In the report dismantling and sharing of the previous issue of Semiconductors and Electronic Components Outlook 2024 (3): Semiconductor Design Segment (Part 1) , China exportsemi net analyzed the first four market segments in the "semiconductor design segment" in detail, namely Computing power chip, digital SoC, CMOS image sensor (CIS), analog chip. This issue will share the last four market segments of the semiconductor design sector, namely radio frequency chips, memory chips (including bulk, HBM and modules), MCU, and power devices.
Review and Outlook of Semiconductor Design Sector ( Part 2 )
Radio frequency chip: The supply cycle has bottomed out, and it is time for LPAMiD to be replaced by domestic products
Looking back on 2023: The momentum of mobile phone shipments has gradually bottomed out, and 5G penetration has steadily increased. The emergence of 5G communication technology introduces new frequency bands and puts forward new requirements for the number of compatible frequency bands, power, power consumption, linearity, etc. of the radio frequency front-end, driving the volume and price of the radio frequency industry to rise.current perspective of 5G penetration rate, as of 3Q23, according to statistics from IDC and the Academy of Information and Communications Technology, the global 5G smartphone penetration rate has reached 60%, and the 5G smartphone penetration rate in mainland China has reached 84%. The 5G penetration rate is still increasing steadily; at the same time, from mobile phone terminals Looking at the driving force of sales, according to data from IDC and the Academy of Information and Communications Technology, global smartphone shipments in 3Q23 were 304 million units, a year-on-year increase of 0.3%/month-on-month growth of 13.5%; mainland China’s smartphone shipments were 71 million units, a year-on-year increase of 18.4%/month-on-month growth of 5.9% , we believe that the current global mobile phone purchase cycle resonates with that of mainland China. After nearly two years of destocking of mobile phone terminals, the bottom signal of the overall purchase kinetic energy is clear. We are optimistic that the smartphone purchase kinetic energy will usher in a marginal improvement in 2024. Investors are advised to wait for the turning point in mobile phone shipments.
Figure 16 : As of 3Q23, global 5G smartphone penetration rate reached 60% ; Figure 17 : As of 3Q23, mainland China’s 5G smartphone penetration rate reached 84%
Looking forward to 2024 Opportunity #1: The RF front-end inventory level has shown a downward inflection point. Pay attention to the profit and valuation repair opportunities of the industry chain in 2024. Looking back from 2019 to 2022, based on the relatively weak demand for mobile phone terminals, the absolute value of inventory of radio frequency companies overseas and in mainland China has continued to grow. However, as mobile phone terminal inventories are reduced, we see that the absolute value of inventory of overseas/mainland China radio frequency companies in 3Q23 dropped by 14%/8% respectively compared with the end of 2022. At the same time, the inventory turnover days of overseas/mainland China industry chains have gradually declined since 1Q23. Based on the background of the gradual stabilization of mobile phone terminal sales in 2H23, looking forward to 2024, we are optimistic that the inventory level of the mobile phone RF front-end industry chain will continue to decline. In the environment of inventory depletion, it is recommended that investors pay close attention to the RF industry chain in 2024 when the inflection point is approaching. profit and valuation restoration opportunities.
Figure 18 : The absolute value of inventory of major RF companies in mainland China will gradually stabilize at the end of 2022 ; Figure 19 : The inventory turnover days of major RF companies in mainland China will gradually decrease since 1Q23
Figure 20 : The absolute value of inventory of major overseas RF companies will also gradually stabilize at the end of 2022 ; Figure 21 : The inventory turnover days of major overseas RF companies will also gradually decrease since 1Q23
Looking ahead to 2024, Opportunity #2: It is time for domestic substitution of LPAMiD, and the platform-based product layout will become one of the long-term core competitiveness of RF companies.
From the perspective of market space, according to statistics from Yole Development and Zhuosheng Micro’s announcement, the mobile terminal RF front-end market will be US$19.2 billion in 2022 and is expected to reach US$26.9 billion by 2028. The average annual compound growth rate from 2022 to 2028 will be 5.8%; among which, the market size of PA modules (including key material numbers such as LPAMiF and LPAMiD) in 2022 will be approximately US$8.7 billion, accounting for approximately 45% of the overall market, and is a key component of the 5G radio frequency solution for mobile phones.
From a technical perspective, we believe that the trend of radio frequency front-end modularization is clear, and the importance of platform-based product layout has become increasingly prominent. With the increase in the number of frequency bands, bandwidth and technology upgrades, the number of 5G radio frequency front-end modular devices has increased significantly compared with 4G. According to the official website of Huizhi Micro, from the Phase 2 discrete solution in 2014 to the Phase 7LE integrated solution in 2020, the module integration level of the RF front-end has continued to increase, and the penetration rate of transmitter modules in flagship and high-end models has continued to increase. Considering that key material numbers such as LPAMiF and LPAMiD have put forward higher requirements for the design capabilities of RF front-end companies in PA, filters, LNA and other fields, we believe that platform-based product layout will become one of the long-term core competitiveness of RF companies. .
At the current point of time, we believe that the leading RF companies in mainland China have completed the research and development of LPAMiF modules, and LPAMiD is at a critical moment for domestic substitution. Taking listed companies in the mainland supply chain as an example, according to the 2023 interim report of Zhuosheng Micro, the company is continuing to promote RF filters, RF power amplifiers and their module capabilities to boost LPAMiD research and development; Weijie Chuangxin reported in its 1H23 interim report It was disclosed in the 1H23 interim report that the company's independently developed LPAMiD products have been shipped in batches and sold in batches to leading domestic mobile phone brand customers; Huizhi Micro also showed in the 1H23 interim report that the company has completed mass production of LPAMiD products. Looking forward to 2024, we recommend that investors continue to pay attention to the domestic substitution progress of mainland RF companies in PA modules (including key material numbers such as LPAMiF and LPAMiD) and the corresponding performance increases.
Figure 22 : Global RF front-end market space ; Figure 23 : The trend of RF front-end modularization is clear
Memory chips (including bulk, HBM and modules): Prices bottomed out and rebounded, with attention paid to the demand for AI servers/AI PCs/AI mobile phones
Looking back on 2023: As storage prices continue to fall in 2H22, the price of storage wafers has been close to or even dropped below the cost price. Global storage wafer fabs led by Samsung, SK Hynix, and Micron have adopted "factory closures" to reduce production capacity and began to "reluctantly sell" "Wafer supply compression has caused an adjustment in the supply and demand relationship of storage products. According to information from TrendForce, storage products have seen prices bottom out in August and September 2023. NAND Flash prices signed between Samsung and third-party module manufacturers have increased by about 10% quarter-on-quarter. At the same time, some module manufacturers such as Kingston , ADATA has also begun to increase product quotations. According to TrendForce forecast, DRAM prices are expected to increase by 3%-8% month-on-month in 4Q23, and NAND Flash prices are expected to increase by 8%-13% month-on-month.
Figure 24 : DRAM product price growth rate and forecast in each quarter from 2Q23 to 4Q23E; Figure 25 : NAND Flash product price growth rate and forecast in each quarter from 2Q23 to 4Q23E
Looking forward to 2024: On December 15, 2023, with the launch of Intel's latest Core Ultra 7 processor, many complete machine manufacturers such as Lenovo and Asus have launched AI PCs. In 2024, most manufacturers plan to launch AI PC products with corresponding architectures from Intel/AMD/Qualcomm. We believe that 2024 is expected to be the first year of AI PC. According to Canalys forecasts, the penetration rate of AI-compatible PCs is expected to reach 37% in 2025, and AI-compatible PCs will account for approximately 60% of all PC shipments in 2027. Micron predicts that the demand for DRAM for a single AI PC will increase by 4-8GB, and the demand for NAND Flash will also increase. We believe that in 2024, with the recovery of sales of personal computers and smartphones and the increase in the penetration rate of AI PCs and AI phones, storage prices are expected to continue to rise from the demand side.
In addition, HBM (high-bandwidth memory) has been in short supply due to the pull of high-performance GPUs. TrendForce believes that high-end AI server GPUs equipped with HBM chips have become mainstream. According to data released by TrendForce, global HBM capacity will be approximately 180 million GB in 2022, increasing by approximately 60% to 290 million GB in 2023, and will increase by another 30% in 2024. Based on the HBM selling price of US$20 per GB, the global HBM market size in 2022 will be approximately US$3.63 billion. We estimate that the market size will reach US$12.74 billion by 2026, corresponding to a CAGR of approximately 37%.
Recommended stocks include Longsys, Juchen Technology, and Lanqi Technology; suggested paying attention to BIWIN Storage and Demingli.
MCU: General MCU has a weak recovery, and the prosperity in 2024 remains to be seen.
Looking back on 2023: The global MCU market has fallen from the high in 21 to the bottom range in the first half of 23. From 2020 to 2021, affected by the epidemic, the global MCU market is in short supply, and related manufacturers are ushering in a period of growth dividends. Affected by price increases, MCU manufacturers' revenue has grown rapidly year-on-year. For example, the monthly revenue growth rate of Nuvoton and Songhan has remained above 10% since April 2020; from the end of 2021 to the first half of 2022, the economy will continue to decline. The environment has interrupted the demand for stockpiling by terminal manufacturers. Market demand in consumer electronics, industry and other markets has turned cold, causing general-purpose MCUs to enter a downward cycle. Manufacturers have accumulated inventory. However, automotive grade MCUs are relatively prosperous due to their long verification cycle and slow production capacity release. ; From the second half of 2022 to the first half of 2023, mainland MCU manufacturers cut prices to clear inventory. Taiwan MCU manufacturers also lowered MCU quotations across the board, and inventory turnover days are close to historical highs.
Since 3Q23, the consumer market has picked up, and some MCU products have shown a weak recovery trend. In the second half of 2023, with the release of new consumer terminal products and manufacturers' inventories gradually returning to normal, the consumer downstream market will pick up. According to China Micro Semiconductor's financial report, 3Q23 single-quarter shipments exceeded 470 million units, and the cumulative shipments this year were approximately 1.2 billion units, which has exceeded the entire previous year. The inventory turnover days in 3Q23 were 396.53 days, while the inventory turnover days in 1Q/2Q23 were respectively is 486.75/448.77 days. According to Future Electronics, the delivery dates of 8-bit and 32-bit MCUs from major international manufacturers have continued to decline since 3Q23, and prices have remained flat month-on-month. The prices of some STMicroelectronics models have fallen to the level before shortages and price increases in 2021, with a significant price decline in September. Narrow.
Figure 26 : Single-quarter net interest rate changes of Nuvoton and Songhan
Looking forward to 2024: It is expected that the supply and demand of the MCU market will bottom out and recover in 2024, but the upward extent still needs to be observed. Wind investor survey minutes show that Zhongying Electronics said at the end of November that the 3Q23 market increase will include orders from white appliances and small home appliance MCUs. The first quarter of next year is still uncertain. The progress of inventory digestion depends on the recovery of terminal demand. We believe that although the prices of some consumer MCU products have rebounded, order visibility is limited. At present, MCU prices have entered a bottoming stage, and the supply and demand boom in 2024 still needs to be observed. But at the same time, we should pay attention to the product progress of domestic automotive MCU companies, such as GigaDevice, Guoxin Technology, etc.
Figure 27: Inventory level of domestic MCU manufacturers (100 million yuan); Figure 28: Inventory turnover days of domestic MCU manufacturers (days)
Power devices: There are still concerns about the short-term market, and medium- and long-term investment opportunities are still worthy of attention.
Since the beginning of 2023, the power device sub-sector as a whole has continued to underperform the electronics index, and individual stocks have declined by about 50% compared to the high point at the beginning of the year. The forward P/E has basically been adjusted to 30x or even below levels before December. From a fundamental perspective, the year-on-year growth rate of quarterly revenue of power device companies has slowed down significantly or even turned negative, and gross profit margins have also declined. After experiencing poor stock prices and performance for nearly a year, we believe that the current market still has two concerns:
- In the traditional silicon-based diode/MOS field, the downstream is oriented to consumption and traditional industrial applications. After the end of destocking, the market demand is still not strong enough to recover. In addition, there are supply-side factors such as abundant production capacity and homogeneous products. Although the price of devices has fell, but did not yet reflect an obvious upward trend;
- In the field of IGBT single tubes and modules, the downstream is mainly oriented to applications such as photovoltaic energy storage and new energy vehicles. The supply shortage in 2023 will be significantly alleviated compared with 2022. With the growth rate of the downstream automobile and optical storage industries expected to return to normal levels from high growth, the continued release of the domestic supply side may lead to intensified competition and erode the gross profit margin of mid-to-high-end products. We estimate that from 2023 to 2025, the compound growth rate of domestic IGBT production capacity is still expected to reach nearly 30%.
However, we believe that the power device sector still has medium- and long-term investment opportunities.
Looking at the positive factors,
- In terms of technology iteration trends, the continuous increase in SiC penetration rate is expected to bring a higher growth ceiling to power device companies. We predict that starting from 2024, SiC market sales in the field of new energy vehicles are expected to overtake IGBT, and domestic SiC devices will Getting on the train is expected to bring the performance of related companies back to the track of high-speed growth;
- The proportion of overseas sales of power device companies is still low. In view of the fact that the products of domestic companies have the strength to compete with overseas leading companies, and as downstream new energy OEMs go overseas, we believe that local domestic power device companies have the conditions for global market sales. We believe that the power device industry still has strong long-term attention value. After the expected decline in gross profit margin of high-end products is gradually realized, the cost-effectiveness of the layout is expected to appear.
Recommended companies to pay attention to: Star Semiconductor, Dongwei Semiconductor, China Resources Microelectronics, Silan Microelectronics, New Clean Energy, Hongwei Technology (not covered), Yangjie Technology (not covered) and other leading companies.
Figure 29 : Year-on-year revenue growth rate of major A-share power device companies ; Figure 30 : Gross profit margin of major A-share power device companies
Figure 31 : Overview of NTM valuations of some power device companies
Figure 32 : Domestic photovoltaic and automotive IGBT production capacity demand and supply table ; Figure 33 : IGBT supplier production capacity statistics
Figure 34 : Automotive IGBT and SiC market size
At this point, the detailed analysis of the eight market segments in the "semiconductor design sector" has come to a perfect end. Next, China exportsemi net will continue to take you to analyze the development trends of the two market segments in the "semiconductor manufacturing sector" in detail. Stay tuned.
Outlook for Semiconductors and Electronic Components in 2024 (1): Industry Review in 2023
Semiconductor and Electronic Components Outlook 2024 (5): Semiconductor Manufacturing Sector
Outlook for Semiconductors and Electronic Components in 2024 (7): Panel/PCB/Component Sector
