- 2024-11-01
- News
Semiconductor Equipment Enters a High-Growth Cycle
With the expansion of semiconductor fabs in mainland China in recent years, the semiconductor equipment industry has experienced rapid development and continues to maintain growth vitality and potential. Many manufacturers' new products have been recognized by customers, with significant growth in orders, opening up market space while forming a virtuous cycle.
The new round of expansion plans for fabs has brought growth opportunities for the semiconductor equipment industry. Many companies have achieved significant results in expanding new customers and developing new markets, enhancing the overall revenue level. According to statistics, by the end of the third quarter of 2024, the contract liabilities of the semiconductor equipment sector reached 20.182 billion yuan, a year-on-year increase of 13.99%. Some orders have been transformed into revenue, and the revenue or profit of related companies in the third quarter may reach a new high. Some companies' gross margins have slightly decreased. The differences in product structure and customer structure in a single quarter can cause fluctuations in gross margins. Equipment manufacturers need to increase R&D investment, introduce new functions, new modules, and new products to improve bargaining power, and reduce the cost and expense pressure brought by depreciation through large-scale production, maintaining the stability of profit margins.
In recent years, the capital market has provided large-scale financial support for semiconductor equipment companies, with the scale of equity financing exceeding 20 billion yuan. So far, the return on net assets of related companies has increased significantly. Currently, the terminal market demand for automotive, industrial, and consumer electronics continues to recover, and the complexity of devices is increasing, which will support the acceleration of orders in the upstream equipment segment.
Advertisement
The peak investment period for fabs is coming.
The last semiconductor cycle reached its bottom in the fourth quarter of 2023, with fab utilization rates falling below 70%. Affected by the global chip act and the AI wave, fabs have started a new expansion cycle. The International Semiconductor Industry Association expects fab equipment spending to grow for three consecutive years from 2025 to 2027, with year-on-year growth rates of 21%, 12%, and 4%, respectively. Equipment spending in 2027 is expected to reach a record $145 billion. In 2024, it is expected that 60 new fabs will be added worldwide, including 6 fabs under construction in mainland China and 19 fabs in operation. It is expected that by 2027, there will be 239 300mm fabs worldwide, with mainland China accounting for 29.71%. The expansion plans of fabs have brought growth opportunities for the semiconductor equipment industry. According to statistics, by the end of the third quarter of 2024, the contract liabilities of this sector reached 20.182 billion yuan, a year-on-year increase of 13.99%, and the inventory balance reached 57.612 billion yuan, a year-on-year increase of 42.81%.
In the first three quarters, Zhongwei Company's new orders reached 7.64 billion yuan, a year-on-year increase of about 52.0%, of which etching equipment new orders were 6.25 billion yuan, a year-on-year increase of about 54.7%, and LPCVD new orders were 300 million yuan, with new products starting to increase in volume; it is expected that new orders in 2024 will be between 11 billion and 13 billion yuan. In the first three quarters, the company's production of special equipment increased by about 310% year-on-year, with a corresponding output value of about 9.419 billion yuan, a year-on-year increase of about 287%, laying the foundation for subsequent shipments and revenue recognition. At the end of September, the balance of goods sent out was about 3.507 billion yuan, an increase of 2.64 billion yuan from the beginning of the year's balance of 868 million yuan; contract liabilities reached 2.988 billion yuan, a quarter-on-quarter increase of 17.86%, and an increase of about 2.216 billion yuan from the beginning of the year's balance of 772 million yuan; the inventory balance was 7.82 billion yuan, a quarter-on-quarter increase of 15.40%, for the preparation of orders on hand.
Some companies have started to convert orders into performance. In the first three quarters, Huahai Qingke achieved a revenue of 2.452 billion yuan, a year-on-year increase of 33.22%, and achieved a net profit attributable to the parent company of 615 million yuan, a year-on-year increase of 33.85%; among them, the revenue in the third quarter was 955 million yuan, a year-on-year increase of 57.63%, and the net profit attributable to the parent company was 246 million yuan, a year-on-year increase of 62.36%, setting a historical record. The company expects that with the launch of CMP equipment that meets more material process and more advanced process requirements, and the application of new technologies in the country in the future, customers' demand for the purchase and upgrade of CMP equipment will grow rapidly. Zhengfan Technology also set a historical record for single-quarter performance, with a revenue of 1.649 billion yuan in the third quarter, a year-on-year increase of 54.63%, and a net profit attributable to the parent company of 195 million yuan, a year-on-year increase of 55.63%.
Shengmei Shanghai and Northern Hua Chuang's third-quarter revenue set a historical record, with operating income of 1.573 billion yuan and 8.018 billion yuan, respectively, a year-on-year increase of 37.96% and 30.12%, and a quarter-on-quarter increase of 6.09% and 23.81%. Shengmei's equipment R&D and manufacturing center was completed and officially put into operation, including two workshops and one auxiliary workshop. According to media reports, the first measurement equipment has been installed in the R&D clean room, which can improve the company's measurement capability to 1xnm. In recent years, Northern Hua Chuang has developed new products such as CCP etching machines, high-end single-wafer cleaning, PECVD, and vertical multi-wafer ALD, which have been verified on the production line and obtained repeat orders from multiple customers, supporting the company's future revenue growth.
Gross margin is basically stable.
In the first three quarters of 2024, Northern Hua Chuang's R&D expenses were 2.192 billion yuan, nearly doubling compared to two years ago. The company's development expenses and intangible assets accounted for 8.23% and 7.39% of total assets, respectively, while the above proportions were 10.48% and 4.98% in the same period last year. The expansion of revenue scale has offset the cost and expense impact brought by the amortization of intangible assets to a certain extent. Northern Hua Chuang's net asset return rate after deducting non-recurring gains or losses in the first three quarters reached 14.69%, a historical record, with a sales gross margin of 44.22% and an asset turnover rate of 0.35 times, all at historical highs. In electronic process equipment, material costs account for 94% of total costs, and material costs are mainly the costs of purchased parts. The company believes that in the future, as the proportion of localization increases, the price of parts will continue to decrease.
In the first three quarters, Zhongwei Company's operating income was 5.507 billion yuan, a year-on-year increase of 36.27%. The company's plasma etching equipment has been recognized by more customers at home and abroad. In the first three quarters of 2024, the revenue from etching equipment was 4.413 billion yuan, a year-on-year increase of about 53.77%; the new product LPCVD equipment achieved the first sale, with a revenue of 28 million yuan; the EPI equipment has successfully entered the mass production verification stage of the client and has completed the process verification of multiple advanced logic device and MTM device customers. The company's gross margin from January to September 2024 was 42.22%, a decrease of 1.23 percentage points from the same period last year.
Zhengfan Technology's gross margin in the first three quarters was 27.47%, a decrease of 0.78 percentage points year-on-year. The slight decrease in gross margin is mainly due to the pressure on the price side of the process medium system business and the relatively high depreciation costs after the new gas production capacity is put into place, according to CITIC Construction Investment's judgment.
From 2022 to the first three quarters of 2024, Huahai Qingke's gross margins were 47.42%, 46.46%, and 45.82%, respectively, with a year-on-year decrease of 0.64 percentage points in the first three quarters. The company plans to maintain the gross margin and net margin at a relatively stable level by continuously increasing R&D investment.
Category expansion and market development.
The International Semiconductor Industry Association expects that the sales of semiconductor equipment will reach a new high of $128 billion in 2025, and the backend segment will accelerate growth in 2025, with the sales of testing equipment increasing by 30.3% year-on-year, and the sales of packaging equipment increasing by 34.9% year-on-year.
Zhengfan Technology's performance in the first three quarters of 2024 has improved significantly. The company has sufficient orders on hand, with the IC industry accounting for about 50%, and chips have increasingly become the company's largest downstream industry, while the proportion of photovoltaics continues to decline; the proportion of new contracts for non-system business exceeds 38%, with a year-on-year increase of 83%, becoming the driving force for the company's order and subsequent revenue growth.
Northern Hua Chuang's main business includes semiconductor equipment, vacuum and lithium battery equipment, and precision electronic components. It has achieved a platform-based layout in the semiconductor equipment field, with specific products including etching machines, PVD, CVD, ALD, cleaning machines, and other high-end semiconductor process equipment. As of the end of the first half of 2024, the investment progress of Northern Hua Chuang's semiconductor equipment industrialization base expansion project phase four, high-end semiconductor equipment R&D project, and high-precision electronic component industrialization base expansion project phase three were 59.65%, 86.63%, and 72.7%, respectively. The expansion of domestic memory production lines will drive the company's orders to grow rapidly. The newly built semiconductor equipment Tai Ma base has been completed and put into use, which can meet the needs of production capacity growth.
Huahai Qingke's CMP products, as one of the key process equipment in the front-end manufacturing of integrated circuits, have gained more customers, and the market share has continued to increase. The new polishing system architecture CMP machine has achieved small batch shipments and has obtained batch sales orders from many top customers; the 12-inch ultra-precision wafer thinning machine has achieved the first verification, and its performance has been recognized by customers, meeting the needs of customers for mass production; the brush cleaning equipment and 12-inch single-wafer terminal cleaning machine applied to 4/6/8-inch compound semiconductors have achieved the first acceptance. With the continuous expansion of the company's CMP product market retention, the scale of key consumables and maintenance services and other business scales will gradually increase, and the revenue from wafer regeneration and wet equipment will gradually increase, and the company expects that the operating income will increase year-on-year.
Starting with etching and other front-end equipment, Zhongwei Company has turned its attention to the market opportunities of advanced packaging. The company's TSV equipment can be used in the field of advanced packaging, and the company has also laid out other equipment products applied to advanced packaging, which will be gradually introduced to the market according to customer needs.
In recent years, the capital market has provided large-scale financial support for semiconductor equipment companies. Northern Hua Chuang has raised a total of 10.5 billion yuan through private placements in 2019 and 2021, and Zhongwei Company raised 8.2 billion yuan in 2021. Recently, Shengmei Shanghai plans to raise 4.5 billion yuan through private placements to accelerate R&D progress and deepen product layout. The company has adjusted its full-year revenue forecast for 2024 to 5.6 billion-5.88 billion yuan, which is higher than the previous minimum forecast of 5.3 billion yuan.
Shengmei Shanghai's cleaning equipment can cover about 90%-95% of the cleaning steps. The semiconductor cleaning equipment and electroplating equipment can compete with the world's first-tier semiconductor equipment suppliers. The vertical furnace series equipment has been batched into many customers' production lines, and the track equipment for coating and development has also entered the customer side and is under verification. The plasma-enhanced chemical vapor deposition PECVD equipment is under development, and it is expected that the process coverage rate of this equipment will reach about 50% in 2024, and in 2025 and later, Shengmei Shanghai's vertical furnace, PECVD, Track and other equipment are expected to contribute to revenue.
- 102 Comments
- 198
- 123