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Financial Investment News reporter Lin Ke

Recently, the market has continued to fluctuate and rebound, volatility has increased, and hot spot switching has begun to accelerate. As one of the leaders of the market counteroffensive, the semiconductor sector, although there has been a significant differentiation after a continuous surge, the overall trend is still good.

Some industry insiders pointed out that the semiconductor industry has seen a cycle turning point, funds in the context of the rebound of the boom in the active layout, the industry's leading companies are generally optimistic, it is recommended that investors in the semiconductor sector in the process of shock layout equipment, materials and other segments.

Drafting: Qing Zixiu

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Semiconductor equipment: with long-term conditions

With

the establishment of the industrial trend of science and technology power, superimposed policy support, a new round of bull market technology stocks is expected to become the main line of investment, of which semiconductor equipment is the core asset of A-share hard technology, and market participants continue to be optimistic about the follow-up market. Some analysts pointed out that after the short-term rebound, the current A-share semiconductor equipment share price is at a relatively low level, and the valuation is at the historical 20%-40% water level. In terms of valuation, compared with overseas equipment companies, combined with higher performance growth, the valuation of A-share equipment companies has certain advantages. In the medium and long term, overseas equipment companies are all long-term assets, and under the premise of expanding advanced processes and increasing the localization rate, A-share equipment companies have long-term conditions.

Zhang Xiaofei, an analyst at Haitong Securities, pointed out that after nearly five years of development, the revenue and net profit attributable to the parent company of domestic semiconductor equipment listed companies have been growing, but they are still small compared with overseas semiconductor equipment companies and have huge room for growth. In the face of the construction needs of domestic downstream wafer fabs, excellent domestic semiconductor equipment companies must not only continue to meet the personalized needs of customers, but also need more innovative technological development; At the same time, if we can complete more product lines with the help of investment and acquisitions, and provide customers with more complete terminal process application solutions, I believe that we will see excellent local semiconductor equipment companies go through the cycle and continue to grow into "China's AMAT" and "China's KLA". Looking ahead, mergers and acquisitions in the semiconductor field will continue to emerge in the next few years, including the injection of in vitro assets by the same actual controller, cash payment and issuance of shares, exchangeable bonds, etc. The semiconductor equipment industry is a "big country", in the context of solving the key technical difficulties of "stuck neck", the domestic excellent semiconductor equipment listed companies are expected to continue to expand and strengthen and enhance competitiveness through mergers and acquisitions while continuously carrying out technology research and development iterations.

At present, the global semiconductor capital expenditure is picking up, the downstream demand is increasing, and the overall demand and performance of the semiconductor industry are improving. Yang Zhong, an analyst at Huafu Securities, pointed out that in the process of localization, the autonomy rate of China's semiconductor industry has increased year by year, from 14% in 2012 to 18% in 2022, and is expected to reach 26.6% in 2027. Benefiting from the above-mentioned trends such as the rise of the semiconductor boom, the iterative upgrading of manufacturing technology and the accelerated evolution of the localization rate, domestic semiconductor equipment manufacturers are expected to continue to benefit from the expansion of the semiconductor market scale and the deepening of the localization rate by relying on their own product competitiveness and category expansion capabilities, and the growth rate and space may be very significant. It is recommended to pay attention to North Huachuang, China Micro Corporation, Tuojing Technology, Xinlai Materials, Changhong Technology, Zhengfan Technology, MayAir Technology, Yingjie Electric, Tengjing Technology, Jingzhida, Jiaocheng Ultrasound, etc.

A selection of potential stocks

North Huachuang (002371).

AMEC (688012).

Tuojing Technology (688072).

Changhong Technology (300151).

Changchuan Technology (300604).

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Semiconductor materials: Benefiting from the rise in market demand

In the semiconductor industry chain, semiconductor materials are located in the upstream link and are the core foundation of the semiconductor manufacturing process. At present, the localization rate of semiconductor materials in China is low, especially in the high-end field of silicon materials, photoresists and other products. The localization rate of key areas of the semiconductor materials industry still needs to be broken through, and epitaxial mergers and acquisitions are conducive to building platform enterprises to achieve leapfrog development together, and there are many subdivisions of semiconductor materials, and epitaxial mergers and acquisitions to broaden the business scope is also a reasonable path for enterprises to become bigger. In terms of industry cycles, total capital expenditures for semiconductors are expected to be $166 billion in 2024, down 2% from 2023, and capital expenditures are expected to increase by 11% to $185 billion in 2025, surpassing the record high of $182 billion set in 2022. In the future, the overall capital expenditure will resume growth, which will be conducive to the expansion of production capacity, the increase in the use of semiconductor materials, and the gradual upward trend of the industry.

Chen Yaobo, an analyst at Huaan Securities, pointed out that semiconductor manufacturing materials can be subdivided into silicon wafers, electronic special gases, masks, CMP materials, photoresists, wet electronic chemicals, targets and other materials, which can be divided into a variety of categories according to different processes. Due to the large number of sub-industries, the platform layout of enterprises helps to expand their own growth space. However, at the same time, the large number of subdivisions also leads to the limited space of a single market scale, and it takes a certain amount of time for products to be supplied in batches from certification, so it is expected that stable growth will become a growth model for the semiconductor materials business of domestic enterprises.

The window period for foundry expansion is conducive to the improvement of the localization rate of local enterprises, and determines the competition pattern of local semiconductor material enterprises during this period. Semiconductor materials are mostly consumables, and the expansion of domestic wafer factories has promoted the expansion of China's semiconductor materials market, and also brought opportunities for local enterprises to carry out localized substitution. According to SEMI, about 60% of the world's 20nm-45nm process node manufacturing capacity is located in China. And if you include the new fabs planned to be put into production, it is expected that in the next 3 to 5 years, the total 20nm-45nm foundry capacity in China will be close to 80%. This period of time will be a golden window period for enterprises to increase the localization rate of semiconductor materials.

As the semiconductor industry continues to recover and the demand for semiconductor materials grows, segment leaders are expected to be the first to benefit. Some industry analysts said that benefiting from the recovery of consumer electronics and the high demand for AIGC computing power, the demand for logic has accelerated, the inventory of memory chips has been removed, the price has risen, and the growth rate of the market scale has rebounded. It is expected that in the future, with the continuous recovery of end market demand and further destocking, the demand for AI computing power will remain high, the release of new demand such as HBM will be accelerated, and the localization rate of semiconductor materials such as advanced packaging materials, photoresists, and high-end electronic chemicals will continue to advance, and the upward cycle of the industry is expected to begin. In the context of the continuous recovery of market demand and the steady progress of localization, it is recommended to pay attention to Qingyi Optoelectronics in the field of reticle; Dinglong Co., Ltd., Anji Technology, etc. in the field of CMP polishing materials; Huate Gases in the field of specialty gases; Tongcheng New Materials in the field of photoresist, Chinachem Technology, etc.

A selection of potential stocks

Qingyi Optoelectronics (688138).

Dinglong shares (300054).

Anji Technology (688019).

Huate Gas (688268).

Tongcheng New Materials (603650).