Shulou(Shulou.com)11/24 Report--

At the end of the year, looking back to 2022, under the influence of slowing global economic growth and sluggish consumer demand, the semiconductor industry has turned from hot to cold, chip enterprises are under pressure to move forward, optimize product portfolio, adjust production capacity layout and continuously promote chip technology innovation. Rational investment of capital in China's chip market and accurate implementation of policies push the industry into a stable development stage.

For the semiconductor industry, 2022 is a turning year for strategic adjustment and preparation, and the industry maintains resilience and flexibility to cope with the double cycle of the market, laying a foundation for long-term development.

Chip industry: From boom to cold winter 2021, the global semiconductor industry is booming, chip market demand surges, capital boom surges,"lack of core,""price increase" and "supply exceeds demand" become focus words. As of the first quarter of 2022, the semiconductor industry grew for eight consecutive quarters, the longest continuous growth in history, but this record ended in the second quarter of 2022.

As with every previous cycle, after the heat, the semiconductor market began to cool. In 2022, under the influence of slowing global economic growth and sluggish consumer demand, the semiconductor industry is in a downturn and enters a downward cycle. According to Omdia data, semiconductor market revenue in the second quarter of 2022 was $158.1 billion, down 1.9% month-on-month, and semiconductor revenue in the third quarter was $147 billion, down 7% from the second quarter. Two consecutive quarters of decline also hit semiconductor companies hard, with Samsung's profit falling 31.39% in the third quarter; Intel's net profit plunging 85%; NVIDIA's net profit falling 72%;AMD's net profit plunging 93%. Memory chips are the most obvious signal that the semiconductor industry is entering a downward cycle. SK Hynix's third-quarter profit fell 60% year-on-year and Micron's net profit fell 45% as DRAM and NAND product sales and prices both fell.

At present, the semiconductor industry is experiencing a double cycle of market cyclical changes and growth momentum conversion. First, the demand for consumer terminals represented by PCs and smart phones declined, enterprise inventories continued to rise, and semiconductor industries dominated by consumer electronics, such as memory chips, MCU and display driver chips, entered a downward cycle. Second, the rising demand for chips in 5G, automobile, data center, industry and other fields has become a new growth driving force for semiconductor development. New products and new applications generated by new technologies such as 5G, AR / VR, AI and autonomous driving will further boost the chip market. SEMI expects the global semiconductor industry to build 84 large-scale chip manufacturing plants between 2021 and 2023, with segments including automotive and high-performance computing driving its spending growth.

Under the influence of double cycle, the revenue of relevant enterprises is cold, but the development of each business line is uneven. AMD, for example, saw revenue decline, but its data center, embedded and gaming divisions maintained strong growth; Intel's client computing revenue fell 17% year-on-year in the third quarter, but autonomous driving company Mobileye revenue rose 38% year-on-year. For example, Qualcomm and Infineon diversified the automotive and industrial control fields, offsetting the decline in the consumer electronics field and showing growth. For example, NXP's revenue in the third quarter increased by 20.4% year-on-year, net profit increased by 42.2%, its automotive business revenue increased by 24% year-on-year; industrial and Internet of Things business increased by 17% year-on-year; and communications infrastructure and other business revenue increased by 14% year-on-year.

If God closes a door for you, he will certainly open a window for you. Under the double cycle, chip enterprises are strengthening diversified product layout to resist market risks. Of course, winter has arrived, natural spring return period, some experts expect the semiconductor industry will begin to pick up in the second half of next year.

Chip enterprises: From high-flying to rational adjustment, the double cycle effect superposition, weak consumer electronics demand continues to 2023, and institutions predict that global semiconductor capital expenditure will decline by 26% year-on-year in 2023. Under the influence of multiple factors, semiconductor enterprises move forward under pressure, stepping into rational adjustment stage from the triumph in 2021, optimizing product portfolio, adjusting production capacity layout and formulating strategic plan reasonably.

It is reported that SK Hynix will reduce investment by 50% in 2023 and reduce production of low-profit products; Micron will cut capital expenditure by 30% in 2023 and cut investment in chip packaging equipment by half; Kaixia will cut 3D NAND flash memory production by about 30%; Intel will achieve $3 billion in cost reductions by 2023 and annualized cost reductions and efficiency gains of $8 billion to $10 billion by the end of 2025. Chip manufacturers are expected to maintain a period of capital reduction and production reduction to promote the normalization of market supply and demand balance. At the same time, the cold wave of the market has penetrated into chip design, manufacturing, sealing and testing, equipment and other links. "layoffs" and vacation-style "layoffs" are common occurrences. In addition, the "single-cut tide" also swept Samsung, LG, TSMC and other head manufacturers, covering driver IC, PMIC, MCU and other key chips.

Although market development continues to decline, IDC said that the global semiconductor market will double in the next 10 years, with a total market capitalization of more than 1 trillion US dollars, so adjusting product strategy in line with market trends remains the main tone of chip companies. TSMC, for example, plans to cut its capital expenditure forecast for 2022 from at least $40 billion to $36 billion in response to market changes. But at the same time, TSMC is also keeping up with the high computing power demand of the current society, promoting the development of 3D IC to achieve better system performance; actively expanding mature process capacity to meet the rapid growth of chips in different application fields; and striking a balance between increasing supply chain flexibility and increasing costs.

As the saying goes, offense is the best defense, and new growth momentum has more demand for quality improvement in the semiconductor industry. Therefore, chip companies have not slowed down the pace of innovation, but have promoted technological breakthroughs with a long-term vision.

In 2022, advanced processes continued to advance, 3nm process technology started mass production, and 2 nm plans were released one after another. At the same time, chip design, advanced packaging, sealing test and other links have been steadily upgraded, and the exploration of post-Moore technology in the industry has continued to deepen. In the post-Moore era, small chips are an important technical idea to break through Moore's Law. In March this year, Intel, ARM, Qualcomm and TSMC jointly established the Small Chip Alliance to launch the universal chip interconnection standard UCle. On December 16, China released the first native Chiplet technical standard, a key step to break through the limitations of advanced process technology.

In 2022, China officially stepped into the era of "material superman," and the scale of mobile Internet of Things industry continued to grow, driving the rapid growth of Internet of Things chip shipments. This year, chip enterprises and module enterprises cooperated to launch a variety of module products supporting the latest 5G R17, and many chip enterprises completed technical verification based on R17 and RedCap. The R & D and industrialization of lightweight 5G chips will further improve the cost performance of terminal modules.

China market: from impetuousness to calmness In 2022, the blockade of Chinese science and technology enterprises by the United States intensified, and China still faced problems such as talent shortage and chip dependence on import. However, rational investment of capital, precise implementation of policies and focused development of enterprises made China's chip market turn from impetuousness to calmness, such as silkworm chrysalis silently exerting force before butterfly change, aiming at consolidating foundation, continuous innovation, pursuing breakthrough, and making domestic core hang high one day. Sing loudly.

With the efforts of all parties, more talents, funds and policies have landed in the semiconductor industry. China's semiconductor industry will continue to grow in 2022. According to statistics from the China Semiconductor Industry Association, sales of China's semiconductor industry will increase from 788.5 billion yuan in 2017 to 124.23 billion yuan in 2021, with an average annual compound growth rate of 12%. It is estimated that the market size of China's semiconductor industry will reach 1383.9 billion yuan in 2022.

This year, SMIC, Changjiang Storage, Longxin Zhongke and other chip head enterprises stable output, small and medium-sized chip enterprises also began to emerge. According to the statistics of new wealth, as of November 2022,50 semiconductor unicorns have emerged in China, with a total valuation of 858.4 billion yuan. Ruili integration, purple light exhibition sharp, central core integration ranked in the top three. Among them, there are 25 chip design companies, occupying half of the country, 8 GPU, MCU and other fields have been born, 5 unicorns have become the hottest track; new development forces in upstream materials, equipment and EDA software fields are also fully spread. It is worth mentioning that in 2022, China's FPGA track also made great progress all the way, financing constantly.

Jiwei Consulting said that domestic substitution has been further deepened in many fields. Successful development of the first mobile phone Beidou short message communication RF baseband integrated chip in China; trial production of the first 28/22nm ReRAM 12-inch chip production line in China; mass production of domestic self-developed "Fuxi" power chip; Ziguang Guoxin launched the first LPDDR4X memory product facing the vehicle gauge market in China; Wuqi launched the first 1 x 1 dual-frequency concurrent Wi-Fi 6 mass production chip in China; Changdian Technology realizes 4nm mobile phone chip packaging... At the same time, China has also made certain achievements in the development of RISC-V. Zhongyi Xinsheng Technology released the first low-power NB-IoT Internet of Things Hub chip based on RISC-V core architecture; Saifang Technology's first industrial firewall based on RISC-V chip has made a phased new breakthrough in the energy industry.

Crisis breeds new opportunities. In 2022, the chip industry will usher in a new inflection point in the downward cycle. Enterprises will strengthen diversified layout and balance the relationship between supply and demand of products, so as to build a more efficient and healthy supply chain ecology. At present and in the future, chip enterprises will surely cross the cycle and grow flexibly, providing more stable impetus for the digital transformation of society.

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