Gathering micro-network news, a few days ago the SMIC Board of Directors announced the company's audited consolidated results for the year ended December 31, 2017.
Revenue in 2017 recorded a record high of US$3,101.2 million, compared with US$2,914.2 million in 2016, an increase of 6.4%.
Gross profit for the year of 2017 was US$740.7 million, which was US$849.7 million compared to 2016.
The gross profit margin for 2017 was 23.9%, which was 29.2% compared to 2016.
In 2017, revenue growth from 28nm recorded a record high of 8.0% of total wafer revenue, which is a 4.4-fold increase over revenue in 2016.
The net cash generated from operating activities in 2017 recorded a record high of US$1,080.7 million, compared with US$977.2 million in 2016, representing an increase of 10.6%.
The net debt-to-equity ratio remained low at 11.8% as of December 31, 2017.
Letter to shareholders
Dear shareholders,
In the past 2017, the company recorded a total revenue of approximately US$3.1 billion, an increase of 6.4% year-on-year; recorded a profit before tax depreciation and amortization of approximately US$1.12 billion, an increase of approximately 5.2% over the same period of last year. New high. Due to the weak smartphone market and process migration of some products, the growth trend has slowed down from the previous year. At the same time, the increase in depreciation expense due to the expansion of new production capacity and the increase in our R&D investment also contributed to earnings growth. This brought pressure. The revenue from the United States District grew by 44.5% year-on-year in 2017, while the revenue in China Region was flat compared to 2016. The expansion of production at 28 nm is our main growth driver for 2017. One of them. The proportion of revenue from 28nm rose rapidly from 5% at the beginning of the year to 11.3% at the end of the year, an increase of 443% over the same period last year.
In the past year, the management of the company has also undergone some changes. Dr. Qiu Ciyun decided to step down from his post as CEO for personal family reasons. The Board of Directors successively appointed Dr. Zhao Haijun and Dr. Liang Mengsong as joint CEOs and executive directors of SMIC. It is believed that Dr. Zhao Haijun and Dr. Liang Mengsong will work together to lead SMIC to a new height and contribute to the development of SMIC. At the same time, we also express our heartfelt thanks to Dr. Qiu for his outstanding contribution to the company. SMIC will continue to maintain its international and independent operations. With the strong support of all management teams, we are confident in the company's future prospects.
On the evening of December 6, 2017, the Company successfully completed a equity portfolio financing transaction in the global capital market. The total raised funds amounted to approximately US$1 billion, reflecting the firm confidence of the capital market in the future development of SMIC. It is the largest technology-related stocks and stock-related products in the Hong Kong market so far. The share issuance is the largest increase in the primary market for technology stocks so far by the Hong Kong Stock Exchange. At the same time, SMIC is also the only company in the Asia-Pacific region for almost five years. The regional issuance without coupons jumps, and there is no interest rate rebalancing for enterprises with perpetual convertible bonds, and the coupon rate of perpetual convertible bonds is the lowest level in the Asia-Pacific region so far. This financing has been approved by SMIC’s major shareholders. With strong support, Datang Holdings and the National Integrated Circuit Industrial Fund have actively participated in this round of financing, and on the basis of exercising their preferential subscription rights and oversubscribed the current issuance of perpetual convertible bonds, fully embodying the major shareholders. Strategic support for company development.
In 2018, we clearly recognized the changes in the market environment of the industry, such as the slowdown in the growth of smart phones. The main driving force for growth in the industry has shifted to high-performance computing products based on advanced processes, and competition in mature processes has become increasingly fierce. The price pressure is much greater than the original expectation. SMIC is currently in a transitional transition period. Challenges and opportunities coexist. We are also pleased to observe that we have made encouraging progress in advanced process R&D, showing that R&D efficiency has been greatly improved. We are not only The growth rate of 28nm HKMG yield has been greatly improved, and even more encouraging progress has been made in 14nm R&D. The device yield rate and other factors have all reached the internal target well. 2018 is a potential one. Years. We will continue to increase R&D investment, accelerate the research and development of advanced processes and key mature process platforms, and make full preparations in technology. We are determined to use our honest and innovative manufacturing and services to dedicate our customers to first-class technologies and products. We will continue to proceed from the best interests of all shareholders, and diligently and cautiously execute our business plan. We would like to The majority of shareholders, customers, suppliers, and employees to express my sincere thanks to the sustained attention and support the development of SMIC given.
Zhou Zixue Chairman and Executive Director
Zhao Haijun, Liang Mengsong Co-CEO and Executive Director
2. Pass the Samsung fan-out package factory to purchase equipment, and plan to take the apple next year.
Gathering micro-messages, fan-out wafer level packaging (FOWLP) enables smaller form factors, thinner packaging, higher I/O density, and polycrystalline silicon The grain solution has created a lot of performance and cost advantages, and has therefore become a hot topic in the semiconductor industry in recent years. Apple has adopted the A10 processor of the TSMC 16nm FinFET process, which has become the key to the real take-off of FoWLP.
Last year, Korean media alleged that Samsung Electronics was dissatisfied with Taiwan Semiconductor Manufacturing Co. relying on FOWLP's advanced technology to take away all Apple processor orders and decided to save money and catch up. The latest report pointed out that Samsung will set up a packaging plant in South Korea and adopt a fan-out package. technology.
As early as 2016, there were rumours in the industry that Samsung Motors, after receiving Samsung L3 and L4 LCDs from Tianan Plant, began converting the factory into a semiconductor packaging factory. The relevant packaging equipment manufacturers issue equipment orders, and it is expected that the production will start at the earliest in early 2017.
In view of the current situation, this action has not been reached on schedule. Recently, industry sources revealed that Samsung plans to use 2.5D and fan-out packages inside the factory. It is expected that it will save a large amount of resources to purchase equipment. It can be completed at the end of this year. Setup, Samsung will decide whether to expand production depending on demand.
It is reported that the new plant has high frequency wide memory (HBM) and Wafer Level Packaging (WLP) technology, HBM can significantly improve energy efficiency, commonly used in artificial intelligence (AI) chips. 3D wafer level packaging can be used for high-speed cameras Image sensor, Samsung flagship S9 equipped with such image sensors.
Last year, Korean media also reported that Samsung has accelerated the development of this technology from Intel's corner-sealing expert Oh Kyung-seok. It plans to deploy a new production process before 2019. Once the envelope measurement technology is on the line, Samsung can regain the apple. Orders.
Fuji Market Research Institute, a Japanese market research agency, has released a survey report indicating that with the adoption of 'fan-out wafer-level packaging (FOWLP) technology on the application processor in 2016, Apple’s packaging technology market is rapidly expanding, and it is expected that 2017 There will be more manufacturers to adopt this technology in the year. It is expected that the scale of FOWLP's global market in 2020 is expected to increase to 136.3 billion yen (about 1.202 billion U.S. dollars), which will increase by approximately 12% from 10.7 billion yen (about 10.4 billion U.S. dollars) in 2015. Times (grow 1,174%).
3. Continually increasing demand for IC ICs in mainland China, quadruple the capacity of TSMC's Nanjing plant
Mainland China continues to accelerate the pace of semiconductor manufacturing. However, TSMC still dominates the foundry market. Continental IC design plants still cannot leave TSMC. The market adjustment agency also expects the monthly capacity of the TSMC Nanjing plant to reach 2021. It is expected to jump from the originally planned 20,000 films to 80,000. The industry also expects that China's Hass, Spreadtrum will become the largest customer of the plant.
According to the latest data from Gartner's announcement, there are currently many foreign companies setting up wafer factories in mainland China, such as foundries Globalfoundries, TSMC, DRAM, 3D NAND, and Intel, Samsung and SK Hynix. Intel, Samsung and SK Hynix have started mass production.
It's worth noting that TSMC originally estimated that the monthly capacity of the Nanjing plant will be 20,000 wafers per 12-inch wafer after it is put into mass production. According to Gartner data, the monthly capacity of the TSMC Nanjing plant in 2021 will be expected to increase by four times to 80,000 wafers per month. Although the scale is only close to the capacity of the TSMC super fab, the growth rate of the scale of production capacity is still considerable.
TSMC originally planned that the Nanjing plant is expected to start production of the 16nm FinFET process in the second half of this year. The industry expects that if the 16nm process goes smoothly, it will enter the 14nm process two years later, and the advancement to the more advanced process is not ruled out, but TSMC will According to the original plan behind at least one generation of process.
According to Gartner, the mainland is actively cultivating the semiconductor industry. At present, the IC design industry is growing fastest. Therefore, the demand for semiconductor chips in mainland China will inevitably expand gradually.
In fact, apart from promoting semiconductor self-manufacturing in mainland China, it also advocates the localization of foreign manufacturers. Therefore, TSMC Nanjing will naturally become the best place for IC designers in Mainland China to cast films. Industry experts infer that according to the mainland’s current 5G, efficient computing (HPC) The chip market development, Hass, Spreadtrum and other vendors are bound to become the future of TSMC Nanjing plant's largest customer.
Gartner also pointed out that setting up a fab to set up a plant in mainland China will inevitably attract surrounding wafer materials. Packaging and testing companies will be stationed together. Forming a semiconductor supply chain around the fabs will greatly help the development of talents and the surrounding economy. This has also become a great help. Mainland China's local governments actively entrenched in the cooperation of high-tech industries.
4. Hailin Investment: Build a billion-dollar domestic semiconductor giant by 2020
Adhere to 'a center, two basic points', deep-growing pan semiconductor field.
In 2017, the total size of national private equity funds exceeded RMB 12 trillion. Under strict supervision, the growth momentum of private equity funds has slowed down, with the number of offerings dropping by 34% year-on-year. The scale of private equity funds has shown negative growth for the first time, and some obvious structural changes have emerged. The growth part is more concentrated in equity venture capital funds, and industrial funds are forming a very distinctive branch. With the recent release of the 'Unicorn' list, it has aroused widespread concern.
As a senior person with more than ten years of investment in the industry, Yin Jiayin, managing partner of Beijing Hailin Investment Co., Ltd., said that now is the golden period for the development of the pan-semiconductor industry and the best moment for industrial funds. Future industrial investment opportunities are concentrated in Divide the industry field. She plans to build a domestic semiconductor equipment giant with a sales income of 10 billion yuan and a profit of over 1 billion yuan by 2020 to cultivate a unicorn enterprise.
Adhere to 'one center, two basic points' and deepen the pan-semiconductor field
Hailin Investment was established in 2005. It is a joint venture between China and Israel. It is also one of the earliest innovative industrial investment institutions in China. It covers venture capital, merger and acquisition integration, financial advisory and capital management. As of June 2017 Hailin Investment Management Fund amounted to 30 billion yuan. Its China Optoelectronics and Innovation Technology Industry Fund is the largest domestic industry fund focusing on the field of pan-semiconductors. Sponsors include BOE, Infiniti and other large domestic and foreign companies. It is supported by the Chinese and Israeli government, the Ministry of Industry and Information Technology and the China Optics and Optoelectronics Industry Association.
Since the Nineteenth National Congress, the country has referred to industries such as integrated circuits, 5G, new materials, new energy, and equipment manufacturing industries as strategic industries. The entire pan-semiconductor industry has ushered in the best era.
In response to new development opportunities, Yin Jiayin stated that Hailin Investment has proposed a strategy of “one center and two basic points.” One center is centered around industry, two basic points are focus, and projects that do not understand are not invested and passed. Cross-border mergers and acquisitions, to promote the organic integration of the leading companies in the subdivided sectors and existing domestic investment companies, focusing on the creation of high-end automation equipment and flexible semiconductors.
At present, Hailin Investment is planning to acquire a pan-semiconductor segment leader. After landing, it will deepen integration with domestic investment projects. By 2020, it will grow into a billion-billion-level sales revenue, and domestic semiconductor equipment with a net profit of over one billion yuan. Unicorn.
Focus on the upstream of the industrial chain, Hailin Investment gross margin exceeds 30%
On March 8th, BOE A announced to invest 92.5 billion yuan to build the sixth-generation AMOLED production line and high-generation thin-film transistor liquid crystal display device production line projects and supporting projects in Chongqing and Wuhan respectively. On March 12, Broadcom acquired 117 million US dollars for the high price of Qualcomm. The plan was rejected by the United States on the grounds of national security. During the two sessions, a large wave of integrated circuits was included in the government work report. This series of events caused the pan-semiconductor industry to catch the eye.
Yin Jiayin said, 'Some companies are concerned about the subject matter of a relatively large amount. What they are doing is eye-catching overseas mergers and acquisitions. That is the way they are manufactured in the middle reaches. Their gross profit margin is 10%. We mainly focus on equipment. The upper part of the smile curve of the industrial chain, such as materials, usually has a gross margin of 30-50%.
To circumvent the cyclical risks of high-tech industries, Hailin Investment is rapidly transforming into pan-semiconductor equipment. It has strengthened its supply of semiconductor equipment. 'I personally worked as a CRT before and watched the rise of TFT LCDs in China. There is no decline, but OLED has risen and equipment manufacturing has remained unchanged. Many of the companies we invest in now do CRT equipment, TFT equipment, and LED equipment. We do not target an industry. These are ours. Customers, we all supply equipment to them. It may be a factory to supply these equipments. Providing turnkey projects in smart factories is our next goal.
The withdrawal method is flexible and diversified. It is not afraid that the IPO window will be closed or not.
Since the unusual volatility of stock indexes in 2015 revealed that the market is still immature in many aspects, the reform of the registration system once stagnated, causing long-term backlogs of application companies to be listed at the entrance to form a huge 'barrier lake'. In 2017, the CSRC concluded the IPO business. At one point, it was 633. Waiting meant funding. Some projects missed the best time on the way to the IPO and even disappeared.
'Every company we invest in can generate synergies. For example, some are made from devices at the front end of the semiconductor, some are back-end, some are detected, and can be easily exited through industrial integration methods such as mergers and acquisitions of listed companies. Since then, regulators have had a relatively large influence on regular exits. For example, the IPO window has stopped, but we have mainly focused on industrial integration, and exit is more secure.
Up to now, Hailin Investment has successfully invested in a large number of star enterprises such as Dongxu Optoelectronics, Shangda Electronics, Lianchuang Electronics, Xinyihua, Huasheng Power, and Blu-ray Technologies, etc. There have been 16 successful exits. The 10 companies adopted IPO, and most of them were based on industrial integration.
5. Huawei breaks the US-Japan monopoly China's independent research and development of high-end storage accounted for 60% of the domestic market
Without it, life will be a mess: The savings will be lost, the phones will be lost, and the machines will be paralyzed - storage technology is the cornerstone of modern society. In the high-end storage industry competition, China is breaking the monopoly of the United States and Japan.
Due to the breakthrough in high-end storage, on March 26th, the Guangdong Grand Prize for Technology 2017 was awarded to Huawei. It was commented that the high-end storage system is a core facility of the national strategic industry, and the efforts of Huawei and other companies are making up for China. Short board.
Grab the local market
From tape drives to solid-state drives, the bottleneck of computer speed and reliability has been on storage devices for 70 years.
Luo Haoyuan, an investment partner of Zhongyue Jinqiao Investment Group, told the reporter of Science and Technology Daily: 'The United States is far ahead in this field. The high-end storage market share is basically divided among five companies: Dell EMC, NetApp, HP, Hitachi and IBM. Many commercial scenarios require extremely reliable data retention. Newcomers have a hard time getting a share.'
'In the past, the high-end storage used by Chinese users was basically foreign brands, and the most important data were stored on it. For the sake of information security and lower maintenance costs, many Chinese users hope to achieve domestic alternatives.' Hangzhou Hongshan Technology Li Zhi, president of the company’s stock company, said.
In this context, in recent years, Chinese companies have made a breakthrough in the domestic market to achieve alternatives. Li Zhi said: 'Five years ago, China's storage market, the share of domestic companies does not exceed 10%, and now accounts for more than half.'
According to the statistics of the authoritative organization IDC last year, domestic storage brands accounted for 60% of the domestic enterprise market, Huawei was the first name, Hikvision, Inspur and Dawn were also outstanding; North-east Guangshen and other economically developed regions, users are more rational, also More willing to support the storage of localization.
Core areas began to replace imports
At present, domestic high-end storage has entered the financial core system of some major domestic banks - used by the bank's headquarters, which symbolizes the highest reliability.
After the Spring Festival, everyone had to buy train tickets. The 12306 became the most pressured system in China. Now, the 12306 ticket electronic payment platform uses the products of Hong Shan. In the general fields such as Sinopec and Guodian, we have been completely involved with many international companies. Do the same level, and be more adaptable to local users than they are. ' Li Zhi said.
'Competing with foreign products, to use the original one hundred dollars to do things, do better with fifty dollars, but also a reasonable profit. Chinese products can do this.' Li Zhi said.
From zero to yes, from good to good
Thanks to continuous state funding and support, Chinese companies have made continuous progress in high-end storage and are expected to compete with high-performance computing and servers to compete with international giants. In November last year, the authoritative Gartner high-end storage key capability rankings Huawei showed its prominence in various scenes and ranked second to fifth. In the past, this list was dominated by the United States and Japan.
The reporter learned from Huawei that in 2012, Huawei's National 863 Program's "Massive High-End Storage Systems for the Next Generation" project passed the acceptance test and began to lay out the high-end storage industry. Since 2013, Huawei has invested more than 400 million yuan to tackle high-end research. Storage systems. Currently they have a 3200 people, distributed in the storage technology team.
In recent years, under the background of policy support, all aspects of storage technology have made breakthroughs; at present, China’s entrepreneurs have achieved 'from zero to the most need for accumulated technologies such as storage media, computing chips, and operating software. There is ', is achieving 'from good to good'.
For example, NAND and DRAM memory chips, which are indispensable for computer storage, have no domestic products in the past. This year, Ziguang’s investment in domestically produced memory is about to be listed on a large scale. This not only means that China has autonomous and controllable memory, but also indicates that China will share this. A market dominated by Japan and South Korea. The domestic Feiteng chip also replaced the Intel chip in some special-purpose high-end storage devices, ensuring independent controllability.
'From available to easy to use, we must rely on the market to drive. But entering the market, it is difficult to exist as a separate part, it must be an ecosystem.' Li Zhi said that foreign giants not only have strong integration capabilities and top-level design capabilities, but also create their own As the center of the ecosystem, there is a very high user influence; and the ecological system of China's storage companies is also being formed.
6.Semiconductor silicon wafers increase the gap between supply and demand this year
According to the latest statistics of TrendForce, from 2016 to the end of 2017, there are a total of 28 eight-inch and 12-inch wafer fabs newly built and planned in China, of which 20 are 12 inches and 8 are eight inches. The production time will fall on this year. Observed at the speed of completion of the current global semiconductor fab, the visibility of semiconductor silicon wafers will reach 2020, and it is evident that the supply shortage of silicon wafers will continue.
The top five semiconductor silicon wafer manufacturers worldwide are more cautious about the silicon wafer super recycling business strategy. At this stage, business objectives are based on profit maximization as the primary principle, followed by the maintenance of market share or product portfolio. Optimization and other objectives. In addition, due to the fact that the equipment for producing silicon wafers is still being delivered for more than one year, the supply of 12-inch silicon wafers in 2018 is expected to increase only slightly from 3 to 5%, while the 12-inch semiconductors Demand for silicon wafers is expected to increase by 5 to 7% per year, so this year's supply and demand gap for 12-inch silicon wafers will increase from 2017.
It is estimated that by 2020 all de-bottleneck measures will be exhausted, and then the global demand for 12-inch silicon wafers will reach more than 6.5 million per month. If manufacturers no longer carry out new expansions, they will cause second-tier wafer fabs to be out of stock. First-line wafer plant shortage crisis.
At present, the market price of 12-inch silicon wafers has officially stood at US$100. Although the first-line semiconductor manufacturers have purchased large quantities, the average contract price has also reached nearly US$90. The average increase in the first quarter has been expanded to 15%. New production capacity will be released next year. In order to gain more silicon wafer production capacity, it is willing to consolidate the supply volume by 10 to 20%. It is completely in the seller's market.
Silicon wafer plant revenue will rise quarter by quarter
At present, downstream semiconductor customers are seeking supply assurance. Signing of long-term purchase contracts has become the norm. Among them, taking Taiwan's leading global crystal as an example, orders for six-inch silicon wafers will reach the end of 2018, and prices will rise slightly; eight-inch silicon wafers Round demand goes directly to June 2019. Orders for 12-inch silicon wafers are required until the end of 2019. Some customers even reach 2020.
In terms of current market conditions, if the downstream customers fail to enter into long-term contracts for guaranteed quantity and price with Universal, the company will not be able to supply sufficient quantities to meet customer demand. The time for the first wave of price increase this year to take effect is in January 2018. Effective on the 1st, global crystal is expected to gradually increase prices in the next quarter or every six months.
Universal's net profit record high Taiwan Sembcorp revenue see
As the average price of Universal's customer contracts increased by nearly two digits, it is expected that the first quarter of global crystal consolidated revenue could reach 13.525 billion yuan, continuing to hit a new high; and the new contract price will be effective to offset the negative factors of the appreciation of the new Taiwan dollar, and it is expected that the gross profit margin will increase. Further increase of 3.9 percentage points to 34.3%, business interests are estimated to reach 3.328 billion yuan; Outside the industry, under the reduction of interest expenses, the estimated net profit is about 0.71 billion yuan; After-tax net profit is estimated to reach 2.51 billion yuan, and the single quarter EPS is about 5.74. Yuan, will set a record high.
Taiwan’s another silicon wafer fab, Taiwan Seiketsu, is a joint venture between Formosa Plastics and Japanese Sumco, with the latest holdings being 41.32% and 46.95%, respectively. Sumco is the second largest supplier of silicon wafers in the world. The advantages of Taiwan Foundry have also become an important supply chain for Sumco in Taiwan. At present, the production capacity of 12-inch and 8-inch production capacity is approximately 280,000 and 320,000 respectively, with a market share of approximately 6%. Major customers The structure was foundry and DRAM plants accounted for half of the total. TSMC, Micron, Inako, Nanke and UMC all accounted for approximately 60% of the total shipments. The mainland market currently ships eight inches, accounting for approximately 20%, given that the silicon wafer industry is in short supply, the company's strategy tends not to sign a long contract but close to the spot price in order to improve the profitability. It is estimated that this year's revenue will also hit a new quarter by quarter, and it is worth continuing to track.