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The "golden age" of chips is returning.

Among the A-shares today, the strongest sectors are the chip sector and the related consumer electronics sector. Among them, the semiconductor ETF once soared by more than 3%. So, what is the reason?

Analysts believe that there are three main reasons:

First, it was reported on July 16 that benefiting from the recovery in demand in the smartphone and PC markets and the approaching traditional peak season, coupled with the fact that silver prices have soared by more than 30% this year, major Japanese passive component manufacturers such as Murata and TDK are planning to increase product quotations. The products to be increased in price will initially include multilayer inductors, magnetic beads and other products, with an increase of up to 20%, which is a rare large price increase in the passive component industry in recent years.

Second, last night, Changchuan Technology released a surprising performance forecast: net profit of 200 million to 230 million yuan in the first half of 2024, a year-on-year increase of 876.62% to 1023.12%. Previously, nine semiconductor chip design companies including GigaDevice and Montage Technology all released performance forecast announcements, which were quite impressive.

Third, recently, the upward rhythm of the global semiconductor cycle can be clearly felt. In June, my country's integrated circuit exports increased by 23.4%, driving export growth by 0.8 percentage points, and its contribution to exports surpassed automobiles and ships to rank first. Global semiconductor sales have turned positive since November 2023, with the growth rate in May hitting a two-year high of 19.3%. South Korea, which occupies a dominant position in the global semiconductor industry chain, has maintained a high growth rate in exports, with monthly growth rates exceeding 50% since April.

So, is the semiconductor opportunity here?

Big performance explosion

Last night, the performance of semiconductor companies released another "big satellite". Changchuan Technology said that it would achieve a net profit of 200 million to 230 million yuan in the first half of 2024, a year-on-year increase of 876.62% to 1023.12%. The company pointed out that the main reason for the substantial increase in performance was that during the reporting period, the integrated circuit industry as a whole recovered moderately, and customer demand in the subdivided fields increased significantly. The company insisted on being customer-centric, strengthening core competitiveness, and enriching the product matrix. The company's product coverage in the field of integrated circuit testing has been continuously expanded, the market share has continued to rise steadily, and the operating income has increased significantly compared with the same period last year.

According to incomplete statistics, nine semiconductor companies have announced their performance, and their performance is quite good. Among them, Montage Technology has released a "big satellite". According to the company's performance forecast, the net profit attributable to the parent company's owners after deducting non-recurring gains and losses in the first half of 2024 will be 535 million to 565 million yuan, an increase of 13924.98% to 14711.96% (i.e. 139.25 times to 147.12 times) compared with the same period last year (statutory disclosure data).

GigaDevice's net profit in the first half of 2024 increased by about 54.2%, mainly due to the recovery of demand in the consumer and network communication markets in the first half of the year, which boosted the company's storage product sales. Lanqi Technology's revenue in the second quarter of 2024 was 928 million yuan, a year-on-year increase of 82.6%, of which the sales revenue of interconnect chips was 833 million yuan, a record high for a single quarter, mainly due to the increase in DDR5 penetration and the increase in shipments of the company's AI products.

May seems to be a very important month for semiconductors. According to SIA data, the global semiconductor industry sales in May 2024 were US$49.1 billion, a year-on-year increase of 19.3% and a month-on-month increase of 3%. The year-on-year growth rates of the Americas (43.6%), China (24.2%) and other Asia-Pacific regions (13.8%) increased, while those of Japan (-5.8%) and Europe (-9.6%) decreased.

In addition, according to WSTS data, logic chips and memory chips will drive the full-year growth in 2024, with logic chips expected to grow by 10.7% and memory chips expected to grow by 76.8%. In 2025, the scale of memory chips and logic chips is expected to increase to more than US$200 billion, with memory chips expected to grow by more than 25% compared to 2024 and logic chips by 10%.

From China's export data, integrated circuit exports grew by 23.4% in June, driving export growth by 0.8 percentage points, and the contribution to exports surpassed automobiles and ships to rank first. Computer, mobile phone, and LCD exports increased by 9.8%, 1.9%, and 13.3%, respectively, driving export growth by 0.5 percentage points, 0.1 percentage points, and 0.1 percentage points, respectively. Analysts believe that with the global economic recovery and the rise of AI, the global semiconductor industry has entered an upward cycle.

Is the opportunity here?

So, is the investment opportunity in the semiconductor sector here?

First, from a macro perspective, the US dollar interest rate cut may be the real big opportunity for the domestic semiconductor sector. At present, the valuation of most sectors is still constrained by this. So, are expectations for a US dollar interest rate cut increasing? CICC's research report this morning said that the Fed's interest rate cut is expected to open up room for domestic interest rate cuts, which will help ease the current high financing costs.

Secondly, from a fundamental perspective, the global smartphone market continues to recover, and the demand side continues to improve. Canalys data shows that in the second quarter of 2024, the global smartphone market has grown for three consecutive quarters, with shipments increasing by 12% year-on-year to 288 million units. Samsung has refocused its strategy on the high-end market and continues to lead the world with an 18% market share. Apple followed closely behind, ranking second with a 16% market share. Xiaomi followed closely behind Apple, occupying 15% of the market share in the second quarter, a huge increase of 30%, and the fastest year-on-year growth among the top five manufacturers. vivo ranked fourth with a 9% market share. Transsion also ranked fifth with a 9% market share.

According to SEMI's "Mid-Year Total Semiconductor Equipment Forecast Report", the global total sales of semiconductor manufacturing equipment by original equipment manufacturers are expected to set a new industry record, reaching US$109 billion in 2024, a year-on-year increase of 3.4%. Growth will continue in 2025, and sales are expected to hit a new high of US$128 billion, driven by the front-end and back-end market segments.

According to data tracking by a certain organization, in the SoC direction, the demand for consumer electronics continues, and the growth trend is expected to be maintained in the second half of the year. In the storage chip direction, the standard price increase is expected to be transmitted to the niche price, and the overall price upward trend remains unchanged; in the high-speed transmission chip direction, AI server shipments are expected to grow quarter by quarter, and the overall order visibility will increase; in the driver chip direction, AMOLED penetration will drive growth; MCU inventory reduction is expected to gradually come to an end; analog chip inventory has returned to normal levels; power, silicon carbide, foundries, packaging and testing plants, AI servers, etc. all show continued positive signs.

Source: China Securities

Statement: All information content of Databao does not constitute investment advice. The stock market is risky and investment should be cautious.

Editor: Lin Lifeng

Proofreading: Yang Shuxin

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