ASML has launched a double-stage lithography machine to achieve a leapfrog increase in production capacity. The system can be synchronized with two workpiece stages.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

1.3. Evolution of lithography machines: from contact to EUV

The earliest history of lithography machines dates back to the last century. In 1955, Bell Labs applied photolithography to silicon wafers, which made printed circuit boards. Three years later, Fairchild Semiconductor manufactured the first "step-by-step" lithography camera. In the 60s of the 20th century, GCA manufactured the first contact lithography machine. After this, Nikon and Canon joined the lithography machine industry research. Subsequently, Nikon introduced the first step-by-step lithography machine. ASML was founded in 1984 and launched a two-stage lithography machine at the beginning of the 21st century. In 2003, ASML introduced the immersion lithography machine, and ASML established the dominance of lithography machines. Ten years later, the world's first EUV mass-produced product was launched by ASML, and its monopoly was further strengthened.

Contact lithography (1950s): The earliest lithography technique, it is a method of transferring a pattern from a photomask (a mask with the desired pattern) to a substrate (such as a silicon wafer) through direct physical contact. In a contact lithography machine, the photomask and substrate are in direct physical contact with each other. The mask is placed directly on top of the substrate, and UV rays shine through the mask, transferring the pattern to the substrate. The process is often used for patterns of smaller features and is often associated with older semiconductor manufacturing processes. Due to the diffraction of light and the challenge of making direct contact without damaging the mask or wafer, it has limitations in achieving fine resolution.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Proximity lithography machine: Proximity lithography technology transfers the pattern from a photomask to a silicon wafer with a small gap between the mask and the substrate. In a proximity lithography machine, the photomask is placed close to the substrate rather than directly touching the substrate. Proximity lithography offers several advantages over contact lithography, such as reduced risk of mask and substrate damage, as well as the ability to achieve smaller feature sizes compared to contact lithography. This method, which emerged shortly after exposure lithography, increased the distance between the mask and the wafer to prevent damage, but faced similar resolution limitations.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Step-by-step scanning optical lithography (1980s-1990s): Scanning projection lithography is a high-resolution, high-throughput process that uses a scanning process in which the mask and substrate remain stationary and the projection system scans the pattern on the substrate. Scanning projection lithography machines operate on a substrate by scanning the photomask pattern in a step-by-step repetitive fashion, where the substrate gradually moves to expose different areas.

Deep ultraviolet (DUV) lithography (90s to 2010s): With the need for smaller features, lithography moved into the deep ultraviolet spectrum, initially around 248nm and then progressively to shorter wavelengths such as 193nm. These advancements allow for finer details, but require sophisticated optical systems to handle shorter wavelengths.

In August 2000, ASMAIL's first TWINSCAN system lithography machine was shipped, which was a major step forward in the lithography machine industry. While previous lithography machines had only one stage, ASMAIL's innovative dual stage allows one stage to expose a 12-inch wafer while the other stage is pre-aligned before exposure, increasing productivity by an astonishing 35%.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Immersion lithography: To further improve the resolution, immersion lithography was introduced. Liquid, usually water, is used between the lens and the wafer instead of air, allowing shorter wavelengths to be used efficiently. In 2004, Asmail, a lithography machine manufacturer, took the lead in developing an immersion lithography machine, which was improved and successfully put into use.

Double Patterning and Multiple Patterning: As a solution to break through resolution limitations, these methods include splitting the pattern into multiple exposures to achieve finer features than a single exposure.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Extreme ultraviolet (EUV) lithography (2010s-present): EUV lithography utilizes an extremely short wavelength of about 13.5 nm to achieve smaller features without relying on complex multiple patterning. Relying on EUV lithography machines, more refined processes of 7nm and below have been realized.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

02 The lithography machine market reached more than 20 billion US dollars, and ASML monopolized the high-end market

2.1. Lithography machines account for about 24% of the semiconductor equipment market

According to data released by SEMI, the global semiconductor equipment market size increased from US$31.8 billion to US$107.4 billion from 2013 to 2022, with a CAGR of 14.5%; in the same period, the scale of semiconductor equipment in Chinese mainland increased from US$3.4 billion to US$28.3 billion, with a CAGR of 26.5%, significantly higher than the global level. With the prosperity of downstream markets such as consumer electronics and PCs and the expansion of new application fields such as 5G, AI, and cloud computing, the global demand for semiconductors continues to grow, which in turn promotes the capital expenditure of semiconductor manufacturers to enter an upward cycle, and the market size of semiconductor equipment has also increased.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The global lithography machine market size was approximately $25.8 billion in 2022. Semiconductor equipment = manufacturing equipment + packaging and testing equipment, according to SEMI data, in the global semiconductor equipment market in 2022, the market size of wafer manufacturing equipment will account for more than 85%, and among all the equipment in wafer manufacturing, the highest proportion of market investment is lithography machine, etching machine and thin film deposition equipment, accounting for 24%, 20% and 20% of the entire semiconductor equipment respectively, and the total market size of these three types of equipment accounts for 64% of the entire semiconductor equipment.

Combined with the data of 107.4 billion US dollars in the semiconductor equipment market in 2022 given by SEMI, the market size of semiconductor lithography machines in 2022 will reach 25.8 billion US dollars. From a domestic point of view, if the domestic semiconductor equipment accounts for 26% of the world in 2022, the market size of lithography equipment in Chinese mainland is about 6.7 billion US dollars.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

2.2. ASML monopolizes high-end lithography machines, and domestic lithography machines have made breakthroughs at 28nm

According to SEMI's forecast, in the global lithography machine market, ASML, Canon, and Nikon monopolize most of the market share. According to statistics, the global lithography machine market will exceed $20 billion in 2022, of which the revenue of ASML, Canon, and Nikon lithography machines will reach $16.1 billion, $2 billion, and $1.5 billion, respectively, with market shares of 82%, 10%, and 8%, respectively. In terms of shipments, ASML, Canon, and Nikon accounted for 63%, 32%, and 5% of the market share, respectively. Judging from the shipments of the three high-end models of EUV, ArFi and ArF, ASML still maintains its leading position, accounting for 100%, 95% and 87% of shipments respectively. In terms of revenue sources in 2022, Chinese mainland accounted for 14% of ASML's sales.

In 2022, ASML's lithography machine revenue will be about $16.1 billion, an increase of 23% from $13.1 billion in 2021. A total of 345 lithography machines were shipped, including 40 EUV lithography machines, 81 ArFi lithography machines, 28 ArF lithography machines, 151 KrF lithography machines, and 45 i-line lithography machines.

In 2022, Canon's lithography machine revenue was approximately $2 billion. Canon's lithography machines are mainly i-line and KrF, and the number of lithography machines shipped reached 176 units. Of these, 125 units of the i-line were shipped. Shipped 51 units of Canon panel (FPD) lithography machines.

In 2022, Nikon's lithography machine business generated revenue of approximately $1.5 billion. Nikon lithography machines are mainly used for integrated circuits, and a total of 30 units were shipped. Among them, 4 ArFi lithography machines, 4 ArF lithography machines, 7 KrF lithography machines, and 15 i-line lithography machines were shipped.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

In 2022, the market share of these three manufacturers will be 82%, 10% and 8% respectively, with ASML as the leader forming a monopoly pattern. Among them, ASML dominates the field of ultra-high-end lithography machine EUV, the field of high-end lithography machine ArFi and ArFdry is also mainly occupied by ASML, Canon is mainly concentrated in the field of i-line lithography machine, and Nikon is involved in addition to EUV.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

There is still a gap between domestic lithography machines and international manufacturers in terms of technology nodes, among which Shanghai Microelectronics is a leading enterprise of domestic lithography machines, and its SSX600 series lithography machines can meet the lithography process needs of 90nm, 110nm, 280nm critical layers and non-critical layers of IC front-end manufacturing, and can be used for large-scale industrial production of 8-inch lines or 12-inch lines. On the basis of the previous 90nm, Shanghai Microelectronics will mass-produce 28nm immersion lithography machine, and deliver the first domestic SSA/800-10W lithography machine equipment in 2023.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

03 In 2022, the global lithography machine parts market will be about 12.4 billion US dollars, and light sources, optics, and duplex tables are the core systems

3.1. Lithography machine system composition

The lithography machine system is complex, including light source system, illumination system, projection objective lens system, workpiece table and mask table subsystem, leveling and focusing subsystem, mask and silicon wafer alignment subsystem, silicon wafer transmission and pre-alignment system, and whole machine environment subsystem.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

(1) Light source system: The key component in the lithography machine plays a key role in providing light, controlling the wavelength and intensity of light, improving exposure efficiency, and ensuring exposure quality. The light emitted by the light source passes through the transparent areas of the photomask, forming a patterned image.

(2) Illumination system: It is located between the light source and the projection objective lens, and is a complex non-imaging optical system. The main purpose is to provide the right light for the projection objective so that it can image accurately. In the lithography machine, the performance of the objective lens determines the line width and overlay accuracy of the lithography machine, which is the core component of the lithography machine, and the lighting system provides a suitable light source for the objective lens to assist it in completing high-precision imaging tasks.

(3) Projection objective lens system: The projection objective lens system is one of the core components in the lithography machine, and its function is to magnify the chip pattern through optical principles and project it onto the silicon wafer. In a projection objective system, it usually consists of multiple lenses and mirrors that are precisely aligned and calibrated to ensure the accuracy and clarity of the projection.

(4) Workpiece table: The workpiece table is an important part used to place silicon wafers in the lithography machine, and its function is to support and fix the silicon wafers during the lithography process to ensure the accuracy and quality of lithography. The workpiece table is usually composed of a high-precision mechanical structure with high stability and precision. On the stage, the wafers are precisely positioned and fixed to avoid movement or distortion during the lithography process. In addition, the workpiece stage is equipped with functions such as temperature control and vibration suppression to ensure a stable environment during the lithography process. At present, the advanced lithography machine adopts a dual workpiece stage system to further improve the production efficiency and capacity of the lithography machine.

(5) Mask table subsystem: The mask table is mainly used to carry the mask plate and ensure the stability and accuracy of the mask plate during the lithography process. When the lithography machine is working, the mask table will be automatically operated according to the preset program, including the loading, positioning, and fixing of the mask to ensure the accuracy of the position and angle of the mask.

(6) Leveling and focusing subsystem: The leveling and focusing subsystem is an important part of the lithography machine for accurately adjusting the position of the workpiece table and the mask table to ensure that high-precision projection and imaging can be achieved during the lithography process.

(7) Mask and silicon wafer alignment subsystem: The mask and silicon wafer alignment subsystem is a key part of the lithography machine to ensure the accurate alignment of the mask and silicon wafer to ensure that high-precision projection and imaging can be achieved during the lithography process. In the alignment subsystem, commonly used techniques include optical alignment, electron microscope alignment, etc. These technologies can be used to achieve high-precision alignment by scanning and inspecting the surface of masks and wafers.

(8) Wafer transport and pre-alignment system subsystem: The wafer transport and pre-alignment system in the lithography machine is responsible for ensuring high-precision projection and imaging of silicon wafers. The transfer system transfers the silicon wafer from the rail machine to the pre-alignment platform, which accurately positions and adjusts the wafer through optical measurement and sensor technology to ensure its correct position and angle in the lithography machine.

(9) The environmental subsystem of the whole machine in the lithography machine ensures the accuracy and imaging quality of the lithography process by controlling parameters such as temperature, humidity, cleanliness and vacuum. The coordination of these control subsystems provides a stable machining environment for the lithography machine, ensuring high-precision lithography results.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated
Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The lithography machine is known as the pinnacle of human science and technology, and the top of its technology is mainly reflected in the three major systems - light source system, optical system, and double workpiece table system.

The light source system mainly provides exposure energy for the lithography machine, which is one of the core components of the lithography machine. There are 7 common wavelengths, including 3 types of ultraviolet rays: G line (wavelength 436nm), H line (405nm), I line (365nm), deep ultraviolet (DUV) 3 types: 248nm, 193nm, 157nm, and extreme ultraviolet (EUV) 13.5nm. In general, the shorter the wavelength, the higher the resolution. Excimer lasers are typically used to provide deep ultraviolet light sources, while EUV light sources mainly provide EUV light at 13.5 nm. The light source of the lithography machine has a high barrier, and the excimer laser is mainly provided by Cymer and Gigaphoten, and Keyi Hongyuan is the domestic supplier. ASML dominates the field of ultra-high-end lithography machine EUV, the field of high-end lithography machine ArFi and ArFdry is also mainly occupied by ASML, Canon is mainly concentrated in the field of i-line lithography machine, and Nikon is involved in addition to EUV.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The illumination system is one part of the optical system. One of the key functions of the lighting system is to provide uniform illumination of the light source, covering the entire photomask and substrate. Uniformity is essential to ensure that the pattern transfer is accurate, distortion-free, and defect-free. In terms of light source equipment: Wavelength Optoelectronics has successfully developed a parallel light source system for lithography machines, which can be used in the field of domestic lithography machines. Focuslight's light field homogenizers are supplied to the world's top optical companies and ultimately used in ASML's core equipment.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The projection objective lens system consists of 20~30 lenses, which reduces the circuit diagram on the mask plate proportionally and then projects it onto the silicon wafer, and can compensate for various optical errors. Abroad, ZEISS is the exclusive supplier of ASML's key optical components, and in China, Silex, a subsidiary of Sai Microelectronics, provides micromirror systems for the world's leading lithography companies. The DUV optical lens developed by MLO has been applied to SMEE's domestic lithography machine, and the optical module of the company's semiconductor testing equipment is supplied to KLA. As one of the leading optical companies in China, Fuguang Co., Ltd. has the ability to provide high-precision optical lenses and optical systems, and is expected to provide high-precision optical lenses and optical systems for lithography machines and other fields. Generally speaking, there is still a big gap in the domestic technical level.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The workpiece table and mask table subsystem can realize the synchronous scanning of the mask and the wafer, step movement, alignment scanning, perform leveling and focusing, assist in wafer unloading, etc. It effectively improves the accuracy and efficiency of lithography, and the double workpiece table of foreign lithography machine is monopolized by ASML, and the domestic Huazhuo Jingke and Tsinghua University teams are in the forefront. The silicon wafer transfer and pre-alignment system subsystem transports the silicon wafer from the wafer box to the workpiece table, and completes the mechanical pre-alignment and optical pre-alignment, so that the silicon wafer is preliminarily aligned with the machine coordinate system, and enters the scope of the alignment system, and then the exposed silicon wafer is transferred back to the wafer from the workpiece table. The instrument used to measure accuracy is a grating scale. Aopu Optoelectronics is the leading high-end grating encoder in China. Suda Vig provides positioning grating components to SMEE, the company's grating scale cycle accuracy is less than 1nm, and the company's nanoimprint technology is leading in China.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The global semiconductor equipment market is highly concentrated, with the sum of the market share of the top 5 manufacturers exceeding 75%, and their gross profit margin is also relatively stable. In addition to the gross profit margin of Ketian Semiconductor, the fifth largest manufacturer, which exceeds 60%, the gross profit margin of the top four manufacturers is basically in the range of 40%-50%. Weighting the gross profit margin of the top manufacturers according to the sales in 2021, the gross profit margin of semiconductor equipment is about 46.5%, that is, the cost ratio is about 53.5%.

Taking ASML as an example, the net sales in 2023Q3 will be 6.7 billion euros, the gross profit margin will be 51.9%, and 90% of ASML's manufacturing costs will come from parts, so it is assumed that the cost of lithography machine parts accounts for 90%.

According to SEMI data, the global semiconductor market size in 2022 will be $107.4 billion, of which the lithography machine market size will be $25.8 billion.

According to the formula: lithography machine parts market size = lithography machine equipment market size * cost rate * proportion of parts cost in the equipment, combined with the above analysis, it is obtained:

In 2022, the global lithography machine parts market size = 25.8 billion US dollars x 53.5% x 90% = 12.423 billion US dollars.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

3.2. Light source system: provide suitable wavelength and stable light for the lithography machine

The light source system is one of the core components in the lithography machine, which is responsible for providing light of a specific wavelength and intensity to achieve precise exposure in the semiconductor manufacturing process, which determines the resolution of the lithography machine. According to the Rayleigh criterion, the resolution formula is:

R= k1 * λ/NA, λ represents the wavelength of the light source, NA represents the numerical aperture of the objective, and k1 represents the lithography process factor. Among them, there are 7 common wavelengths, 3 types of ultraviolet rays: G line (wavelength 436nm), H line (405nm), I line (365nm), deep ultraviolet (DUV) 3: 248nm, 193nm, 157nm, and extreme ultraviolet (EUV) 13.5nm. In general, the shorter the wavelength, the higher the resolution.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The light source has the following functions in the lithography machine:

1. Light source: The light source of the lithography machine will emit light to the light plate, which becomes the main source of the exposure process.

2. Wavelength control: Accurately control the wavelength of the light source, and adjust the wavelength by changing the temperature, current and other parameters of the light source.

3. Improve exposure efficiency: A high-intensity and stable light source can improve the exposure efficiency, and the intensity of the light can be controlled by adjusting the current, voltage and other parameters of the light source to achieve faster and more accurate exposure.

4. Ensure exposure quality: The wavelength stability, intensity stability, and spot size of the light source will affect the exposure quality, and it usually includes a series of optical components and a feedback control system to monitor and control the stability of the light.

5. Extend the service life of the lithography machine: The use of a suitable and stable light source can reduce the loss of the machine and avoid the damage of the machine due to excessive light source adjustment.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The internal structure of the light source system includes light-emitting diodes (LEDs) and optical systems.

LEDs are the core part of the light source system, and it is an electroluminescent semiconductor material that acts as positive and negative electrodes and acts as a support through pins.

The luminescence principle of LEDs is that there is a transition layer between p-type semiconductors and n-type semiconductors, called p-n junctions. When a forward bias is applied to the electrode, electrons and holes are injected into the P and N regions, respectively, and when the non-equilibrium minority carriers are recombined with the majority carriers, the excess energy is converted into light energy in the form of radiant photons.

The optical system is used to adjust the shape and size of the light to fit the objective lens system of the lithography machine. It typically consists of a series of lenses and mirrors that are used to focus light into the desired spot shape and size. In addition, the control system is used to control the stability and accuracy of the light source system. It typically includes a series of sensors and control circuits that monitor and control the wavelength, intensity, and stability of light.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Light source classification: mercury lamp, excimer laser, EUV light source.

1. Mercury lamp: As the most common light source of lithography machine, the common wavelengths of mercury lamp are 365nm, 405nm and 436nm. When a mercury lamp is energized, the electrons in the system excite to produce light. This type of light production typically releases a lot of heat and therefore requires cooling system maintenance, and the efficiency of the mercury lamp's life is reduced due to the prolonged release of heat.

2. Excimer lasers: Excimer lasers are usually used to provide deep ultraviolet light sources. The excimer has the property of binding into molecules in the excited state and dissociating into atoms in the ground state. Lasers use their properties to make laser transitions to emit light of a specific wavelength. There are generally three types of excimer lasers: KrF (248nm), ArF (193nm), and F2 (157nm).

3. EUV light source: This light source mainly provides EUV light at 13.5 nm. How it works: A light source is generated by irradiating tin (Sn) droplets with a high-power CO2 laser. Taking the LPP scheme as an example, the molten tin droplets in the vacuum chamber are ejected from the generator, and the low-intensity pre-pulse impact is used to expand them into a pancake shape (the light intensity can be significantly increased by the large light-receiving area of the pancake tin), followed by the high-intensity pulse impact to form a plasma, and finally the plasma is captured by the collector mirror to emit radiation and transmitted to the exposure system.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The technical complexity, high precision and stability requirements, intellectual property barriers, supply chain barriers, and relatively small market size of the lithography machine light source system have led to high barriers to the light source of the lithography machine. These factors make new entrants in this field face greater market risks and uncertainties, thus making the competition pattern of the entire lithography machine light source industry relatively stable.

Gigaphoton (one of the suppliers of EUV light sources) has a laser power of up to 27kW: Gigaphoton has been providing laser light sources for ASML, Nikon and Canon since its establishment. A total of three EUV light sources were designed, namely Proto#1, Proto#12 and Pilot#1, of which Pilot#1 is a product for commercial application, with a laser power of 27kw and an output power of 250W. At present, there are only two companies that can produce EUV light sources: one is Cymer in the United States, and the other is Gigaphoton in Japan, Cymer was acquired by ASML in 2013 and currently occupies more than 80% of the market for lithography machine light sources. At present, in China, Keyi Hongyuan can provide 193nm ArF excimer lasers to break the monopoly.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

3.3. Optical system: provides accurate projection and efficient exposure for lithography machines

The optical system plays a vital role in the lithography machine, which is the guarantee of high-resolution imaging of the lithography machine, which directly affects the accuracy, quality and reliability of chip manufacturing. It is mainly composed of optical elements such as lenses, mirrors, plano-convex lenses, etc., and projects the chip design pattern onto the mask with high precision by precisely controlling the focusing, illumination, and exposure time of the light. Specific functions include image development, resolution control, exposure control, stability and reliability, lighting control, etc.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Optical system = illumination system + projection objective. The illumination system provides stable illumination by adjusting the shape of the light, expanding the beam, controlling the exposure dose and improving the uniformity of the light, and the projection objective lens is divided into contact and non-contact types, which function is to multiply the reticle pattern and focus it on the wafer.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The optical system is one of the important parts of the lithography machine, which mainly includes the following types:

1. Projection optical system

Projection optics are one of the most widely used optical systems in lithography machines. It uses components such as light sources, lenses, and mirrors to shrink and map the chip pattern on the mask onto the silicon wafer, thereby enabling chip manufacturing.

2. Scanning optics

The scanning optical system is a new type of optical system that uses high-speed scanning to project the mask pattern onto a silicon wafer. With the advantages of high speed, high precision and high stability, the scanning optical system has become an indispensable and important equipment in modern chip manufacturing. Compared with traditional projection optical systems, scanning optical systems have higher manufacturing efficiency and higher accuracy.

3. Interferometric optics

Interferometric optics is an optical system based on the principle of interference, which uses the interference of light to realize the manufacture of chip patterns. With the advantages of high precision and high stability, interferometric optical system has become an indispensable and important equipment in some special fields, such as micro-nano fabrication and photonic crystal manufacturing.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

As far as technical barriers are concerned, they are divided into the following two aspects:

Projection objective: With the continuous improvement of resolution requirements, projection objectives need to be continuously superimposed to meet the requirements, and optical materials and processing have approached the industrial limit, so it is difficult to improve technology.

Lighting system: There are three requirements for light, which are light uniformity, light shape adjustment, and scanning bar light control.

As far as suppliers are concerned, the domestic projection objective lens supplier is MLO Optics, with a resolution of less than 30nm, while the resolution of foreign ZEISS is less than 0.25nm, while in terms of optical crystals, Fujing Technology can supply LBO crystals, BBO crystals, Nd:YVO4 crystals, and magneto-optical crystals, while Cristal Laser S.A. can supply KTA crystals, RTP crystals, LBO crystals, BBO crystals, and BBO crystals, and in terms of lasers, Focuslight Technology's light source non-uniformity is controlled at 1% Below, the light source inhomogeneity of foreign FLSBA is 3%~5%.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

3.4. Duplex table: Enables lithography machines to achieve efficient parallel processing

The duplex system plays an important role in the lithography machine, effectively improving the production efficiency of the lithography machine. Conventional lithography machines have only one workpiece stage, and all steps, such as wafer loading and unloading, measuring, alignment, and exposure, are performed sequentially. However, the design of the duplex system allows most of the measurement and correction work to be carried out in parallel with the exposure work.

Taking the TWINSCAN dual workpiece table as an example, when the No. 1 workpiece is stepped scanning and exposure at the exposure position, the No. 2 workpiece can complete the upper and lower wafers and 3D topography measurement at the measurement position. Once the No. 1 table has finished exposing the wafer, the two tables switch positions and functions, and so on, achieving efficient exposure of the wafer. As a result, the design of the duplex system significantly increases the productivity of the lithography machine.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The internal structure of the duplex station mainly includes the following main parts:

1. Duplex station: The duplex station is the core component of the duplex system, which carries the transportation and positioning tasks of silicon wafers in the lithography machine. The duplex stage is usually composed of a high-precision mechanical structure to ensure the accuracy and stability during the working process of the lithography machine.

2. Positioning system: The positioning system of the duplex system is used to determine the position and attitude of the silicon wafer on the carrier. It typically consists of a series of sensors and actuators that enable precise control and adjustment of the silicon wafer.

3. Handling system: The handling system of the duplex station system is used to transfer the silicon wafers between the carrier stations. It usually consists of a series of robotic arms and drives that enable fast and accurate handling of silicon wafers.

4. Control system: The control system of the duplex system is used to control the movement and work of the whole system. It usually consists of a series of controllers and sensors that enable precise control and adjustment of the system.

5. Safety system: The safety system of the duplex system is used to ensure the safety of the system in the working process. It usually consists of a series of safety sensors and actuators, which can realize the safe monitoring and control of the system.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The technical level of the double workpiece stage is mainly evaluated by the wafer transfer speed and alignment accuracy, and the technical barriers mainly come from these two aspects. In terms of transfer speed, to meet the exposure imaging speed of the DUV lithography machine, the wafer platform needs to move at 7g acceleration to match the imaging speed. The double workpiece table also has high requirements for precision. The first is that the chip needs to be superimposed in the manufacturing process, so there will be an offset, generally thousands of nanometers of offset, and the accuracy requirement is 1-2nm; second, due to the uneven surface of the wafer, the height difference of the photoresist at different positions on the wafer surface is more than 500nm, and the accuracy is required to be less than 100nm. At present, only Huazhuo Jingke can supply dual workpiece stages in China, which can be used for 65nm lithography machine applications, while ASML can supply sub-nanometer lithography machine workpiece stages. The accuracy of the grating encoder (used to measure the alignment accuracy) of Optoelectronics can reach 1um/m, and the accuracy of foreign Heidenhain companies is 2um/m.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

04 Related Subjects

4.1. MLO Optics: A domestic industrial-grade precision optics leader, with broad growth space for semiconductors and AR/VR

MLO was established in 1999, and on June 1, 2015, MLO completed the change of shares to a joint-stock company, and was listed on the Shanghai Stock Exchange on March 9, 2023. The company is a leading provider of precision optics integrated solutions in China, focusing on the R&D, design, manufacturing and sales of precision optical devices, optical lenses and optical systems. At present, the company's products are mainly customized industrial-grade precision optical products, mainly covering six subdivided application scenarios, including semiconductors, life sciences, aerospace, unmanned driving, biometrics, and AR/VR detection. From the perspective of customer structure, the company's customers are all over the Middle East, the United States, Europe and other places, and the core customers in each downstream field include Align, MGI, Camtek, KLA, Shanghai Microelectronics, Microsoft, Meta and other large enterprises.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Judging from the company's financial data, the company's business has developed rapidly, the scale of revenue has been expanding, and the market share has continued to increase. From 2020 to 2022, the company's operating income will be about 246 million yuan, 331 million yuan and 439 million yuan respectively, and the net profit attributable to the parent company will be 42 million yuan, 47 million yuan and 59 million yuan respectively. From the perspective of the company's total operating income, the company's total operating income has achieved seven consecutive increases from 2016 to 2022, and the net profit attributable to the parent company has also shown an upward trend.

From the perspective of business types, optical devices, optical lenses and optical systems account for 98.23% of the company's revenue, of which the proportion of optical device revenue is decreasing, while the proportion of revenue from more technologically advanced optical systems is relatively increasing. From the perspective of the company's downstream application revenue, life sciences, semiconductors and AR/VR detection are the company's top three downstream applications, and the company's product sales in the semiconductor and life sciences fields have increased rapidly, while the proportion of aerospace business revenue is decreasing.

In 2023Q3, the company achieved revenue of 121 million yuan, -7.89% year-on-year and +5.73% month-on-month, and net profit attributable to the parent company of 0.08 billion yuan, -70.83% year-on-year and -47.32% month-on-month. The company's Q3 revenue decreased year-on-year, and the net profit attributable to the parent company decreased sharply, mainly due to the company's high-intensity investment in the semiconductor field, resulting in a significant increase in management/R&D expenses.

In terms of downstream applications, the company's revenue in the first three quarters of semiconductors, life sciences, AR/VR detection, biometrics, aerospace, and unmanned driving accounted for 35.35%, 29.32%, 9.63%, 8.85%, 5.68%, and 3.34% respectively. Among them, the demand in the semiconductor and aerospace fields is strong, with semiconductor revenue increasing by 46.71% year-on-year, and aerospace revenue increasing by 62.96% year-on-year.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

From the perspective of the company's product structure, the company mainly provides customers with customized precision optical devices, optical lenses and optical systems. In terms of optical lenses, the company's lenses, flat films, and prisms are used in lithography machines, and its customers include Corning Group, Shanghai Microelectronics, etc., and provide high-precision lenses and optical systems for semiconductor testing equipment.

In terms of precision optical devices, MLO Optics is able to provide precision optical devices including lenses, prisms and flat sheets (including multispectral filters, fluorescence filters, space mirrors, etc.) with its exquisite R&D and manufacturing technology. These devices have excellent characteristics such as high surface type, high finish, and high-performance coating, and are widely used in major national strategic development fields such as lithography machines, high-resolution satellites, lunar exploration projects, and civil aviation aircraft. The DUV optical lens developed by the company has been applied to SMEE domestic lithography machine, and the optical module of the company's semiconductor testing equipment is supplied to KLA.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated
Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.2. Fujing Technology: The world's leading optical crystal, precision optical components are widely deployed in VR/AR, semiconductor equipment and other fields

Fujing Technology was established in 1990 by the Fujian Institute of Physical Structure of the Chinese Academy of Sciences (hereinafter referred to as the Institute of Physical Structure, Chinese Academy of Sciences), and in March 2008, Fujing Technology Co., Ltd. was listed on the Shenzhen SME Board. The company is mainly engaged in the research and development, production and sales of crystal components, precision optical components and laser devices.

The company has been deeply engaged in nonlinear optical crystals for more than 30 years, and is a world-renowned leading manufacturer of LBO crystals, BBO crystals, Nd:YVO4 crystals, magneto-optical crystals, precision and ultra-precision optical components, high-power optical isolators, acousto-optic and electro-optical devices.

The company is one of the few suppliers in China that can provide one-stop comprehensive services of "crystal + optical components + laser devices". The company's products are constantly enriched, and its downstream applications are gradually expanded, and its customers cover the world's leading manufacturers, including Coherent, TRUMPF, Spectral Physics and Ryke Laser.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Judging from the company's financial data, in 2022, the company will achieve an operating income of 768 million yuan, a year-on-year increase of +11.57%, and the company's operating income has maintained a nine-year growth, mainly due to the company's upstream laser industry, which has been affected by the rapid development of the domestic laser industry in recent years and strong customer demand. In 2022, the company will achieve a net profit attributable to the parent company of 226 million yuan, a year-on-year increase of +18.30%, and the company continues to expand its product line, with downstream applications covering the laser industry, optical communications, automotive electronics, consumer electronics and other fields.

In Q3 2023, the company achieved operating income of 207 million yuan, a slight decrease year-on-year, and net profit attributable to the parent company of 53 million yuan, -26.49% year-on-year. The company's Q3 performance declined, mainly due to the company's increased deployment of new application fields such as biomedicine, semiconductors, and optical communications, resulting in a large increase in expenses. From the perspective of profitability, the company's gross profit margin and net profit margin in 23Q3 were 55.98% and 29.07% respectively, which decreased compared with the same period last year.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Fujing Technology, as the main business provider in the upstream of the laser industry, the company's products cover three categories: crystal components, precision optical components and laser devices. Fujing Technology's optical components can be used to manufacture the optical part of the lithography machine, including key components such as projection lenses and microscopes. The company and Zhongke Jingchuang and the Institute of Physical Structure invested in the establishment of Fujian Ruichuang Optoelectronics Technology Co., Ltd. to carry out the development, production and sales of diffractive optics and micro-optics and other products, diffractive optical elements (DOE) are a series of movable lenses in the lithography machine, mainly used to produce the light source required for lithography. At present, the company's products are indirectly supplied to ASML.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.3. Fuguang Co., Ltd.: a leader in aerospace-grade high-end lenses, leading the domestic substitution of AI and pan-semiconductor ultra-high precision optics

Fuguang Co., Ltd. originated from the state-owned 8461 Factory, which was established in 2004 and successfully listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange on February 26, 2020. It is a manufacturer of optical products integrating R&D, production and sales.

Through years of technology accumulation and product upgrading, Fuguang Co., Ltd. has strong R&D strength and has successfully developed a series of high-performance optical products. These include 150 million pixel ultra-high-definition continuous zoom lens, co-aperture dual-spectral continuous zoom lenses and lightweight special all-in-one zoom lenses, a series of lightweight special all-in-one zoom (22x, 30x, 36x) lenses, and has completed the development of 30x special all-in-one zoom lens prototypes, 20X, 30x ultra-telephoto K-class (1.3 million pixels) high-definition mid-wave infrared zoom lenses and light-sized large-field K-level high-definition mid-wave infrared zoom lens prototypes.

The company's main products include optical lenses, optical components, lasers and laser optical components, which can be widely used in security, scientific research, industry, medical, aerospace, semiconductor and other fields.

In terms of customers, the company provides customers with two series of "customized products" and "non-customized products". Among them, the "customized products" series mainly include special optical lenses and optoelectronic systems, which are widely used in major national aerospace missions and high-end equipment such as "Shenzhou series", "Chang'e lunar exploration", "Tianwen-1", etc., and the core customers cover scientific research institutes and enterprises under the Chinese Academy of Sciences and major groups, and are one of the most important providers of special optical lenses and optoelectronic systems in China; Smart city, Internet of Things, Internet of Vehicles, intelligent manufacturing and other fields. Core customers include well-known enterprises such as Hikvision, Huawei, Bosch, Honeywell, and Dahua.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Judging from the company's financial data, the company's business has developed rapidly, and its operating income has shown an expanding trend. From 2020 to 2022, the company's operating income will be about 588 million yuan, 675 million yuan and 781 million yuan respectively, and the net profit attributable to the parent company will be 51 million yuan, 45 million yuan and 29 million yuan respectively. The company's overall operating income in 2022 was +15.76% over the same period of last year, and the net profit attributable to the parent company was -35.05% over the same period of last year, mainly due to the company's investment in buildings and equipment, resulting in an increase of 29.6506 million yuan in depreciation of fixed assets and amortization of long-term assets in the current period compared with the same period last year, and the company's talent incentive caused an increase of 3.3852 million yuan in new share-based payment expenses and an increase of 10.9799 million yuan in employee remuneration over the same period last year. In 2023Q3, the company achieved operating income of 138 million yuan, a year-on-year increase of -34.74%, and a net profit attributable to the parent company of -33 million yuan, a year-on-year increase of -5.08%.

The company's Q3 operating income declined significantly, mainly due to cyclical fluctuations in the market, the postponement of customer production plans and the decrease in demand for international and domestic non-customized optical lenses.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Judging from the company's overall revenue data, in 2022, the company's main business will achieve operating income of 776 million yuan, a year-on-year increase of 16.37%, of which the revenue of customized products business will be 145 million yuan, an increase of 85.81% over the same period of the previous year, accounting for 18.67% of the total revenue, and the gross profit margin of products will be 43.76%. The revenue of non-customized optical lens business was 565 million yuan, an increase of 6.30% over the same period of the previous year, accounting for 72.83% of the total revenue, and the gross profit margin of products was 16.01%. The revenue of optical components and other businesses was 66 million yuan, an increase of 15.34% over the same period of the previous year, accounting for 8.5% of the total revenue, and the gross profit margin of products was 29.30%.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Relying on the accumulation of technology research and development in the optical lens industry, the company's spherical lenses, aspherical lenses, binary curved surfaces, off-axis surfaces, irregular lenses and freeform surfaces can have a shape error of 0.1um and a surface roughness of up to 1nm, which is at the advanced level in China. In terms of coating technology, the all-dielectric high-reflection coating < 99%, the drift amount < 1nm, and the uniformity of the whole furnace <5nm.

According to the company's investor relations activity record form, the company's precision and ultra-precision machining experimental center construction project was completed in March 2022, which can carry out breakthroughs in ultra-precision optical processing technologies such as infrared lens processing, aspherical glass lens processing, aspherical plastic lens processing, spherical lens high-precision processing, ultraviolet lens processing, etc., and provide high-precision optical lenses and optical systems for high-end equipment (such as lithography machines), national defense, aviation, aerospace and other fields. The company is a core supplier of aerospace-grade high-end lenses and military optics, and the company develops lithography machines and other semiconductor equipment lenses, lenses and other products, and cooperates with domestic industry customers to develop them.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.4. Focuslight Technology: Scarce laser component manufacturer, lidar + pan-semiconductor + medical cosmetology multi-industry layout

Founded in September 2007, Xi'an Focuslight Technology Co., Ltd. has been deeply involved in the laser industry for more than ten years, and has certain technical advantages and market position in the upstream semiconductor laser component segmentation.

In the field of automobiles, the company has obtained two domestic fixed-point projects, and is actively promoting the fixed-point landing with overseas customers, and has reached a settlement agreement with customer B; in the field of semiconductor applications, the company's logic wafers and power semiconductor annealing have achieved import substitution, and the Hefei fundraising and investment projects are progressing in an orderly manner, which is expected to form a new growth point; in the field of medical aesthetics, overseas Cyden customers are expected to be in 2024 In December 2021, the company successfully IPO, listed on the Science and Technology Innovation Board and raised 1.77 billion yuan for projects such as micro-optical applications and industrialization of lidar transmitter modules, Focuslight is expected to open a new stage of rapid development. Based on the industry position of the upstream bottleneck, Focuslight actively deploys midstream photonic application solutions.

At present, Focuslight has four major businesses: semiconductor laser, laser optics, optical system, and automotive application (lidar), providing core components and application solutions for solid-state laser, fiber laser manufacturers and research institutes, medical beauty equipment, industrial manufacturing equipment, lithography machine core component manufacturers, lidar machine enterprises, semiconductor and flat panel display equipment manufacturers, etc., and the products are gradually used in advanced manufacturing, medical health, scientific research, automotive applications, and information technology. The company's customers include Continental, Velodyne LiDAR, Luminar, Shanghai Microelectronics, TSMC, LG Electronics of South Korea, etc.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Judging from the company's financial data, the company's business has developed rapidly, the scale of revenue has been expanding, and the market share has continued to increase.

From 2020 to 2022, the company's operating income will be about 360 million yuan, 476 million yuan and 552 million yuan respectively, and the net profit attributable to the parent company will be 35 million yuan, 68 million yuan and 127 million yuan respectively. In 2022, the company's main business income increased by 16.31% year-on-year, and the net profit margin of sales increased by 9.25pct year-on-year.

In terms of products, the operating income of semiconductor laser components and raw materials was 228 million yuan, +30.93% year-on-year, and the gross profit margin was 48.45%, the operating income of laser optical components was 229 million yuan, +2.96% year-on-year, and the gross profit margin was 60.23%, and the operating income of pan-semiconductor solutions was 61 million yuan, +68.70% year-on-year, and the gross profit margin was 63.01%. The operating income of automotive application solutions and medical and health solutions were 29 million yuan and 20 million yuan respectively.

In Q3 2023, the company achieved operating income of 145 million yuan, +6.87% year-on-year and +17.74% month-on-month, and net profit attributable to the parent company of 17 million yuan, -56.13% year-on-year and +48.78% month-on-month. From the perspective of profitability, the profitability of 2023Q3 has been restored, with a gross sales margin of 47.48%, +4.75pct month-on-month.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company said on the investor interactive platform that the company provides core components for lithography machines and semiconductor wafer annealing for company A, a core supplier of ASML in the Netherlands, which are ultimately used in the core equipment of global high-end lithography machine manufacturers, and in recent years, light field homogenizer products have also been used in major domestic lithography machine research and development projects and prototypes. According to the needs of different models of customers, the company matches light field homogenizers with different wavelengths, and the products have been used in DUV lithography machines such as KrF, ArF, and ArF immersion type.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.5. Jingfang Technology: Wafer-level packaging leader, automotive cameras, miniature optical lenses, and GaN devices open up growth space

Founded in 2005, Jingfang Technology established the first domestic wafer-level packaging factory in 2006, and was the first professional packaging and testing service provider in Chinese mainland and the second largest in the world that can provide WLCSP mass production services for image sensor chips at the beginning of its listing in 2014.

As a leader in wafer-level through-silicon via (TSV) packaging technology, the company focuses on the smart sensor market represented by image sensor chips, and its packaged products mainly include CIS chips, TOF chips, biometric identification chips, MEMS chips, etc., which are widely used in smart phones, security monitoring digital, automotive electronics and other market fields.

The company has been deployed in the field of vehicle cameras for many years, and the company's subsidiaries Anteryon and Jingfang Optoelectronics have the world's leading core capabilities in micro optical design, R&D and manufacturing, and have broad application prospects in many markets such as semiconductors, automobiles, and industrial automation.

With the development of the company's technology, on the one hand, the company's core advantages in the field of hybrid optical lenses continue to improve, and further expand its market scale in industrial, automotive and other advantageous application fields in Europe and the United States: on the other hand, the micro optical lens has successfully obtained the certification of overseas TIE1 customers, achieved large-scale mass production in the field of automotive intelligent projection, and can provide customized micro optical solutions in automotive intelligent interaction systems such as automotive headlights. The company is a global leader in CIS chip packaging and testing, with a deep layout in the automotive field, deeply bound to leading manufacturers such as Haowei and Sony, and is expected to continue to benefit from the high growth of the automotive CIS market in the future.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Judging from the company's financial data, from 2020 to 2022, the company's operating income will be about 1.104 billion yuan, 1.411 billion yuan and 1.106 billion yuan respectively, and the net profit attributable to the parent company will be 382 million yuan, 576 million yuan and 228 million yuan respectively. The company's revenue decline in 2022 is mainly due to the weak demand for downstream consumer electronics and the industry's overcapacity and high inventory, resulting in a weak prosperity in the image sensor segment.

In Q3 2023, the company achieved operating income of 200 million yuan, a year-on-year increase of -21.65%, and a net profit attributable to the parent company of 34 million yuan, a year-on-year increase of +14.22%. The decline in the company's Q3 performance is mainly due to the weak demand for consumer electronics such as downstream mobile phones and the overcapacity of the industry and high inventory, resulting in a decline in the company's overall packaging business revenue.

Looking forward to the long term, with the gradual recovery of the downstream consumer market, the company's development and expansion in new fields such as vehicle camera packaging and miniature optical device manufacturing, and the corresponding business scale and production capacity continue to increase, which is expected to open up new performance growth points.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

In terms of products, the revenue of chip packaging and testing in 22 years was 857 million yuan, a year-on-year decrease of 33.46%, mainly due to the impact of the recession in the consumer electronics market such as mobile phones, and the decrease in packaging orders and shipments; This is due to the increase in the demand of the agricultural automation market, the continuous and steady growth of the hybrid lens business, and the significant increase in the commercial application scale of the company's wafer-level miniature optical device (WLO) business in the field of automotive intelligent interaction.

From the perspective of Q4 single quarter, in Q4 2022, the operating income was 231 million yuan, down 9.41% from the previous quarter, and the net profit attributable to the parent company was 0.07 billion yuan, down 76.67% from the previous quarter, and the Q4 performance still decreased from the previous quarter. In 2023, the company will actively adjust its product structure, continue to develop and expand new fields such as vehicle camera packaging and miniature optical device manufacturing, and continue to enhance its business scale and production capacity, which is expected to open up new performance growth points.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company continues to integrate the design, R&D and manufacturing capabilities of Anteryon and Jingfang Optoelectronics in the Netherlands to expand the scale of mass production and commercial application. Anteryon, formerly known as Philips Optics and Electronics, is currently the largest customer of ASML in the Netherlands, whose hybrid lenses and wafer-level miniature optical lenses (WLO) are mainly used in optical lenses of lithography machines and automotive welcome lights under the MLA solution. According to the company's semi-annual report, 23H1 Jingfang Optoelectronics achieved a net profit of 1.8 million yuan, and Anteryon achieved a net profit of 12.77 million yuan.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.6. Su Davig: Nanoimprint lithography leader, business involves semiconductors, unmanned driving, AR/VR detection and other fields

Founded in 1999, SVG started out of the Optical Parts Processing Division. It entered the testing market in 2003, followed by the security market in 2006 and the biomedical market in 2009. As a provider of precision optics integrated solutions, SVG's products focus on the R&D, design, manufacturing and sales of precision optical devices, optical lenses and optical systems, mainly involving semiconductors (including lithography machines and semiconductor testing equipment), life sciences (including gene sequencing and oral scanning, etc.), aerospace, unmanned driving, biometrics, AR/VR detection and other application fields. The company's customers are well-known enterprises at home and abroad, including Microsoft, Huawei, BOE, Samsung Electronics, Dell, TPV Technology, Coretronic Optoelectronics, etc.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

In 2022, SVG achieved operating income of 1.72 billion yuan, down 1.21% from the same period of the previous year, operating profit of -320 million yuan, total profit of -330 million yuan, and net profit attributable to shareholders of listed companies of -280 million yuan, narrowing the loss range.

In 2022, the main reason for the loss is that the profit level of its Huarisheng is not as expected, so a large impairment provision of 260 million yuan has been made, and its second-panel industry has experienced a cyclical contraction, resulting in a decline in the revenue of new printing materials and light guide materials, and the utilization rate and capacity utilization rate of the Nantong factory are still at a low level.

In terms of high-end intelligent equipment, testing and verification have been carried out in the fields of lithography machines and core component materials, photovoltaic copper plating patterning equipment, AR-HUD projection screens, etc. With the recovery of downstream demand, the profitability of this sector is expected to increase.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated
Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

In the field of public safety and new printing materials, Suda Vig not only serves as the only designated supplier of anti-counterfeiting film for driver's license and driving license of the Ministry of Public Security, but also provides technical support for ID card reading anti-counterfeiting. The new optical printing materials are mainly used in the packaging of consumer goods such as tobacco and alcohol, cosmetics and daily chemical products. With the rise of green packaging, its environmentally friendly 3D transfer materials are gradually replacing traditional packaging materials for tobacco and alcohol, cosmetics and daily chemical products.

In the field of new materials for consumer electronics, it mainly includes light-guiding materials and conductive materials. Light guide materials are mainly used in liquid crystal display backlight modules such as notebook computers and LCD TVs. The customers of the subsidiary Weiwang Technology include downstream manufacturers such as BOE, Samsung Electronics, LG Display, AUO Optoelectronics, Qisda, TPV Technology and other manufacturers.

In the field of conductive materials, the subsidiary Weiyeda mainly mass-produces transparent conductive films and related products, which are used in large-screen/flexible display touch, MiniLED electrode films, 5G antennas and vehicle antennas, photovoltaic cell transfer electrode films, color electronic micro-cup transparent conductive films and other fields.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

SVG is an outstanding enterprise in the field of high-end intelligent equipment, and its product lines include direct writing lithography, 3D lithography, projection/scanning lithography, nanoimprint lithography, etc.

The company's direct-writing lithography equipment has been exported to Japan, South Korea, Israel and other countries, and occupies a certain market share in the field of domestic scientific research lithography equipment. In addition, SVG has also been involved in the fields of photovoltaic copper plating patterning equipment, chip mask and IC substrate, and has been actively developed using direct-writing lithography technology.

As a leading manufacturer of micro-nano structure products and technical service providers in China, SVG has established a basic technology platform system for the R&D and manufacturing of micro-nano optics through independent research and development of key manufacturing equipment for micro-nano optics - lithography machine. The company is committed to providing customers with the design, development and manufacturing services of micro-nano optical products for different purposes, and has successively developed a number of lithography machines and imprint equipment covering nano and micro-scale.

Through the self-made micro-nano structure mold, Suda Vig uses nanoimprint to form micro-nano structures on the surface of specially treated PET\PC films and other substrates. This micro-nano structure has different magnitudes and morphologies, which can make the material produce various special effects, such as photochromic patterns, brightness and diffusion properties, transparent conductive properties, holographic images, etc.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.7. Optoelectronics: a supplier of core components of lithography machines, with business covering semiconductors, aerospace, medical and other fields

Founded in June 2001, Aopu Optoelectronics is a high-tech enterprise funded by Changchun Institute of Optics, Fine Mechanics and Physics, Chinese Academy of Sciences and Guangdong Fenghua High-tech Co., Ltd. It was formerly known as the Changchun Institute of Optics and Mechanics of the Chinese Academy of Sciences, and was listed on the Shenzhen Stock Exchange in January 2010.

The company is affiliated to Changchun Institute of Optics and Mechanics of the Chinese Academy of Sciences, and is an important enterprise in the domestic photoelectric measurement and control instrument manufacturing industry. The company's main business is the research and development, production and sales of photoelectric measurement and control instruments and equipment, new medical instruments, optical materials, grating encoders, high-performance carbon fiber composite products and other products, which are widely used in the military, medical equipment industry and other fields.

The company has a strong R&D team and advanced manufacturing equipment, and is committed to providing customers with high-quality, personalized products and services. In addition, Optoelectronics has a number of core patents and technologies in the field of photoelectric detection, and its products are constantly innovating and upgrading to provide high-quality products and services to customers around the world. Customers include well-known enterprises and institutions such as the Institute of Optics and Mechanics, the subordinate units of the Aerospace Science and Industry Group, Huazhong CNC, and the Institute of Microsatellite Innovation of the Chinese Academy of Sciences.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

In 2022, Optoelectronics achieved operating income of 627 million yuan, +14.67% over the same period of last year, operating profit of +102 million yuan, a year-on-year increase of 90.79%, total profit of 101 million yuan, a year-on-year increase of 91.40%, and net profit attributable to shareholders of listed companies of 82 million yuan, an increase of 75.31% over the same period of last year. The reason for the large gap between the growth rate of revenue and net profit attributable to the parent company in 2022 is the company's acquisition of Changguang Aerospace in September 2022, whose main business is aviation composite materials.

In Q3 2023, the company achieved operating income of 160 million yuan, a year-on-year increase of +15.35%, and a net profit of 45 million yuan, a year-on-year increase of +19.79%. The net profit attributable to the parent company was 26 million yuan, a year-on-year increase of -21.75%. The main reason is that there was a large investment income of 31.2 million in the third quarter of last year, deducting the impact of investment income, the company still achieved a significant increase in net profit attributable to the parent company in the third quarter.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

Aopu Optoelectronics is a high-tech enterprise engaged in the manufacture of optical mechatronics products, its major shareholder is the Changchun Institute of Optics and Mechanics of the Chinese Academy of Sciences, mainly responsible for the research and development of the light source and optical part of the domestic lithography machine in mainland China, according to the Workers' Daily, the two major equipment developed by Aopu Optoelectronics: aspheric ultra-precision milling equipment and multi-degree of freedom rapid grinding and polishing equipment, which can process 2.5 meters of aperture optical components.

The CNC demonstration base production line of mirror milling and grinding can serve the entire civil field. In addition, the high-precision absolute grating scale and encoder produced by the holding company Yuheng Optics are the prerequisites for ensuring the positioning accuracy of the workpiece table of the lithography machine. As the core subsystem of the lithography machine, the workpiece table system directly affects the yield and overlay accuracy of the three major performance indicators of the lithography machine.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.8. Wavelength Optoelectronics: a major manufacturer of precision optical components and components, with steady growth in main business revenue

Wavelength Optoelectronics was established in 2008 and listed on the Shenzhen Stock Exchange on August 23, 2023.

The company focuses on the field of industrial laser processing and infrared thermal imaging, and is committed to providing overall solutions for various optical equipment, optical design and optical detection.

Wavelength Optoelectronics mainly produces a series of components and assemblies of laser optics and infrared optics, as well as provides optical design and inspection services. The product range includes beam expanders, scanning lenses, focusing lenses and collimating lenses in laser optics, as well as infrared thermal imaging lenses, near-infrared lenses, short-wave infrared lenses, medium-wave infrared lenses and long-wave infrared lenses in infrared thermography. In addition, Wavelength Optoelectronics also provides mainstream optical design software ZEMAX and optical testing equipment.

The company's products can be widely used in consumer electronics industry, marking industry, new energy power battery and other industries. The company's main customers include well-known large enterprises such as Huagong Technology, AutoNavi Infrared, Jiuzhiyang, and IPG Apache in the United States.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

From 2020 to 2022, the revenue of wavelength optoelectronics business was 266.5016 million yuan, 309.4171 million yuan and 341.915 million yuan respectively, and the net profit attributable to the parent company was 44.0534 million yuan, 54.4317 million yuan and 61.5073 million yuan respectively, all showing a growth trend.

From January to September 2023, the company's operating income was 261.5518 million yuan, a year-on-year increase of +4.41%, the net profit attributable to shareholders of the parent company was 42.6421 million yuan, a year-on-year increase of -9.69%, and the net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses was 40.9039 million yuan, a year-on-year increase of -8.03%.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The optical components industry in which the company is located is a technology-intensive industry, and the technology upgrade iteration is fast, in order to improve the conversion rate of R&D investment, the main enterprises in the industry are mostly oriented to market demand for R&D.

In 2022, the company launched products such as lithography machine parallel light source system and AR near-eye inspection lens, and successfully entered the semiconductor and AR/VR fields. With the virtuous cycle of R&D-production-sales, the company will continue to enhance the ability to transform scientific research achievements, actively allocate R&D resources, and continue to invest in R&D to further enhance the company's innovation strength and sustainable operation ability.

In the field of semiconductor applications, the company has the ability to provide large-aperture optical lenses for lithography machines.

The company has successfully developed the lithography machine parallel light source system that can be used in the field of domestic lithography machines, and has delivered a number of systems for the proximity mask chip lithography process.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.9. Xuguang Electronics: Electric vacuum + military + electronic ceramics work together, and launch tubes and aluminum nitride structural parts enter the semiconductor equipment supply chain

Founded in 1965, formerly known as the state-owned Xuguang Electron Tube Factory, the company implemented shareholding reform in 1994 and was listed on the Shanghai Stock Exchange in 2002.

The company is the only high-tech enterprise in China with a whole industry chain from metal parts processing, precision ceramics manufacturing to complete sets of electrical equipment, and has formed a trinity of electric vacuum devices, military products, and electronic ceramics.

Electric vacuum business segment, the company's electron tubes are widely used in laser processing equipment and many other subdivisions, the switch tube company now has a complete vacuum switch tube and solid sealing pole industry chain, key process technology, equipment and testing equipment, has become the most complete varieties, the largest production of ceramic vacuum interrupter manufacturing base, widely used in the field of medium and high voltage power grid power distribution; Independent controllable embedded computer system, electronic ceramics sector, the company has the core technology of ceramic metallization, the acquisition of Chengdu Asahi porcelain to achieve horizontal expansion of the electronic ceramics industry, products mainly include aluminum nitride powder, substrates, structural parts and HTCC and other electronic ceramic materials.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company's business development is stable and improving, and its revenue and net profit have continued to grow in the past three years.

From 2020 to 2022, the company's operating income will be 902 million yuan, 1.007 billion yuan, and 1.141 billion yuan respectively, and the net profit attributable to the parent company will be 54 million yuan, 58 million yuan, and 100 million yuan respectively. In 2022, the company's gross profit margin increased by 4.63 pct year-on-year, and net profit margin from sales increased by 2.67 pct year-on-year.

According to products, the company's switch tubes, precision structural parts, embedded computers, electronic tubes, switch cabinets, intelligent electrical, aluminum nitride products accounted for 46.19%, 13.67%, 7.79%, 5.96%, 4.82%, 2.55%, 1.87% of the revenue, and gross profit margins were 11.70%, 40.23%, 49.67%, 61.07%, 30.41%, 23.27%, and 37.85% respectively.

In the electric vacuum business segment, the company grasped the opportunity of the country's vigorous development of new power systems and power grid construction, and drove the increase in the sales proportion of high value-added products through the continuous optimization of product structure, so as to achieve steady sales growth and further improvement of profitability; in the military sector, the company achieved the double improvement of "production capacity + efficiency" by continuously increasing investment in product research and development, optimizing the production process and grasping the implementation of projects; in the electronic ceramics sector, the aluminum nitride industry is the company's "number one project" , has made breakthrough progress, showing a strong development trend.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

As an international advanced high-power transmitter manufacturer, the company has strong R&D capabilities, complete product series, and more than 100 kinds of products, with a working frequency range of 0.1MHZ-1000MHz and an output power range of 1KW-1MW.

The products can be used in radar, medical, CO2 laser equipment, radio and television, semiconductor equipment, controllable nuclear fusion and other fields.

At present, the company's transmitter tube products used in the field of semiconductor equipment such as lithography machines and plasma cleaning/polishing have been verified by customers and sold in batches.

On the basis of the existing alumina ceramic technology, the company has successfully expanded into the field of aluminum nitride through holding Chengdu Asahi Porcelain.

As of the first half of 2023, the company has achieved the smooth operation and large-scale stable mass production of the first set of aluminum nitride powder continuous furnace in China, with an annual production capacity of 240 tons of aluminum nitride powder and a product yield of more than 85%;

Aluminum nitride substrates have achieved an annualized production capacity of 3 million pieces and a product yield rate of more than 80%, and have been verified and supplied by more than 20 enterprises at the downstream application end, and have become the main suppliers of aluminum nitride substrates in China.

In terms of aluminum nitride HTCC, the company has completed the development of independent raw material formula and slurry system, and the small-scale test products have passed the certification of some domestic and foreign customers, and more than ten customers have been included in the list of qualified suppliers, and it is expected to achieve batch shipments before the end of the year, with an annual production capacity of 50,000 pieces;

In terms of aluminum nitride structural parts, the company's large-size structural parts have been used in the lithography process, etching process, thin film process, ion implantation and other processes of the semiconductor industry and the pan-semiconductor industry (including photovoltaic industry).

In addition, the company and a research institute of the Chinese Academy of Sciences jointly carried out the research and development of "high-precision ceramic components for semiconductors", and is committed to accelerating the localization process of electrostatic chucks and heating plates for semiconductors.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.10. Tengjing Technology: One of the main providers of precision optical components, semiconductor + AR is expected to open up growth space

Tengjing Technology was established in October 2013 and successfully listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange in March 2021.

The company's main products are optical components and optical fiber devices, which are the basis of optical modules and various optical fiber devices, so the company's business covers a very strong expansibility, the company's products are mainly used in optical communications, fiber lasers and other fields, and a small number of other products are used in quantum information scientific research, biomedicine, consumer optics and other fields.

In addition to its main business, the company actively expands the layout of new application scenarios such as biomedical, AR, automotive, and semiconductor. In the field of semiconductors, the company's multi-band beam splitter can be applied to the optical system of lithography machines, in the automotive field, the company's lidar business is in the stage of sample delivery or small batch verification, and in the field of AR, the company's precision optical components such as aspheric lenses and prism combinations have been applied to emerging consumer electronics products such as AR.

The company's customers include quantum information research institutions, well-known optical module manufacturers Lumentum and Finisar, fiber laser manufacturers R customers, nLIGHT, etc.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company's operating income has continued to increase, and has now reached seven consecutive increases.

From 2017 to 2022, the company's operating income increased from 83 million yuan to 344 million yuan, with an annualized growth rate of 32.89%.

According to the company's 2022 annual report, by product, the company's main business, precision optical components, achieved revenue of 279.4754 million yuan, a year-on-year increase of 19.76%, achieved sales of 47.7891 million pieces (pieces), a year-on-year decrease of 2.57%, and optical fiber device business achieved revenue of 64.577 million yuan, a year-on-year decrease of 6.49%, and achieved sales of 1.8849 million pieces, a year-on-year increase of 4.41% The revenue growth of precision optical component products benefited from the high prosperity of the optical communication industry, and the non-ball cap products and WSS component products applied to the optical module of the access network achieved a significant growth. The revenue of other application fields was 16.626 million yuan, a year-on-year increase of 100.68%.

In 2023Q3, the company achieved operating income of 80 million yuan, a year-on-year decrease of 15.25%, and a net profit attributable to the parent company of 10.8 million yuan, a year-on-year decrease of 40.00%, mainly due to the fact that in the main business, the telecommunications market in the field of optical communication is relatively weak, the demand for individual products has slowed down, the downstream of fiber laser has recovered steadily, and with the strategy of actively reducing prices and increasing the share of some mature products, the investment in production facilities has increased fixed costs such as depreciation and amortization.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The beam splitter project developed by the company has successfully entered the supply chain of semiconductor microelectronic equipment factory.

It is mainly used in the optical system of lithography machines. After it is put into production in the future, it will effectively meet the needs of customers, fill the market gap in this field, and realize the replacement of domestic equipment.

As a diffractive optical element, the beam splitter is able to divide a single laser beam into multiple beams and maintain the original characteristics of each beam, that is, after the laser passes through the beam splitter, the beam diameter and phase remain the same, while the propagation direction and energy will change specifically. This unique optical property makes beam splitters irreplaceable in many high-precision optical applications.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.11. Tongfei Co., Ltd.: a leader in CNC temperature control equipment, a supplier of special temperature control equipment for semiconductor device manufacturing equipment

Tongfei was established in 2001 and listed on the Shenzhen Stock Exchange in May 2021.

The company's leading products are divided into 4 series: liquid constant temperature equipment, electrical box constant temperature installation, pure water cooling unit, and special heat exchanger, mainly including: MCO oil cooler, MCW water cooler, MCWL/TFLW laser special water cooler, MCS cutting fluid cooler, MCA electrical box temperature and humidity regulator, MEA electrical box heat exchanger, MWA air/water heat exchanger, MEO hydraulic oil heat exchanger, industrial washing heat exchanger and water cooling cabinet and other products.

Involved in machine tools, electronics, military industry, aerospace, automobiles, ships, rail transit, communications, electric power, new energy, industrial washing and other industries, the products are sold to Germany, Switzerland, the Czech Republic, Japan and other countries and Taiwan, China.

The company has become one of the main manufacturers with business scale and product coverage in the field of industrial temperature control in China, and has expanded excellent and stable customer groups in various fields, including EMAG, Mazak, TRUMPF, Beijing Jingdiao, Ruike Laser and other domestic and foreign giants.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company's development speed is relatively fast, the operating income has continued to grow in the past six years, and the net profit attributable to the parent company has also shown a growth trend.

From 2020 to 2022, the company's operating income will be 612 million yuan, 829 million yuan, and 1.008 billion yuan respectively, and the net profit attributable to the parent company will be 125 million yuan, 120 million yuan, and 128 million yuan respectively.

In 2022, the company's gross sales margin will be 27.35%, a year-on-year increase of 0.38pct, and the net sales margin will be 12.69%. According to the product, the company's liquid constant temperature equipment, electrical box constant temperature device, and pure water cooling unit accounted for 53.52%, 21.68%, and 17.97% of the revenue, respectively, and the gross profit margin was 25.16%, 25.73%, and 36.46% respectively.

The company's products are closely aligned with the intelligent development direction of industrial equipment manufacturing and the national strategy of energy conservation and emission reduction, and have realized the integrated development of downstream strategic emerging industries, and the industry has ushered in a broad market space. In particular, the rapid growth of the energy storage industry and the power electronics industry has ushered in unprecedented development opportunities. The company's customers include well-known enterprises such as North Huachuang, Xinqi Microelectronics, Huahai Qingke, Shanghai Microelectronics, TBEA and so on.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

According to the investor research report, domestic substitution and market share improvement are the main growth paths for enterprises in the semiconductor manufacturing field in mainland China.

With a good industry reputation and a number of independent intellectual property rights, the company has gradually expanded its cooperation with well-known customers such as North Huachuang and Xinqi Micro Packaging.

The energy consumption and heat generation of electronic components running in semiconductor manufacturing equipment in chip production links such as crystal biosectioning, photolithography, etching, physical vapor deposition (PVD) and chemical vapor deposition (CVD) are increasing, and temperature control equipment must be introduced to prevent energy from being converted into heat to cause the opening and heating of the device, so as to ensure the full performance of the equipment. The company mainly provides professional temperature control products, which are expected to provide equipment for semiconductor manufacturing.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.12. China Porcelain Electronics: the leader of electronic ceramic products, resource integration into the field of compound semiconductors

Sinocera Electronics was founded in 2009 and successfully listed on the Shenzhen Stock Exchange in 2021.

The controlling shareholder of the company is China Electronics Technology Group Co., Ltd., and its main products include optical communication device shells, wireless power device shells, infrared detector shells, high-power laser shells, acoustic meter crystal oscillator shells, 3D optical sensor module shells, 5G communication terminal module shells, aluminum nitride ceramic substrates, ceramic components, integrated heaters, etc., which are widely used in optical communications, wireless communications, industrial lasers, consumer electronics, automotive electronics and other fields.

In terms of optical communication device shells, the company has completed the design and development of 800G optical communication device shells, which is equivalent to overseas technical level. In terms of consumer electronics, the company's aluminum nitride thin film substrates and thin and thick film composite substrates can be matched with the company's optical communication device shells, and have been supplied in batches, and filter products cover SAW, BAW and other devices.

The company's precision ceramic parts are the core components for semiconductor equipment prepared by precision processing of advanced ceramics such as alumina and aluminum nitride, which have excellent properties such as high strength, corrosion resistance and high precision, and are used in key semiconductor equipment such as etching machines, gluing and developing machines, lithography machines, ion implanters, etching machines, gluing and developing machines, lithography machines, ion implanters, etchings.

The company's consumer electronics customers cover domestic first-line brands. The company's consumer electronics ceramic shell and substrate series products mainly include acoustic table crystal oscillator shell, 3D light sensor module shell, aluminum nitride ceramic substrate, etc., among which the acoustic table crystal oscillator shell is mainly used for crystal oscillator and acoustic surface filter packaging, and the structural form is mainly SMD, which is widely used in mobile intelligent terminals such as smart phones, AR/VR, smart watches, TWS, as well as consumer electronics fields such as wireless communications, automotive electronics, and medical equipment.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company has always focused on the field of electronic ceramics, with independent intellectual property rights in the three core technology fields of electronic ceramics and metallization system, key core materials of electronic ceramics and metallization system, semiconductor shell design simulation technology, and key technology of multilayer ceramic high-temperature co-firing.

The 2022 annual report disclosed that the company's flagship product, the shell product business for communication devices, maintained stable growth, achieving revenue of 945.7706 million yuan in 2022, a year-on-year increase of 30.49%: With the diversification of consumer electronics intelligent terminal application scenarios, the company's market share of high-end consumer shells and substrates has gradually increased, and the revenue of consumer electronics ceramic shells and substrates in 2022 will be 200.2913 million yuan, a year-on-year increase of 64.67%.

In the first three quarters of 2023, the company achieved operating income of 1.907 billion yuan, a year-on-year increase of +1.69%, and a net profit attributable to the parent company of 343 million yuan, a year-on-year increase of -3.43%.

In the third quarter of 2023, the company achieved operating income of 645 million yuan, +5.02% year-on-year, and net profit attributable to the parent company of 122 million yuan, -3.40% year-on-year.

The reasons for the significant increase in the growth rate of non-net profit deducted from the beginning of 2023 to Q3 are in accordance with the accounting standards for business enterprises: (1) the non-net profit deducted on a consolidated basis in 2023 includes the non-net profit deducted from the restructuring target from August to September 2023; (2) according to the Accounting Standard for Business Enterprises No. 20 - Business Combination and Accounting Standard for Business Enterprises No. 33 - Consolidated Financial Statements, the business combination under the same control offset the profits of 4 units, including the listed company itself; Explanatory Announcement No. 1 on Information Disclosure of Companies Offering Securities to the Public - Non-recurring Gains and Losses, the net profit and loss for the current period from the beginning of the three target periods to the date of consolidation arising from the business combination under the same control have been deducted.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company's precision ceramic parts are the core components of semiconductor equipment prepared by precision processing of advanced ceramic materials, such as alumina, aluminum nitride, etc.

These parts have excellent properties such as high strength, corrosion resistance, and high precision, and are widely used in key semiconductor equipment such as etching machines, gluing and developing machines, lithography machines, and ion implanters. Among them, the ceramic heating plate has the advantages of good temperature uniformity, high control accuracy, high dimensional accuracy, corrosion resistance, etc., and as a key component of the equipment, it can directly contact the wafer, which can realize high-precision control of the surface temperature of the wafer and rapid temperature rise and fall.

The electrostatic chuck is an ultra-clean wafer carrier suitable for vacuum or plasma environments by clamping the wafer using the principle of electrostatic adsorption and maintaining its flatness without damage. These ceramic components are essential for the proper functioning of semiconductor equipment and the smooth running of the production process.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

4.13. Xinqi Micro Packaging: A leading domestic direct-writing lithography equipment, with a business layout including PCB, pan-semiconductor and photovoltaic domains

Founded in 2015 and successfully listed on the Shanghai Stock Exchange in April 2021, Xinqi Micro is a leading enterprise of direct-writing lithography equipment in China. The company takes micro-nano direct writing lithography technology as the core, and develops, manufactures, sells and provides corresponding maintenance services.

The main products include PCB direct imaging equipment and automatic line system, pan-semiconductor direct writing lithography equipment and automatic line system, etc., covering multi-field lithography from micron to nanometer.

The company's PCB direct imaging equipment includes MAS, RTR, NEX, FAST, DILINE and other series, and the PCB exposure equipment has also expanded from low-end to high-end, among which the MAS35T for HDI/flexible board has a production capacity of 480 sides/hour, and the performance has been greatly improved. The pan-semiconductor direct-writing lithography equipment of Xinqi Micro includes LDW, WLP, MLF, MLC, RTR, MAS, NEX and other series, and the products are used in the manufacture of IC, MEMS, biochips, discrete power devices, etc., IC mask manufacturing,

Advanced packaging, display lithography and other links. In the field of IC substrates, the MAS6 series has a minimum line width of 6μm; in the field of new displays, the company implements a point-to-surface strategy, focusing on NEX-W (white oil) models, cuts into the customer supply chain, and promotes market sales in this field; in the field of lead frames, the company implements a key customer strategy, and uses product development and customer resource accumulation in the field of semiconductor packaging such as WLP to promote the substitution of etching process for traditional stamping processes, thereby driving the revenue of the pan-semiconductor field to rise.

The company's customers include Shengyi Electronics, Shenghong Technology, Dynamic Electronics, Shanghai Electric Co., Ltd., Pengding Holdings and other leading manufacturers.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

The company's revenue increased from 22 million yuan in 2017 to 652 million yuan in 2022, with a compound annual growth rate of 197%, the net profit attributable to the parent company increased from -6.85 million yuan in 2017 to 137 million yuan in 2022, and the revenue in the first three quarters of 2023 was 524 million yuan, a year-on-year increase of 27.30%, and the net profit attributable to the parent company was 118 million yuan, a year-on-year increase of 34.91%.

In 2022, the sales volume of the company's PCB series equipment and pan-semiconductor series equipment will be 174/26 units, a year-on-year increase of 20.83% and 52.94%, and the revenue will be 5.27/96 million yuan respectively, and the gross profit margin will be 37.9% and 65.08% respectively.

Since 2018, the company's gross profit margin has always remained above 40%, and the net profit margin has basically remained above 20%.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

In April 2016, Xinqi Micro developed the semiconductor direct writing lithography equipment MLL-C900 product, successfully realized the industrial application of direct writing lithography technology, and gradually developed LDW-X6 products for IC mask plate making, LDW-D1 products for domestic direct writing lithography automatic line system for OLED display panels and WLP products for wafer-level packaging. Simai Microelectronics and other well-known enterprises in the industry have reached cooperation to realize domestic substitution in the field of pan-semiconductors.

In September 2022, the company has delivered WLP2000 wafer-level packaging direct-writing lithography machine, which WLP2000 adopts the most advanced digital lithography technology, which can directly transfer layout information to a substrate coated with photoresist without masking, which is mainly used in the field of 8inch/12inch integrated circuit advanced packaging, including Flip Chip, Fan-In WLP, Fan-Out WLP and 2.5D/ 3D and other advanced packaging forms, WLP2000 is its self-developed lithography equipment with automatic rewiring (RDL) function in the field of wafer-level packaging, and its performance indicators have reached the international advanced level.

Lithography machine has achieved a breakthrough: the core bottleneck link of chip manufacturing, and the domestic substitution of lithography machine has been accelerated

05 Risk Warning

5.1. R&D Technology Risks

The technical requirements of lithography machines are high, and many technical problems need to be solved in the process of R&D and manufacturing, such as optical system design, precision machinery manufacturing, control system development, etc. Insufficient technology may lead to problems such as unstable equipment performance and low manufacturing accuracy, affecting the quality and efficiency of chip manufacturing.

5.2. Working Capital Risk

The R&D and manufacturing of lithography machines require a large amount of capital investment, including R&D expenses, manufacturing costs, equipment installation and commissioning costs, etc. Insufficient funds may lead to problems such as project interruption and capital chain breakage, affecting the operation and development of enterprises.

5.3. Market Price Movement Risk

The lithography machine market is influenced by the semiconductor market, and the market demand and competitive situation are constantly changing. Market changes can lead to problems such as poor equipment sales and price fluctuations, affecting the profitability and market position of enterprises.

5.4. Supply Chain Risks

Lithography machine manufacturing requires a large number of raw materials and components, such as optical components, mechanical components, electronic components, etc. Supply chain issues, such as supplier bankruptcies, logistics disruptions, etc., can prevent businesses from producing properly or delivering equipment on time.

5.5. Policy Risks

The lithography machine industry is affected by government policies, such as tax policy, industrial policy, science and technology policy, etc. Policy changes may lead to adverse effects on enterprises, such as increased tax revenues and industrial restrictions.

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The report comes from [Foresight Think Tank]

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