Today, the General Administration of Customs released China’s import and export data for goods trade in the first 11 months of 2024. In the first 11 months, China's total import and export value of goods trade was 39.79 trillion yuan, a year-on-year increase of 4.9%. Among them, automatic data processing equipment and its parts,Integrated circuit and automobile exports show double-digit growth. Data show that in the first 11 months of this year, my country's exports of goods trade were 23.04 trillion yuan, an increase of 6.7%; imports were 16.75 trillion yuan, an increase of 2.4%.
In terms of export,Exports of mechanical and electrical products were 13.7 trillion yuan, an increase of 8.4%, accounting for 59.5% of my country's total export value. Among them, automatic data processing equipment and its parts were 1.33 trillion yuan, an increase of 11.4%;Integrated circuits reached 1.03 trillion yuan, an increase of 20.3%; Mobile phones were 874.45 billion yuan, a decrease of 0.9%; automobiles were 762.97 billion yuan, an increase of 16.9%.
In terms of imports,Imports of mechanical and electrical products were 6.35 trillion yuan, an increase of 7.5%. in,501.47 billion integrated circuits, an increase of 14.8%, with a value of 2.48 trillion yuan, an increase of 11.9%;There were 637,000 cars, a decrease of 11.3%, and the value was 256.43 billion yuan, a decrease of 14.9%.
As the dust settles on the November data,This is the first time that China’s integrated circuit exports have exceeded one trillion yuan.It demonstrates China's important position in the global semiconductor industry chain and its continuously increasing international competitiveness.
01 China’s import and export of integrated circuits in the past ten years
Judging from the number of China's integrated circuit exports in the past ten years, 2021 and the previous seven years have generally shown an upward trend, with a slight decline in 2022 and 2023. China's integrated circuit import volume has also shown a similar situation in the past ten years.
This means that the semiconductor industry will enter its heyday in 2021. This year will be mainly affected by the wave of core shortages, the localization of integrated circuits, and the promotion of emerging industries. The later decline in both the import and export volume and value of integrated circuits was mainly affected by changes in the global economic situation.
The rising export value reflects that China's independent development of semiconductors has achieved initial results. The continuous growth of imports is a direct reflection of the continued expansion of demand in mainland China's semiconductor market.
Previous DIGITIMES data showed that China's chip import and export trade volume in 2024 will benefit from the global terminal market, such as the recovery in demand for smartphones and personal computers, as well as the construction of generative artificial intelligence infrastructure and the automobile industry. The chip import and export volume will increase by 5.2% and 11.4% respectively year-on-year.
Import amount, DIGITIMES analyst Jian Congxun pointed out,The amount of integrated circuits imported into mainland China in 2024 is estimated to be approximately US$320 billion.Taiwan has advantages in downstream wafer manufacturing, packaging and testing industries, while South Korea and Malaysia are key areas for the memory and packaging and testing industries respectively, and are China's top three sources of imported integrated circuits. Since 2019, the proportion of China’s imported integrated circuits from the United States has declined year by year.
In terms of export value,China's chip exports in 2024 will be close to US$95 billion, the second highest since the COVID-19 epidemic, reflecting that China's independent development of semiconductors has achieved initial results. In terms of export regions, Taiwan, South Korea, Vietnam and Malaysia are the top four chip exporters in mainland China.
As far as imported integrated circuit categories are concerned,China's imported integrated circuits mainly include processors and controllers, followed by memories.
As far as the export integrated circuit category is concerned,Memory is also a major category of China's integrated circuit exports. Chinese companies are able to produce memory products of different specifications and performance according to the needs of different customers, thereby occupying a certain share in the international market. Especially in some emerging market countries and regions, Chinese memory products are highly cost-effective and have been welcomed by local customers.
The reason for the high proportion of memory import and export is that, on the one hand, the domestic market has strong demand for high-end memory, but its own production capacity is insufficient in the high-end field; on the other hand, Chinese memory companies have certain advantages in cost and mid-to-low-end technology, and can find space to compete in the international market.
In 2023, the import and export volumes of these two major categories will both decline. Among them, the import value of processors and controllers was US$176.3 billion, accounting for 50.3%, a year-on-year decrease of 14.1%; the import value of memories was US$78.9 billion, accounting for 22.5%, a year-on-year decrease of 22.1%. The export value of processors and controllers was US$50 billion, a year-on-year decrease of 4.5%; the export value of memory was US$55.8 billion, a year-on-year decrease of 20.6%.
That year, the processor and controller trade deficit was US$126.3 billion, and the memory trade deficit was US$23.1 billion. It can be seen that in terms of processors and controllers, China's integrated circuits are relatively dependent on foreign countries.
02China’s chip production is rising step by step
As the core of information technology, integrated circuits have become a key element of competitiveness. Faced with this trend, China is increasing the pace of development of its local integrated circuit industry with unprecedented determination and intensity.
As shown in the figure above, since 2014, the market size of China's integrated circuit industry has been rising, and integrated circuit production has also increased rapidly. After that, there will be rapid growth around 2020 and 2021, with output growth reaching 29.5% and 33.3% year-on-year. Similar to the situation of import and export volume, China's integrated circuit output will also experience a slight decline in 2022, and then resume an upward trend again in 2023. However, in general, the compound annual growth rate of China's integrated circuit production in the past ten years is still far higher than the global average growth level.
Integrated circuit exports can accelerate growth, on the one hand, thanks to the overall recovery of the semiconductor industry. Affected by terminal demand, the global integrated circuit industry will experience a downward cycle in 2023, and almost all market segments will enter the "destocking" stage. In 2024, with the weak recovery of the global economy, the inventory of downstream users will gradually be reduced, and the integrated circuit industry will begin to recover.
03Chip production capacity continues to increase
In the middle of this year, the World Fab Forecast released by the International Semiconductor Industry Association (SEMI) showed that as chip demand continues to rise, global semiconductor fab production capacity will continue to grow. It is expected that the total global fab production capacity will increase by 6% year-on-year in 2024 and 7% year-on-year in 2025. By then, it will reach a record high of 33.7 million 8-inch wafer equivalents per month.
From the perspective of process nodes, the production capacity of cutting-edge process nodes of 5nm and below is expected to increase by 13% year-on-year in 2024, mainly due to the generation of artificial intelligence (AI) in data center training, inference and cutting-edge equipment. In order to improve processing power efficiency, chip manufacturers including Intel, Samsung and TSMC are preparing to start producing 2nm all-gate (GAA) chips. It is expected that by 2025, the year-on-year growth rate of production capacity of cutting-edge process nodes of 5nm and below will reach 17%.
Judging from the expansion of production capacity in various regions, it is expected thatChinese chip manufacturers will continue to maintain double-digit percentage year-on-year production capacity growth. By 2024, production capacity is expected to increase by 15% year-on-year, reaching 8.85 million 8-inch wafer equivalents per month; in 2025, it will increase by 14% year-on-year, reaching 10.1 million 8-inch wafer equivalents per month, accounting for nearly one-third of the industry total.
Mainland China's production capacity expansion is mainly focused on mature processes. TrendForce recently pointed out that with the release of new production capacity, it is estimated that by the end of 2025, the proportion of mature process production capacity of mainland wafer foundries among the top ten manufacturers will exceed 25%, with 28/22nm having the most new capacity. The development of special process technology of mainland China's wafer foundry companies is advancing fastest with the HV platform process, and it is expected to achieve mass production of 28nm in 2024.
Judging from the quantity of chip demand, mature processes of 28nm and above account for about three-quarters of the world's share, while advanced processes account for only one-quarter.
Today, the results of the expansion of China's chip industry have gradually emerged. China's total chip production surged 40% year-on-year in the first quarter of 2024, reaching 98.1 billion units, almost three times the same period in 2019. In the next few years, China's mature process chip production capacity is expected to achieve significant growth.
04 Equipment and materials benefit simultaneously
With the expansion of wafer fabs in mainland China in recent years, the upstream equipment and materials industry has also experienced rapid development.
Semiconductor equipment, unprecedented opportunities
In the global semiconductor equipment market, the United States, Japan and Europe have long occupied a dominant position. However, with the rapid growth of mainland China's wafer manufacturing capacity, as well as the continuous advancement of technology and changes in the international situation, the domestic semiconductor equipment industry is facing unprecedented development opportunities.
According to the global semiconductor equipment market statistical report released by SEMI, global semiconductor equipment sales increased significantly by 19% year-on-year in the third quarter of 2024, reaching US$30.38 billion, a 13% month-on-month increase.
Ajit Manocha, President and CEO of SEMI, said: "The global semiconductor equipment market achieved strong growth in the third quarter of 2024, driven by investments aimed at supporting the spread of artificial intelligence and the production of mature technologies. The growth in equipment investment occurred across multiple regions, which are looking to strengthen their chip manufacturing ecosystems. Among them, North America saw the largest year-over-year increase, whileChina continues to lead in spending."
Overall, the global semiconductor equipment market will show a good development trend in 2024. SEMI predicts that the global semiconductor equipment market will grow by 3.4% year-on-year in 2024, reaching US$109 billion.Among them, China accounts for as high as 32%. This growth not only reflects the booming development of the global semiconductor industry, but also reflects China's important position in the global semiconductor market.
Judging from the revenue performance of semiconductor equipment companies in recent years, in the past four years, the annual revenue of five companies, Northern Huachuang, AMEC, Tuojing Technology, Atom Semiconductor, and Huahai Qingke, has been rising. Northern Huachuang and Atom Semiconductor's revenue in 2023 has more than doubled that of 2021. China Micro's 2023 revenue has also doubled compared with 2021. Tuojing Technology and Huahai Qingke's revenue in 2023 has more than tripled that of 2021.
Correspondingly, the annual net profits of each company have also been rising. It is worth noting that the net profit attributable to the parent company of Northern Huachuang in the first three quarters of this year has exceeded the total net profit attributable to the parent company for the whole year of 2023. The net profit attributable to the parent company of Huahai Qingke and Huafon Measurement and Control in the first three quarters of this year is also comparable to the total net profit attributable to the parent company for the whole year of 2023.
At the same time, many companies also stated in their third quarter reports that they have made positive progress in signing new contracts.
In the first three quarters,AMECNew orders were 7.64 billion yuan, a year-on-year increase of approximately 52.0%, of which new orders for etching equipment were 6.25 billion yuan, a year-on-year increase of approximately 54.7%. New orders for LPCVD were 300 million yuan, and new products began to increase in volume; new orders are expected to be between 11 billion and 13 billion yuan in 2024. In the first three quarters, the company's total production of special equipment increased by approximately 310% year-on-year, corresponding to an output value of approximately 9.419 billion yuan, a year-on-year increase of approximately 287%, laying the foundation for subsequent shipments and revenue recognition.
Some companies have begun to realize the conversion of orders into performance. In the first three quarters,Huahai QingkeThe operating income was 2.452 billion yuan, an increase of 33.22% over the same period last year, and the net profit after non-attributed to the parent company was 615 million yuan, a year-on-year increase of 33.85%; of which the operating income in the third quarter was 955 million yuan, a year-on-year increase of 57.63%, and the net profit after non-attributable to the parent company was 246 million yuan, a year-on-year increase of 62.36%, a record high. The company expects that with the launch of CMP equipment that meets more material processes and more advanced process requirements, as well as the application of new domestic technologies in the future, customers' demand for the purchase and upgrade of CMP equipment will grow rapidly.
Shengmei ShanghaiandNorthern HuachuangThe revenue in the third quarter hit a record high, with operating income of 1.573 billion yuan and 8.018 billion yuan respectively, a year-on-year increase of 37.96% and 30.12%, and a month-on-month increase of 6.09% and 23.81%.
In recent years, the capital market has also provided large-scale financial support for semiconductor equipment companies. Northern Huachuang has raised a total of 10.5 billion yuan through private placements in 2019 and 2021. In 2021, China Microelectronics Corporation has raised 8.2 billion yuan through private placements. Recently, Shengmei Shanghai plans to raise 4.5 billion yuan through a private placement to speed up research and development and deepen product layout. The company has adjusted its operating income forecast range for 2024 to 5.6 billion to 5.88 billion yuan, which is higher than the previous lowest forecast of 5.3 billion yuan.
Semiconductor materials, ushering in opportunities
In the global semiconductor material supply chain, countries such as Japan and the United States have long dominated the market.
However, in recent years, as domestic semiconductor material manufacturers continue to improve their semiconductor product technology and R&D capabilities, the localization process of China's semiconductor materials has accelerated.
According to the "China Semiconductor Materials Special Research and Development Prospects Forecast and Assessment Report 2024-2029" released by the China Business Industry Research Institute, the size of the semiconductor materials market in mainland China in 2022 will be approximately 93.975 billion yuan, a year-on-year increase of 8.72%, and it will be approximately 97.9 billion yuan in 2023. Analysts from the China Business Industry Research Institute predict that the market size will reach 101.1 billion yuan in 2024.
After years of development, China's semiconductor materials have basically achieved layout or mass production in key material fields, but the overall products are still mainly mid- to low-end. Some high-end products such as ArF photoresist have been certified by some companies, but high-end materials are still dominated by overseas manufacturers, and there is a large gap with overseas manufacturers in terms of production capacity and market size.
In recent years, policy support and industrial funds have also injected strong impetus into semiconductor materials companies. National major funds have made investments in the field of semiconductor materials many times to help companies expand production scale and improve research and development capabilities. At the same time, local governments have also introduced relevant policies to encourage semiconductor material companies to take root locally and accelerate the formation and development of industrial clusters.