摩根士丹利-亚太地区-半导体行业-大中华区半导体业DRAM竞争日益激烈会如何参与-2019107-24页

Charlie Chan Daniel Yen Jeff Hsu In Line MORGAN STANLEY TAIWAN LIMITED Charlie Chan EQUITY ANALYST 886 2 2730 1725 Daniel Yen CFA EQUITY ANALYST 886 2 2730 2863 Jeff Hsu RESEARCH ASSOCIATE 886 2 2730 2864 Greater China Technology Semiconductors Asia Pacific IndustryView Greater China Technology SemiconductorsGreater China Technology Semiconductors Asia Asia PacificPacific How China will Chip In Competition Stacking Up in Specialty DRAM We are downgrading Nanya Tech to UW given China vendors progress in supplying specialty DRAM to the domestic market China CXMT emerges as a relevant vendor in specialty DRAM market ChangXin Memory Technologies CXMT is a DRAM IDM based in Hefei China Back in May 2019 the company disclosed that it has acquired DRAM technology know how from Qimonda In the recent China Flash Market Summit in September see news link CXMT stated that it has moved into the production phase using the competitive stack capacitor process technology instead of the outdated trench capacitor According to our checks with equipment vendors CXMT will ramp its capacity to 40k wafers per month in 1H20 which is faster than DRAMeXchange s estimate of a 30kwpm by 2020 More self sufficiency from China semi We estimate China system brands account for 20 30 of global specialty DRAM demand which includes TV low end smartphones networking equipment ADSL and PC peripherals Specialty DRAM demand should be around 10 of global DRAM or around 130kwpm This means CXMT s 40kwpm capacity should fullfil China s domestic demand On the supply side Nanya Tech Winbond and other Taiwan venders account for 60 65 global supply followed by Micron and Korean venders CXMT also announced DDR4 and LPDDR4 specialty DRAM 8Gb products based on 19nm process in late September which should start to impact Nanya Tech in 2H20 after customer qualifications Threat to global DRAM leaders should be still remote We believe the Chinese competition will be contained in the specialty DRAM market in the coming year because CXMT s cost structure may not be comparable to industry leader given its trailing edge process node at 19nm We don t think China s DRAM capacity will be relevant to the mainstream DRAM cycle in the coming two years However if CXMT does advance its process to 1ynm eg 17nm by 2020 competition may emerge earlier Downgrading Nanya Tech to UW Near term although PC DRAM contract prices have stabilized Nanya Tech s bit shipments may slow as customers should have replenished enough specialty DRAM inventory We revise down Nanya Tech s 2020 and 2021 EPS to reflect the competition from CXMT We lower our target multiple to 1 2x given the lower ROE and derive a new price target of NT 65 We stay OW on Winbond given its strength in the NOR Flash business Exhibit 1 Companies featured table What s Changed Summary Revision NewOldNewOld 19E20E21E 2408 TWNanya TechUE6569 6 2 4 8 Companies Featured TickerCompany 2408 TWNanya Tech 2344 TWWinbond 20 81 7065UW OW17 952325 Oct 04 Price Price Target Upside Downside TickerCompany RatingPrice TargetEPS Change Rating Source Refinitiv Morgan Stanley Research estimates Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research As a result investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research Investors should consider Morgan Stanley Research as only a single factor in making their investment decision For analyst certification and other important disclosures refer to the Disclosure Section located at the end of this report Analysts employed by non U S affiliates are not registered with FINRA may not be associated persons of the member and may not be subject to NASD NYSE restrictions on communications with a subject company public appearances and trading securities held by a research analyst account 1 October 7 2019 09 00 PM GMT Understanding China s DRAM industry development slow but making progress Specialty memory is another move towards China semiconductor self sufficiency China has built an effective supply in NOR Flash with Gigabyte s design and SMIC s foundry capacity Investors are also aware of YMTC s 3D NAND given its differentiated X Stacking technology please refer to our report China s Industrial Evolution Global Semis How China Will Chip In In China s DRAM industry Tsinghua Unigroup started its DRAM business unit in July news link but its R and 2 although CXMT has acquired the major DRAM process know how from Qimonda it remains to be seen whether the company can supply to markets outside mainland China given insufficient IP protection Exhibit 10 CXMT DRAM technology Roadmap Source CXMT 6 Exhibit 11 China DRAM capacity breakdown table Source DRAMeXchange Morgan Stanley Research e estimates derived from DRAMeXchange numbers Exhibit 12 MS vs DRAMeXchange forecasts on China DRAM capacity Source DRAMeXchange Morgan Stanley Research estimates Exhibit 13 China semi industrial evolution will specialty DRAM turn to global commoditization Source DRAMeXchange Morgan Stanley Research estimates Exhibit 14 China memory companies and their respective locations CompanyLocationMain Product GigaDeviceBeijingNOR NAND YMTCWuhanNAND CXMTHefeiDRAM JHICCFujianDRAM Source Morgan Stanley Research 7 Nanya Tech Downgrade to UW on long term threat from Chinese players Our Nanya Tech stock downgrade is more about long term concern despite short term stabilization of DRAM pricing The DRAM contract price decline should be less severe in 4Q19 DRAMeXchange estimates 4Q19 PC DRAM contract prices to decline only 5 Q Q which means Nanya Tech s quarterly earnings cycle should have bottomed in 2Q19 which some recovery in the coming quarters Typically the bottom of quarterly earnings should be a sign to accumulate Nanya Tech stock and that also explains why stock has performed 22 in 3Q19 vs Taiex up 2 in the same period However given we expect concerns from Chinese competition to increase in the coming year and given the real impact to Nanya Tech s business could be as soon as in 2H20 we have decided to downgrade the stock to UW Globally we are still concerned about high DRAM inventory and lukewarm demand in particular server DRAM please refer to Asia Pacific Technology Memory Recent Developments and Micron Technology Inc Micron Earnings expectations miss we still see memory weakening next year Customers inventory replenishment may have come to an end Due to Japan s restriction on chemical exports to Korea see link Nanya Tech s bit shipment grew around 25 Q Q beating its 3Q19 bit shipment guidance of mid teens Q Q growth However the company s September sales were down 4 2 M M suggesting customers may have built sufficient DRAM inventory Migration to 1xnm technology is a dilemma Nanya Tech will soon decide whether it wants to license Micron s 1x 1ynm DRAM technology starting from 2020 or use its own developed 1xnm technology If Nanya Tech chooses to license we expect company s gross margin to decline given the loyalty fee Our base case assumption is that the company uses it own 1xnm technology but R faster than expected 20nm ramp competition from China further out than expected DRAM prices remain steady beyond 2H19 as supply remains tight Nanya Tech ramps up 20nm production with higher than expected yield and hence enjoys a further increase in bit shipments in 2020 1 2x 2020e BVPS1 2x 2020e BVPS Specialty DRAM competition from Chinese players heating up 20nm migration ramps up on track The additional capacity from Chinese player CXMT should worsen the specialty DRAM supply demand conditions We are expecting ASP to drop 7 Q Q in 3Q19 and to drop 15 Y Y in 2020 Bit shipments should increase by a mid single digit according to guidance in 2019 0 9x 2020e BVPS0 9x 2020e BVPS Slower than expected 20nm migration DRAM sees a severe downcycle in 2020 Slower 20nm yield improvement in 2H19 DRAM industry overall faces a severe downcycle in 2020 given oversupply China enters DRAM mass production Why Underweight The upward spot market trend near term is a positive but not enough to compensate for the approaching competition from Chinese specialty DRAM players Customers inventory replenishment may come to an end soon prompting specialty DRAM prices to decline Macro uncertainties still persist regarding the Japan Korea trade dispute Nanya Tech s P B valuation is still rich compared with market leaders like Hynix and Micron Key Value Drivers 20nm 1Xnm capacity ramp up Specialty DRAM growth DRAM ASP increase Potential Catalysts DRAM contract price decline Poor monthly sales suggest either ASP or shipment shortfall Industry peers report a weak industry outlook Risks to Achieving Price Target Upside Faster than expected 20nm ramp up progress More demand for specialty DRAM from 4K2K TVs and smart set top boxes DRAM upcycle driven by slower supply expansion and or demand strength Margin improvement thanks to ASP increase and cost reduction Risk Reward Nanya Tech 2408 TW UW PT NT 65 Risk Reward Nanya Tech 2408 TW UW PT NT 65 Specialty DRAM competition from China heating up downgrade to UWSpecialty DRAM competition from China heating up downgrade to UW 13 Financial Summary Nanya Tech Income StatementCash Flow Statement NT mn Years End Dec 20182019E2020E2021ENT mn Years End Dec 20182019E2020E2021E Net sales84 72253 95162 82161 374Cashflow from Operations48 24430 95030 98731 387 COGS 38 106 32 352 36 513 35 780 Net profits39 36214 00816 03815 297 Depreciation Expense 12 081 14 080 15 127 15 127 Depreciation11 98314 04115 12715 127 Variable Cost 26 025 18 272 21 386 20 652 Working Capital Change7 7243 572 62 853 Gross profit46 61621 59926 30825 595Other adjustments 10 825 670 116 110 Operating expenses 7 261 6 585 7 202 7 388 Cashflow from Investing 12 513 6 937 12 000 12 000 Operating income39 35515 01519 10618 206Capex 20 400 7 000 12 000 12 000 Non operating income2 2291 447682682Change of LT Investment 86 000 Pre tax income41 58416 46219 78818 888Change of ST Investment0000 Income tax 2 223 2 454 3 750 3 591 Other adjustments7 9736300 Reported net Income39 36214 00816 03815 297Cashflow from financing 11 847 816 7 564 8 660 Adj wtd avg shrs m 3 0813 0483 0523 052Increase in L T debt0000 Reported EPS NT 12 784 605 255 01Increase in S T debt 8 21 57900 Modelware EPS NT 12 784 605 255 01 Cash Dividend Paid 10 879 21 787 7 564 8 660 Dir DRAM price rebound in 2H19 We assume 1 NOR Flash pricing rebound in 2H19 and 2 DRAM price hikes into 1H19 with 25nm accounting for 40 in 2019 1 4x 1 4x 2019e BVPS2019e BVPS NOR flash pricing stabilizing DRAM downcycle We expect 1 NOR pricing erosion stabilizes in 2H19 and 2 DRAM prices drop 15 20 Y Y in 2019 0 6x 2019e BVPS0 6x 2019e BVPS NOR flash price faces major pricing pressure in 2H19 DRAM turns to severe oversupply in 2019 with slower technology migration We assume 1 NOR flash sales see significant price declines and 2 DRAM prices drop 20 Y Y in 2019 38nm only accounts for 20 of sales in 2019 Why Overweight We expect Winbond s NOR pricing erosion to stabilize in 2H19 We expect DRAM supply to be constrained after the policy issue Winbond could have strong bit shipment growth and cost reduction in 2020 Key Value Drivers NOR ASP increase NOR bit shipment growth MCU shipment Potential Catalysts DRAM pricing stabilization in 2H19 NOR pricing stabilization in 2H19 Faster technology migration Risks to Achieving Price Target Downside NOR flash downcycle driven by weaker demand Lower than expected DRAM pricing given ongoing supply shortage Slower than expected SLC NAND development Winbond Risk RewardWinbond Risk Reward DRAM and NOR are both improvingDRAM and NOR are both improving 15 Winbond Financial Summary Income StatementCash Flow Statement NT mn Years End Dec 201720182019E2020E2021ENT mn Years End Dec 201720182019E2020E2021E Net sales47 59251 19047 55351 55058 931Cashflow from Operations12 14313 53313 13313 80915 902 COGS 31 268 31 956 33 604 36 174 41 356 Net profits5 5517 5292 0922 9544 273 Depreciation Expense 6 084 7 500 8 850 10 969 12 614 Depreciation5 5715 9818 74710 86512 511 Variable Cost 19 681 18 329 18 555 18 803 22 368 Working Capital Change1 7742 571 1 669 1 466 2 059 Gross profit16 32419 23413 94915 37617 575Other adjustments 752 2 548 3 9631 4561 178 Operating expenses 9 668 11 224 11 516 11 908 12 464 Cashflow from Investing 15 030 17 062 21 529 19 500 14 000 Operating income6 6568 0102 4333 4685 111Capex 15 409 16 928 18 500 19 500 14 000 Non operating income442468349414414Change of LT Investment230 1 000 Pre tax income7 0988 4782 7823 8825 525Change of ST Investment253 108 779 00 Income tax 1 547 948 690 927 1 252 Other adjustments 103 25 2 250 00 Reported net Income5 5517 5292 0922 9544 273Cashflow from financing9 4461 85410 8813 891 565 Adj wtd avg shrs m 3 5823 9803 9803 9803 980Increase in L T debt2 324 3 310 14 8715 0001 000 Reported EPS NT 1 551 890 530 741 07Increase in S T debt554 554 000 Modelware EPS NT 1 551 890 530 741 07 Cash Dividend Paid 2 143 3 980 3 991 1 109 1 566 Dir Stock Broker BSE Registration No INB011054237 and NSE Registration No INB INF231054231 Merchant Banker SEBI Registration No INM000011203 and depository participant with National Securities Depository Limited SEBI Registration No IN DP NSDL 372 2014 which accepts the responsibility for its contents and should be contacted with respect to any matters arising from or in connection with Morgan Stanley Research and or PT Morgan Stanley Sekuritas Indonesia and their affiliates collectively Morgan Stanley For important disclosures stock price charts and equity rating histories regarding companies that are the subject of this report please see the Morgan Stanley Research Disclosure Website at or contact your investment representative or Morgan Stanley Research at 1585 Broadway Attention Research Management New York NY 10036 USA For valuation methodology and risks associated with any recommendation rating or price target referenced in this research report please contact the Client Support Team as follows US Canada 1 800 303 2495 Hong Kong 852 2848 5999 Latin America 1 718 754 5444 U S London 44 0 20 7425 8169 Singapore 65 6834 6860 Sydney 61 0 2 9770 1505 Tokyo 81 0 3 6836 9000 Alternatively you may contact your investment representative or Morgan Stanley Research at 1585 Broadway Attention Research Management New York NY 10036 USA Analyst Certification The following analysts hereby certify that their views about the companies and their securities discussed in this report are accurately expressed and that they have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report Charlie Chan Daniel Yen CFA Unless otherwise stated the individuals listed on the cover page of this report are research analysts Global Research Conflict Management Policy Morgan Stanley Research has been published in accordance with our conflict management policy which is available at A Portuguese version of the policy can be found at br Important US Regulatory Disclosures on Subject Companies As of September 30 2019 Morgan Stanley beneficially owned 1 or more of a class of common equity securities of the following companies covered in Morgan Stanley Research Chipbond Technology Corp King Yuan Electronics Co Ltd Macronix International Co Ltd MediaTek Nanya Technology Corp Novatek Parade Technologies Ltd Realtek Semiconductor Silergy Corp UMC Universal Scientific Ind Shanghai Vanguard International Semiconductor WIN Semiconductors Corp In the next 3 months Morgan Stanley expects to receive or intends to seek compensation for investment banking services from ASE Technology Holding Co Ltd MediaTek Nanya Technology Corp Shenzhen Goodix Technology Co Ltd Silicon Motion SMIC UMC Universal Scientific Ind Shanghai Within the last 12 months Morgan Stanley has received compensation for products and services other than investment banking services from ASE Technology Holding Co Ltd King Yuan Electronics Co Ltd MediaTek Nanya Technology Corp Novatek Realtek Semiconductor Silicon Motion SMIC UMC Universal Scientific Ind Shanghai Winbond Electronics Corp Within the last 12 months Morgan Stanley has provided or is providing investment banking services to or has an investment banking client relationship with the following company ASE Technology Holding Co Ltd MediaTek Nanya Technology Corp Shenzhen Goodix Technology Co Ltd Silicon Motion SMIC UMC Universal Scientific Ind Shanghai Within the last 12 months Morgan Stanley has either provided or is providing non investment banking securities related services to and or in the past has entered into an agreement to provide services or has a client relationship with the following company ASE Technology Holding Co Ltd King Yuan Electronics Co Ltd Macronix International Co Ltd MediaTek Nanya Technology Corp Novatek Realtek Semiconductor Silicon Motion SMIC TSMC UMC Universal Scientific Ind Shanghai Winbond Electronics Corp Morgan Stanley we correspond 18 Equal weight and Not Rated to hold and Underweight to sell recommendations respectively COVERAGE UNIVERSEINVESTMENT BANKING CLIENTS IBC OTHER MATERIAL INVESTMENT SERVICES CLIENTS MISC STOCK RATING CATEGORY COUNT OF TOTAL COUNT OF TOTAL IBC OF RATING CATEGORY COUNT OF TOTAL OTHER MISC Overweight Buy115537 28142 24 53237 Equal weight Hold143246 31947 22 67847 Not Rated Hold10 00 0 10 Underweight Sell55818 7611 14 22416 TOTAL3 1466761435 Data include common stock and ADRs currently assigned ratings Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months Due to rounding off of decimals the percentages provided in the of total column may not add up to exactly 100 percent Analyst Stock Ratings Overweight O The stock s total return is expected to exceed the average total return of the analyst s industry or industry team s coverage universe on a risk adjusted basis over the next 12 18 month