With the completion of the disclosure of all listed companies‘ 2023 third quarter reports, the strength of downstream end customer demand is closely related to the fluctuation trend of upstream semiconductor manufacturers‘ performance.
Overview of Revenue in the Top 10 Terminal Industries in China
According to the main downstream application scenarios of semiconductors, Core Octopus has selected representative enterprises from the top ten industries for tracking, including automotive tier1, automotive vehicles, industrial control, communication equipment, photovoltaic, energy storage, medical equipment, Internet of Things, consumer electronics, and servers. According to incomplete statistics from Core Octopus, in the downstream industry in Q3, the automotive industry remained highly prosperous; The effect of server destocking is good, with major companies experiencing significant month on month growth driven by AI servers; However, the performance of photovoltaic and energy storage, which had a high level of prosperity in the first half of the year, showed a significant month on month decline in Q3, and it is necessary to be vigilant about the risk of inventory adjustments.
1. Car Tier 1 Q3 revenue increased year-on-year and month on month http://www.ic-bom.com
Specifically, in terms of the automotive Tier 1, the performance of major manufacturers still continues the previous stable growth trend. Manufacturers in the industry, including Desai Xiwei, Huayang Group, and Junsheng Electronics, maintained a good momentum of year-on-year and month on month growth in both revenue and net profit in Q3. Taking Junsheng Electronics as an example, with the accelerated transformation of intelligent electrification in the global automotive industry, the company actively seizes the market opportunity of continuously increasing penetration rate of intelligent electric vehicles and increasing market share of Chinese independent and new force brands. Since the beginning of this year, it has maintained a strong expansion momentum in new business orders. In the first three quarters of 2023, the company‘s global cumulative new orders with a total lifecycle value of approximately 59 billion yuan, including new orders related to new energy vehicles with a total value of approximately 35 billion yuan. From the perspective of market regions, the cooperation relationship between the Chinese market, especially the top independent brands/new forces, is constantly strengthening, and the proportion of order amounts has significantly increased. The domestic business team has newly received about 25 billion yuan in global market orders, accounting for about 42%.
1. The profitability of the automotive industry is booming, and BYD is making a lot of money
In terms of industries, according to data from the China Automobile Association, from January to September 2023, China‘s automobile production and sales completed 21.075 million and 21.069 million units respectively, with year-on-year growth of 7.3% and 8.2%, respectively. In the field of new energy vehicles, China‘s production and sales of new energy vehicles reached 6.313 million and 6.278 million units in the first three quarters, respectively, with year-on-year growth of 33.7% and 37.5%. While maintaining rapid growth in production and sales, our new energy vehicles are also further optimized in terms of technological level, brand competitiveness, and supporting environment.
It is worth noting that China‘s automobile exports have grown rapidly since the beginning of this year, with 3.388 million vehicles exported in the first three quarters, a year-on-year increase of 60%. Among them, 2.563 million traditional fuel vehicles were exported, a year-on-year increase of 48.3%. The export of new energy vehicles reached 825000 units, a year-on-year increase of 1.1 times.
Against the backdrop of high prosperity, manufacturers such as BYD, SAIC Group, Changan Motors, Great Wall Motors, and GAC Group in the industry achieved net profits of 21.367 billion yuan, 11.407 billion yuan, 9.882 billion yuan, 4.995 billion yuan, and 4.511 billion yuan in the first three quarters, respectively. Overall, they made a lot of money. Taking BYD as an example, the company‘s cumulative passenger car sales in the first three quarters of this year were 2.0702 million units, a year-on-year increase of 76.14%. In the first three quarters, BYD achieved a revenue of 422.275 billion yuan, a year-on-year increase of 57.75%. The net profit attributable to the parent company was 21.367 billion yuan, a year-on-year increase of 129.47%. In the third quarter, BYD achieved a revenue of 162.51 billion yuan, a year-on-year increase of 38.49%. The net profit was 10.413 billion yuan, a year-on-year increase of 82.16%, and the average daily profit was 113 million yuan, making it still the most profitable enterprise in the entire industry.
2. The fastest growth rate of new energy, with Ningde Times‘ energy storage business CAGA reaching 381.09% in the past three years
In terms of new energy, in 2023, the National Energy Administration will continue to anchor the carbon peak and carbon neutrality goals, coordinate energy security supply and green and low-carbon development, accelerate the construction of major projects such as large-scale wind and photovoltaic bases, and spare no effort to increase the supply of clean electricity. The development of renewable energy will continue to achieve new breakthroughs.
As of the end of September 2023, the cumulative installed capacity of wind power in China has exceeded 400 million kilowatts, a year-on-year increase of 15%, including 368 million kilowatts of onshore wind power and 31.89 million kilowatts of offshore wind power; In the field of photovoltaics, in the first three quarters of 2023, the newly installed capacity of photovoltaics in China reached 128.94 million kilowatts, a year-on-year increase of 145%; In the field of energy storage, according to CNESA data, there were 850 energy storage projects (including planning, construction, and operation projects) in the first half of 2023, more than twice the number of projects in the same period last year. The newly added operating scale is 8.0GW/16.7GWh, exceeding the level of last year‘s newly added scale (7.3GW/15.9GWh).
Driven by the overall high level of prosperity, most enterprises in the industry have welcomed very good development opportunities. Taking Ningde Times as an example, the company‘s energy storage system revenue increased from 1943.4502 million yuan in 2020 to 2022, with related revenue reaching 44980.2773 million yuan and CAGA reaching 381.09%. Due to the rapid development of energy storage business, the proportion of energy storage business in Ningde Times is also rapidly increasing, from 3.86% in 2020 to 13.69% in 2022. In 2023H1, the energy storage system business of Ningde Times achieved a growth rate of 1.1 times again, indicating that the industry‘s overall development and growth trend is still good.http://www.ic-bom.com
3. Rapid development of AI, with AI servers in short supply
In terms of servers, benefiting from the explosion of generative AI, AI servers have ushered in a rare development opportunity. According to Aletheia‘s data, the entire AI server market is expected to reach $135 billion in 2025, 4.5 times the size of 2022.
From the statements of the entire manufacturer, most companies are currently optimistic about the development prospects of AI servers. Among them, Guangda stated that the company‘s current AI server orders are in short supply, and it is estimated that Al servers will have double-digit growth in 2023, and the sales of AI servers will double in 2024; Lenovo stated that the company‘s AI server new product orders are booming, and the company will continue to invest an additional $1 billion in AI server and other businesses in the future; Hon Hai Group pointed out that in the future, five to six new production lines will be added to meet the demand for AI servers; In addition, ODM manufacturers such as Huaqin Technology and Wentai Technology also pointed out that their server business is expected to experience rapid growth this year.
These types of chips have the most "money" potential
At present, it is widely expected in the industry that the semiconductor market will end its adjustment by the end of 2023 and is expected to achieve further sales growth in 2024. So, what are the semiconductor opportunities that are expected to continue to grow high in the coming year that are worth our attention?
1. Opportunities for electrification and intelligence brought by the transformation of the automotive industry
The century old automotive industry has ushered in continuous changes in electrification, intelligence, and networking, with significant growth in both the usage and value of automotive semiconductors. According to IDC data, the automotive semiconductor market will experience significant growth in the coming years, with a market size of $32 billion and a compound annual growth rate of 9% by 2027.
(1) Electrification: Power devices such as MOSFETs, IGBTs, silicon carbide, and power management chips such as AC-DC and DC-DC will significantly grow
In the field of IGBT, BYD Semiconductor, STAR Semiconductor, and Times Electric are currently ranked in the top three. In addition, companies such as Silan Micro, China Resources Micro, Hongwei Technology, New Jieneng, Zhixin Semiconductor, Qinglan Semiconductor, and Cuizhan Micro are also developing rapidly in the field of automotive IGBT. Taking BYD as an example, it has been using the IGBT devices of its subsidiary BYD Semiconductor. In recent years, despite the severe shortage of its own production capacity, BYD has gradually placed orders with local enterprises with automotive grade IGBT production capabilities, such as Silan Micro, Star Semiconductor, Times Electric, China Resources Micro, and Cuizhan Micro, with order levels reaching 100 million yuan to ensure the surge in demand for IGBT in new energy vehicle production; In the field of silicon carbide, although the current order volume of Chinese manufacturers is temporarily lower than that of traditional foreign power giants, manufacturers represented by Tianyue Advanced, Dongguan Tianyu, Hantiancheng, San‘an Optoelectronics, etc. are also developing rapidly, with orders from major manufacturers exceeding 1 billion RMB, presenting a thriving scene in the entire industry.
(2) Intelligence: Autonomous driving and intelligent cockpit will drive the growth of MCU, SoC, MCU, FPGA, and storage chips
The main driving points for the intelligent development of automobiles are "intelligent cockpit" and "autonomous driving".
In the field of intelligent cabins, local supply chain manufacturers are constantly rising in this wave of car electronics chip shortage. Huawei, Quanzhi Technology, Xinchi Technology, Xinqing Technology, Horizon, Black Sesame, and other manufacturers have also achieved good development results in the field of intelligent cabins; In the field of autonomous driving, Huawei, Horizon, and Black Sesame have also made rapid progress. Taking Horizon as an example, as a pioneer in promoting the commercial application of intelligent driving in the field of passenger cars in China, Horizon has a mission of "empowering machines to make human life safer and better". As early as 2020, Horizon officially began the first year of mass production of intelligent chips in Chinese cars, achieving breakthroughs from 0 to 1. To this day, the cumulative shipment volume of Horizon Journey chips has exceeded 3 million pieces, becoming the first in China to achieve the largest scale of front-end production of automotive intelligent chip companies. It has designated more than 20 domestic and international mainstream car companies with a total of more than 120 models, becoming the preferred partner for domestic and foreign car companies to promote intelligent landing in the Chinese market.
2. Opportunities for power devices brought by new energy sources under the dual carbon background
The demand for semiconductors in the new energy generation industry such as photovoltaic energy storage comes from IGBT/silicon carbide for photovoltaic inverters/energy storage converters, BMS for battery management systems, and the demand for AC-DC, DC-DC, gallium nitride and other devices from product power sources.
In the field of optical storage IGBT, compared with large foreign manufacturers, domestic manufacturers such as Star semiconductors, Slangway, Time Electric, Yangjie Technology, and New Clean Energy have some gaps in product stability and technology progressiveness. However, with the continuous increase of R&D investment in recent years, some manufacturers‘ products are gradually introduced into system integrators as secondary or tertiary suppliers and have earned tens of millions of income. With the continuous development and maturity of technology, these manufacturers are expected to usher in further growth space in the energy storage field in the future.
In the BMS field, BMS AFE chips are responsible for collecting battery voltage, with major manufacturers including Ningde Times, BYD, Tesla, Texas Instruments, and Adeno; The ADC chip is mainly responsible for converting the collected battery voltage into digital values through an analog-to-digital converter (ADC). The main manufacturers include Texas Instruments, Adeno, Saint Bang Micro, and SREP; As the main control chip, MCU chips are mainly responsible for calculating the state of charge. The main manufacturers include Texas Instruments, Alpha Semiconductor, NXP, Infineon, Renesa, Zhongying Electronics, Zhaoyi Innovation, Beijing Junzheng, and Xinhai Technology; Digital isolation chips are mainly used for digital communication between high and low voltage, with main suppliers including Texas Instruments, Adeno, Xinke, Botong, Infineon, Rom, Ansemy, Qipuwei, Rongpai, Nanochip, Chuantu Micro, Gree Micro Technology, etc.
