​In 2024, the semiconductor industry is ushering in a new beginning.

According to data from the Semiconductor Industry Association (SIA), global semiconductor industry sales reached US$49.1 billion in May, a month-on-month increase of 4.1% and a year-on-year increase of 19.3%.

“The global semiconductor market has achieved year-over-year growth every month in 2024, with May’s year-over-year sales growth rate marking the largest increase since April 2022,” said John Neuffer, SIA president and CEO.

Recently, as the semi-annual report window opened, A-share semiconductor companies have also disclosed their first-half performance forecasts, further confirming the positive trend that the industry is gradually emerging from the trough and moving towards recovery.

01

The semi-annual report performance is "preliminary"

In the first quarter of this year, the performance of many A-share semiconductor-related listed companies has collectively recovered, especially memory chip companies. As for the reasons for the company's expected increase in half-year performance, many chip companies mentioned key factors such as "recovery of downstream demand" and "restorative growth in the industry", which also indirectly verifies that the semiconductor industry is continuing to recover.

In the blink of an eye, the year is already halfway over. The related companies in the A-share semiconductor sector have once again presented the market with a satisfactory mid-year report card with a series of impressive results, injecting a shot in the arm to the development of the overall market this year.

Among the 24 semiconductor companies in the above table, red fonts indicate year-on-year revenue/net profit growth, while green fonts indicate declines. It can be seen that only SiChuang Electronics has a year-on-year decline in net profit, while the other 23 companies have all delivered satisfactory results, and some companies even have a year-on-year increase in net profit of more than 500%.

From the perspective of the size of net profit attributable to the parentAmong the 24 companies, 5 companies had a net profit attributable to their parent companies of more than 500 million yuan, accounting for 20.8%; 14 companies had a net profit attributable to their parent companies of 100 million to 500 million yuan (inclusive), accounting for 58.3%; 2 companies had a net profit of 0 to 100 million yuan, accounting for 8.3%; 2 companies had a net loss, accounting for 8.3%; and 1 company, Ningbo Silicon Electronics, did not disclose relevant data.

The companies whose net profits attributable to parent companies exceeded 500 million yuan were GigaDevice, Haiguang Information, Will Semiconductor, Montage Technology, and North Huachuang.

The companies with net profits attributable to parent companies of RMB 100 million to RMB 500 million (inclusive) are Shanghai Belling, Espressif Technologies, BIWIN Memory, Goodix Technology, Allwinner Technology, Rockchip, Jiangfeng Electronics, Tianyue Advanced, Jinghe Integrated Circuit, Changchuan Technology, Huahai Qingke, Tongfu Microelectronics, Huatian Technology, and Jiejie Microelectronics.

The companies with net profits between 0 and 100 million yuan are Xinyichang and HuaWei Electronics.

The companies that suffered net losses were SiChuang Electronics and Silan Microelectronics.

In terms of net profit growthAmong the 24 companies, 6 companies had an increase in net profit attributable to their parent companies of more than 500%, accounting for 25%; 3 companies had an increase in net profit attributable to their parent companies of between 200%-500% (inclusive), accounting for 12.5%; 2 companies had an increase in net profit attributable to their parent companies of between 100%-200% (inclusive), accounting for 8.3%; 6 companies had an increase in net profit attributable to their parent companies of between 0%-100% (inclusive), accounting for 25%;

Only one company had a negative increase in net profit attributable to its parent company, namely SiChuang Electronics. The remaining six companies did not release relevant data, but Shanghai Belling, Goodix Technology, Tianyue Advanced Technology and Jinghe Integrated Circuit all turned losses into profits, and Silan Microelectronics reduced its losses.

The companies whose net profit attributable to parent companies increased between 0% and 100% (inclusive) include GigaDevice, Haiguang Information, Jiangfeng Electronics, North Huachuang, Huahai Qingke, and Xinyichang.

Companies whose net profit attributable to parent companies increased between 100% and 200% (inclusive) include Lexin Technologies and Jiejie Microelectric.

Companies whose net profit attributable to parent companies increased by 200%-500% (inclusive) include BIWIN Storage, Tongfu Microelectronics, and Huatian Technology.

Companies with net profit attributable to their parent companies increasing by more than 500% include Will Semiconductor, Lanqi Technology, Allwinner Technology, Rockchip, Changchuan Technology, and HuaWei Electronics. It is worth noting that Changchuan Technology's net profit for the first half of 2024 is expected to increase by more than 10 times compared with the same period last year, reaching 876.62% to 1023.12%.

As for the reasons for their performance growth, many companies mentioned the continued recovery of market demand and the significant increase in demand from downstream customers.

Rockchip said, market demand is gradually recovering, and AIoT (intelligent Internet of Things) is experiencing growth.

Goodix Technology saidBenefiting from the growth in end-customer demand, the company's shipments and operating income achieved year-on-year growth. In addition, with the company's product iterations and the reduction in wafer costs, product costs were optimized and the gross profit margin level gradually recovered.

GigaDevice saidAfter experiencing sluggish market demand and gradual inventory reduction in 2023, demand in the consumer and network communication markets rebounded in the first half of 2024, driving the company's storage chip product sales and revenue growth.

Montage Technology saidSince the beginning of this year, the demand for memory interface chips has recovered and the company's market share in the field of DDR5 memory interface chips has further expanded. In addition, the emergence of new products has also brought new growth points for performance.

Wellshares saidIn the first half of 2024, the company will introduce products in the high-end smartphone market andAutopilotApplications continue to penetrate, and at the same time, the company has effectively improved its product gross profit margin by optimizing its product structure and supply chain structure.

Earlier, the mid-year performance expectations of companies such as BIWIN Storage and fast-charging chip leader Nanxin Technology were also good. BIWIN Storage expects to achieve a year-on-year growth of 169.97% to 222.22% in operating income in the first half of 2024; and a year-on-year growth of 194.44% to 211.31% in net profit. The company mentioned that the change in performance this period was mainly due to the recovery of the industry.

It is worth noting that although the net profit growth of many semiconductor companies has increased significantly, it is due to the low base of the same period last year. For example, in the first half of 2023, Demingli lost 79.13 million yuan, BIVI Memory lost 296 million yuan, and Goodix Technology lost 136 million yuan. These companies turned losses into profits in the first half of 2024. Although Montage Technology, Rockchip, and Will Semiconductor did not make losses in the first half of 2023, they also fell into a performance trough.

So has the semiconductor market really recovered strongly? Next, Semiconductor Industry Horizons will lead you to explore how different tracks are performing.

02

Several highlights of the semiconductor industry's recovery

Consumer electronics rebound, server demand strong

In recent years, the semiconductor industry has achieved a transition from downturn to recovery. As the global economy picks up, the consumer electronics market recovers and server demand grows strongly, bringing new development opportunities to the semiconductor industry.

In the consumer electronics sector, Will Semiconductor's net profit increased significantly, and the innovation of Montage Technology also promoted performance growth. At the same time, the performance of chip companies such as Goodix Technology, Shanghai Belling, Espressif Technology, and Allwinner Technology also improved.

In the server market,cloud computingThe development of big data and artificial intelligence has increased the demand for data center construction and the demand for servers, which has driven the growth of product demand for semiconductor companies such as Haiguang Information, GigaDevice, and Biwin Storage.

Wafer foundry demand recovers

The long-dormant foundry industry seems to be recovering rapidly.

Recent market news shows that TSMC is planning to raise prices for advanced process technologies, and the capacity utilization of mainstream players seems to be rising after several sluggish quarters.

Earlier, during the performance exchange in the first quarter of this year, leading wafer foundries including TSMC, SMIC, and Huahong all mentioned that the demand for some processes or size specifications was very strong.

However, it should be pointed out that the current price increase has more obvious structural characteristics, and is based on the background of low capacity utilization in the previous quarters. Many manufacturers (especially those focusing on mature processes) have experienced multiple price cuts to compete. The industry generally believes that the lowest foundry price has been basically reached in the fourth quarter of 2023, and the current foundry price has stabilized.

Qunzhi Consulting predicts that in the second half of 2024, the capacity utilization rate of wafer foundries in mainland China will show a relatively steady recovery trend, and the order growth of 12-inch 55nm-90nm process will be relatively obvious, but the possibility of a general increase in wafer foundry prices is low, and we still need to wait and see the market feedback in the third quarter.

Price increases for multiple categories of products are rising

From the first quarter to the second quarter of this year, the price increase of memory chips began to spread to peripheral links, gradually forming the third wave of driving the reversal of my country's chip industry. Memory modules, NOR Flash, EEPROM, MCU, power chips (IGBT, MOSFET), etc., have all shown a trend of price increases.

First, let's look at the storage areaOn the one hand, the storage industry has reached a cyclical turning point. In the past few years, the memory market was sluggish, so some major storage manufacturers such as Samsung, SK Hynix, and Micron have adopted a strategy of reducing production to maintain prices, stabilizing the price of DRAM particles by reducing supply. As inventory reduction is completed and demand from downstream industries such as consumer electronics, communications, and automobiles gradually increases, product prices have re-entered an upward cycle.

On the other hand, DDR is improved on the basis of the original SDRAM. SDRAM can only transmit data once in one clock cycle, while DDR can transmit twice, so the transmission bandwidth is larger. With the development of technology, DDR has gone through multiple rounds of technological iterations and developed into DDR2, DDR3, DDR4 and DDR5.Generative AITechnological developments have driven a surge in demand for high-bandwidth memory and DDR5.

Benefiting from the new demand from AI servers, the original manufacturers are actively promoting the rapid increase of DDR5 production capacity and expanding the supply of 32Gb DDR5 high-capacity particles. Combined with the production capacity of new processor platforms that support DDR5, the overall technology iteration and product upgrade trend on the server side, the penetration rate of DDR5 on the server side is expected to exceed 50% in the second half of the year. Companies such as Lanqi Technology that have deployed memory interface chip business are expected to benefit deeply from the increase in the volume of DDR5 memory interface chips and supporting chips.

With the support of two major factors, domestic storage manufacturers have entered the fast lane this year.

Looking at power semiconductors. Power semiconductors are divided into three major categories: low power, medium power and high power. Low power mainly includes diodes, triodes, rectifier bridges, etc., medium power includes all-round MOS tubes, and low-voltage MOSFET and high power include IGBT single tubes, IPM and IGBT modules. The main application markets for low-power power devices are consumption, industry and automobiles, medium power is mainly used in industry, automobiles and consumption, and high power is mainly used in new energy, industry and consumption.

Industry insiders said that the price of low-power power devices bottomed out in Q3 2023 and began to rise, mainly due to the surge in demand in the consumer sector (especially the mobile phone industry), which led to a shortage of supply. Last year, low-power power devices experienced a wave of general price increases, with some components uniformly increasing in price by about 10%.

The price of medium-power power devices was at a historical low last year. Although there were tentative price increases, there were insufficient market orders. Some manufacturers raised prices slightly for individual devices and customers, with increases ranging from 5-8%.

The price of high-power power devices is still at a medium-high level, and prices are expected to rise in some periods of this year. Recently, there have been rumors that high-power power devices will increase in price again, but this has not been implemented.

It is reported that from January 2024, various power semiconductor companies have successively adjusted prices: Sanliansheng's full range of products increased by 10-20%, Lancai Electronics' full range of products increased by 10-18%, Gaogexinwei's full range of products increased by 10-20%, Jiejie Microelectronics increased by 5-10%, etc. In May and June, for some medium and low voltage products, power manufacturers such as Huarun Micro and Yangjie successively raised prices/negotiated prices. The price increase of power semiconductors reflects the gradual recovery of downstream demand and the marginal improvement of the power semiconductor market.

Finally, let's look at MCU. As 2024 enters the second half, the MCU chip market is shifting from a destocking cycle to a demand cycle. It is reported that Taiwan's MCU manufacturer Ying Guang notified its agents at the beginning of this year that it would increase the price of OTP MCU (blank MCU that cannot be repeatedly programmed) from now on. The spot price of 32-bit MCUs from China's GigaDevice also showed a slight rebound. The company said that the biggest challenge for the company's MCU business in 2023 is the destocking of industrial customers, which has a significant impact on overall revenue. In 2024, the inventory of industrial customers will basically be destocked and normal delivery will begin.

Regarding the price increase, industry insiders believe that due to the previous inventory accumulation, many MCU manufacturers almost lost money to sell out and actively reduce inventory. The price of general-purpose MCUs has reached a new low. In the first quarter of this year, the price quotations of some products began to rise. Some products also had the situation of super parts (HOT RUN) for urgent orders. The market situation is expected to gradually return to normal. In general, the market has begun to see individual manufacturers determine their pricing strategies based on their inventory status and customer demand. Although the price increase phenomenon is not common, it is still a positive trend.

Some industry insiders predict that after Q2 next year, as inventory returns to a reasonable level and the order base is not high, MCU prices may rebound significantly.

03

What will the market look like in 2024?

With the high growth in performance of semiconductor companies, many institutions are optimistic about the future market outlook of the semiconductor industry.

Minmetals Securities pointed out that the global and Chinese semiconductor cycles are currently in a transition period from passive destocking to active restocking. Lianshuo Securities believes that the AI ​​wave is still the main driving force for the recovery of the semiconductor industry. The weak recovery of the product side is fed back to the improvement of the manufacturing side. The utilization rate of manufacturing and packaging and testing continues to remain high, which has the logic of increasing both quantity and price.

Ping An Securities stated that currently, there are signs of improvement in semiconductor manufacturing, domestic substitution is in full swing, semiconductor equipment companies have ample orders, and the industry's upward trend is maintained; in addition, major manufacturers continue to invest in AI terminals, and chips with AI performance are constantly being updated, which is expected to drive a new round of demand for replacement devices.

In addition, according to Gangtise investment research data, global semiconductor equipment sales will drop slightly by 1% in 2023, and are expected to resume growth to more than US$100 billion in 2024, and are expected to grow by more than 18% in 2025. Therefore, 2025 will be a major growth turning point for global semiconductor equipment. Starting from Q3 2023, the price of the storage sector has continued to rise for four consecutive quarters, which is attributed to the price increase driven by supply-side production control. At present, the capacity utilization rate of various manufacturers has basically reached 80~90%. It is expected that the storage sector will be in a state of supply and demand balance in the second half of 2024, and there may be structural shortages; by 2025, AI will drive a significant increase in storage demand, and the demand side will cause storage prices to continue to rise.