2023 is a big year for fabs to go public. the three new shares with the largest amount of capital raised are all engaged in foundry business, involving huahong company (688347.SH), SMIC integration (688469.SH) and crystal integration (688249.SH). At a time when the semiconductor cycle has not yet reversed, the actions of these wafer head manufacturers are interesting.

on the evening of October 24, SMIC announced that the company's investment in core power technology (Shaoxing) Co., Ltd. (hereinafter referred to as "core power") has completed the industrial and commercial registration. A number of participants in Core Power are the investment platforms of the head companies in the new energy industry. SMIC said the investment in the company aims to promote the rapid development of the listed company's silicon carbide (SiC) business.

Under the background of the trend of photovoltaic installation speed and high-voltage fast charging of electric vehicles, silicon carbide, a semiconductor material with better performance, is in short supply. Compared with overseas large factories, domestic silicon carbide business started late, good rate and overall production capacity can not meet the needs of downstream power semiconductor plants. With the head of the characteristics of the fab continue to speed up the construction of production capacity, silicon carbide release after the investment opportunities are also concerned by the market.

Ningde, SAIC, Sungrow, etc. Core Power

as early as the end of August this year, SMIC announced foreign investment and related party transactions. Nearly two months later, the details of SMIC's capital contribution, controlling equity ratio and other investors have been settled.

According to the announcement, Xinlian Power is mainly engaged in the process research and development, production and sales of silicon carbide (SiC) and other compound semiconductors, with a registered capital of 0.5 billion yuan, and has completed the industrial and commercial registration procedures. SMIC integrated the use of its own funds to contribute 0.255 billion yuan, accounting for 51% of the total registered capital, will be included in the scope of the consolidated statements of listed companies.

Behind the other investors of Core Power are listed companies and popular investment institutions at the head of the new energy sector. Sunshine Power (300274.SZ) directly invested 7.6 million yuan, holding 1.52 percent of the shares. Yibin Chendao New Energy Industry Equity Investment Partnership (Limited Partnership), which participated in the investment in Ningde Times, invested 3.42 million yuan. Shareholders Henan Shangqi Huirong Shangcheng No.1 Industrial Fund Partnership (Limited Partnership) include SAIC (600104.SH) and Huayu Auto (600741.SH). In addition, the investment platforms of Xiaopeng Automobile and Lixun Precision also appeared as investors of Core Power.

According to the financial report, SMIC is a leading domestic wafer foundry enterprise with special process, mainly engaged in wafer foundry and module sealing and testing in the fields of MEMS and power devices. The company's process platform covers ultra-high voltage, automotive, advanced industrial control and consumer power devices and modules, as well as automotive, industrial, consumer sensors, applications covering smart grid, new energy vehicles, wind power generation, photovoltaic energy storage, consumer electronics, 5G communications, Internet of Things, household appliances and other industries.

SMIC is currently the only company in China that can achieve large-scale mass production of silicon carbide MOS. According to the 2023 semi-annual report, the company's IGBT production capacity for core chips in the automotive and industrial control fields reached 80000 chips/month; SiC new production capacity of 2000 chips/month. In addition, the company has MOSFET production capacity of 65000 pieces/month, MEMS production capacity of 11000 pieces/month, HVIC production capacity of 5000 pieces/month.

Domestic production capacity needs to climb

Although the current semiconductor cycle is still in the downward period, some categories are still in the process of reducing prices to inventory, but due to the continued high demand, the pricing of automotive IGBT is still strong, silicon carbide is still rising. This is the structural demand formed under the background of the large speed increase of wind and solar power installation and the increasing penetration rate of electric vehicles.

the trend of high-voltage and fast charging of electric vehicles is the general trend. under the new technology, trams can not only easily achieve 1000 kilometers of endurance, but also charge hundreds of kilometers in 10 minutes. Silicon carbide is the nuclear "core" of the electric drive system to upgrade to high voltage, benefiting from excellent material properties, in the main inverter of new energy vehicles, on-board chargers, fast charging piles, photovoltaic inverters and other scenarios have a wide range of application space.

The efficiency and safety of high-voltage fast charging equipment, as well as the quality of the parts of the electric vehicle itself, put forward higher requirements and challenges. Great Wall Securities believes that under the trend of high voltage and fast charging, the application of silicon carbide devices can effectively solve the pain points of charging pile equipment that urgently needs to adopt new devices with more high voltage resistance, high temperature resistance and safety, and reduce costs and increase efficiency to realize fast charging of electric vehicles. At present, silicon carbide is still in the introduction stage in the charging pile market, and the charging module penetration rate of silicon carbide in DC charging piles is only 17% in 2021. Under the background of high-pressure fast charging, the combination of "SiC" and "800V" has gradually become the layout hot spot of new energy vehicle enterprises and charging pile enterprises. It is expected that with the reduction of cost in the future, the penetration rate of SiC in the charging pile market will be further improved.

take the financial report of Infineon, the global leader in power discrete devices and automotive semiconductors, for example, the company's revenue reached 4.089 billion euros in the second quarter of fiscal year 2023, up 13% year-on-year and down 1% month-on-month. demand for consumer smartphones and PC is still sluggish, and the automotive business has become a bright spot. Infineon previously said it would invest up to 5 billion euros to expand its factory in Kulin, Malaysia, to build the world's largest 200mm silicon carbide plant.

The layout actions of overseas giants reflect the continued high prosperity of the silicon carbide industry under the new energy wave. A semiconductor industry insider told China Business News that the supply of silicon carbide materials in China is still in short supply, which to a certain extent limits the development speed of automotive grade silicon carbide and other products. "The silicon carbide industry is still dominated by large overseas factories such as Europe, America and Japan. Due to insufficient domestic upstream production capacity, downstream power device manufacturers who have high-quality silicon carbide supply guarantee are expected to take the lead in development." The above-mentioned semiconductor source said: "In fact, the production capacity of silicon carbide is always in a tight state in the world. We have seen many large overseas factories join forces to sign long-term contracts to ensure the stability of the supply chain of silicon carbide materials."

at present, power semiconductor head enterprises such as sanan photoelectric (600703.SH), shilanwei (600460.SH) and time electric (688187.SH) are all speeding up their layout in the silicon carbide field through various means. Among them, Sanan Optoelectronics through foreign investment to set up a wholly-owned subsidiary Chongqing Sanan Semiconductor Co., Ltd., planning to produce 8-inch silicon carbide substrate, in order to expand production capacity to ensure the use of the joint venture substrate.