SMIC Returns To A-Share Chip Industry?

On July 16, a chip manufacturing Co., Ltd. was listed on Shanghai Stock Exchange. Picture vision China

On July 16, SMIC returned to a shares and landed on the science and technology innovation board.

As expected, the market value of the first day was close to 700 billion yuan. On July 16, the closing price was 82.92 yuan / share, up 201.97%. The market value finally reached 591.752 billion yuan, and the fund-raising amount reached 450 billion yuan.

So far, SMIC has set a number of records on the science and technology innovation board in one fell swoop. The speed of passing the meeting, the ranking of the value of science and technology stock market, and the amount of fund raised have been unparalleled for a time. The return of the Big Mac in the chip industry can obtain greater financing support and higher valuation in the domestic capital market, which is very important for the capital technology intensive wafer manufacturers.

Furthermore, the listing has become a weathervane for the capital market to invest heavily in semiconductors, and the domestic public can also enjoy the dividend of semiconductor market.

At present, IPO plays an important role in promoting the development of domestic and international semiconductor industry.

In the face of such benchmarking events, it also triggered market discussion. Is this a bubble? Some people support it. This is the most important tool of our country and deserves more support. There are also concerns that there is a big gap between the core technology and the leading TSMC.

Some people in the industry said that SMIC is facing challenges and opportunities, but even if there is a high-tech bubble, it is not a bad thing. Bubbles and development go hand in hand. Only by "supersaturation" can we select the most suitable species for survival. We need more semiconductor enterprises with high-tech content.

From a broader perspective, both SMIC and Huawei are vaguely pointing to a future war, a competition on 5g, artificial intelligence and semiconductors, and a contest and game about industrial highlands.

Journey of SMIC

There have been many reshuffles in the history of wafer foundry, and the journey of SMIC international has been rough. Zhang Rujing, the founder of the company, and Zhang Zhongmou, the founder of TSMC, both worked in Texas Instruments and both returned to Taiwan to set up a wafer factory. At first, Zhang Rujing established the world integrated circuit, but eventually sold it to TSMC. Later, Zhang Rujing came to the mainland of China and founded SMIC with the support of the Shanghai municipal government. On the way to start his business, SMIC was also sued by TSMC, and the road of development was not smooth.

Now, it has become the first enterprise of "nano core board" in the world. Looking back, SMIC mainly has three development stages. From 2000 to 2004, SMIC built factories in Shanghai and Beijing, and acquired Tianjin Motorola wafer factory. From 2004 to 2015, SMIC gradually put into production, with both 8-inch and 12 inch IC wafer foundry business. Since 2015, SMIC has been developing rapidly, and in 2015, it has become the largest in mainland China An enterprise with 28 nm mass production has achieved a breakthrough in zero production of high-end chips in mainland China, and has started the construction and expansion of production bases in Shanghai, Beijing, Tianjin and Shenzhen. Mass production of 14 nm FinFET will be realized in 2019, and the second generation FinFET technology will enter the customer introduction stage.

At present, SMIC ranks the fifth in the wafer market. According to the latest data of Jibang, TSMC will continue to be the first in the world in the second quarter of 2020, with a market share of 51.5%, followed by Samsung, which accounts for 18.8%, followed by Grosvenor (7.4%), Lianhua Electronics (7.3%) and SMIC International (4.8%).

In this highly concentrated market, TSMC still accounts for more than 50% of the market share. Its 5-nanometer process has been mass produced, and is in the process of tackling 2 nm. However, Grosvenor and Lianhua electronics, facing high cost and technical barriers, have announced to give up the research and development of 7-nanometer process technology.

SMIC is still investing continuously, and a wider financing channel is also essential. From 2017 to 2019, SMIC's R & D investment was 3576.0778 million yuan, 4470.9001 million yuan and 4744.4566 million yuan, accounting for 16.72%, 19.42% and 21.55% of the operating income respectively.

Zhao Haijun, CO CEO of SMIC international, previously pointed out that "the first one to make money in wafer foundry, the second to make no money, and the third to lose money, so we must strive to be the top two."

It's not easy to compete for the upstream. TSMC has a large number of technical personnel and production experience, which forms a very high moat. With the support of the state, Samsung is working hard to catch up with TSMC. SMIC, which is in the climbing stage of 14nm production capacity, is facing strong competitors and is accelerating its production expansion.

SMIC international told the 21st century economic reporter that the funds raised in this listing will be mainly invested in the field of scientific and technological innovation, including "SN1 project of 12 inch chip", "reserve fund of advanced and mature technology research and development project" and "supplementary working capital". Among them, "SN1 project of 12 inch chip" is the first advanced production line of 14nm and below in mainland China. The implementation of the project will help the company further enhance its technical strength, enrich its product portfolio, and expand its production capacity, so as to comprehensively improve the company's ability of IC wafer foundry in various technical nodes and process platforms.

In the view of Zhang Xiaorong, President of the Institute of deep science and technology: "market financing is necessary. The chip industry needs a huge amount of capital, and often starts with several billion yuan. The existing financing of SMIC can solve the development of half a year to a year. In addition, it also needs long-term support from government funds and policies, and funds and policies need to be implemented as soon as possible. "

He also said that he did not have to pursue the international mass production mode of 5 nm chips based on the short-term strategy of "catch-up with the if7 chip in the international market, and he did not need to open up the international mass production mode. This process can support the development of 5g chips. In addition to mobile terminals such as mobile phones, it can keep the industry for a period of time. "

"Leader" of domestic semiconductor industry chain

Integrated circuits and semiconductors, as industries reflecting national competitiveness, are the technological highlands that all countries must contend for. On June 30, the Central Commission for reform and reform deliberated and approved the guiding opinions on deepening the integration and development of new generation information technology and manufacturing industry. The meeting stressed that to accelerate the integrated development of new generation information technology and manufacturing industry, we should comply with the new round of scientific and technological revolution and industrial transformation trend, take the supply side structural reform as the main line, and take intelligent manufacturing as the main direction To speed up the innovation and development of the industrial Internet, speed up the fundamental change of the production mode and enterprise form of the manufacturing industry, consolidate the basic support for the integrated development, improve the laws and regulations, and improve the development level of the digital, networked and intelligent manufacturing industry.

At the same time, among SMIC's luxury strategic placement investors, there are national large fund phase II, local governments, upstream and downstream enterprises in the industrial chain, CICC and Haitong. From this, we can see the determination of national support for the semiconductor industry and the linkage of SMIC's international and domestic semiconductor industry chains.

For example, among the strategic placement investors, the investors of Qingdao Juyuan Xinxing equity investment partnership include Shanghai Xinyang, Zhongwei company, Shanghai Xinsheng, LanChi Investment Co., Ltd., Zhonghuan, Weiwei, huiding technology, shengmei semiconductor, Anji technology, Laimu shares, Juchen, Quanzhi technology, Zhichun technology and Jiangfeng electronics. These are the upstream and downstream enterprises in the semiconductor industry chain, and will work with SMIC to help domestic semiconductor develop in a coordinated way and speed up localization.

In addition, among the 29 strategic investors, SMIC signed a strategic cooperation memorandum with 18 of them. They will carry out business cooperation with SMIC and continue to carry out strategic cooperation in customer introduction, process improvement, supply chain expansion and other aspects.

Under the chain reaction of Huawei incident, the voice of independence is becoming stronger and the pace of domestic substitution is accelerating. As for how SMIC can drive the development of the industrial chain, Zhang Xiaorong told the 21st century economic reporter that first of all, there is demand in the market, and the domestic semiconductor industry is in the historical opportunity period of wafer capacity expansion, and the United States has been unable to completely eliminate China's integrated circuit industry through export control and technical blockade. With the continuous friction between China and the United States in the field of advanced high-end manufacturing, it is more and more obvious that China will focus on the chip industry at home, and the demand for domestic chip equipment is growing strongly.

Secondly, SMIC has a certain strength. SMIC, as the leading OEM manufacturer in China, has the potential to connect and drive the whole industry chain, such as package testing and chip design. In addition, according to the national fund planning, the investment direction will focus on chip manufacturing and upstream equipment such as etching machine, film equipment, testing equipment and cleaning equipment. These fields are also the upstream and downstream enterprises of SMIC.

Of course, the return of SMIC international will not make the domestic semiconductor strength achieved overnight, and it will play a leading role. However, it is also necessary to follow the industry development law, and the cultivation of localization needs time. At the same time, we should not build a car behind closed doors. We need to unite partners in the global industrial chain with an open mind.

Xinmou research points out that under the support of policies, the number of integrated circuit enterprises in China has developed rapidly in recent years -- from 2015 to now, there are thousands more integrated circuit enterprises in China. Take the design industry as an example. At present, there are more than 2000 design enterprises in China, which is more than three times of the rest of the world. However, "quantitative change" may not lead to "qualitative change". The international trend of semiconductors is integration. Facts have proved that only by holding the nose of the industry can the transmission effect and multiplier effect of policies be better exerted.

According to the industrial law, large-scale, platform, leading and manufacturing enterprises are the mainstay of the industry in terms of technological innovation, industrial driving, risk resistance, employment solution and social responsibility. Therefore, it is particularly important to promote the rapid development of "large, flat, long and system" enterprises by means of financial policies.