Throughout the history of the semiconductor and equipment industry, every market downturn ends with the advent of technological innovation and begins a new growth period. Technological waves in fields such as the Internet of Things and artificial intelligence are expected to spur a new round of growth in the industry. The strong market demand for integrated circuits drives the continuous upgrading of the industry and the increase in investment, which effectively promotes the development of the integrated circuit equipment manufacturing industry. Therefore, the semiconductor equipment market is closely related to the prosperity of the integrated circuit industry. Although the penetration rate of PCs and smartphones in 2019 is close to a high level in the short term, which will affect the sustained and rapid development of the semiconductor and equipment industries to a certain extent, the new demands represented by 5G and the Internet of Things and their driven cloud computing, artificial intelligence, The rise of new applications such as big data is expected to open up incremental demand in the semiconductor and equipment industries.
The rapid development of the global 5G industry will have a greater pulling effect on the demand for semiconductors and equipment. The core of 5G technology lies in the chip, whether it is a base station or a mobile phone, it is closely related to it. Chips that directly benefit from the large-scale commercial use of 5G include memory chips, computing chips, control chips, smartphone chips, and baseband chips.
1) Storage chip: The growth of traffic is one of the characteristics of the 5G era. Whether it is a server or a cloud, the high speed and large traffic of 5G will naturally bring about a large demand for storage. The 10G memory + 512G storage capacity of mobile terminals may become the mainstream. configuration. With the advancement of the large-scale commercialization of 5G, the quarterly storage demand from the second half of 2019 to 2020 will increase significantly year-on-year. At present, in the field of memory chips, the United States, South Korea, Taiwan, etc. are in a dominant position. The local memory chip manufacturers in mainland China, represented by YMTC and Hefei Changxin, are investing intensively and catching up, and have achieved the stage of production capacity and technology. Sexual breakthrough.
2) Computing chips: Servers, core networks, base stations, etc. all need computing chips. Except for a few server chips, my country has a certain accumulation of products and technologies, and the vast majority of computing chips are basically American companies leading the world.
3) Smartphone chip: One of the most important terminals in mobile communication is a smartphone. Smartphone chips not only perform calculations, but also perform specialized processing, such as GPU for image processing and NPU for AI processing. Smartphone chips also need to be small in size. , low power consumption and other characteristics. Manufacturers such as Huawei, Apple, and Samsung are all developing their own flagship chips.
In addition, the impact of 5G in the future will go far beyond the scope of the technology industry and affect all levels of society, spawning new application scenarios, promoting new economic activities, and then generating a wider and more widespread global demand for various types of chips. Stimulate, and then drive the demand for semiconductor equipment into a new growth period.
In the 5G era, the expansion of global memory chip production capacity has more prominently driven demand for etching equipment and thin-film deposition equipment. The development of the 5G industry has spawned incremental demand, and the advancement of downstream technologies has put forward higher requirements for semiconductor processes and equipment. The incremental demand space for key process equipment such as etching, lithography, and thin film deposition may be relatively broad. Among them, the expansion of memory chip production has a significant pulling effect on equipment. For example, in the field of 3D NAND memory chips, as the number of stacked layers continues to increase, the difficulty and frequency of etching and thin film deposition processes continue to increase, and the demand for etching equipment and thin film deposition equipment is even higher. Benefiting from this, the growth in demand for thin-film deposition equipment may be the largest.
The new trends brought about by the above-mentioned industrial changes have stimulated the demand for the semiconductor industry and the development direction of enterprises, and gradually spread to the equipment sector. The fourth quarter of 2019 is expected to become an upward inflection point for the recovery of global semiconductor equipment industry demand and orders. Some mainstream wafers Both factory capital spending and North American semiconductor equipment maker sales are showing signs of recovery:
1) The fab capital expenditure is a direct factor that affects the demand for semiconductor equipment. In 2018, the capital expenditure of fabs such as TSMC and SMIC declined compared with the same period of the previous year, but from the perspective of the first three quarters of 2019, the above companies The capital expenditure of TSMC has increased significantly year-on-year, with TSMC and SMIC increasing by 44% and 11% respectively. According to IC Insights’ forecast, Samsung and TSMC’s 2019Q4 single-quarter capital expenditures are expected to hit a record high.
Chart: TSMC, SMIC Capital Expenditure and Growth Rate
2) Since April 2019, the year-on-year decline in the shipment value of North American semiconductor equipment companies has been showing a narrowing trend, and the year-on-year decline in September has narrowed to 6%. The change in the shipment amount of semiconductor equipment companies also reflects the improvement in global equipment demand to a certain extent.
Chart: North American Semiconductor Equipment Manufacturers Monthly Shipment Amount and Growth Rate
3) Similar to the change trend of North American semiconductor equipment companies’ shipments, the global thin-film deposition, etching equipment leading applied materials, and the year-on-year change of Lam Semiconductor’s single-quarter revenue fell to the bottom in 2019Q2, and the year-on-year change rate in 2019Q3 entered the recovery stage.
Figure: Single-quarter revenue and year-on-year growth rate of Applied Materials and Fanlin Semiconductor