SMIC International Takes The Lead In Expanding Wafer Production Capacity And Predicts "Core Shortage" Throughout 2021

After determining the strategy of steadily expanding production and mature process, SMIC is speeding up its construction.

On the evening of March 17, SMIC announced that the company signed a cooperation framework agreement with Shenzhen Municipal People's government, and both sides agreed that SMIC and Shenzhen government (through Shenzhen heavy investment group) intend to develop and operate the project through SMIC Shenzhen in the way of proposed investment.

According to the plan, SMIC Shenzhen will focus on the production of 28 nm and above integrated circuits and provide technical services, aiming to achieve the final production capacity of about 40000 12 inch wafers per month, and is expected to start production in 2022.

The new investment in the project is estimated to be US $2.35 billion (about RMB 15.3 billion). It is expected that SMIC Shenzhen will have about 55% and no more than 23% equity respectively by SMIC international and Shenzhen heavy investment group after the completion of the proposed investment.

In fact, when SMIC returned to a, SMIC disclosed its expansion plan since 2020. There are five factories under expansion, namely, factories in Shanghai, Beijing, Tianjin, Shenzhen and Jiangyin. Now, new trends are coming from Shenzhen production line. Previously, SMIC has put an 8-inch production line into use in Shenzhen, and the 12 inch plant planned earlier has finally ushered in new development.

In addition, at present, both at home and abroad are in the big environment of capacity shortage. The active expansion of wafer foundry factories such as SMIC international will help ease the supply chain tension and further solve the supply chain security problems in China.

Accelerate the expansion of mature capacity

At present, SMIC has 7 wafer production lines and 1 bump processing line. Its production lines are mainly concentrated in Beijing, Shanghai, Shenzhen and Tianjin. There are a 300 mm wafer plant and a 200 mm wafer plant in Shanghai, and a 300 mm advanced process wafer plant under construction; a 300 mm wafer plant and a 300 mm advanced process wafer plant under construction in Beijing; a 200 mm wafer plant in Tianjin and Shenzhen; and a 300 mm advanced process wafer plant in Jiangyin 300 mm bump processing joint venture factory.

Among them, SMIC has 4 12 inch production lines (3 in mass production) and 3 8 inch production lines. In recent years, 12 inch is the main direction for enterprises to expand production. A Senior Semiconductor analyst told the 21st century economic reporter that the current generation of 8-inch wafer factories in the world has hardly increased investment in 8-inch wafer. The price of 8-inch wafer is low, and the expansion of production is not in line with the demand of efficiency. TSMC and Samsung are mainly expanding 12 inch factories.

Focusing on the 12 inch wafer plant in Shenzhen, SMIC continues to increase its mature production capacity of 28nm and above. CITIC Securities Research Report said that SMIC Shenzhen includes Shenzhen 8-inch (fab15) and Shenzhen 12 inch (fab16) plants, of which fab15 has a production capacity of 46000 pieces / month (8-inch wafer, design capacity of 60000 pieces / month), and fab16 plant has a design capacity of 40000 pieces / month (12in) Currently vacant. It is estimated that SMIC will introduce Shenzhen government and third-party funds into SMIC Shenzhen to expand the 12 inch capacity of fab16.

"Considering that the plant has been completed, licenses have been obtained in recent years, and purchase orders have been issued, and the equipment lead of 6-9 months is required Time (the interval from ordering to supplier delivery), plus about three months of installation and commissioning, the production in 2022 is the normal progress, "CITIC Securities further analyzed and said," it is estimated that 55 / 65nm or the main process, and the production capacity of 40000 tablets / month corresponds to an annual revenue increase of about 580 million US dollars, which is about 15% higher than SMIC's revenue in 2020. "

As can be seen from SMIC's financial report in the fourth quarter of 2020, the proportion of mature process revenue has increased, and the revenue share of 55 / 65 nano technology has increased from 25.8% in the third quarter to 34.0%.

Zhao Haijun, CO CEO of SMIC international, said at the performance meeting that SMIC will continue to expand its production in 2021, with an increase of 10000 tablets / month for 12 inches and no less than 45000 pieces / month for 8 inches. "We hope that the company's production capacity of 28nm and above can grow steadily in the next few years, and maintain a certain profit level while expanding production capacity."

In addition to SMIC Shenzhen, SMIC Beijing City project has also been launched. At the end of July last year, SMIC international and the Management Committee of Beijing Economic and Technological Development Zone signed a cooperation framework agreement. The two sides set up a joint venture to engage in development and operation, focusing on the production of 28 nm and above integrated circuit projects. The first phase of the project is planned to invest 7.6 billion US dollars to achieve a 12 inch wafer production capacity of about 100000 pieces per month.

It can be seen that SMIC has formed a more complete production capacity layout in the three core regions of Guangdong, Hong Kong and Macao Bay area, Yangtze River Delta and Beijing Tianjin Hebei region, and the recent partial release of SMIC supply license by the United States has also helped SMIC to expand its production capacity.

Domestic production capacity continues to be tight

On the other hand, global production capacity is still very short. Many third-party organizations predict that the problem of core shortage will run through 2021, and the imbalance between supply and demand may continue until next year because of the time required for capacity improvement.

The atmosphere of domestic supply exceeding demand is also tense. According to xinmou research review, semiconductor is a cyclical industry, and the capacity shortage may be alleviated next year. In the following year, some processes and products may have relative overcapacity. However, according to the prediction of xinmou research, in the long run, China's semiconductor capacity supply and demand gap is still very large. If we do not actively expand production, by 2025, the domestic capacity gap will be equal to 8 SMIC international.

At present, the most shortage is mature production capacity of 28nm and above. For example, 28nm process technology is mainly used in mobile phone SOC chip, IOT, set-top box, digital TV, surveillance video processor chip and other fields. Benefiting from the increasing demand for high voltage drive, image sensor, RF and other applications, according to IHS Markit statistics, the 28 nm integrated circuit wafer foundry market will maintain a stable growth, and the global market size is expected to reach 9.8 billion US dollars in 2024.

There is also a large market demand for processes above 28nm. The process of 45nm-90nm can be used for memory chips, fingerprint identification chips, WiFi, GPS, Bluetooth, NFC, MCU, etc. at present, MCU is one of the most scarce chip types, and the shortage has continued from last year to this year.

According to the reporter's understanding, the downstream mobile phones, notebook computers, panels and modules in the middle and upper reaches are plagued by core shortage to varying degrees. For example, the supply of chips related to some module products can only meet half of the market. The shortage of chip capacity can be seen. A communication manufacturer also told the 21st century economic report: "recently, we need to face the upstream core every day Among the problems of shortage and price increase, the most important one is memory chip. As a general part, almost all industries have demand for it. At present, the shortage is expected to last at least until the third quarter of this year. "

Therefore, wafer foundry companies led by SMIC are actively expanding production capacity, which is also conducive to alleviating the shortage of production capacity. In addition to SMIC, there are also Huahong group, Yuexin semiconductor and Wuhan Xinxin with 12 inch mass production lines.

The release of more production capacity will wait until the end of the year and next year. According to the Industrial Securities report, Huahong Wuxi plant plans to speed up the construction to 65000 pieces / month by the end of 2021, so as to push the company into a period of rapid growth, and finally expand to 80000 pieces / month. It is estimated that the overall capital expenditure may reach 4 billion US dollars (the first 40000 pieces are 2.5 billion yuan, and the last 40000 pieces are 1.5 billion yuan). After all the expansion is completed, the annual revenue of 1 billion US dollars can be contributed.

In order to solve the problem of domestic capacity supply and demand gap, xinmou research suggests that first of all, we should vigorously support "China", "China", "Guangdong" and "Singapore" to actively expand production. At the same time, under the current international situation, "industry front-line" enterprises are highly concerned by the United States and are within the "target" scope of the "entity list". We should support the existing mass production enterprises to actively expand production and add new relevant owners In addition, we should make preparations for the "third line" of semiconductor industry and lay out the semiconductor generation industry in multi echelons. In addition, the support mechanism for joint venture / overseas enterprises should keep pace with the times, increase the proportion of mainland customers, expand the opening up, increase the introduction of foreign capital, and attract foreign enterprises to build factories in China.