Interview with Zhang Yuyuan: Semiconductors or Davis double-click, looking forward to the outbreak of downstream AI hardware products
"At present, the overall valuation of the semiconductor sector is still low, and it is expected to usher in a Davis double-click market with both valuation and performance after the future performance rebounds", on the sidelines of the Flush Investment Festival and the 2024 Investment Strategy Conference, Zhang Yuyuan, fund manager of Guolianan Fund Semiconductor ETF, clarified his views in an exclusive interview with Silver Persimmon Finance. Zhang Yuyuan said that semiconductors, as a weighted sector of A-shares, need to improve the fundamentals of the industry and the accompanying incremental capital injection if they want to get out of the upward market in the new year.
Huawei Mate60 heralds that domestic substitution has entered a new stage
When it comes to investing, both summary and outlook are essential. Summarizing the semiconductor industry in 2023, Zhang Luyuan believes that the performance of domestic semiconductor equipment and packaging and testing direction is better, while the performance of analog circuits and semiconductor materials is slightly inferior. From a fundamental point of view, the overall fundamentals of storage and digital chips have stabilized and gradually improved, especially for storage, where prices have risen significantly. The overall fundamentals of analog circuits are still not too strong, and we need to be patient for a while. The orders of the packaging and testing equipment are guaranteed, and the performance is more certain.
Regarding the important events in the domestic semiconductor field in 2023, Zhang Yuyuan believes that the emergence of Huawei Mate60 has injected a shot of strength into China's advanced semiconductor process technology. This event marks China's ability to have independent manufacturing capabilities in advanced process technology. It can be said that the birth of Huawei Mate60 indicates that our domestic substitution has entered a new stage.
When it comes to the possibility of the market in 2024, Zhang Yuyuan first cut in from the macro level, "In the current range of the market, although some funds have not yet formed a clear view of the market outlook, but from the selling side, the bearish power of the market has basically been released, the market is in a game stage similar to the balance of long and short, the downward space is limited, and the pressure on the bulls once they break through is relatively small." Semiconductors, as an A-equity heavy sector, need to have an opportunity to enter the upward rhythm when the market as a whole improves and funds are sufficient. ”
He believes that the market is generally expected to improve the fundamentals of semiconductors, but there is a need for practical data disclosure to confirm such expectations, such as the rise in sales of downstream consumer electronics and new energy vehicles may increase the demand for related semiconductor products, as well as the price growth of semiconductor products themselves.
When it comes to which branches of semiconductors are likely to have strong certainty in 2024. Zhang Yuyuan said that digital chips and storage will rebound at the bottom, packaging and materials as pro-cyclical sectors, the certainty of the bottom rebound is also strong, and semiconductor equipment will maintain stable growth in performance.
Storage products or cycle changeovers
"In 2024, the certainty of storage products largely comes from the changes in the cycle stage", in Zhang Yuyuan's view, some storage manufacturers are already reducing production capacity in 2023, and storage is still in the cycle of destocking, but with the passage of time, storage will be converted from destocking to replenishing inventory in 2024, and the iteration of storage products will also boost the demand for new products.
From the analysis of downstream application fields, Zhang Luyuan said that the shipments of consumer electronics, especially mobile phones, have been significantly improved after the launch of Huawei Mate60. In addition to traditional consumer electronics, storage also has the demand for artificial intelligence, such as servers, AI PCs and AI mobile phones and other products The promotion may further increase the demand for storage products in 2024, at present, it seems that these AI hardware products need to process a larger amount of data, so each AI hardware terminal will first need a larger number of storage products, and it may take some time for storage products with higher conversion efficiency such as HBM to achieve better integration with AI hardware.
Looking forward to the explosion of AI hardware products
If most of the downstream demand for semiconductors is still running in the industry cycle, then in 2024, the promotion of AI hardware may become a flashpoint event no less than the emergence of ChatGPT in 2023.
Zhang said that AI-related hardware products may be the first to be presented in the form of AI PCs or AI mobile phones. This kind of product is still in the blank stage, but once the demand rises, the magnitude of growth will be geometric, and it will also drive a significant increase in the demand for related semiconductor products.
In recent years, the iteration of traditional smartphone-related technologies has slowed down and consumer demand for replacement has declined, and the emergence of AI mobile phones may be a major technological iteration, thereby promoting the explosion of replacement demand.
Although it is also possible to implant AI software on traditional PCs and mobile phones to achieve some functions, such as Siri on Apple products, Zhang believes that the application scenarios that can be achieved by software are limited, and the AI of real hardware can make the terminal become an assistant to solve problems in a real sense. And the uncertainty at the moment is that there is no disruptive AI PC or AI mobile phone product yet.
In 2024, the semiconductor industry will usher in a bottom rebound, a node of cycle transformation, and a possible downstream explosion of AI hardware products, which may become a reason for investors to look forward to the semiconductor sector.