Global semiconductor sales in the first half of 2023 were about US $243.2 billion, still down about 20% year-on-year, and the boom in the downward cycle remained sluggish.

With the end of the semi-annual report, the second quarter performance changes of A- share foundry listed companies have also been announced. Since the downturn of the current semiconductor cycle, dragged down by the continued downturn in the consumer market, the upstream wafer foundry industry encountered greater challenges during the year. Due to the structural demand of the end market, the demand in the field of new energy vehicles and scenery storage has become a watershed in the performance of wafer foundry manufacturers, and companies in these emerging fields have achieved revenue growth against the trend.

Benefiting from new energy demand, SMIC's integrated revenue grew against the trend

On the evening of August 30, SMIC (688469.SH), a characteristic process foundry company, released its first semi-annual report after listing. So far, the semi-annual results of the four foundries on the board have all been released.

In the first half of the year, SMIC achieved operating income of 2.52 billion yuan, an increase of 24.1 percent over the same period last year, and its net profit attributable to its parent continued to lose 1.108 billion yuan, mainly due to depreciation of equipment. The net cash flow from operating activities was 0.962 billion yuan, an increase of 74.96 percent over the same period last year, and R & D expenses reached 0.65 billion yuan, an increase of 70 percent over the same period last year.

After excluding non-main business income such as selling supporting housing to employees, SMIC's main business income in the first half of the year increased by 0.938 billion yuan to 2.482 billion yuan, an increase of 60.75 percent over the same period last year.

According to the semi-annual report, SMIC integrates new energy as its main business, with new energy vehicles and industrial control business contributing 81.5 percent of its main revenue . Among them, the new energy vehicle segment accounted for 51.86 , while the industrial control (photovoltaic energy storage) business accounted for 29.6 . among them, the company's automobile business increased by 510.67 year on year, driving the growth rate of main business income to exceed 60%.

SMIC said in its semi-annual report that in the first half of 2023, the company realized the large-scale mass production of the vehicle-grade silicon carbide (SiC) MOSFET used in the vehicle-mounted main drive inverter high-power module (2,000 pieces/month), and will further expand the scale of mass production.

2023 is the big year for the listing of wafer foundries. crystal integration (688249.SH), SMIC integration and hua hong company (688347.SH) have successively landed on the board, raising 9.96 billion yuan, 11.072 billion yuan and 21.203 billion yuan respectively. The growth rates of operating income of the three companies in the first half of the year were -50.44 per cent, 24.09 per cent and 11.52 per cent, respectively. Together with SMIC (688981.SH), the board currently has four wafer foundries, but the performance of each plant in the first half of the year is more differentiated.

Among them, Jinghe Integration's net profit in the first half of the year turned from profit to loss, with a net profit loss of 43.6101 million billion yuan, down 101.66 percent from the same period last year, and operating income also fell sharply by 50.44 percent. It is reported that Crystal Integration has achieved mass production of 150nm to 55nm process platform, and is developing 40nm and 28nm process platform.

The situation of SMIC, the leading stock, is also not optimistic. In the first half of the year, the company's revenue and net profit fell 13.32 and 52.06 respectively. revenue in the second quarter was $1.56 billion, down 18% from $1.903 billion in the same period last year and up 6.7 percent month on month. Net profit was $0.464 billion, up 73.8 percent month on month and down 26.2 percent year on year.

Hua Hong Company, as the most comprehensive wafer foundry enterprise with characteristic process platform in the industry, achieved operating income of about 8.844 billion yuan in the first half of this year, an increase of 11.52 percent over the same period last year, and net profit attributable to its parent was 1.589 billion yuan, an increase of 32.07 percent over the same period last year.

according to the prospectus and financial report, SMIC's main business is to provide one-stop chip and module foundry manufacturing services from design services, wafer manufacturing, module packaging, application verification to reliability testing for industrial control fields such as new energy vehicles, scenery storage and power grid, and high-end consumer goods markets, and has established three major technical directions of power semiconductors, sensors and signal connection.

on may 10 this year, SMIC integrated listed on the sci-tech board at an issue price of 5.69 yuan per share, raising 11 billion yuan for the second phase of wafer manufacturing project, the technological transformation project of MEMS and power device chip manufacturing and packaging testing production base, and SMIC Shaoxing phase iii 12-inch characteristic process wafer manufacturing pilot line project. For the current performance loss scenario, SMIC expects the company to achieve corporate-level profitability in 2026, based on certain assumptions.

while releasing the semi-annual report, SMIC also announced a foreign investment. the company plans to jointly invest 0.5 billion yuan to invest in the establishment of xinlian power technology (Shaoxing) co., ltd. (hereinafter referred to as "xinlian power") with related parties, SAIC, Xiaopeng automobile, Ningde era (300750.SZ), lixun precision (002475.SZ), sunshine new energy and other well-related industrial investment institutions.

The bottom of the semiconductor cycle gradually appears, or bottoms out at the end of the third quarter

In the downward trend of global semiconductor sales, the interim performance of A- share semiconductors is sluggish. Except for the equipment end and very few chip design manufacturers, most companies have shown a double decline in revenue and net profit.

Wind data show that the semiconductor (Yangtze River component) sector of 183 companies, the first half of this year, the median year-on-year growth rate of operating income of -7.36, the median year-on-year growth rate of net profit attributable to -41.6.

public data show that global semiconductor sales fell 22% and 21% year-on-year in April and May, respectively, and the year-on-year change in June was-17%, narrowing slightly. but the industry generally believes that the warming of sales in June is not a sign of an upward turn in the cycle. most organizations believe that the cycle of the semiconductor industry is in a stage of switching from downward to upward. the fundamentals of the industry are expected to hit bottom in the 2. and third quarters of this year. the upward space in wafer foundry and sealing and testing is greater than the downward space. design manufacturers are difficult to give overall evaluation due to different application fields and inventory levels of various products, and are more suitable for tracking targets one by one.

"At this stage is the bottom gradually apparent, the greater probability is that global semiconductor sales bottomed out in the third quarter, mainly consumer electronics demand is still sluggish, some categories are still in the state of price cuts to inventory. Perhaps Apple, Huawei's new product launch in September can boost consumer sentiment and demand for replacement." A TMT industry analyst told CBN, "At the same time, we believe that the space for semiconductor sales to continue to go down is very limited, and the space and time for this cycle to go down is basically in place compared to the past few cycles. We are more inclined to think that semiconductor sales will pick up significantly in the fourth quarter, and the industry boom in 2024 is worth looking forward".