Dongxin shares sprint Kechuang board fund indirect shareholding prospectus re-exposed that memory chips rose sharply in the first half of the year

SMM News: Science and Technology Innovation Board's memory chip circle is becoming more and more lively! Following Juchen shares and Puran shares, another memory chip is proposed to sprint Kechuang board. On September 22nd, memory chip design company Dongxin Semiconductor Co., Ltd. (hereinafter referred to as "Dongxin Co., Ltd.") Science and Technology Innovation Board IPO was accepted by the Shanghai Stock Exchange.

Indirect shareholding of large funds

Data show that Dongxin Co., Ltd. was established in 2014, focusing on the research and development, design and sales of small and medium-sized general-purpose memory chips.

Unlike Science and Technology Innovation Board's listed company Juchen, which focuses on EEPROM (electrically erasable programmable read-only memory), Pran mainly supplies NOR Flash and EEPROM, Dongxin shares as well as NAND, NOR and DRAM memory chips.

Memory chips are mainly divided into three categories: DRAM, NAND Flash and NOR Flash. According to IC Insights, DRAM is the largest market segment in the global memory chip field, with a market share of 58%, about 40% for Flash, and only 1% for nor Flash (note: 2018 data). The industry has long been controlled by international storage giants such as Samsung Electronics, Hynix, Armor, Micron Technology and other international storage giants, with a low localization rate; mainland players such as Zhaoyi Innovation and Puran shares are still in the catch-up period.

According to disclosure, Dongxin's stock storage products have been certified by many platform manufacturers, such as Qualcomm, Broadcom, MediaTek, ZTE, Ruixin, Beijing Junzheng, Hengxuan Technology, Ziguang Zhanrui and so on. and has entered Samsung Electronics, Haikang Weiwei, Goyle shares, voice holding, Huierfeng and other customers' supply chain system, used in communications equipment, security monitoring, wearable devices, mobile terminals and other fields.

However, from a financial point of view, Dongxin shares are still in a state of loss. The operating income of the company from 2016 to 2019 and from January to June 2020 was 358 million yuan, 510 million yuan, 514 million yuan and 312 million yuan respectively, and the net profit of returning mother in the same period was-84.6057 million yuan,-9.1431 million yuan,-62.4929 million yuan and-5.8636 million yuan respectively.

According to the prospectus, Shanghai Juyuan Juxin Integrated Circuit Industry Equity Investment Fund Center (Limited Partnership) (hereinafter referred to as "Juyuan Juxin") holds 8.46% of Dongxin shares, making it its second largest shareholder. Juyuan Jucore is a sub-fund under the flag of the National Integrated Circuit Industry Investment Fund, which holds a 45.09% stake in the former. Tianyuan information shows that in history, Juyuan Juxin has invested in 30 integrated circuit-related projects, such as Core Acer Micro Appliance, Jiang Polong Electronics, Zhaoxun Micro Power, and so on.

In addition, well-known institutions such as Haitong Venture Capital and Hubble Technology (100% owned by Huawei Investment Holdings Co., Ltd.) have also bought shares in Dongxin.

The average price of major products rose in the first half of the year.

In the eyes of the outside world, the biggest bright spot of Dongxin shares is its competitiveness in the small and medium-sized capacity market in the field of flash memory. It is said that the 24nm NAND that the company has mass-produced is the most advanced flash chip manufacturing process in the mainland, which has achieved a technological breakthrough in local memory chips.

Domestic Flash Yi Zhaoyi Innovation in August this year also mentioned that 24nm NAND from the process state has reached a state of mass production, is also actively promoting with customers.

Unnamed semiconductor industry experts mentioned that 24nm is a process between 28nm and 20nm, which is a relatively advanced process node. TSMC's latest mature process in 2018 is 7nm, and SMIC's latest process is 14nm.

As one of the few full-category memory chip solution providers, the disclosure of Dongxin's prospectus also provides the market with a major observation window for the memory chip industry.

According to the prospectus, during the reporting period, Dongxin NOR products increased from 9.4018 million in 2017 to 91.6938 million in 2019, while NAND production increased from 35.0648 million to 95.3511 million, while DRAM production remained stable at 20 million.

However, only from the product dimension of NOR Flash, there is still a certain gap between the production of Dongxin shares and comparable companies. Public xing shows that in 2019, Pran NOR Flash shipments reached 1.463 billion, and Zhaoyi innovative memory chip Flash (NOR+NAND) production has exceeded 2 billion.

While production is rising steadily, the price of memory chips is also rising.

According to the prospectus, the average prices of NOR, NAND and DRAM products rose 4.08 per cent, 15.39 per cent and 53.32 per cent respectively in the first half of this year, which seems to confirm the buzzing news of price increases for memory chips so far this year. The company's prospectus also revealed that the company's average NOR Flash price rose 5.36% from January to March this year.

"Science and Technology Innovation Board Daily" reporter contacted Dongxin shares to understand the market trend of memory chips in the first half of the year and the factors that triggered price increases. The company did not give a specific reply, saying only that the disclosure of the prospectus would prevail.

In February this year, Flash giant Wang Hong plans to raise NOR FLASH and SLC NAND FLASH quotations in the second quarter, an increase of more than 10%, which once attracted the attention of the industry.

In an interview with Science and Technology Innovation Board Daily, a partner of a well-known chip industry investment fund pointed out that in the fourth quarter of last year, the storage industry has gradually tended to balance supply and demand, and the elimination of market inventory has accelerated. Storage prices were originally in an upward trend this year, and in the first half of the year, under the influence of the epidemic, the tension on the supply side intensified, superimposing the high-tech export controls raised by the United States around the world, thus further promoting price increases, but in essence, it is still determined by supply and demand. For example, the core of Wang Hong's price increase is still benefiting from TWS, the overall introduction of OLED panels and the accelerated deployment of 5G base stations.

This is also confirmed in the prospectus of Dongxin shares. According to disclosure, from January to June 2020, the company's NAND series products achieved sales revenue of 136 million yuan, mainly due to the company's further opening up the communications equipment market, especially in the application of 5G communication equipment, resulting in continuous sales of NAND products.