Is the semiconductor industry hitting the "growth ceiling"?
Recently, chip concept stocks have continued to suffer, and the semiconductor sector in the secondary market has remained sluggish. Yesterday, TSMC radio shares plunged 8.3%, setting a record for the largest decline, and also brought the talk of semiconductor "winter is coming" to the forefront.
On October 12, the A-shares counterattacked, and the semiconductor sector became one of the main forces leading the rise. As of the close, C Fuchuang, Godson Zhongke, Fengdao Technology, Shengbang Co., Ltd., Macro Micro Technology, Infront Micro and many other stocks had daily limit or more than 10%; SMIC, Zhaoyi Innovation, North Huachuang, Weiwei Leading stocks such as Ernst shares also turned red.
Looking back on the sector's sell-off, what is the reason behind it? Does today's surge mean the adjustment is over? Are there still opportunities for the future? These issues have sparked heated discussions in the market.
01
The global semiconductor market plummeted
Since the beginning of this year, the A-share semiconductor sector has undergone significant adjustments.
The data shows that during the year, 8 semiconductor stocks have retreated by more than 60%, namely Guoke Microelectronics, Weir Shares, Wingtech Technology, Mingwei Electronics, Fuman Microelectronics, Chipsea Technology, Espressif Technology, Zhuoshengwei, Among them, the market value of Weir shares evaporated by 182.734 billion yuan during the year. And there are 11 stocks with a retracement in the range of 50%-60%.
Of course, the sell-off in semiconductors is not unique to A-shares - looking at US stocks again, the Philadelphia Semiconductor Index, as the vane of the global semiconductor industry, has also suffered a huge drop recently. On October 10, the index fell to 2,275 points, hitting a new low in nearly two years, with a drop of more than 40% during the year. A few days ago, AMD (AMD) once fell by more than 13%, hitting its lowest level since July 2020.
Looking back at this round of semiconductor sell-off, the fundamental reason is the market's concerns about weak demand.
Since June this year, the global demand for consumer electronics has been stagnant, and the upstream of the industry chain has faced greater pressure. There are frequent reports of significant reductions in orders or price reductions for mature processes around the world. Recently, the US SIA website announced the statistics of its WSTS. After the continuous decline in the previous two months, the global semiconductor device sales in August were still rapidly declining. The monthly sales in August was 47.36 billion US dollars, almost the same as the same period last year. It was flat, down 3.37% month-on-month from the $49.01 billion in July.
The problem of pressure on demand is also simultaneously manifested in the third-quarter results of major companies.
AMD released preliminary financial results for the third quarter, and it expects revenue for the quarter to reach $5.6 billion, up 29% from a year earlier, down 15% from a year earlier, and a far cry from the $6.7 billion previously expected ; Samsung Electronics also released a preliminary performance report for the third quarter. During the reporting period, the company's revenue was 76 trillion won, a year-on-year increase of 2.7%; its profit was 10.8 trillion won, a year-on-year decrease of 31.7%. This is the first time in the past three years that Samsung Electronics' profit has experienced a year-on-year negative growth, which is 8.3% lower than market expectations.
The sluggish demand combined with the decline in the performance of chip giants such as Samsung and AMD, the semiconductor sector as a whole is under pressure, and the trigger for the big dive is the new export restrictions by the US government.
In the news, after the chip act, the U.S. government added 31 Chinese companies, research institutions and other groups to a so-called "unverified list" that restricts their ability to obtain certain regulated U.S. semiconductor technologies. This restriction aggravates the stability risk of the global semiconductor chip industry chain.
02
Institutional funds are bucking the trend
However, in the face of the correction of the semiconductor sector, the market is not pessimistic, on the contrary, many investors have begun to take advantage of the fund bargaining to deploy the chip industry.
According to Choice data, as of October 10, 2022, the shares of 8 chip/semiconductor-themed ETF funds have increased in the past month, with a total increase of 3.465 billion shares, and the shares of 2 funds have increased by more than 1 billion shares.
Beishang Capital has also quietly increased its positions in the chip sector recently. According to statistics from Databao, based on the average transaction price in the range, semiconductor stocks have received a total of 2.359 billion yuan in northbound capital since September. 13 stocks have received more than 100 million yuan of capital from Beijing, including Wingtech Technology, Silan Microelectronics, Star Semiconductor, Zhaoyi Innovation, Montage Technology, etc. During this period, financiers added more than 100 million yuan of stocks at the same time, including Weir Shares and Beijing Junzheng.
In response to the accelerating downturn of the semiconductor industry, a number of semiconductor companies in A-shares have announced their third-quarter performance forecasts, many of which are typical representatives of accelerated growth.
According to the latest performance forecast released by North China Creation, the company achieved a net profit of 1.555 billion-1.795 billion yuan in the first three quarters, an increase of 136.16%-172.62% year-on-year, of which the third-quarter net profit increased by 129.92%-198.89% year-on-year.
In addition, Jingsheng Electromechanical expects that the net profit in the first three quarters of this year will increase by 70%-90% year-on-year, with a profit of 1.887 billion yuan to 2.109 billion yuan; Year-on-year growth of 55%-75%. ; Walter Gas expects a net profit of 173 million yuan to 194 million yuan in the first three quarters of this year, a year-on-year increase of 68%-88%; net profit after deduction of non-deductible goods increased by 85%-105% year-on-year.
Market participants believe that the next three quarterly and annual reports of semiconductor companies are expected to be relatively bright as a whole.
03
Short-term pressure and unhindered industry acceleration trend
In general, the issue of export restrictions has brought some challenges to some companies in the semiconductor industry chain in my country, but in the context of anti-globalization, my country's semiconductor industry chain still has structural investment opportunities. Funds bucking the trend to buy bottoms also reflect optimism for the long-term development of my country's semiconductor companies.
In addition, on the evening of October 11, Shengmei Shanghai and Haiguang Information also issued announcements one after another, explaining the impact of the US government's new export restrictions on the company. Both said that there would be no substantial impact.
Shengmei Shanghai announced that the Bureau of Industry and Security of the U.S. Department of Commerce announced a series of detailed rules for the Export Administration Regulations. The above-mentioned new regulations have a controllable impact on the company as a whole and will not have a substantial impact on the company's normal operations. The company will continue to pay attention and actively communicate with relevant departments and institutions.
According to the Haiguang Information announcement, the company's production and operation are currently normal. After a preliminary assessment, the matter will not have a significant adverse impact on the company's short-term operations and financial conditions, and the long-term impact requires further assessment by the company.
At present, the development of the domestic semiconductor industry is accelerating, the development logic of the semiconductor industry has undergone major changes, the global division of labor and cooperation is gradually decreasing, and under the circumstance of increasing uncertainty in the external environment, the independent control of the entire industry chain is expected to surpass the industry cycle. It will become the main line of development of the domestic semiconductor industry in the future. The next few years will be a golden period for the development of my country's semiconductor equipment and material enterprises.
Tianfeng Securities pointed out that at present, my country has gradually emerged from a number of excellent leading companies in the field of semiconductor equipment parts/equipment/materials, and the products have successively passed the production line verification of domestic production lines such as SMIC/Huahong/Changcun/Changxin. Taking into account the impact of this export control, it is expected that the localization of the industrial chain will accelerate again, and relevant domestic manufacturers are expected to usher in development opportunities. There will be four main lines of follow-up investment:
1) Semiconductor materials and equipment: Zhengfan Technology / Jacques Technology / Shanghai Silicon Industry / Huafeng Measurement and Control / North Huachuang, etc.;
2) OEM packaging and testing: Hua Hong Semiconductor / SMIC / Changjiang Electronics Technology / Tongfu Microelectronics;
3) IDM: Wingtech / Sanan Optoelectronics / Times Electric / Silan Micro / Yangjie Technology;
4) Semiconductor design: Nanochip / Dongwei Semiconductor / Haiguang Information, etc.