What is the pattern of the global semiconductor market in the post-epidemic era?

Since the outbreak of the new crown epidemic in 2020, the global economy has shown signs of recession. According to the estimates of the International Monetary Fund (IMF), most countries in the world have locked down their cities or locked down their countries, which has caused the global economic growth rate to shrink by 3%. Large consumer countries include the United States and China. and European countries’ economic growth rates will drop significantly compared to 2019 (-5.9%, -1.2% and -7.5%, respectively), which will lead to a rapid decline in the purchasing power of these countries, which is expected to drag down the entire country in the future. Revenue performance of the semiconductor industry.

IC Insights forecasts a 4% decline in global semiconductor revenue this year, and Gartner forecasts a 0.9% decline in semiconductor revenue. McKinsey & Company said it expects sales demand in the global chip market to decline by 5% to 15% in 2020, with some IC market segments expected to decline sharply.

On May 6, IC Insights data showed that the sales of the top ten semiconductor companies in the first quarter of 2020 increased by 16% year-on-year, more than double the year-on-year growth rate of the global semiconductor industry (7%). Huawei’s HiSilicon’s sales in the first quarter of this year were US$2.67 billion, an increase of US$935 million from US$1.735 billion in the first quarter of last year, a year-on-year increase of 54%. TSMC, the only pure-play foundry in the top 10, posted a 45% year-over-year increase in sales, mainly due to increased orders for 7nm application processors for smartphones from Apple and HiSilicon.

The new crown epidemic first broke out in China on a large scale. By mid-April, after the epidemic in China was brought under control, the new crown epidemic had spread around the world, and the impact on various application markets using semiconductors had gradually deepened. The second quarter and second half of 2020 will be a critical period to test the overall market demand.

In the post-epidemic era, what are the differences in the global semiconductor landscape? In the decline of consumer demand, what are the growth points of the semiconductor application market? How will the foundry demand change? The Electronic enthusiast reporter conducts the following detailed analysis.

The global spread of the new crown epidemic accelerates the process of China’s semiconductor autonomy

The sudden new crown pneumonia epidemic hit the world, and the semiconductor supply chain was inevitably hit hard. As an important part of the global supply chain, how will the domestic semiconductor industry be affected? Wei Shaojun, director of the Institute of Microelectronics at Tsinghua University, told the media that since the domestic epidemic occurred around the Spring Festival holiday and the epidemic was well controlled, the impact on the semiconductor industry was generally controllable. He also judged that the adjustment of the global semiconductor supply chain in the next few years is a high-probability event, but it is impossible to have a comprehensive reorganization of the supply chain.

At the same time, we see that the impact of the foreign epidemic will not end in the short term, and the impact of international logistics will indirectly lead to a shortage of domestic supply. When domestic production capacity has been restored, domestic semiconductor products may accelerate the replacement of foreign products. The growth rate of the semiconductor industry will slow down. Compared with the previous double-digit annual growth rate of the semiconductor industry, this year’s industry growth is likely to remain single-digit. The acceleration of localization of semiconductors, the recent return of SMIC to the STAR Market is a representative event.

On the evening of May 5, SMIC announced that the company’s board of directors passed a resolution on April 30, approving the proposed issuance of RMB shares, granting special authorization and related instructions, and the resolution allowing SMIC to apply for listing on the Science and Technology Innovation Board. It is proposed to issue no more than 1.686 billion new shares in RMB. As of the close of Hong Kong stocks on May 5, SMIC reported HK$15.26 per share. If it is issued at par, SMIC is expected to raise funds of 23.5 billion yuan.

According to the latest data from IC insights, Huawei HiSilicon is the largest IC design manufacturer in China and ranks among the top ten semiconductor companies in the world for the first time. As the largest wafer foundry in China, SMIC cooperates closely with Huawei. At this time, it applies for listing on the Science and Technology Innovation Board, and the funds are mainly invested in the 12-inch chip SN1 project, that is, the 14nm and below process of FinFET. After the funds are in place, it will speed up The company’s advanced technology progress is conducive to the rapid realization of the localization of semiconductor manufacturing.

At present, semiconductor manufacturing is mainly dominated by overseas manufacturers such as TSMC, Samsung, Intel, etc. SMIC downstream supplies Huawei HiSilicon, Qualcomm and other customers, and the upstream industry chain covers many semiconductor manufacturers such as NAURA, China Micro, and Anji. Technology, if SMIC is listed on the Science and Technology Innovation Board, it will benefit the development of the entire industry chain.

Market demand for semiconductor applications is differentiated, and the epidemic drives the formation of new growth points

According to the latest data released by TrendForce, the global semiconductor downstream terminal demand is mainly in the communication category (including smartphones), accounting for 32%. PC/tablet accounted for 29%, consumer electronics accounted for 13%, and automotive electronics accounted for 12%. Xu Shaofu, a senior analyst at TrendForce, believes that consumer electronics will experience a significant decline, falling by 13%. Consumer demand fluctuates in the second half of 2020. Although manufacturers have not delayed their product plans, considering the different recovery situations after the epidemic, consumer demand may not be prosperous in the peak season, which will affect the sales performance of semiconductor manufacturers in the peak season.

Auto electronics are also affected by the epidemic, and global auto consumption is sluggish. Chen Hongyan, deputy research manager of TrendForce, told the media that due to the impact of the new crown pneumonia epidemic, the global auto market is expected to decline by 12.8%, with a total of only 7,900 10,000 vehicles, while sales in the semiconductor market for automotive use may also fall by 12%.

The bright spots of growth come from two areas: first, the epidemic has led to an increase in PC usage and wireless transmission demand, and the demand for computing chips such as servers and data centers has increased, which can already be shown in Intel’s latest financial report. Second, due to the epidemic, there is a need for industrial automation in the industrial field, especially for urgently needed medical supplies, as well as for instruments after resumption of work, which will drive the growth of related semiconductor products.

Servers and 5G infrastructure drive the demand for related chips, such as HPC, PMIC, controller IC, etc. The total amount is not as good as that of consumer products. Although there is long-term support, in addition to many high-end chip competitors, it is still necessary to look at the epidemic situation in many regions. To control the situation, since some IDM operators have been deeply affected, MCU, PMIC and other products are expected to be undertaken by producers in areas where the epidemic is less severe.

Advanced manufacturing processes drive new products to market, and the epidemic affects the follow-up demand for wafer foundry under pressure

The 2019 annual report of TSMC, the world’s leading foundry, shows that TSMC’s latest 5nm process has entered the mass production stage, and the 3nm process is also under continuous research and development. TSMC’s first-quarter consolidated revenue was 310.597 billion yuan (about 10.316 billion U.S. dollars), of which 7nm wafer shipments accounted for 35% of total wafer revenue; 10nm wafer shipments Accounted for 0.5% of total wafer revenue; 16nm wafers accounted for 19% of total wafer revenue.

According to TrendForce’s forecast, wafer foundry orders continued to rise in the first quarter, and it would be difficult to continue the order renewal and inventory replenishment in the first quarter, and it would be difficult to increase revenue in the second quarter. The IDM industry’s response is relatively straightforward, and they need to make some adjustments to their operations in the second half of the year. The second half of the year will depend on the control of the epidemic and the speed of business activity recovery, and the overall development trend will remain unchanged.

The IDM industry needs to make adjustments. In the second half of 2020, whether the demand strength will be maintained requires further evaluation. If the IDM business demand is strong in the first half of the year, there will be a good performance in the second half of the year.

Affected by the new crown epidemic, when the semiconductor application market fluctuated, the Middle East and Southeast Asia were locked in one after another in March. IC packaging and testing manufacturers were affected in the short term, and they responded promptly to the impact, including NXP and ON Semiconductor. Earnings estimates have been revised.

The data collected by the author shows that overseas media reports that Apple’s new generation of Mac processors will use TSMC’s 5nm process, Huawei’s smart collection chip Kirin 1020 and Apple A14 will use 5nm process, and Qualcomm Snapdragon 875 has been exposed to use TSMC’s 5nm process. Technology, the mass production plan of TSMC’s 5nm advanced process is realized as scheduled, which will help IC design manufacturers to increase their revenue and drive the increase in the total number of wafer foundries.

In addition, the promotion of advanced process technology helps chip manufacturers gain a foothold in developing new products and creating new demands, and drives the migration and adoption of process technology for other products.

All in all, for wafer foundries such as TSMC and SMIC, the impact in the first half of 2020 will be small, but subsequent inventory digestion will become a problem, which may affect the performance in the second half of the year. In addition, the national security ban proposed by the United States has expanded again. Mid-May was the deadline for the extension of the last wave of Huawei ban. From the current situation, there is no time to stock up in advance. If there is a negative situation, it will affect the semiconductor industry. huge.