On January 17, 2024, Intel CEO Pat Gelsinger said at the World Economic Forum in Davos that due to the joint restrictions on semiconductor equipment by the United States, Japan and the Netherlands, the technology gap between China's semiconductor manufacturing industry and the world's top wafer fabs is about 10 years.
On the one hand, the difference between the 10 years is not so big, in 2014, Intel just released the second-generation Core with 14nm process; on the other hand, the real development progress of China's semiconductor equipment is far beyond the imagination of Americans.
In 2023, the consumer electronics industry will be sluggish, and the chip industry will also be dragged down.
According to data from the General Administration of Customs, China imported a total of 479.5 billion integrated circuits in 2023, down 10.8% from 2022, and imports amounted to US$349.4 billion, down 15.4%.
In addition, China's imports of diodes and similar semiconductor components (roughly understood as low-end chips) fell by 23.8% in 2023.
On the export side, China exported a total of 267.8 billion integrated circuits in 2023, down 1.8% from 2022, and the export value was US$136,000, down 10.1%.
However, the decline of these two data is not the same, indicating that the chips produced in Chinese mainland have actually increased.
According to the National Bureau of Statistics, China's integrated circuit output will reach 351.4 billion in 2023, an increase of 6.9% compared with 324.2 billion in 2022. It accounts for about a quarter of the world's total integrated circuit production capacity.
In 2023, 1.17 billion mobile phones will be shipped worldwide.
It is not difficult to find that in terms of quantity, high-end process chips (above 7nm) dominated by mobile phones are not the mainstream. As long as China can achieve a wider range of domestic substitution of 14nm or even 28nm, it will be able to eat up most of the profits in the chip industry chain.
In the field of CMP equipment, another Chinese company has achieved a breakthrough in the manufacturing process, the company said in the prospectus: the company's CMP equipment can achieve 28nm and above process technology. Because the prospectus also mentions that its competitor Huahai Qingke can achieve 14nm and above process technology.
01
Jingyi Micro successfully IPO
Jingyi Micro is a company engaged in CMP equipment, which belongs to CETC Group.
The so-called CMP equipment refers to chemical mechanical polishing equipment. CMP is a technique used in the manufacture of integrated circuits to obtain global planarization, which removes unwanted materials from the surface by simultaneous chemical reaction and mechanical grinding.
The company's mainstream products are 8-inch (compatible with 6-inch), and 12-inch products have been verified and some orders have been received. In terms of product structure, the company mainly focuses on 8-inch equipment, and has become the first domestic manufacturer to export overseas 8-inch CMP equipment.
In the prospectus, the company said: in some customer production lines to achieve 100% domestic replacement of CMP equipment.
As a newly established company (2019), the scale of operation is relatively small, and it does not make much sense to focus too much on financial indicators in this case.
According to the prospectus, during the reporting period (2020 to 2023 interim report), the company's operating income was 99.8421 million yuan, 219.6614 million yuan, 505.8082 million yuan and 308.6788 million yuan respectively. The net profit was 14.184 million yuan, 128.2437 million yuan, 93.302 million yuan and -9.7649 million yuan respectively.
On the one hand, benefiting from the vigorous development of the chip industry, the company's growth is very high, on the other hand, the company's gross profit margin remains stable, which is 35.22%, 51.31%, 50.35% and 55.63% respectively.
On the whole, the company's performance continued to grow, and the gross profit margin of the main business was stable.
02
The problem of over-reliance on large customers
Since the establishment of the company, SMIC has been one of its largest customers. In the first half of 2023, revenue accounted for more than half.
SMIC's importance is well known, but it's a double-edged sword.
As a start-up company in the industry, large customers can help grow and escort, but on the other hand, relying too much on large customers, the company is equivalent to binding with SMIC, and the technology is independent and controllable, but it is difficult to achieve independent and controllable revenue and gross profit margin.
Here are the 55 of the company's fourth largest customers in the first half of 2023, which are the scientific research institutions of CETC.
According to the official website, the core chips and key components developed by the institution are widely used in territorial air defense, early warning and detection, communication and navigation, and satellite aerospace engineering, creating a "Chinese chip" with independent core technology. In recent years, the 55th Institute has vigorously promoted the development of civilian industries in the two major fields of radio frequency electronics and power electronics.
Focus: Radio Frequency Electronics.
Xingkong Jun found a news that Zhejiang University students visited 55 schools.
Who is domestic customer A?
The company left a message in the prospectus:
Since this ranking is public, Xingkong Jun checked it and it was Shaoxing SMIC. According to the company's investigation, this company has just changed its name: Xinlian Integration.
SMIC, the company's second largest shareholder, holds only 14.11% of the shares and will not consolidate it. This also means that the revenue of SMIC (SMIC Shaoxing) will not be reflected in SMIC's financial report.
03
Patent lawsuits
In the field of chips, a company without a patent lawsuit must not be a good company.
For example, Intel and AMD have been entangled in patent lawsuits for half a century, spending countless money, manpower and material resources, and finally basically reached a settlement. Haiguang even took advantage of the "loophole" of the patent lawsuit between the two to successfully obtain the technology of x86.
However, the company's patent lawsuit is a bit special.
Gu Haiyang, the founder of Hangzhou Zhongsi, was once a member of the predecessor of Jingyi Micro 45 and led the CMP business of 45 firms.
This is born from the same root, so why not be in a hurry to fry each other.
The two sides began to "tear" mode.
Fortunately, in August 2023, the parties reached a settlement agreement (there may be a lot of work behind the scenes that cannot be seen). According to the Settlement Agreement, Hangzhou Zhongsilicon will not sue again for the 8-inch CMP device or claim its rights, rights and interests and pursue legal liability through any other means. The litigation will not have a material adverse impact on the issuer's financial position and ability to continue operations. There are no potential disputes related to 8-inch CMP equipment between the Company and Hangzhou Zhongsi Future, and the Company does not have any other outstanding or foreseeable major litigation or arbitration matters.
When China's CMP technology is still relatively weak, we should try not to produce internal friction.