Warning of overcapacity in semiconductors: planning ahead or unfounded?

Our reporter Jia Li, trainee reporter Guo Jichuan

  Restricted by various conditions, the supply of semiconductor chips has been insufficient since last year, causing a lot of trouble to downstream companies.

Since the beginning of this year, industries such as automobiles, mobile phones, and home appliances have also continued to hear the voice of a shortage of chips.

  A relevant person from Buick told the Securities Daily reporter that the shortage of chips has reduced the production of popular models such as GL8 by more than 30%; TCL mobile phone manufacturers claim that display driver chips and decoding chips are the shortest in the mobile phone industry chain; Xiaomi President Lu Weibing even complains. The lack of cores in mobile phones "is not lacking, but extremely lacking."

  However, in the midst of a panic, Texas Instruments, one of the world’s largest chip manufacturers, issued a warning that the surge in investment is exacerbating the emergence of overcapacity in the semiconductor industry. The industry’s production capacity will increase significantly in the next few years, and with demand Decline, profits will be hit.

Depu Capital also stated in March this year that the global semiconductor investment boom may lead to overcapacity and industry collapse.

In the second half of last year, the National Development and Reform Commission also issued similar warnings to local investment chip projects, requiring local governments to strengthen their awareness of the risks of major project construction.

  In the current "hard to find a core", is the worry about the overcapacity of semiconductors unfounded?

  Many factors lead to "core shortage"

  A reporter from the Securities Daily found that in the semiconductor industry chain, the construction of wafer fabs at the upstream manufacturing end took a long time, which made it difficult to rapidly expand production capacity.

As downstream new energy vehicles, smart terminals, etc. have increased in volume, the demand for chips has continued to rise, and the problem of insufficient chip supply has become increasingly prominent.

  Among them, automakers are most affected by the shortage of chips.

At present, General Motors, Ford Motor and other companies have reduced or even stopped the production of certain models, and domestic automakers have also been partially affected.

The impact of chip shortages is still spreading in mobile phones, smart home appliances and other fields. News of home appliance chip shortages, price increases, and delivery extensions continue to spread.

  Song Jia, director of the Industrialization and Industrialization Collaborative Innovation Center of the State-owned Assets Supervision and Administration Commission of the State-owned Assets Supervision and Administration Commission of China There are structural tensions that are difficult to resolve in the short term.

  Wu Quan, the founding partner of Huaxin Jintong (Beijing) Investment Fund Management Co., Ltd., told the "Securities Daily" that the problem of chip supply shortage, from an endogenous point of view, is that the effectiveness of investment is not enough, and the supply capacity and industry have not yet been formed. ability.

From an external point of view, semiconductors, as a field with a high degree of globalization and division of labor, are affected by factors such as the epidemic. Supply chain interruptions, extended delivery periods, and insufficient production capacity have occurred, resulting in varying degrees of chip shortages and shortages in the world. , The so-called "core shortage tide."

  In the context of tight chip supply, many companies even do not hesitate to cross-border chip projects and expand production capacity.

In recent years, some domestic localities and companies have been enthusiastic about investing in chip projects.

According to statistics from the National Development and Reform Commission, in the first half of last year alone, nearly 20 places in China signed or started construction of compound semiconductor projects, with a total planned investment of more than 60 billion yuan.

Therefore, the National Development and Reform Commission issued a warning to local investment in chip projects, and in accordance with the principle of "who supports it, who is responsible", it will report and account for those that cause major losses or trigger major risks.

  According to An Guangyong, an expert on the Credit Management Committee of the Global Mergers and Acquisitions Association, part of the reason for the current "shortage of cores" is due to a large number of stocks. The vicious circle of chip manufacturers increasing supply, and this vicious circle may eventually lead to excess chip production capacity."

  A large number of new production capacity will be released in 2023

  "Now that wafer capacity is in short supply, manufacturers continue to expand production. With the release of expanded production capacity, market demand will undergo new changes, and there may be cyclical overcapacity." Lin Zhi told the "Securities Daily" reporter.

  He believes that the current shortage of wafer production capacity, wafer manufacturers and capital are supporting the expansion of production, there is a rush phenomenon, if the demand in the next few years can not keep up with the rate of capacity expansion, overcapacity will occur.

If the overcapacity exceeds 10%, it is likely to accelerate the elimination of industries and cause waste of resources.

  Some institutions also predict that the shortage of semiconductor production capacity may be alleviated next year, after which some processes and products may have relatively overcapacity.

Recently, TSMC said that the shortage of chips in the automotive industry will be the first to be resolved. The company is currently giving priority to the production of automotive chips. In the first half of 2021, TSMC’s automotive MCU chip production has increased by 30% year-on-year, and the annual growth rate is expected to reach 60%.

  Wu Quan believes that Texas Instruments’ warning of overcapacity deserves the attention of the industry. As an established semiconductor company, Texas Instruments has personal experience and deep insights into the laws and cycles of the semiconductor industry.

A large number of new entrants may cause disturbance or damage to the semiconductor industry ecology and supply chain.

  Even new entrants in the semiconductor industry are also vigilant about future overcapacity issues.

The relevant person in charge of LGD Display told the "Securities Daily" reporter: "We have also independently researched and developed micro-display driver chips. In recent years, this chip is very scarce. At present, it is mainly based on foundry. In order to prevent excess, we will do a certain amount of production capacity. control."

  The reporter learned that there is a time gap between chip investment and capacity release. It takes about 12 to 24 months from start-up, testing, trial production to increase in capacity utilization.

The global chip shortage this year has led to global capital focusing on the semiconductor industry. Related companies have invested in a large amount of new production capacity, and the release time of production capacity will be concentrated in 2023.

There are also institutions that predict that a large amount of chip production capacity will be released in the second half of 2023, and there may be overcapacity problems at that time.

  Technological progress promotes the explosion of "core" demand

  "Under the background of uncertain market prospects, the strategy of industry giants has become uncertain, which has also caused the semiconductor chip industry to change from previous cooperation greater than competition to competition greater than cooperation. Under this framework, the semiconductor industry has insufficient advantages and insufficient production capacity. The situation of overcapacity and inferiority will exist at the same time." Huawei Cloud MVP Ma Chao said in an interview with a reporter from Securities Daily.

  Based on the industry accumulation in the past decades and the improvement of the country's comprehensive strength, China's semiconductor industry has reached a new stage of iterative and upgrade development.

Under the loose policy, capital and market environment, my country’s semiconductor companies have made more efforts to achieve "changing lanes and overtaking". While accelerating the deployment of mainstream silicon-based chips, they are also actively deploying carbon-based chips, quantum chips and other cutting-edge chips. Technology.

  "Whether silicon-based chips will have a crisis of excess depends on the progress of carbon-based chips and even quantum computing. We have made good progress in both aspects. For example, we have successfully fabricated high-density and high-purity semiconductor arrays on 8-inch substrates. Tube materials, the material purity can reach 99.9999%, and graphene materials prepared by chemical vapor deposition have proven to have excellent electrical properties. These all mean that carbon-based integrated circuits have initially possessed the foundation for industrialization, and the "carbon era" is about to Coming." Ma Chao said.

  From the perspective of the downstream market, my country's new energy vehicles and the Internet of Things are developing rapidly, and the value of chips is becoming more and more important.

At the same time, with the development of third-generation semiconductors, autonomous driving and AI technologies, the demand for related chip products will continue to increase in the future.

  Booming demand is driving the rapid rise of Chinese chip companies.

Wang Haoyu, managing director and head of capital markets at CreditEase Wealth, believes that the main problem of China's chip industry chain is the low localization rate of upstream materials and equipment.

He said, “my country’s strength in many subdivisions of chip design is not weaker than that of overseas giants, but there is still a long way to go in the key links of the chip upstream, such as photoresist and lithography machines. Even if we Chip production is also restricted in foundries with mature 28-nanometer processes."

  Zhang Cuixia, chief investment consultant of Jufeng Investment, told the "Securities Daily" reporter that the global semiconductor chip production capacity is increasing at a rate of about 1% to 3% every year, but the demand for chips is based on technological progress.

The industry’s expectations of overcapacity are often based on current market demand forecasts, without taking into account the future chip demand for more intelligent industries.

(Securities Daily)