Beijing Huaxing Wanbang Management Consulting Co., Ltd. Shang Rui Chen Hao
The recent hotspots in the domestic semiconductor industry can be described by two "too much". One is that the stock prices of listed companies in the Chinese core group have crashed a little bit, and the other is that there are a lot of activities in the industry and enterprises. The former shows that the market of many domestic chip design companies (fabless business models) is excessively concentrated in consumer electronics mainly based on smartphones, and the weakness of this track has brought about a sharp decline in the profits of chip companies; the latter shows that the industry is still Drive new application opportunities. Beijing Huaxing Wanbang Management Consulting Co., Ltd. (Huaxing Wanbang) believes that digital transformation and information infrastructure construction are the most important opportunities at present and in the next few years, and everyone should actively enter the new track.
On August 13, Weil (603501), a chip design company with a profit of more than 4 billion yuan in 2021, took the lead in releasing the first half of 23 (23H1) performance report. The announcement stated that the non-net profit attributable to shareholders of listed companies was- 78.96 million yuan, a decrease of 105.44% over the same period last year. As a result, the stock price of Weir shares plummeted the next day, which triggered a continuous decline in the entire semiconductor sector. Prior to this, the stock price of GigaDevice (603986), a leading storage and MCU chip design company with a market value of more than 70 billion yuan, also fell sharply on August 4, with a drop of more than 9% at one point approaching the limit.
No pre-cut news is good news?
The end of August will be the period when listed companies will focus on announcing their performance in the first half of 2023 (23H1). Although many companies have already announced the announcement of pre-reduction semi-annual performance as early as Weir shares, many investors are worried that the situation of consumer electronics has not improved. Under the current situation, the profitability of 23H1 will become the normal state of major companies in the chip design industry in the next few years, or return to normal after the crazy growth of the past few years. After superimposing the current trend of the entire securities market, the stock prices of many listed companies in the semiconductor industry The past few days have been "ups and downs".
While having to face the facts, practitioners in the semiconductor industry must actively look for new development directions: In the next two weeks, everyone will have to face the high-density listed companies in the semiconductor industry that once had high hopes and whose price-earnings ratio has remained high. It is reported that the 23H1 profit will drop sharply or lose money, and there will even be more stock price flash crashes, which will bring new shocks. But more importantly: From the 23H1 performance forecasts of these listed semiconductor companies, we need to see which application industries will become the new golden track for semiconductor companies, and which companies will become the gold-absorbing kings in the next few years.
Global smartphone market data for the second quarter of 2023 released by market research firm Omdia
This is because not all performance forecasts are profit pre-reduction announcements, so in addition to the smartphone industry that cannot see rapid improvement in the short term, the semiconductor industry still has many new opportunities, especially in digital transformation and information infrastructure. New demand or incremental demand for chips during the construction process. The new needs that can be seen now include computing power, security and ubiquitous connectivity , including hardware accelerator chips or IP such as independent GPU/FPGA, various types of security chips (including digital RMB) and new infrastructure such as 5G small base stations chip……
good news too
Another company that released a positive profit forecast for 23H1 on June 16 is China Electronics Huada Technology (00085.HK), a Hong Kong-listed company under the central enterprise China Electronics Corporation (CEC). Beijing Zhongdian Huada Electronic Design Co., Ltd. is an independent pure chip design company. Its main products are smart card chips, security chips, security MCUs with integrated security chips, and digital RMB hard wallet sets. The company announced that its profit in the first six months is expected to reach 650 million Hong Kong dollars, while the profit in the same period last year was 203 million Hong Kong dollars, and the net profit of 650 million Hong Kong dollars has exceeded its net profit for the whole of last year.
CLP Huada Technology’s first-half results will be released on August 30, but judging from the company’s profit growth trend in recent years, security chips, as an important link in the construction of information infrastructure, should have broad prospects in the future . Of course, its value needs further confirmation, because the company's stock price has also plummeted along with the market recently, and its closing market value on August 21 was only HK$2.5 billion. Compared with its peers on A shares, the market value and price-earnings ratio All pitifully low . Although the Hong Kong market has always underestimated small and medium-sized technology companies, industry companies should also consider finding more opportunities from new directions such as information security basic hardware.
let go of yourself
Let's take a look at a very interesting performance forecast, which may help you relieve your current anxiety. Hangzhou Silan Microelectronics Co., Ltd. (600460) is expected to achieve a net profit attributable to the owners of the parent company of about -50.37 million yuan in the first half of 2023; compared with the same period last year, there will be losses. The main reason for the loss in this period's performance is that the stock prices of Yuneng Technology (688348) and Anlu Technology (688107) among other non-current financial assets held by the company fell, resulting in a net income after tax of -225 million from changes in their fair value Yuan.
That is to say, the company was expected to achieve about 156 million yuan of non-net profit attributable to the mother in 23H1 through its main business. Invested in the stocks of photovoltaic and semiconductor listed companies, resulting in substantial losses. Silan Micro is an integrated semiconductor device manufacturer (IDM) established very early and listed on the stock market. It is absolutely familiar with the semiconductor industry and the stock market, and Anlu Technology invested by Silan Micro is a leading company in the field of FPGA chips in China. Behind and China Electronics Huada Technology also stands for CEC.
Since Silan Micro Investment Chip Company, which is also an A-share semiconductor listed company, has lost money, other people should not be too sad because of the current downturn, but should look forward. However, Silan Micro's performance forecast has raised several very serious questions for all institutions and individuals: What is the next high-quality track in the semiconductor industry that must be considered at the strategic level? Where are the business opportunities that can be converted into corporate profits beyond vision and ideals? How about discovering new tracks and new steeds on a tactical level? Are companies oriented towards information infrastructure construction, such as China Electronics Huada Technology (00085.HK), a subsidiary of CEC, worthy of attention in the future?
Active actions to discover new tracks
Huaxing Wanbang is still convinced that the digital transformation of China's economy and the construction of national/enterprise information infrastructure will provide many opportunities for the semiconductor industry. Intelligence, greenness, integration, high-end and autonomy will further enrich and expand the application scenarios of China Chip, and form a corresponding technical system, standard system and application system, and at the same time complement each other with global standards, thus forming a new High-value track; computing power, security and ubiquitous connectivity and their integration will bring new opportunities.
For example, everyone has been paying attention to smart manufacturing, but service-oriented manufacturing and green manufacturing, which are also written into the 14th Five-Year Plan and the 2035 long-term goal outline like smart manufacturing, will also bring many new demands. In recent years, the National Institute of Service-oriented Manufacturing, a think tank located in Linping District, Hangzhou, has carried out a lot of research and discovered many industrial integration development models based on service-oriented manufacturing and green manufacturing. Combining them with semiconductor and software technologies can provide Provide new impetus for future industrial economic development.
Another example is that my country has passed the fourth anniversary of 5G commercial use. While the coverage of 5G networks has achieved leadership, it will develop in the direction of further enhancing the depth of 5G applications and the degree of integration with vertical industries. The demand for 5G small base stations with energy efficiency and higher flexibility brings the corresponding system-on-chip (SoC) demand. The PC802 small base station baseband SoC and supporting carrier-grade software developed by Picocom Microelectronics (Hangzhou) Co., Ltd. (Picocom) is an innovative product that combines powerful computing power and 5G/4G mobile communication technology. It has been selected by dozens of customers around the world, and the small base station products of many customers have passed the test of the operator's live network.
Piccolo and Kiwi Communications showcased the industry's first full-featured 4G+5G dual-mode small base station (using PC802 baseband SoC) at MWC Shanghai 2023
At the same time, domestic chip design companies are also making continuous efforts to explore the direction of high-end products. For example, MCU is the hardest hit area for the decline of semiconductor stocks this year. The reason is also due to the weakness and excessive competition in the consumer electronics market; In the high-end market, in addition to actively improving the design and manufacturing of hardware and passing AEC-Q100 and other automotive and industrial certifications, it is also actively embracing world-class manufacturers in the fields of tools and software support, such as GigaDevice, China Micro Semiconductor and IAR (Ai Subsystem) such as the world's top development tool chain provider to provide users with high-performance, high-quality MCU product solutions.
Use the understanding of China's needs to break through the advantages of international counterparts in marketing, and use new architectures such as RISC-V and customized tools provided by international leading manufacturers, in IoT terminals, storage control, industrial automation, smart cars and more It is also a new way of development to provide customized chips in the field, and it means that China Chip's independent innovation will no longer repeat the track set by international manufacturers.
This road and business model have been verified. For example, Codasip, an international leading provider of processor IP and development tools, provides RISC-V processor IP and software and hardware integrated design tool Codasip Studio. Since the company was established in 2014, it has adopted its The shipment of CPU/DSP chips designed by IP and tools has reached 3 billion; at the same time, the company also cooperates with leading tool and IP manufacturers such as IAR and SmartDV to form a processor and SoC that can support high performance and high quality complete system. As a founding member of the RISC-V Foundation, the company will participate in the "2023 RISC-V China Summit" held by the foundation in Beijing on August 23-25 (booth: C4 – Codasip), and will present a presentation entitled "RISC -V • Custom Computing • Software/Hardware Co-Design" keynote speech.
Combining computing power with application scenarios is another opportunity for the development of China Chip, especially in today's ascendant development of my country's information infrastructure. This model first started when the world's top Internet and technology companies used embedded FPGA (eFPGA) IP provided by Achronix and other companies to build their own ASICs, combining the directional high-performance computing required by the data center with the parallel computing of FPGA logic arrays and Combined with programmability, it quickly distanced itself from the second-tier service providers who relied on heap hardware. At present, Achronix's Speedcore eFPGA IP has been applied in a wider range of fields, proving that computing power + scenarios can develop many new chip products, and can also customize brand-new ASICs for many vertical industries. Achronix will participate in the "2023 Global AI Chip Summit" (Booth No. 10) to be held in Shenzhen on September 14-15.
In the field of IoT, the annual Works With developer conference held by Silicon Labs (also known as "Silicon Technology") has always been a grand event in this field, attracting more than 8,000 IoT industry stakeholders and developers to participate every year. This year's conference will be held in a free and online manner from August 22nd to 23rd, US Central Time (August 22nd to 24th, Beijing Time). The event has more than 40 in-depth technical sessions, covering all Major IoT protocols and ecosystems. In the conference opening keynote, Silicon Labs CEO Matt Johnson will preview the company's next-generation IoT development platform.
Special note: The relevant listed companies and their products and data mentioned in this article do not constitute investment advice, please pay attention to readers. If you want to read more technical economics comments on the semiconductor industry, please follow the WeChat public account "Huaxing Wanbang Technical Economics".
Related notices:
On November 23, 2023, China Electronics Exhibition and Information Communication Co., Ltd. and Beijing Huaxing Wanbang Management Consulting Co., Ltd. will hold "A Chips China 2023 and the First International Hardware Data Processing Accelerator Conference" at the Shanghai New International Expo Center. Reaching the future from afar" as the theme, around the annual theme based on innovative data processing hardware accelerator (Accelerator) technology and "win in architecture innovation", invited Imagination Technologies, Innosilicon, Bikeqi Microelectronics, Achronix, Codasip, IAR , Muxi Integrated Circuits, Silicon Labs, XMOS and other industry-leading manufacturers jointly presented a wonderful event for the audience. As the first large-scale seminar in China dedicated to introducing communication hardware accelerators, more sponsors and partners are welcome to contact us.