From June 28th to 29th, the 8th Jiwei Semiconductor Conference 2024 with the theme of "Crossing Boundaries and New Quality Future" was held in Xiamen International Conference Center Hotel.
Han Xiaomin, vice president and general manager of consulting business of Aijiwei, said in his speech on the theme of "The New Normal of the Development of China's Semiconductor Industry" that under the influence of application, competition and external environmental pressure, the domestic semiconductor industry has entered a new normal.
Multiple factors are superimposed, and the domestic semiconductor industry is facing a new normal
Han Xiaomin pointed out that under the influence of AI demand and the increase in storage prices, the global semiconductor market will increase significantly in 2024 and 2025, and the semiconductor market will be relatively weak due to weak demand.
In terms of sub-regions, the market decline in Chinese mainland will be the most severe in 2023 (-14%). According to WSTS statistics, since the Chinese mainland market surpassed the United States for the first time in 2007, China has maintained the position of the world's largest single semiconductor market for 17 consecutive years. According to estimates, if the business dominated by storage and data centers continues to maintain a high growth trend in 2024, by the end of 2024, China's position in the world's largest single semiconductor market for 17 years may have to give way. This also shows that from the overall situation, the industry is in a time node of development differentiation and fierce changes in the competition pattern.
Judging from the trends of the four major application markets, the smart phone and automobile markets are basically the same as the forecasts made by Jiwei Consulting at the end of last year. The smartphone market grew by 3.5%, while the growth rate of the new energy vehicle market was revised down from 21.5% to 20.1% due to the impact of policies and tariffs on overseas exports. The data center server market is lower than expected, with an expected growth of 7.7% to 3.5%, and the main growth force comes from AI servers, and the growth of traditional servers is under pressure. The biggest variable in the decline in the notebook market was the market performance of AI PCs released intensively in the second half of the year, but the performance for the whole year was not optimistic, from 3.8% to -4.3%.
The performance of global semiconductor giants is also diverging, according to TechInsights statistics, leading memory companies led the decline, and companies with HBM support are relatively balanced. Nvidia and Broadcom, which are mainly engaged in AI, performed strongly. As the ballast stone and weather vane of the entire industry, the simulation industry also shows different degrees of differentiation, domestic and foreign companies are in the destocking cycle, mainly for industry, consumer enterprises performance decline seriously, while the performance of automobile-based enterprises is relatively stable. From the current point of view, AI can be said to be a vane for the development of the entire industry, which will open up space for the incremental space of the entire market.
From the perspective of wafer manufacturing, Han Xiaomin analyzed that the entire industry has changed greatly in the past two years, and the global wafer production capacity will be about 26.5 million pieces/month (8 inches, the same below) in 2023, and is expected to increase to 30 million pieces/month by 2025 and about 36 million pieces/month by 2028, with an average annual growth rate of about 6%-6.5%.
By the end of 2023, Chinese mainland's wafer manufacturing capacity will be about 4.9 million pieces per month, accounting for about 19.6% of the global total. In 2024Q2, it has reached 5.2 million, and it is expected to reach 5.5 million by the end of the year, and the global proportion will basically remain unchanged. Based on the construction and commissioning of existing projects, we estimate that by 2028, it will reach 8.95 million pieces per month, accounting for nearly 25% of the global total.
Judging from the wafer manufacturing projects that have been announced in the United States, Han Xiaomin pointed out that the total investment amount is about 400 billion US dollars, including not only advanced processes and advanced storage production lines such as TSMC, Intel, and Samsung, but also IDM enterprises based on mature processes such as NXP, TI, onsemi, and ADI, and wafer foundries based on mature processes such as GF and X-Fab. The U.S. CHIPS bill is expected to support 10% (about $39 billion) of investment. Moreover, it is not ruled out that there will be new projects to expand and expand in the future.
In this regard, Han Xiaomin judged that domestic manufacturers, whether advanced or mature technology, will face greater competitive pressure in the next few years, and industrial decoupling and industry competition will increase the risk of overcapacity. Previously, due to the industry in a downward cycle, the capacity utilization rate was low, but by the second quarter of this year, the 12-inch production capacity was close to saturation, while the 8-inch line utilization rate was still low.
At present, the semiconductor industry has become the firepower of the great power game, and the United States has introduced a series of measures in recent years to curb the high-end development of China's semiconductor industry. Han Xiaomin believes that at the level of encircling and restricting the development of local AI, the United States is likely to continue to check and fill gaps, expand the scope, and involve the relevant control of open source architecture and large models.
In addition to the comprehensive blockade in the field of advanced technology, it is worth noting that the United States has also put the control of mature chips on the agenda. Han Xiaomin mentioned that the United States BIS launched a mature chip survey on January 28, 2024, and it is expected that a preliminary plan will be introduced before this year's election, that is, at the end of the third quarter and the beginning of the fourth quarter, which is not optimistic.
Han Xiaomin concluded that from the perspective of the overall market application demand, competition with international enterprises and the complex impact of the external environment, the development of the domestic semiconductor industry is facing changes and will enter a new normal.
Under the policy of science and technology innovation, enterprises and investment institutions "double clear" self-hematopoiesis has become a compulsory course
Previously, it was analyzed that the main characteristics of China's new normal are: speed - from high-speed growth to medium-high growth; Structure - the economic structure is constantly optimized and upgraded; Power - from factor-driven, investment-driven to innovation-driven. Han Xiaomin believes that these characteristics basically correspond to the current problems encountered in the semiconductor industry, and it can be said that the semiconductor industry has also entered a new normal.
From the three perspectives of the new normal, Han Xiaomin elaborated on the key issues of the domestic semiconductor industry.
First, it is difficult to maintain high growth that significantly exceeds the market average. In the past 20 years, China's semiconductor industry has maintained a high growth trend, but the growth rate has been revised down in recent years, and the growth rate of China's semiconductor industry will fall below 10% in 2023. Moreover, China's semiconductor industry accounts for nearly 20% of the world's total, except for memory, accounting for a significant share, and it is relatively difficult to achieve a growth that exceeds the market average in the future. From the perspective of import and export, the growth trend in the past few years is obvious, but since last year, the downward cycle of the industry and the severe situation of external decoupling have been severe, and the growth rate has dropped significantly.
Second, the semiconductor industry as a whole is disenchanting, semiconductors can not be completely equated with hard technology, high-end, core, neck field and the general technology industry and manufacturing industry to be differentiated. In response to the IPO, not long ago, the China Securities Regulatory Commission issued the "Eight Measures on Deepening the Reform of the Science and Technology Innovation Board to Serve Scientific and Technological Innovation and the Development of New Quality Productivity" (hereinafter referred to as the "Eight Measures"), which emphasized the attributes of scientific and technological innovation. Han Xiaomin pointed out that in March 2019, the Science and Technology Innovation Board was launched, and 5 sets of listing rules were proposed, from which any one of the above can be applied for, and this year from Article 9 to Article 8, and then to the re-revised listing rules in April, the threshold has been raised, and the rules have changed from 5 OR to 4 AND + X, and the effect of the restart remains to be seen.
Third, in the case of involution in the industry, going overseas and mergers and acquisitions are not two optional paths.
In this regard, Han Xiaomin believes that the domestic involution is mainly in the second echelon or even lower positions, in order to seize market share of the initiative to choose. Now the involution has not reached the level of excessive involution, unless the volume reaches the point where some players with an obvious market position disappear and roll out a result, the involution will continue. From the objective situation of the industry, involution is a normal metabolic process, and it is estimated that the involution of the industry will continue to 1~2 years.
Focusing on going overseas, Han Xiaomin said that in terms of a product like a chip, if it does not have the brand effect of to C or the ability to rely on marketing to open the market, the effect will not be too great for the chip company.
At the level of mergers and acquisitions, Han Xiaomin said that the investment in the semiconductor industry has reached a clear situation. Judging from the investment projects in recent years, the number of investments has declined but not dramatically. Semiconductor companies that do not fall within the scope of support from the science and technology innovation policy will encounter difficulties in follow-up financing. The LP ecosystem, which is dominated by government funds, will lead to further concentration of funds in the GPs of leading industries and state-owned GPs. In the case of a significant increase in the risk-return ratio of semiconductor investment, for investment institutions that rely more on social capital and expect excess returns, the initiative to "clear" has begun.
Local governments are also beginning to see the situation and shrink investment. Han Xiaomin concluded with data that second- and third-tier cities have basically given up the idea of laying out the IC design industry, and clearly sought "distinctive" positioning and accepted supporting positioning. The core cities and first-tier cities are also "interested" in projects with insufficient "scientific and technological innovation attributes". The demand for the development of local industries is still strong, from semiconductors to pan-semiconductors, and then to electronic information and even pan-electronic information. This shows that the systemic investment opportunities are basically over, and the enterprises and investment institutions under the science and technology innovation policy are "double cleared".
In this case, in the past few years, the amount of foreign equity investment of some semiconductor listed companies has been increasing year by year, and they have consciously established their own "circle of friends". Under the current situation, these previous investments in associates, joint ventures or foreign small equity investments are further transformed into mergers and acquisitions, which are worthy of attention.
Finally, Han Xiaomin emphasized that many companies will face a "second" entrepreneurship with a shrinking attitude, and market-oriented, customer-oriented, and self-hematopoiesis will be a compulsory course for every semiconductor company.