In the first half of 2022, many industries, including mobile phones and automobiles, are shrouded in the shadow of "lack of cores", chip production capacity has declined, demand has skyrocketed, and prices have skyrocketed, but correspondingly, chip companies are in the primary and secondary capital markets. The popularity has gradually returned to rationality, and the valuation and market value of related companies have shrunk significantly, showing an obvious situation of ice and fire.
Take the seven new stocks in the pan-semiconductor industry that debuted in April this year as an example, five of which broke down on the day of listing, and the stock prices of many "chip bull stocks" in the past also halved.
The cyclical market for chips is coming, and this also puts forward higher requirements for entrepreneurs and investors.
In an interview with Yicai, a number of investors expressed a common view: chip entrepreneurs should define products in a longer cycle, and can no longer "plant potatoes and cotton" in a hurry, only make popular products, and only have Only companies with stronger financing capabilities, R&D capabilities, production capabilities, and resource integration capabilities can withstand cyclical fluctuations and survive, otherwise, they will be squeezed out of the track.
Industry valuation callback market value decline
Unlike the shortage of chips in the semiconductor industry, chip companies are currently facing the embarrassing situation of shrinking valuations, falling prices, and tight capital chains.
From January to April this year, only 5 of the nearly 140 core stocks in the semiconductor sector tracked by Aijiwei rose in market value, with an average drop of 35% and a maximum drop of more than 60%.
From January to April, 12 of the 14 new semiconductor stocks listed on the Science and Technology Innovation Board once fell below the issue price, of which 9 broke on the first day, with a breakout ratio of 64%, and 100% of unprofitable companies broke.
Taking the semiconductor giant Weil as an example, Weil, which rose in 2019, completed the major asset reorganization of Beijing Haowei and Sibike with 16 billion yuan. The stock price once rose from about 30 yuan to 345 yuan, but as of June 6 At the close of noon on the 2nd, the share price of Weil shares was 170 yuan per share, and the total market value fell to 149.2 billion yuan.
The trend of bursting bubbles and waning popularity is spreading in the primary and secondary markets, and for the entrepreneurs of chip companies, the era of "being chased by institutions to invest" may be over.
"The current IC scale is less than 5 billion, which is not suitable for starting a business, or it is difficult to be an independent IPO company." An investor in the information technology direction of a certain line of RMB funds told reporters that the difficulty of chip technology is not the most important thing. You should also look at whether it is scarce enough, look at the market from the perspective of scarcity, and then think about the team.
Shi Jianping, a partner of Lanchi Ventures, told reporters that, unlike the state of the boom, today's chip industry entrepreneurs have improved their openness of thinking and homogeneity problems. The industry's cognition is not enough, but in the cyclical changes, it will gradually walk out of its own unique differentiated competition path.
Shi Jianping said that the current industry valuation shrinkage cannot be generalized. The overall technical threshold of the semiconductor industry itself and the requirements for talents are high, and the valuation is not low in the initial stage.
With the successful tape-out of the project and the recognition of customers, it will take a leading position in the industry and can obtain a higher premium. Under such an "overdraft", today's valuation is falling and the bubble burst is reasonable.
But relatively speaking, although the market value of the entire secondary market chip companies has retreated a lot, it is not an exaggeration compared to other industries.
Wang Zhenxiang, investment director and general manager of semiconductors of Innovation Works, told the first financial reporter that the team has recently encountered projects with parity financing from the previous round.
"But not only in the semiconductor field, but the overall primary market is more rational. This is a good thing, but it is not particularly exaggerated. The valuation of the primary market is still higher than the multiple of the secondary market."
Wang Zhenxiang believes that the PE and PS values in the semiconductor field have always been higher in China than in the United States. The normal level in China for many years is about 50-70 times PE, and the average PS is about 6 times. Of course, specific subdivisions are required, depending on the project. Chip design, semiconductor equipment, chip manufacturing or chip packaging and testing.
If the PE of chip design companies drops to 20-30 times in the near future, it will be slightly lower, but such a valuation level is based on the current economic situation, which is "reasonable in stages" and will inevitably change in the long run, because semiconductors are inherently cyclical sex industry.
After the global chip shortage, is the chip flooding?
Compared with the valuation correction, what is more challenging for investors and entrepreneurs is that the demand of the chip industry is changing drastically.
According to CINNO Research data, in the first quarter of 2022, the average inventory turnover days of domestic IC design manufacturers increased to 192 days, an increase of about 58 days from the first quarter of 2021.
Among them, the average inventory turnover days of consumer IC design manufacturers in the first quarter is about 201 days, and the market demand has weakened significantly.
Elvis Hsu, general manager of CINNO Research's semiconductor division, told reporters that there are cyclical changes in the semiconductor industry inventory. After the industry has experienced two years of rapid development, the inventory level has increased accordingly.
In addition, it is reported that the current inventory days of Hon Hai, Flextronic, Pegatron, Quanta, Compal, and Inventec have increased for six consecutive quarters, from 62.7 days in December last year to 66.8 days in March this year. , it is estimated that the fourth quarter will continue to increase to 80 days, 30% more than the peak in 2019.
In this regard, William Li, an analyst at market research agency Counterpoint, told reporters that the inventory days of ODM manufacturers have now exceeded the 70-day threshold. In the case of relatively weak demand, it is not impossible to increase the expected increase to 80 days.
"At present, the industries with the highest chip consumption are all at historically high or second-high inventory levels." William Li told reporters that if you look at mobile phones, PCs and cars, mobile phones are roughly at the same level as the end of 2021 and the beginning of 2022. level; PCs are generally higher than at the end of last year, and have reached a 10-year high; car inventory has also reached a 10-year high.
The reasons are mainly due to the impact of the general economic environment, changes in people's consumption habits, and the impact of the epidemic. These factors affect the demand side and the supply chain side.
Secondly, the current international situation is complex, black swan events are frequent, and the global supply chain structure is changing. These are all factors that affect the changes in the semiconductor industry.
Wang Zhenxiang told reporters that semiconductors are a cyclical industry. With the rise and fall of global supply and demand, semiconductors will rise and fall cyclically. Typically, like memory chips, the cycle is more obvious every few years, such as DRAM and NAND Flash. The price of the memory stick can feel the obvious difference.
However, although the current demand for the chip industry is gradually differentiated, in the industry's view, it is too early to say that the collapse of the semiconductor industry is far away.
Elvis Hsu said that there are still significant market growth drivers for automobiles and some HPC and AloT chips.
"From the perspective of upstream wafer manufacturing, in the first quarter, the revenue of the world's major wafer foundries maintained high growth, and TSMC's quarterly revenue exceeded US$17 billion, showing that the global wafer manufacturing market demand is strong." Elvis Hsu told reporters , the shrinking market demand for smart phones will guide the flow of relevant production capacity to other products, which will help to balance market supply and demand and stabilize prices.
From the perspective of investment, Wang Zhenxiang also said that the willingness to invest at the LP level has not changed much, and he is still willing to invest in the semiconductor field. About 70% of the willingness to invest is in hard technology and 30% in health care. Semiconductors are a small part of hard technology. The latter also includes automation, AI empowerment, enterprise services, and the bottom layer of algorithms.
"But it is recommended that entrepreneurs reserve 2-3 years of cash flow, and at least 12 months of reserve. For startups that have not yet made a profit, only cash reserves are not enough. It is recommended that companies continue to raise funds, because you can never judge the time period. Will the industry get better or worse." Wang Zhenxiang said.
The above-mentioned investors in the information technology direction told reporters that chip entrepreneurs should define products in a longer period, but the technical level of many chip manufacturers is still in the "primary school" level, and it still takes time to settle.
"If you are a master swimmer, you can swim in the deep sea and look for opportunities, but if you are not skilled enough and can only swim on the shore, you will face the Red Sea. Now there are powerful companies in many sub-sectors, and we are currently a domestic chip company. It’s okay to target a certain business of these big companies, but the overall benchmarking still has a long way to go.”