On the evening of November 11 this year, SMIC released its Q3 financial report for 2020. Its single quarter revenue exceeded US $1 billion, a record high, and its net profit also increased by 122.7% to US $256 million.
However, on the same day that SMIC's three quarterly results were announced, its Hong Kong stock price fell by 7.23%, and its share price has been depressed since the financial report was released.
Even in the case of tight production capacity and rising prices in the whole foundry industry. In contrast, the share prices of TSMC, liandian and Huahong Semiconductor Co., Ltd. have continued to rise.
So, what does SMIC really have
US export restrictions
In September this year, there was a rumor in the industry that SMIC would be sanctioned by the United States. The subsequent exposure of the US Department of Commerce's Bureau of industry and security (BIS) documents showed that the United States would impose export controls on SMIC and some of its subsidiaries.
On the evening of October 4, SMIC issued an announcement at the Hong Kong stock exchange that after several days of inquiry and discussion with suppliers, it was learned that the US bis had sent letters to some suppliers of SMIC in accordance with the US export control regulation ear744.21 (b), and that some US equipment, accessories and raw materials exported to SMIC would be further restricted by the US export control regulations, It is necessary to apply for an export license in advance before continuing to supply to SMIC.
According to the data, SMIC has 8-inch production capacity in Shanghai, Tianjin, Shenzhen and other places, with a total monthly production capacity of 385000 tablets, mainly producing 0.35-90nm process. In addition, SMIC also has 12 inch factories in Shanghai and Beijing, with a total monthly production capacity of 195000 pieces. Among them, the main process of two 12 inch plants in Beijing ranges from 0.18 μ m to 24 nm, and the Shanghai 12 inch factory provides advanced process of 14 nm FinFET.
It should be pointed out that according to the previously exposed bis documents, the restricted enterprises mainly include:
SMIC international integrated circuit manufacturing (Shanghai) Co., Ltd
SMIC international integrated circuit manufacturing (Tianjin) Co., Ltd
SMIC (Ningbo) Co., Ltd
SMIC international integrated circuit manufacturing (Shenzhen) Co., Ltd
SMIC Southern IC Manufacturing Co., Ltd
Shanghai IC manufacturing Innovation Center Co., Ltd
For SMIC's current 8-inch and 12-inch plants, SMIC's Northern Integrated Circuit Manufacturing (Beijing) Co., Ltd., a joint venture with the Beijing government
However, SMIC has not responded positively to the specific impact of US export control restrictions on SMIC. The official caliber has always been
At the Shanghai Stock Exchange's e interactive platform in recent days, some netizens have asked questions on the issue, SMIC is still the previous caliber, and said
Production capacity continues to be tight, but expansion is limited
Affected by the Xinguan epidemic, in the first half of this year, the industry chain's market forecast, product planning and stock up are conservative. However, with the control of the domestic epidemic situation in the second half of this year, as well as the rapid rebound in the demand for consumer electronics and automotive electronics (many foreign demand for limited production due to the epidemic situation has been transferred to China), the advent of the traditional peak season of the electronics industry in the second half of this year has greatly affected the semiconductor industry Chip demand soared, wafer foundry market (especially 8-inch wafer) production capacity continued to be tight, the voice of price rise.At the second-quarter earnings conference on august 7th this year ,
Moreover, on the evening of July 31, SMIC also announced that it would jointly establish a joint venture with Beijing Development Zone Management Committee, with SMIC holding 51% in China, focusing on the production of 28 nm and above IC projects. The project will be constructed in two phases. The first phase of the project is planned to invest US $7.6 billion, and eventually achieve a 12 inch wafer production capacity of about 100000 pieces per month. The second phase project will be launched timely according to customer and market demand.
However, the plan failed to catch up with the changes. On October 4, SMIC issued an announcement confirming that suppliers would further restrict the export of some American equipment, accessories and raw materials to SMIC international by the U.S. export control regulations, and they must apply for export license in advance before continuing to supply to SMIC. This also means that SMIC's purchase of semiconductor equipment, accessories and raw materials may be subject to certain restrictions.
On November 12, SMIC co CEO Zhao Haijun also disclosed at the performance presentation meeting that:
In addition, SMIC also revised back its capital expenditure this year from about 45.7 billion yuan to 40.2 billion yuan. SMIC said it was mainly due to the US export controls that extended or uncertain the delivery period of some machines, as well as logistics reasons that delayed the arrival of some machines.
Zhao Haijun pointed out that,The biggest problem of export control is that it has affected the production expansion plan. The delivery of some equipment, parts and raw materials in the United States has been delayed. For example, some equipment such as high-energy atomic injector has been delayed for two months.
Recently, we learned from insiders that,At present, SMIC has been unable to buy some of the required equipment parts.
According to previous foreign media reports, SMIC had purchased a large number of products from upstream suppliers in the United States, Europe and Japan before the US restrictions fell, and the procurement scale at that time had exceeded 2020 The procurement items include etching, lithography, wafer cleaning machines and other process equipment and testing machines, and the procurement quantity of related consumables used to maintain the equipment operation is more than one year's demand. But many of them may not have been delivered.
However, just before this, core intelligence news in the "SMIC international confirmed by the United States export restrictions! How to deal with it? 》It is pointed out in the article that without the support of the original factory, even with equipment and accessories, it may be difficult to install and maintain the equipment by yourself. For details, please refer to: http://www.icsmart.cn/40311/ (wechat has been pushed by river crab before)
Therefore, many Taiwan media have been saying recently,Under the influence of us export control, SMIC's expansion of production has been restricted.
Also recently, some netizens asked SMIC questions on the Shanghai e interactive platform:
In addition, recently, due to the continuous shortage of global 8-inch wafer production capacity, TSMC and liandian have raised the wafer foundry price by 10-20% in August this year. According to other news, the price of 8-inch wafer foundry has been increased by 10-15% by liandian, grid core and world advanced technologies. According to the latest forecast, the quotation of 8-inch wafer foundry will rise by up to 40% in 2021.
So, will SMIC's fourth quarter 8-inch wafer foundry price also rise? In response to this, SMIC said in the Shanghai Stock Exchange E-interaction that:
In terms of SMIC's response, the price of new customers and new projects may change, but negotiation between the two sides to determine the price, rather than unilaterally announced price increases. SMIC also said it would
Customer transfer does not exist?
Since September this year, it was reported in the industry that the US government is considering sanctions against SMIC. Some SMIC customers, for the sake of supply chain security, began to plan to transfer some products to other wafer factories for production, so as to reduce the supply risk caused by SMIC's sanctions by the United States.
For SMIC's customers, affected by the export restrictions of the United States, in case SMIC fails to obtain the relevant license or the license period is prolonged, the production of SMIC will be seriously affected, which will directly affect whether the chip of the customer can be delivered as scheduled, which will have a serious impact on the product planning and market planning of customers and their customers Negative impact. Therefore, many customers have to find a way to transfer the order to avoid risk.
Around September 22, foreign media reported that Qualcomm was seeking to transfer part of its OEM orders to SMIC to other manufacturers.
With the exposure of the US export restrictions on SMIC at the end of September and the formal confirmation of the matter by SMIC in early October, the concerns of existing SMIC customers were further aggravated.
At that time, leaders of some domestic chip manufacturers also disclosed that:
In addition, it is rumored that Broadcom plans to transfer some chip orders in SMIC international OEM.
According to the data, Qualcomm and Broadcom are the top two overseas customers of SMIC. They mainly produce power management IC produced by 8-inch factory in 0.18 micron process, and some have commissioned 28 nm RF components to SMIC international for OEM. Among them, Qualcomm orders at least 600000 power management IC wafers in SMIC every year, accounting for almost 40% of its own supply.
Obviously, if big customers such as Qualcomm and Broadcom transfer orders from SMIC, it will have a significant negative impact on SMIC.
However, recently, on the Shanghai Stock Exchange e interactive platform,SMIC said:
SMIC's response may indeed be true. Since the second half of the year, the entire foundry market is full of orders. At present, it is very difficult for Qualcomm and Broadcom to transfer orders from SMIC to other wafer factories. They can only gradually transfer orders.
According to the report of Taiwan industrial and commercial times, in recent months, Qualcomm and Broadcom have successively asked Taiwan's foundry factories such as TSMC, liandian, the world's advanced, and leeco to increase the chip production.
Even if the capacity of the first half of the year is more than 40 inches, it will be difficult for JIC to enter the world even if its capacity is more than 40 inches in the first half of the year. Even if the company successfully obtains the capacity of Taiwan's three fabs, the 8-inch capacity they can supply to the company will be very limited.
in other words,Although it is true that customers such as Qualcomm and Broadcom have a demand to transfer orders from SMIC to other wafer foundry plants, due to the shortage of wafer foundry capacity in the whole market, if there is no early layout in the first half of the year, there will be no capacity to transfer out at this time.
Therefore, in the current wafer foundry market capacity is extremely short of the background, SMIC international does not appear obvious phenomenon of transfer orders. Even if there are those who want to transfer out, it is estimated that there is no way to get enough production capacity in other wafer foundry factories. If you can get some, it is estimated that they will have to pay a high price. In contrast, SMIC International did not clearly raise the price.
Fourth quarter performance risk?
Since last year, SMIC's capacity utilization has been at a high level (97% - 100%). In particular, since the mass production of 14 nanometer technology last year, SMIC has received a large order of Kirin processors from Huawei Hisilicon.
However, as the United States further upgraded its sanctions against Huawei in May this year, SMIC could not continue to OEM chips for Huawei Hisilicon after September 15. SMIC also lost the support of Huawei Hisilicon, a big customer.
Although at the earnings meeting, Liang Mengsong revealed that SMIC is currently working with domestic and overseas customers on more than 10 advanced process flow sheet projects, including 14 nanometers and more advanced technologies (N 1).
This October, Core Technology announced that the company has completed the world's first chip flow and testing based on SMIC International FinFET N 1 advanced technology, all IP are fully self-made, the function of a test passed, for the domestic semiconductor ecological chain to establish a new contribution. Also, according to the core intelligence news understanding, before this Jia Nan technology a mining machine chip also successfully based on SMIC's N 1 stream chip success.
However, it will take a long time for these customers to move from film production to mass production and then to large-scale production, and I am afraid the overall volume capacity is not comparable to that of Huawei Hisilicon to SMIC international.
Liang Mengsong also said:
in other words,SMIC may have to wait until the first half of next year if SMIC wants to recover to the previous utilization rate of 14nm.
Therefore, we can also see that in the third quarter's financial report, SMIC mentioned that the growth in the fourth quarter will slow down, and the fourth quarter revenue is expected to decrease by 10-12% month on month. Of course, on the other hand, this may also be related to the export control of the United States. SMIC officially confirmed that it was restricted by the United States at the beginning of October.
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Link to the original text:Smart news