Halfway through 2024, semiconductor companies have also handed over their report cards.

According to the statistics of the Times Weekly reporter, as of September 1, 2024, all 159 semiconductor listed companies classified by Wind Data Shenyin Wanguo have disclosed their 2024 semi-annual reports.

117 companies achieved year-on-year revenue growth in 2024H1, among which Demingli (001309. SZ), BIWIN Storage (688525. SH), Dawei shares (002213. SZ), Longsys (301308. SZ), and Lin Weina (688661. SH) and 10 other companies doubled their revenue.

More than seventy percent of the enterprises have positive net profit attributable to shareholders of the parent company, and there are 3 companies with a net profit of more than 1 billion yuan, namely North Huachuang (002371. SZ), SMIC (688981. SH), Weir shares (603501. SH）。

The net profit attributable to shareholders of the parent company of 61 companies increased by more than 30% year-on-year, and the net profit of 36 companies increased by more than 100% year-on-year. The top five growth rate of Yingjixin (688209. SH), Changchuan Technology (300604. SZ), Allwinner Technology (300458. SZ), Weir shares (603501. SH), Rockchip (603893. SH), the year-on-year growth rate of net profit reached 1776.17%, 949.29%, 800.91%, 792.79% and 636.99% respectively.

Driven by the wave of artificial intelligence, A-share semiconductor companies are also ushering in development opportunities. TechInsights research points out that the semiconductor market grew by 24% in the first half of 2024 and is expected to continue to soar at a rate of 29% in the second half of the year.

The Times Weekly reporter combed the situation in the first half of 2024 and found that driven by AI demand, the performance of the memory chip industry has increased significantly, and the packaging and testing field has gradually recovered.

The demand for memory chips has picked up

A new round of artificial intelligence development is in full swing, and consumer electronics, data centers and other fields have shown significant signs of recovery under this influence. The increasing maturity of AI technology and the wide extension of its application scenarios have put forward higher requirements for the hardware foundation to support complex algorithm and model training.

Global cloud service providers have increased investment in AI infrastructure such as servers, driving the rapid growth of the AI service market. TrendForce predicts that global AI server shipments will be 1.67 million units in 2024, up 41.5% year-on-year, and AI servers are expected to account for 12.2% of total server shipments. It is estimated that the global AI server output value will reach 187 billion US dollars in 2024, accounting for 65% of the overall server output value.

According to data from China Securities Construction Investment, the current general configuration of server DRAM (module form is conventional memory module RDIMM and LRDIMM) is about 500-600GB, while the average capacity of AI servers on a single module can reach 1TB.

In this case, the high speed and low energy consumption advantages of SSD determine that it can replace HDD in a large area, Haitong International Data, the global enterprise SSD market size will reach 25.51 billion US dollars in 2025, of which the domestic enterprise SSD market size will increase to 48.9 billion yuan, with a compound growth rate of about 25% in five years.

Therefore, the performance of memory chip manufacturers has also been boosted.

Among the top 10 A-share semiconductor companies in terms of net profit attributable to their parent companies, three are memory chip manufacturers: Longsys (594 million yuan), Montage Technology (593 million yuan) and GigaDevice (517 million yuan), and among the top 10 companies that have doubled their net profits, memory chips occupy two seats. Among them, Longsys' growth rate reached 199.64%, and Montage Technology's net profit attributable to its parent company increased by more than 6 times year-on-year. Among the 13 memory chip companies included in the Wind Memory Index, only two companies did not achieve a year-on-year increase in net profit attributable to the parent company.

In its semi-annual report, Longsys mentioned several times the positive impact of AI on operations. The company believes that the demand for high-performance and high-capacity storage solutions in AI, autonomous driving, data centers and other applications continues to grow, and there is huge room for growth in the development of the semiconductor storage industry.

According to the financial report, the company achieved operating income of 9.039 billion yuan during the reporting period, a year-on-year increase of 143.82%; The net profit attributable to shareholders of listed companies reached 594 million yuan, a year-on-year increase of 199.64%.

In response to the current accelerated implementation of AI, Longsys has launched new memory products such as LPCAMM2, CAMM2, and CXL2.0 memory expansion modules to support AI application scenarios with large capacity and high computing power.

Montage Technology, a leading memory interface chip company, is mainly engaged in providing high-performance and low-power chip solutions for cloud computing and artificial intelligence, including memory interface chips, memory module supporting chips, and interconnection chip products. In the first half of the year, the company achieved operating income of 1.665 billion yuan, a year-on-year increase of 79.49%, and the net profit attributable to shareholders of the parent company was 593 million yuan, a year-on-year increase of more than six times.

The company mentioned in the financial report that some of the company's new AI high-performance "capacity" chip products began to be shipped on a large scale, which is one of the main reasons for the substantial increase in revenue and profit in 2024H1. Specifically, the company's three new high-performance "capacity" chip products showed a rapid growth trend, with a total sales revenue of about 130 million yuan in the second quarter, more than doubling from the previous quarter. According to the data, 905 institutions have visited the company this year.

Caitong Securities believes that with the arrival of the peak season of consumer electronics, memory prices are expected to accelerate their rise, and the performance of domestic memory companies is expected to continue to improve; The continued recovery of the memory market is expected to continue until 2025.

The importance of advanced packaging is highlighted

Another major challenge for the semiconductor industry in 2024 is that Moore's Law is slowing down. Under the trend of increasing demand for chip performance by AI, packaging and testing manufacturers have also shared the dividends of growth. China Development Bank Securities believes that driven by AI, there will be opportunities for both volume and price rise in the storage and advanced packaging and testing markets.

Zhu Hao, TPM manager of Huatian Technology, mentioned at this year's elexcon2024 Shenzhen International Electronics Exhibition that under the new demand of high computing power, high bandwidth and high storage, mobile devices are developing towards lightweight and miniaturization, which puts forward higher requirements for the size, cost and performance of chip packaging, and brings more opportunities for packaging and testing.

Previously, TSMC CEO Wei Zhejia mentioned at the second quarter earnings report that 70% to 80% of the company's capital expenditure will be allocated to advanced process technology. About 10% to 20% will be used for technical technology, and about 10% will be used for advanced packaging, testing, etc.

In fact, this is an area that global semiconductor manufacturers are focusing on. CITIC Securities believes that advanced packaging and testing will become an important capacity bottleneck in the future.

Domestic enterprises also have active layout follow-up. Among the 36 companies whose performance has doubled in the semi-annual report, 3 are integrated circuit packaging and testing companies, accounting for second only to chip design companies and semiconductor material companies. Among the 13 A-share packaging and testing companies, more than half of the year-on-year profits have increased, Tongfu Microelectronics and Huatian Technology have achieved a significant increase in net profit, both of which have achieved more than 2 times growth, and Yongsi Electronics has doubled its profits.

In the first half of 2024, Tongfu Microelectronics will achieve operating income of 11.080 billion yuan, a year-on-year increase of 11.83%; The net profit attributable to shareholders of listed companies was 323 million yuan, a year-on-year turnaround.

The company's main business is integrated circuit packaging and testing services, and its revenue accounts for 96.78% of the total revenue. Due to the perennial cooperation with AMD and other industry leaders, with the growth of demand for high-end processors and AI chip packaging and testing, the company's high-performance packaging business maintained steady growth in the first half of the year.

The company believes that for packaging and testing companies, AI has brought two opportunities: on the one hand, the explosion of AI demand continues to increase the demand for advanced packaging; On the other hand, AI computing power is shifting from training to inference and from the end-to-end side of the cloud, which is driving the increasing diversity of advanced packaging technologies.

Huatian Technology, which also performed well in profit growth, had a revenue of 6.718 billion yuan in the first half of the year, a year-on-year increase of 32.02%; net profit was 223 million yuan, a year-on-year increase of 254.23%.

At present, the company's products are mainly used in computers, network communications, consumer electronics and intelligent mobile terminals, Internet of Things, industrial automation control, automotive electronics and other electronic and intelligent fields. During the reporting period, the company's production scale of automotive electronic packaging products continued to expand, 2.5D and FOPLP projects were steadily promoted, and double-sided plastic packaging BGA SiP, ultra-high integration uMCP, and 12-inch lidar products were mass-produced.