The new crown epidemic has swept the world. For more than two years, it has not only not returned, but has repeatedly impacted the global semiconductor industry. In the early days of the outbreak, markets in various countries were pessimistic about future expectations, and the economic situation was unsatisfactory, but new economy companies represented by semiconductors and new energy became the main force of market value growth under the epidemic.
For example, Apple's market value on December 31, 2021 increased by $1,609 billion compared to its market value on January 1, 2020, an increase of 123%; compared with the same period, Microsoft's market value also increased by more than one trillion US dollars, reaching $1,322 billion. The growth rate is 110%.
There are those who are proud, and there are those who are disappointed. Intel, the former semiconductor leader, lost $51 billion in market value in two years, and also entered the top ten in the global market value loss list. When other competitors are prospering, Intel appears to be particularly lonely on this list.
There are red and black lists, so under the raging epidemic, how is the development of the semiconductor industry? Whoever falls and who rises? Which increase or decrease?
The vicissitudes of the semiconductor market under the epidemic
The big semiconductor factory is making great progress
In the two years since the outbreak of the new crown epidemic, there are four semiconductor companies in the top 15 global market capitalization growth, namely Nvidia, TSMC, ASML and Broadcom. Even among the top five companies with market capitalization growth ahead of Nvidia, each has its own chip business. Among them, Apple's chip business can be ranked among the top fifteen semiconductor companies in the world.
Among the top 100 companies with market capitalization growth, a total of 12 semiconductor companies are on the list. The semiconductor equipment industry performed particularly well, with ASML, Applied Materials and Lam Research, the top three equipment makers all making the list. Among the three major equipment companies, ASML, which is holding the throat of advanced technology, has the advantage of exclusively supplying EUV lithography machines.
In the past two years, the global chip production capacity has been greatly expanded. Leading companies such as TSMC and Samsung have spared no expense in the investment of advanced technology. The three-year investment plans of these two companies in semiconductors have each soared to the level of hundreds of billions of dollars. Under the repeated impact of the epidemic, the contradiction of chip shortage is prominent. TSMC spent US$2.887 billion last year to expand the 28nm production capacity of its Nanjing plant, from 40,000 pieces per month to 100,000 pieces; it also spent US$12 billion to build a 5nm process wafer fab in Arizona, USA; it also cooperated with Sony. Semiconductor solutions companies have built factories in Japan, and the huge market demand has caused TSMC to increase rather than decrease during the epidemic.
The expansion of TSMC's domestic production also reflects the rapid development of my country's semiconductors during the epidemic. In 2021, China's integrated circuit industry will exceed one trillion yuan for the first time. According to statistics from the China Semiconductor Industry Association, the sales of China's integrated circuit industry in 2021 will be 1,045.83 billion yuan, a year-on-year increase of 18.2%. Among them, the sales of the design industry was 451.9 billion yuan, an increase of 19.6% year-on-year; the sales of the manufacturing industry was 317.63 billion yuan, a year-on-year increase of 24.1%; the sales of the packaging and testing industry was 276.3 billion yuan, an increase of 10.1% year-on-year.
In 2021 (as of December 1), the number of domestic chip design companies has increased by 592 from 2,218 last year to 2,810, a year-on-year increase of 26.7%. In 2021, the domestic industry-wide sales are expected to be 458.69 billion yuan, an increase of 20.1% from 381.94 billion yuan in 2020.
The impact of the epidemic cannot be underestimated
Affected by the new crown epidemic, many semiconductor manufacturers now have to face the dual challenges of tight supply chain shortages and city blockades.
Malaysia is known as a "semiconductor town", one of the world's top seven exporters of semiconductor products, and one of the major centers of global semiconductor packaging and testing. After Malaysia closed the country in March 2020, not only some semiconductor companies entered a state of shutdown and production suspension, but the export of product shipments was also hindered. Malaysia will not stabilize under 10,000 daily cases until October 3, 2021, and primary and secondary schools nationwide will resume classes in January 2022. In addition, the semiconductor industry is already extremely fragile, and Malaysia's closure of the country has set off a new round of price increases and shortages in the industry.
In the global semiconductor packaging and testing process, Malaysia has always had a unique position. More than 50 semiconductor companies have set up factories in Malaysia, and in the previous Malaysia "closure" operations, many of the above semiconductor packaging and testing/IDM manufacturers have been greatly affected, and many factories have been shut down.
India is the world's second largest mobile phone manufacturing base after China, and plays a pivotal role in the global semiconductor industry chain. According to the Indian Electronics and Semiconductor Association (IESA), the semiconductor components market in India is expected to be worth $32.35 billion by 2025, growing at a CAGR of 10.1% between 2018 and 2025.
In May 2020, due to the continuous spread of the epidemic in India, Foxconn's factories in India suffered large-scale infections. India had to block the country, prohibiting the transportation of non-essential goods such as electronic products, and some offline retailers were also forced to close their stores. India has "closed the city" several times, and many mobile phone or electronics manufacturers once pressed the "pause button".
Vietnam is the biggest beneficiary of the relocation of electronics manufacturing from China. From 2016 to 2018, Vietnam’s electronics exports grew at a CAGR of 23% to US$86.6 billion. Semiconductor manufacturers such as Hon Hai, Luxshare, Sunny Optical, AAC, and Goertek have established production bases in Vietnam. The country is also one of the important production bases for major mobile phone brands such as Samsung.
At the beginning of 2021, Vietnam suffered the third wave of the epidemic, and the production and operation of enterprises were severely impacted.
AMAT and Lam Research, a large U.S. semiconductor production equipment manufacturer, have successively withdrawn their original sales forecasts due to the impact of the new crown pneumonia. Lam Research headquarters complies with the California government's ban on going out. In the future, there will be situations like AMAT and Lam Research stop production, make it difficult to source parts and raw materials, and even some companies may not be able to meet customer delivery dates.
The market competition is hot, and there are many measures to promote development
Due to the increase in demand for notebook computers, PCs, and mobile phones due to the epidemic, the demand for semiconductors has continued to increase, and semiconductors have become an important strategic resource. Countries have announced the "Chip Act", and the United States has even tried to use alliances to offset the negative impact of the epidemic while rapidly developing semiconductors.
As an important market for semiconductors, China has achieved impressive results in anti-epidemic. The production of Chinese factories has been relatively stable under repeated epidemics. On March 28, South Korea reported that the U.S. government proposed to form a “Chip 4” alliance with South Korea, Japan and Taiwan, and the intention behind it was to use this organization to exclude mainland China from the global semiconductor supply chain. .
But "excluding dissidents" is not so simple. South Korea's Samsung has the only overseas production base for memory chips in Xi'an, China, mainly producing flash memory chips. The monthly production capacity of 12-inch wafers reaches 265,000, accounting for 42% of Samsung's overall flash memory output and 10% of the global flash memory market output. China's factory status Visible. Once South Korea joins Chip 4. Can it afford the risk of breaking away from China's semiconductor production chain? And semiconductor development does not depend on blockade, but on a good ecology, so the Korean media is negative about whether this alliance will be established.
In order to promote the development of semiconductors, the US Senate passed the US$250 billion chip bill last year, authorizing US$52 billion to accelerate US semiconductor production and research, in an attempt to "better compete with China" on a global scale. This year, the US House of Representatives also passed the bill not long ago, and it is expected to increase the appropriation to 350 billion US dollars, strengthen the United States in many fields such as manufacturing, research and development, and encourage the US private sector to invest in semiconductor production.
In addition to the United States, the European Union also issued a chip bill in early February. As the pandemic and global semiconductor shortages have forced the closure of factories in everything from automobiles to healthcare equipment, the European Commission has proposed a comprehensive set of measures to ensure the EU's security of supply, resilience and technological leadership in semiconductor technologies and applications. Margrethe Vestager, Executive Vice President Europe, said: "Chips are essential for green and digital transformation and for the competitiveness of European industry. We should not depend on one country or one company to ensure security of supply. We must work together. This will also enable Our international partners benefit. We will work with them to avoid future supply issues.”
The COVID-19 pandemic has exposed the weaknesses of the world's semiconductor ecosystem, and we are collectively facing a severe shortage of chips. The South Korean government released the "K-Semiconductor Strategy", the Ministry of Economy, Trade and Industry of Japan announced the establishment of the "Semiconductor Digital Industry Strategy" with a pre-investment of 42.7 billion yuan, and my country has written the promotion of semiconductor development into the two sessions and the government work report.
The steady development of China's semiconductors under the epidemic
China's Shanghai, Shenzhen, etc. have also been affected under the cover of the epidemic that will not return. As a city with a global impact on the development of the integrated circuit industry, the epidemic will definitely have an impact on its economy. However, under China's "dynamic" zero new crown strategy, the model adopted by Shanghai also reflects the minimization of the impact of the epidemic on the economy. of experimentation and exploration. And given Shanghai's potential impact on production, most fabs won't shut down easily.
Shanghai semiconductor companies implement "two points and one line" closed management of epidemic prevention and production. On April 5, Shanghai proposed that during the lockdown period, for enterprises that implement closed production, employees should live, work, and traffic in the park (factory area), and implement closed management of "two points and one line". Under the premise of the measures, production and operation can be carried out. At present, many integrated circuit companies in Shanghai are maintaining closed management in accordance with epidemic prevention requirements to ensure that production is not affected by the epidemic.
On March 13, 2022, the Shenzhen New Coronavirus Pneumonia Epidemic Prevention and Control Headquarters issued the latest epidemic prevention and control measures, which will be implemented from the 14th to the 20th. Shenzhen was forcibly pressed the pause button this time, and Shenzhen-related electronics manufacturing was also suspended. As we all know, Shenzhen, as China's technology center, is home to a large number of well-known companies including Huawei, ZTE, and DJI.
But things didn't get any worse. Since March 21, all districts in the city have resumed normal operations in an orderly manner. Shenzhen has achieved control of the epidemic in one week, demonstrating the speed of the Chinese government's response to the epidemic, which once again demonstrates the stability of the Chinese market that is different from other countries.
In 2021, the global chip industry will encounter a shortage of production capacity and a surge in supply and price increases. The upstream chips are out of stock, and downstream terminal merchants are miserable. After the easing at the end of the year, a new wave of epidemics will begin after the Spring Festival in 2022. In February, the global chip delivery time (referring to the lead time from ordering to delivery) increased month-on-month. It took 3 days to reach 26.2 weeks, and buyers had to wait more than half a year on average.
The development of semiconductors is ecological. No country in the world can master all the links in the semiconductor industry. Every country is a link in the global industrial chain. Any problems in any link will have an impact on the global supply chain. The repeated outbreak of the epidemic has accelerated the development of semiconductors and exacerbated the contradictions in the market. It is hoped that the epidemic will end soon, the semiconductor market will ride the wind and waves, and the "core core" will prosper.