21st century business herald reporter Zhang Sai Nan reporting from Shanghai

2023 is a difficult year for the semiconductor industry. Due to weak downstream market demand, the entire industry is in a downturn.

Up to now, 63 of the more than 100 A- share semiconductor companies have disclosed their 2023 performance forecasts. The current situation of the industry can be seen from this.

The 21st Century Business Herald reporter found that of the 63 companies, only 12 forecast growth, 26 forecast reductions, 23 losses and 14 first losses, and 2 turned losses. In the same period last year, there were 31 companies with growth in performance.

Further analysis shows that the companies with expected performance in 2023 are concentrated in the equipment industry, including Tuojing Technology (688072.SH), Huahai Qingke (688120.SH), North Huachuang (002371.SZ), etc.

The performance of the industry chain segment is similar to that of the semiconductor industry in 2022, but the decline and losses are even greater. From the reason, the weak demand in the terminal market is still the main reason. However, this may also indicate that the industry has bottomed out and the industry has recovered into what all parties expect in 2024.

First loss of many companies

According to a report recently released by the American Semiconductor Industry Association (SIA), the global semiconductor industry's total sales in 2023 will be $526.8 billion, a decrease of 8.2 percent from the total of $574.1 billion in 2022-and 2022 is the highest annual total in the history of the industry.

and the performance of A- share semiconductor companies in 2022 has declined significantly. At that time, when 21st century business herald reporters analyzed the performance of the sector, they found that the performance of many semiconductor companies had halved. A year later, the performance of industrial chain companies has further deteriorated, with obvious characteristics including an increase in the number of declining companies and an increase in the number of first-loss companies.

according to relevant regulations, listed companies need early warning for a decline of more than 50% in their performance, and 16 of the 26 companies with a decline in performance have a decline of more than 50%. Among them, Changchuan Technology (300604.SZ), Leon Micro (605358.SH), Zhaoyi Innovation (603986.SH), Jingrui Electric (300655.SZ), Quanzhi Technology (300458.SZ) net profit decline is expected to exceed 80%.

Changchuan Technology said that the decline in performance in 2023 was mainly affected by factors such as the global macroeconomic environment and industry cycle changes, and customer demand slowed down. And the company increased the high-end test equipment research and development investment, and actively explore the high-end market, research and development costs and other period costs increased more than the same period last year. In the previous three years, Changchuan Technology's net profit growth rate was above 100 percent.

Leon Micro's net profit growth, which had been as high as 197 per cent in 2021, slowed to 14.6 per cent in 2022 and is expected to decline by 91.49-87.28 per cent in 2023. It said that the prosperity of the semiconductor industry in which it is located has declined, market demand is weak, sales orders for some of the company's products have decreased, and prices of some products have been lowered; in addition, it is also affected by factors such as production expansion, mergers and acquisitions, and convertible bonds.

the increase in the number of first-loss enterprises can better reflect the cold winter of the industry. Core original shares in 2022 net profit growth rate of up to 455, 2023 has fallen into the first loss, is expected to lose 0.272 billion yuan -0.298 billion yuan. In addition to the industry adjustment, it was also attributed to the year-on-year increase in R & D labor costs. In addition, the Company has provided for credit impairment losses on customers with receivable balances based on different risk portfolios.

nastar's loss is relatively large, expected to reach 4.5 billion -6 billion yuan. the performance of some subsidiaries of the company has declined seriously, and goodwill has been greatly impaired. In addition, the first loss company also has Pu Ran shares (688766.SH), Jiang Bolong (301308.SZ) two storage sector companies, which also confirms the low running of the memory chip industry.

not only that, Beijing Junzheng (300223.SZ), Juchen (688123.SH), Lanqi Technology (688008.SH), Zhaoyi Innovation and other storage companies have seen a decline in performance.

from the perspective of industrial chain segmentation, companies with declining performance include large wafer factories, such as SMIC (688981.SH) and huahong company (688347.SH); In the chip design link, the leaders such as core shares and nasida are represented. In addition, material links such as Feikai Material (300398.SZ), Shanghai Silicon Industry (688126.SH ), sealing and testing links such as Huatian 6.00S00S00S00S Technology (00S), the industry trough can be seen.

The equipment is a standout

Under the overall downturn in the industry, it is still gratifying to see that the performance of semiconductor equipment companies is still strong. Of the 12 companies expected to increase their performance in 2023, 6 belong to the equipment industry, namely, Tujing Technology, Huahai Qingke, North Huacheng, Jingsheng Electrical and Mechanical (300316.SZ), Zhongwei Company (688012.SH), to Pure Technology (603690.SH).

At present, Tuojing Technology has the highest net profit growth rate. It is expected to achieve a net profit of about 0.6 billion -0.72 billion yuan in 2023, an increase of 62.84-95.40 percent year-on-year. The company said that last year, it continued to invest in high-intensity research and development, broke through core technologies, and achieved important results in the process of promoting industrialization and iteratively upgrading various product series. At the end of 2023, the amount of sales orders in hand exceeded 6.4 billion yuan (excluding Demo orders), providing guarantee for the growth of subsequent performance.

orders from other equipment companies are also abundant, with northern huachuang signing more than 30 billion yuan in 2023. The amount of new orders for micro-companies in 2023 is about 8.36 billion yuan, an increase of about 2.04 billion yuan over 2022 and a year-on-year increase of about 32.3 percent.

How can equipment companies continue to grow in the midst of a downturn? The main driver is the expansion of fabs.

Take SMIC as an example. Capital expenditure in the fourth quarter of 2023 was US $2.341 billion, and capital expenditure for the whole year was about US $7.47 billion. The main reason why its capital expenditure exceeded the sales of that year was that SMIC still expanded its scale significantly when its peers reduced their expenses. Many projects across the country started construction and the scale of chip investment was huge. The guidance given by SMIC shows that capital expenditure in 2024 is roughly the same as in 2023.

Hua Hong's new Wuxi plant is expected to start production by the end of 2024, and the market expects it to enter a period of high capital expenditure.

Looking ahead to 2024, the market generally believes that domestic semiconductor equipment companies will benefit as fab capital expenditure picks up and domestic machine imports increase.

recently, SEMI revised the size of the global semiconductor front-line equipment market in 2023, from a 18.8 per cent decline in its previous forecast to a 3.7 per cent decline, reflecting increased equipment spending in mainland China. According to SEMI's latest data, global semiconductor front-line equipment sales are expected to decline by 3.9 to $90.6 billion in 2023 and recover to $93.2 billion in 2024, an increase of 3%. Sales in the back-end equipment market will continue to decline in 2023. In 2023, semiconductor test equipment sales are expected to decline 16% to $6.3 billion, and packaged equipment sales are expected to decline 31% to $4 billion. In 2024, test equipment and packaged equipment are expected to grow by 14% and 24%, respectively.

however, it should be pointed out that although semiconductor equipment companies will continue to grow in 2023, the growth rate will slow down from the previous two years. for example, the net profit growth rate of tuojing technology will be 438 in 2022, 696 in 2021 and 62.84-95.40 in 2023. Huahai Qingke expects to grow by 31.38-54.31 in 2023, 103 in 2022 and 163 in 2021 respectively; micro is expected to grow at 45.32-58.15 percent in 2023 and 16 and 105 percent in 2022 and 2021.