Shanghai Silicon Industry, a leading domestic semiconductor wafer enterprise (688126. SH) with a record loss for 2024. According to the performance forecast released by the company on the evening of January 17, the company expects to achieve a net profit attributable to the owners of the parent company of -1 billion yuan to -840 million yuan in 2024, and a net profit attributable to the owners of the parent company after deducting non-recurring gains and losses of about -1.28 billion yuan to -1.07 billion yuan.

The above losses have cast a shadow on the development of Shanghai's silicon industry - in the context of the global semiconductor wafer recovery is lower than expected, the semiconductor wafer company is still increasing production capacity construction, huge R&D investment, high capital expenditure, and huge fixed asset depreciation will weaken the profitability of Shanghai's silicon industry.

The record loss of the Shanghai silicon industry in 2024 is a true portrayal of the above predicament. The company explained that three reasons led to the company's huge losses:

First, the recovery of the semiconductor wafer market is lower than expected. In 2024, the global semiconductor market will usher in a recovery, and according to the WSTS forecast, the global semiconductor market size will exceed 620 billion US dollars, an increase of 19% compared with the same period last year. According to SEMI forecast, during the reporting period, the global semiconductor wafer shipment area fell slightly by 2.5% compared with the same period last year, of which the shipment area of 300mm semiconductor silicon wafers increased slightly by 1.4% compared with the same period last year, and the shipment area of 200mm semiconductor silicon wafers continued to decline by 12.1% compared with the same period last year; At the same time, the global semiconductor silicon wafer (including SOI silicon wafer) market size is expected to be US$13.3 billion during the reporting period, down about 5.6% compared with the same period last year. The company's operating performance is consistent with the overall market situation, of which the unit price of 300mm semiconductor silicon wafers has decreased due to market impact and intensified competition, but its sales volume has increased greatly with the company's production capacity increase and market recovery, while the sales volume of 200mm semiconductor silicon wafers (including SOI silicon wafers) has basically been flat and slightly decreased, and the unit price of some products has decreased greatly due to the impact of the market.

The second is the impairment of goodwill. Shanghai Silicon Industry is a holding company, and during the IPO period, it controlled three subsidiaries of Shanghai Xinsheng, Okmetic and Xinao Technology through business restructuring. Okmetic's production base is located in Europe, and its revenue from customers in Europe and North America is relatively high. Since the main business of Okmetic and Xinao Technology is 200mm semiconductor silicon wafers, it will be greatly affected by the market in 2024, and there will be signs of goodwill impairment, and the preliminary estimate of goodwill impairment is about 300 million yuan.

Third, the cost is larger. Due to the large investment in the early stage of the company's expansion project, the high fixed cost, and the company has always adhered to a high level of R&D investment, the company's performance has also been affected to a certain extent in the short term.

Semiconductor silicon wafers are the most important materials for chip manufacturing and the cornerstone of the semiconductor industry. At the same time, semiconductor silicon wafers are also one of the links with the largest gap between China's semiconductor industry chain and the international advanced level. Shanghai Silicon Industry is the first enterprise in China to realize the large-scale production of 300mm semiconductor silicon wafers. At present, the company's product types cover 300mm polished wafers and epitaxial wafers, 200mm and below polished wafers and epitaxial wafers, SOI silicon wafers, piezoelectric thin film substrate materials, etc., which are widely used in memory chips, image processing chips, general-purpose processor chips, power devices, sensors, RF chips, analog chips, discrete devices and other fields.

At present, the overall expansion of Shanghai's silicon industry is steadily advancing according to the plan. According to the data disclosed in the company's semi-annual report, the project in Shanghai has completed a production capacity of 500,000 pieces/month, and will achieve a production capacity construction target of 600,000 pieces/month by the end of 2024 as originally planned, with the ultimate goal of reaching 1.2 million pieces/month. At the same time, the company's projects in Taiyuan will gradually release new production capacity.