The prospect of semiconductor chip localization is huge, how to tap industrial opportunities?

The life of semiconductor industry in 20 19 is not easy. The performance of companies in the whole industry is not very good. South Korea's per capita GDP, which relies heavily on the semiconductor industry, has also declined. The demand for semiconductors is sluggish, and the shipments of various chips have fallen sharply, which has a significant impact on all links in the industrial chain.

However, with the acceleration of the 5G era, it will become a catalyst for the turning point of the semiconductor industry. 5G network needs the support of the whole industry chain, including 5G base stations, high-speed PCB and related components. The construction period of 5G is about three to five years, which will first bring about the recovery of demand in related industries. The technological upgrading brought by 5G and the driving of related new applications will bring the turning point of the semiconductor industry.

In the next few years, the semiconductor industry will re-enter the boom cycle. In this process, the whole industrial chain is expected to recover, which will bring opportunities to repair the expected difference. For leading companies in various segments, it is more likely to share the dividend of industry growth, and the comprehensive localization of semiconductor industry will create more incremental markets for domestic integrated circuit industry companies, bringing double bullish expectations of performance-driven and valuation improvement.

Explore opportunities in the semiconductor industry mainly from the following perspectives:

The first is the chip design industry, which belongs to the high value-added part of the chip industry chain, including Qualcomm, Huawei Hisilicon, Samsung, ARM, Intel and other companies. The main reason is to seize the commanding heights of chip design and maximize the industry dividend through accumulated technology patents. Among A-share listed companies, there are also some chip design companies. Although they can't compete with international technology giants, they have obvious monopoly advantages in their respective segments.

Secondly, it is domestic substitution. Although some domestic semiconductor companies still have a certain gap with advanced American companies in strength, judging from the situation in the past few years, the semiconductor industry will fully implement domestic substitution in the future. Only in this way will it not be stifled by western countries, which provides a very good market opportunity for many competitive domestic chip companies. For example, in terms of video chips, domestic SOC chip companies can replace NVIDIA chips in the United States.

Third, we must fill in the shortcomings. In the semiconductor industry, we have powerful companies such as Hisilicon in chip design, but we have no advantage in production. At present, SMIC is the most competitive company, which has been able to mass-produce 14 nanometer technology chips, but the higher-tech wafer foundry needs the help of mask aligner Company in ASML, the Netherlands. In the future, China will invest more technology and funds to support it, so companies with R&D are expected to get support.

Fourth, companies with leading links have advantages, although China still needs to catch up with some links in the semiconductor industry chain. For example, in the semiconductor packaging industry, several listed companies in China rank among the top ten packaging and testing companies in the world. Although the gross profit margin and net profit margin of the packaging and testing industry are not high, it is an essential part of the final semiconductor products. These companies have a high market share, and once the industry recovers, they will obviously benefit.

From these four aspects, we will look for companies with the strongest profitability and the highest market share in the industry, which have been continuously investing and developing. These companies will further consolidate their position in the industry, and their performance will be significantly improved in the new round of semiconductor industry rising cycle. At the same time, all links will cooperate more closely to realize the strong development and full localization of China's semiconductor industry and provide solid support for the future development of science and technology industry.