From "no one can see" to "how old are you", behind the overconfidence of the semiconductor industry, this is the status quo!

A few days ago, with the release of a chat screenshot of a WeChat group of "Semiconductor Industry Exchange (500 people)", Chen Hang, chief analyst of founder Securities Technology and Electronics, said bluntly "who are you" to Yang Xiaosong, who is suspected to be the head of SMIC photoresist technology? from the capital markets and the semiconductor industry burst out of the circle.

Judging from the chat content in the screenshot, the source of the online "dispute" between Chen Hang and Yang Xiaosong seems to be related to the current domestic achievements of Chinese enterprises in the field of ArF high-end photoresist. Yang Xiaosong believes that (domestic) ArF "does not have a family to see, each dare not come to see me." As soon as this remark came out, it was angered by Chen Hang.

Four Japanese companies account for more than 80% of the world's photoresist share.

According to the website of the China Securities Industry Association and the official information of the Chen Hangzhou team, Chen Hang, a master of computer science at Peking University, qualified as an analyst to become an electronic analyst at Southwest Securities on June 23, 2019. In November 2019, he moved to founder Securities Research Institute to become the chief analyst of science, technology and electronics. Up to now, Chen Hangzhou has just completed two years of ups and downs in the capital market.

Geng Zhengzheng, an insider in the semiconductor industry and WeChat group chat named "Guangfa Electronic Semiconductor", strongly supported Yang Xiaosong, saying he was a real expert in the relevant field. Another member of the group also questioned Chen Hangzhou on the grounds that "people in the capital market are overconfident." Chen Hang was then invited out for a group chat.

Judging from the articles and excerpts that Chen Hang forwarded in the WeChat group, he believes that wafer foundry manufacturers such as SMIC, as integrators of chip equipment, materials, and processes, do not involve the research, development and production of the lowest-level technologies such as photoresist.

As reported by a reporter from Science and Technology Innovation Board Daily, Chen Hangzhou and Wechat were unable to get in touch with each other directly because they were "added too frequently." In the view of people who have long been concerned about the semiconductor industry and related capital markets, the above interaction belongs to "the gag before the boss, the overall atmosphere is still relatively relaxed", but a number of brokerages in the semiconductor circle think that the matter is sensitive and avoid talking about it.

Senior investors in the primary market in the semiconductor field told Science and Technology Innovation Board Daily that the underlying technology of semiconductor chips is mainly equipment, materials and EDA. Taking the photoresist that both sides hold different views as an example, there are only a handful of enterprises that are laying out this underlying field in our country. At present, Nanda Optoelectronics and Jingrui are the leading domestic photoresist enterprises.

Is domestic photoresist all right or not? Why can't all kinds of photoresist products get into the eyes of Yang Xiaosong? Why do SMIC relevant people dare to say so? It can be seen from the global photoresist market pattern and SMIC's business volume.

According to an estimate by TECHCET, the market for semiconductor photoresist will be $1.9 billion in 2021. In the field of KrF photoresist, only Japanese companies such as JSR, Shin Yue Chemical, Tokyo Ying Chemical and Sumitomo Chemical occupy 82% of the market share; in ARF photoresist market, Tokyo Ying Chemical, Shin Yue Chemical, JSR and DuPont occupy 85% of the market share.

In terms of domestic enterprises, in July this year, NTU Optoelectronics announced that its major national science and technology project-"Advanced Photoresist Product Development and industrialization" project had passed the expert group's acceptance, applied for 91 patents, and currently built a 25-ton photoresist production line (including 5 tons of dry and 20 tons of wet), realizing the sales of ArF photoresist products.

Core Source also issued a new round of fixed growth plan in June, with plans to issue no more than 25.2 million shares and raise no more than 1 billion yuan, mainly for the construction of the Shanghai port-adjacent R & D and industrialization project and the high-end wafer processing equipment industrialization project (Phase II). The research and report of Bank of China Securities believes that the above fundraising projects will promote the research and development of special equipment for high-end semiconductors such as ArF photoresist developer, I-line photoresist developer and KrF photoresist developer.

SMIC has made a lot of efforts over the past year to expand chip production capacity in more mature processes, far ahead of global giants such as TSMC. Science and Technology Innovation Board Daily reported this month that TSMC plans to increase its planned monthly production capacity of its 28nm process plant in Nanjing to 100000 pieces, an increase of 1.5 times, the largest expansion of its mature process in nearly seven years. SMIC's expansion in this process can be pushed to July last year.

With the disclosure of SMIC's international financial report in 2020, the company became Science and Technology Innovation Board's first U share. According to the financial report, its revenue for the whole of last year was 27.471 billion yuan, an increase of 24.8% over the same period last year, and its net profit was 4.332 billion yuan, an increase of 141.5% over the same period last year. In addition, Q1 in 2021, SMIC 14/28nm advanced process revenue of about 500 million yuan, accounting for only 6.9% of the revenue of mature processes above 28nm is about 6.79 billion yuan, accounting for 93.1%.

It is difficult for domestic photoresist to be marketed in the short term.

Chen Hang affirmed SMIC's choice to adapt to the global trend in terms of capacity expansion in the past. However, he also believes that the main contradiction of Chinese semiconductors has shifted from the lack of advanced process training to the lack of domestic semiconductor equipment and materials. At this level, due to the lack of semiconductor technology at the bottom, China lacks not only 14/7/5nm advanced technology, but also more mature processes.

Chen Hang wrote that because of the US crackdown on high-end processes in other countries, SMIC's research and development of the 7nm process is entirely based on American equipment, and its significance does not have to be based on domestic equipment to develop more mature processes. That is to say, in his view, the production and research of domestic lithography equipment and photoresist should at least be respected and valued by SMIC and other domestic semiconductor enterprises.

However, there is a big gap between the game rules of the capital market and the realistic laws of technology and industry. Benefiting from the boom in the global semiconductor industry, the overall performance of semiconductor companies in the secondary market is strong. Can the prosperity of the industry be consistent? Dai Weimin, chairman and president of Core Source, said publicly at the summit on the second anniversary of the opening of the market held by Science and Technology Innovation Board a few days ago that the shortage of semiconductor chips is expected to ease in the second half of the year.

On the one hand, the research and development of the underlying technology in the semiconductor industry is difficult, on the other hand, do enterprises have the motivation and pay the price of time and opportunity cost?

Similarly, taking ArF photoresist as an example, as an important key material in the field of integrated circuit manufacturing, it is widely used in high-end chip manufacturing from 90nm to 14nm and even 7nm. However, only the lithography machine equipment used to verify the product performance in the photoresist production process is expensive for ordinary enterprises.

In January this year, Jingrui announced that it had bought a lithography machine equipment through an agent, which could be used in ArF immersion production and research, achieving a breakthrough in the field of ArF photoresist, but spent as much as $11.025 million. As of the closing price on July 30 this year, Jingrui shares had a market capitalization of more than 20 billion yuan.

In addition, it is understood that due to the complex application environment of photoresist, sometimes it even needs to be specially customized for different factories, so it is difficult to standardize and modularize; photoresist is used on a large scale from successful research and development to the stage of customer verification, the process takes a long time, and the time required is often measured on a yearly basis.

In addition, due to the above two main factors, domestic photoresist market expansion is also a major problem: in general, semiconductor companies do not seem to be willing to easily change photoresist suppliers.

In March this year, SMIC said it would further expand production by adding a 28-yard process. Zhao Haijun, SMIC CEO, also revealed in May that the company plans to spend about $4.3 billion on capital expenditure this year, most of which will be spent on mature processes to expand production.

However, compared with the previous rounds of production expansion and mature process, SMIC has made more effort and cost to introduce foreign lithography equipment and related so-called "underlying technology."

It is understood that Jiang Shangyi's "return" on the one hand enabled SMIC to substantially upgrade its mature technology, and on the other hand, three months after Chiang joined the job, SMIC, which was originally listed by the United States as a physical list and banned the sale of lithography machines, immediately signed a US $1.2 billion purchase agreement with ASML, mainly involving technologies such as DUV lithography machines.