On average, more than 31 chip companies cancel or revoke their business information every day. According to the editor of the Titanium Media App, in the past five years, this number has exceeded 22000. With the rush is gradually fading, the industry downturn is accelerating the transformation of enterprises.
On December 12th, according to exclusive information from Qichacha, as of December 11th, 2023, there have been 10900 chip related companies in China that have been deregistered or revoked, an increase of 69.8% year-on-year and 89.7% compared to 5746 in 2022; During the same period, 65700 chip related enterprises were newly registered, an increase of 9.5% year-on-year.
In 2023, the number of 10900 chip related enterprises cancelled or revoked far exceeded previous years. This means that on average, more than 31 chip companies cancel or revoke their business information every day. According to the editor of the Titanium Media App, in the past five years, the number of chip related companies revoked or cancelled in China has exceeded 22000.
(Note: The data only includes companies with the keyword “chip” in their name, business scope, and product name. The year-on-year growth caliber is sourced from Qichacha, and the annual growth data is compiled and edited by the Titanium Media App.)
With factors such as the US dollar interest rate hike, the continuous decline and decoupling of the consumer electronics market, and the industry downturn, it is difficult for the domestic chip industry to “stand alone” in the unprecedented great changes. According to the latest forecast from World Semiconductor Trade Statistics (WSTS), the global semiconductor market size will reach 520 billion US dollars in 2023, a year-on-year decrease of 9.4%.
This means that the global chip industry is still in a downward cycle, and companies are still facing important challenges. The expected recovery may not be as fast.
On December 8th of this year, TSM, the leader in wafer foundry, released monthly results showing that in November of this year, the company’s combined revenue was approximately 6.539 billion US dollars (RMB 46.941 billion), a decrease of 15.3% compared to the previous month and a decrease of 7.5% year-on-year. From January to November 2023, TSMC’s total revenue was approximately $63.019 billion, a year-on-year decrease of 4.1%. TSMC expects its fourth quarter sales to be between 18.8 billion and 19.6 billion US dollars, a month on month increase of approximately 9% -13%.
TSMC President Wei Zhejia recently stated that 2023 is in a period of adjusting inventory. Given external factors such as inflation and continuous cost increases, there is still uncertainty in 2024. However, thanks to the rapid development of AI applications, 2024 will also be a year full of opportunities.
There are reports that in 2024, TSMC’s capital expenditure may drop to $28-30 billion, a year-on-year decrease of more than 6.3%, and it is feared that it will hit a four-year low.
In the domestic market, according to data from Dongfang Wealth Choice, as of November 1st, 151 semiconductor listed companies have disclosed their 2023 third quarter reports, achieving a total operating revenue of approximately 352.3 billion yuan, almost unchanged from the same period last year; The total net profit attributable to the parent company was approximately 19.3 billion yuan, a decrease of about 54% compared to the same period last year. Among the 151 semiconductor listed companies, 111 semiconductor companies saw a year-on-year decrease in net profit attributable to shareholders, accounting for approximately 74% of the overall number.
Taking AI chip design company Cambrian (688256. SH) as an example. According to its third quarter financial report released in October, it achieved a revenue of 31.3428 million yuan, a year-on-year decrease of 66.15%; The net loss attributable to shareholders of the listed company was 263 million yuan, compared to a loss of 322 million yuan in the same period last year. From January to September 2023, the revenue of the Cambrian period was 146 million yuan, a year-on-year decrease of 44.84%; The net loss attributable to the parent company was 808 million yuan.
At the same time, the secondary market is also not optimistic, and the chip industry is intensifying its internal competition. Taking chip design as an example, according to data shared by Professor Wei Shaojun from Tsinghua University and Chairman of the Integrated Circuit Design Branch of the China Semiconductor Industry Association at ICCAD 2023, there are a total of 3243 chip design companies in China this year, of which 1910 have sales revenue less than 10 million yuan, or 55% of Chinese chip design companies have revenue less than 10 million yuan.
Overall, although there are many domestic chip companies, they are all small and scattered. According to analysis, 70% of domestic semiconductor listed companies have achieved profits, 30% are in losses, and the overall net profit has decreased by about 54%, with 74% of companies experiencing a decrease in net profit.
Wei Shaojun stated that in 2023, most Chinese chip design companies will experience significant losses. Inventory backlog is severe, industry supply is saturated, and some inventory is currently facing impairment risk. Over time, the competitiveness of inventory products is gradually losing, resulting in losses that are inevitable.
Wei Shaojun pointed out that, The external suppression and containment of China’s high-end chips is clear. The US export control measures list the export of high-end chips as a restricted object, not only not selling them to China’s high-end chips, but also restricting the production of Chinese high-end chips. On the one hand, this has caused some trouble for the high computing power chips required by China’s supercomputers and artificial intelligence, but on the other hand, it has also given Chinese chip design companies a rare opportunity to fill in the gaps Supplementing markets where foreign products voluntarily exit. Many companies have realized this and made great efforts, but their achievements in high-end chips are still commendable
“This reveals that our company still needs to further hone its ability to control the market and demand in the market trend, avoid blindly following the trend, and reduce risks.” Wei Shaojun said that it is a serious issue to calmly view the opportunities brought by domestic substitution and encourage enterprises to seize the opportunities and take them to the next level. In fact, domestic substitution is not synonymous with low level, but with high-level requirements. For decades, a large number of electronic devices have relied mainly on imported chips, and now there is a sudden shift to domestically produced chips, posing diverse challenges.
As one of the links with the lowest localization rate of semiconductors, according to VLSI Research data, the majority of the Chinese semiconductor testing equipment market is occupied by manufacturers such as KLA, Applied Materials, and Hitachi, with market shares of 54.8%, 9.0%, and 7.1%, respectively. According to Dongwu Securities, in 2022, the total sales revenue of domestic semiconductor testing equipment manufacturers Zhongke Feice, Shanghai Jingce, and Shanghai Ruili was approximately 746 million yuan, with a corresponding market share of less than 3% in China, far lower than other links such as debonding equipment, etching equipment, and thin film deposition equipment.
Furthermore, from the perspective of import and export data, the domestic chip industry still faces uncertainty. Among them, on the import side, according to the General Administration of Customs, the import volume of integrated circuits (ICs) in China reached 437.6 billion from January to November this year, a year-on-year decrease of 12.1%. Compared with the first 10 months, the import volume decreased by 13.1%, and the total import volume decreased by 16.5% year-on-year to 316.6 billion US dollars; On the export side, according to the National Bureau of Statistics, China exported 31.3 billion IC products in October this year. From January to October this year, China’s integrated circuit exports reached 276.5 billion, a year-on-year increase of only 0.9%.
But the flaws do not hide the beauty. Recently, the concentrated release of domestic chip products such as Huawei Mate 60 series smartphones, Loongson 3A6000 general-purpose processor, and Changxin Storage LPDDR5 storage chip is a strong example. Relying on the support of local supply chain will promote the long-term development of China’s chip industry.
At present, the chip industry hopes to experience a “recovery” in 2024. According to Gartner data, it is expected that global semiconductor industry sales will increase by 16.8% to $624 billion by 2024. Among them, the storage chip industry is expected to grow by 66.3%. In addition, under the demand for generative AI technology, it is expected that the deployment of AI acceleration chips in data centers will increase by more than 20% by 2027.
Research firm IDC even predicts that the global semiconductor sales market will grow by up to 20% in 2024.
IDC Senior Research Manager Zeng Guanwei stated that the recent increase in storage chip prices and the demand for AI applications will drive the overall global semiconductor sales market recovery in 2024, and the semiconductor supply chain is about to bid farewell to the sluggish year of 2023.
Lenovo Group Chairman and CEO Yang Yuanqing stated at the financial report meeting in late November that there are clear signs of recovery in the technology industry, and he expects the PC (computer) industry to resume unit growth in 2024, with the possibility of achieving growth below 5%.
With the accelerated development of domestic chips, according to Hu Weiwu, Chairman of Longxin Zhongke, it is expected that by 2027, the bottleneck problem in China’s chip industry chain should be basically solved.
