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Date
2024-08-19
2023 Semiconductor Market: Bouncing Back?
Over the past year, the semiconductor industry has endured a prolonged winter, with high inventory backlogs piling up like mountains, market demand plummeting into an icy abyss, investments sharply decreasing, and production capacities falling one after another. The entire industry seemed to be groping in the dark, with every step filled with unknowns and challenges.
However, winters always pass, and now people are eagerly watching: has the global semiconductor industry weathered this difficult period? Can this year's semiconductor market sweep away the gloom and usher in the long-awaited turning point?
To explore whether the semiconductor market has recovered, this article will delve into a comprehensive analysis from multiple perspectives, including institutional data, performance in sub-markets, and the operational status of leading enterprises.
How is the market performing? The data speaks
Q1 Global semiconductor market grew by 15.2% year-on-year, down 5.7% quarter-on-quarter
According to SIA data, the total global semiconductor sales in the first quarter of 2024 reached $137.7 billion, a year-on-year increase of 15.2%, and a quarter-on-quarter decrease of 5.7%. Sales in March 2024 decreased by 0.6% compared to February 2024. The growth of the global chip market slowed down in March, as economic headwinds began to outweigh the push from artificial intelligence on chip pricing.
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Looking at the regional market performance, the Chinese market had the largest year-on-year increase in March, reaching 27.4%. This was followed by the American market with a year-on-year increase of 26.3%, the Asia-Pacific/All Other Regions with a year-on-year increase of 11.1%, while sales in Europe and Japan declined, with year-on-year decreases of 6.8% and 9.3%, respectively. In terms of quarter-on-quarter performance, China's monthly sales were flat compared to the previous month, but the American region saw a quarter-on-quarter decrease of 0.1%, Europe decreased by 0.9%, the Asia-Pacific region/All Other Regions decreased by 1.2%, and Japan decreased by 2.0%.
Q2 Global semiconductor market grew by 18.3% year-on-year, up 6.5% quarter-on-quarter
In the second quarter of 2024, the global semiconductor market size reached $149.9 billion, a year-on-year increase of 18.3%, and a quarter-on-quarter increase of 6.5%. John Neuffer, President and CEO of SIA, stated: "In the second quarter of 2024, the global semiconductor market remained strong, with quarterly sales increasing quarter-on-quarter for the first time since the fourth quarter of 2023." Specifically, in June, global semiconductor sales reached $50 billion, a 1.7% increase from $49.1 billion in May.
In terms of regional market performance, the American market was the strongest, with a year-on-year increase of 42.8%; the Chinese market recorded a year-on-year increase of 21.6%; the Asia-Pacific/All Other Regions saw a sales increase of 12.7%; the Japanese market experienced a year-on-year decline of 5.0%; the European market saw a year-on-year decline of 11.2%. In terms of quarter-on-quarter growth, the sales in America, Japan, and China all achieved positive growth in June, with increases of 6.3%, 1.8%, and 0.8%, respectively. However, sales in Europe and the Asia-Pacific/All Other Regions decreased, with decreases of -1.0% and -1.4%, respectively.July and August Global Semiconductor Market Shows Optimism
The data for the global semiconductor market size in Q3 has not yet been released, but the figures for July and August have already brought a positive signal for this year.
In July of this year, the global semiconductor industry's sales reached $51.32 billion, a year-on-year increase of 18.7% and a month-on-month increase of 2.7%. The global semiconductor market continued to grow significantly year-on-year in July, with monthly sales increasing for the fourth consecutive month.
In terms of regional market performance, the American market showed particularly strong growth in July, with sales increasing by 40.1% year-on-year. China's sales grew by 19.5% year-on-year, and sales in other Asia-Pacific regions excluding China and Japan also rose by 16.7% year-on-year. However, sales in Japan and Europe decreased by 0.8% and 12.0% year-on-year, respectively.
In August of this year, global semiconductor sales reached $53.12 billion, a significant increase of 20.6% compared to the same period last year, setting a new record for single-month sales in August. This growth was mainly driven by the strong demand in generative artificial intelligence (AI) related fields, which has led to global semiconductor sales exceeding the same period last year for ten consecutive months.
In terms of regional market performance, the American market was particularly impressive, with sales reaching $16.56 billion, a year-on-year growth rate of 43.9%, becoming an important force driving the overall growth of the global semiconductor market. In contrast, the European market showed signs of fatigue, with sales of $4.26 billion, a year-on-year decrease of 9.0%.
In the Asian market, Japan's sales reached $4 billion, growing by 2.0% year-on-year, maintaining a stable growth trend. The Chinese market also performed well, with sales increasing by 19.2% year-on-year to $15.48 billion, demonstrating strong growth potential. Additionally, the Asia-Pacific region excluding Japan and China, as well as other regions, achieved a year-on-year increase of 17.1%, with sales reaching $12.82 billion.
It can be seen that the global semiconductor market's monthly sales have achieved a growth trend for five consecutive months. This significant increase in sales strongly indicates that global semiconductor demand is recovering strongly. This positive change is mainly due to the rapid development of emerging technologies such as AI, the Internet of Things (IoT), 5G, and automotive electronics. Especially in high-performance computing fields such as AI chips and data centers, the demand has shown a surge, and these areas have become the key drivers of global semiconductor sales growth.
In addition to the market data provided by research institutions, price, inventory, and capacity utilization are important indicators that can most directly reflect the changes in the industry's market situation. Below, the author will conduct research on the global semiconductor industry from these three perspectives.From the actual performance of various wafer foundries, it can be observed that with the development of the semiconductor industry, the capacity utilization rate of wafer foundries is recovering comprehensively. TSMC, in addition to its advanced 3-nanometer and 4/5-nanometer processes running at full capacity, is also seeing a return in capacity utilization for mature 22/8-nanometer processes. Data indicates that TSMC's monthly production capacity for 3-nanometer wafers is gradually increasing from 100,000 to approximately 125,000 units. Wafer foundries in the Taiwan region have a capacity utilization rate of 60% - 65% in the first half of 2024, and it is estimated to recover to 75% - 80% in the second half.
SMIC's monthly production capacity increased from 814.5 thousand 8-inch equivalent wafers in the first quarter of 2024 to 837.0 thousand 8-inch equivalent wafers in the second quarter. The capacity utilization rate rose from 80.8% in the first quarter to 85.2% in the second quarter. In the second quarter of 2024, SMIC shipped over 2.11 million 8-inch equivalent wafers, a sequential growth of 17.7%. Driven by shipments, SMIC's capacity utilization rate has improved significantly.
Hua Hong Semiconductor's capacity utilization rate is also rapidly increasing. In the first quarter of 2024, Hua Hong Semiconductor's overall capacity utilization rate was 91.7%, an increase of 7.6 percentage points from the previous quarter. By the end of the second quarter, the company's monthly production capacity was 391 thousand 8-inch equivalent wafers, with an overall capacity utilization rate of 97.9%, an increase of 6.2 percentage points from the previous quarter. The construction of Hua Hong Semiconductor's second 12-inch production line is progressing at a fast pace, and it is expected to start trial production before the end of the year, further expanding and enhancing the company's production capacity and specialty process platform.
According to data from Quntz Consulting, the average capacity utilization rate of major wafer fabs in the third quarter of 2024 was about 80%, a year-on-year increase of 5% and a quarter-on-quarter increase of 1%. Quntz Consulting estimates that the average capacity utilization rate of major wafer foundries in the fourth quarter of 2024 is expected to recover to around 81% - 82%, with foundry prices stabilizing and seeking the possibility of price increases. Overall, the price reduction trend for mature processes has come to an end. The direct performance of the market situation is reflected in the company's performance, so how is the recovery trend of the semiconductor industry? This can also be explored from the performance trajectory of major semiconductor companies.
Performance of Mainstream Semiconductor Companies
Enterprises within the industry are the most sensitive to the temperature of the industrial chain.
As of September 1, 2024, all 159 semiconductor companies classified by Wind Data under Shenyin & Wanguo have disclosed their semi-annual reports for 2024.
117 companies achieved year-on-year revenue growth in the first half of 2024, with 10 companies such as Demingli, Baiwei Storage, Dawei Shares, Jiangbolong, and He Lin Micro-Nano doubling their revenue.
More than 70% of the companies had a positive net profit attributable to the parent company's shareholders, with three companies having a net profit of over 1 billion yuan, namely North HuaChuang, SMIC, and Wei Er Shares.
61 companies saw a year-on-year increase in net profit attributable to the parent company's shareholders of more than 30%, and 36 companies had a net profit growth rate of over 100%. The top five companies in terms of growth rate are Ying Jixing, Changchuan Technology, Quanzhi Technology, Wei Er Shares, and Rui Xin Micro, with year-on-year net profit growth rates reaching 1776.17%, 949.29%, 800.91%, 792.79%, and 636.99%, respectively.TechInsights research indicates that the semiconductor market size grew by 24% in the first half of 2024, with an expected surge of 29% in the second half of the year.
As the third-quarter report cards of A-share semiconductor companies are being released, the industry recovery is still underway.
Wind data shows that, as of October 17th, 14 listed companies in the A-share semiconductor sector have disclosed their performance forecasts for the first three quarters of 2024. Among them, 10 companies including Juice Technology, Tai Ling Micro, and Jingchen Shares have expected increases in performance, while Quanzhi Technology and Siwei Technology have achieved a turnaround from losses. However, Xilian Integration and Xinyin Shares continue to suffer losses.
Among them, Quanzhi Technology tops the list with a net profit increase of 781.09% to 858.93%. The company had a loss of 20.56 million yuan in the same period last year, but this year it is expected to make a profit of about 140 million to 156 million yuan. Quanzhi Technology incurred a loss in the first quarter of 2023, marking the first loss in the same period in the past five years. By the end of 2023, the net profit turned positive, and the profitability has further improved this year, in line with the overall recovery trend of the semiconductor industry.
Jinghe Integration achieved a net profit of about 270 million to 300 million yuan in the first three quarters, a year-on-year increase of 744.01% to 837.79%. Wei Er Shares ranks third with an increase of 515.35% to 569.64%, achieving a net profit of about 2.257 billion to 2.467 billion yuan.
Regarding the reasons for the performance growth, Quanzhi Technology stated in its performance forecast that during the reporting period, the company seized the opportunity of the recovery in downstream market demand, actively expanded business across various product lines, and increased shipments, leading to a year-on-year increase in operating income of about 50%. The growth in operating income drove the increase in net profit. Jinghe Integration stated that as the industry's prosperity gradually recovers, the company's production capacity has been fully utilized since March this year, and since June this year, the company has adjusted the processing prices for some products, which has helped to steadily increase the company's operating income and product gross profit levels.
Wei Er Shares stated in its announcement that during the reporting period, market demand continued to recover, and downstream customer demand increased. Along with the company's product penetration in the high-end smartphone market and the continuous penetration of autonomous driving applications in the automotive market, the company's operating income and gross margin have achieved significant growth. In addition, to better cope with the impact of industry fluctuations, the company actively promoted the optimization of product structure and supply chain structure, and the company's product gross margin gradually recovered, leading to a significant improvement in overall performance.
Rui Xin Micro's performance forecast shows that, relying on the company's continuous growth in AIoT, especially in automotive electronics, as well as in industrial, business, and consumer markets, coupled with the third quarter being the traditional peak season for the industry, the company achieved a significant year-on-year increase in operating income and net profit in the first three quarters of this year. The operating income for the third quarter was about 911 million yuan, a year-on-year increase of about 51.42% and a sequential increase of about 29.18%, setting a new historical high for a single quarter; the net profit for the third quarter was about 157 million to 177 million yuan, a year-on-year increase of about 199.39% to 237.47% and a sequential increase of about 36.57% to 53.95%, both achieving breakthrough growth.
In summary, the upward trend of the semiconductor industry in terms of market and policy has been confirmed. Looking at the data from the past decade, the industry's prosperity cycle alternates, such as the upturn from the first quarter of 2013 to the fourth quarter of 2014, followed by a downturn, and then an upturn from the fourth quarter of 2019 to the fourth quarter of 2021, followed by a slump from the first quarter of 2022 to the first quarter of 2023. According to SIA data, the global semiconductor quarterly sales growth rate bottomed out in the first quarter of 2023, with the decline narrowing and turning positive in the fourth quarter. According to historical patterns, a new prosperity cycle is brewing, and the semiconductor industry is preparing for surprises in this upward cycle.