汇丰银行-中国-半导体行业-缩小差距中国巨大的芯片挑战

1、EQUITY RESEARCH REPORTTELECOMS, MEDIA & TECHNOLOGYSeptember 2018By: Frank He (S1700517120005) China Semiconductors Narrowing the gap Chinasgreat chip challengeChinas semiconductor industry is making rapid advances but still falls far short of meetingdomestic demandWe iden

2、tify investment opportunities in areas where the technology gap with foreign rivals is narrowingWe initiate coverage on the A-share semiconductor supply chain Naura (Buy), Hans Laser (Buy), Tongfu (Buy), and GigaDevice (Hold)Play interview withFrank HeDisclaimer & Disclosures: This report must be re

3、ad with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of itEQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018Why read this report?Chinas high-tech economy needs far more home-grownchips we explain where they will come fromWe ident

4、ify which A-share companies stand to benefitmost from this move up the technology ladderWe initiate coverage on four major players in Chinassemiconductor supply chain Naura (Buy), Hans Laser (Buy), Tongfu (Buy), and GigaDevice (Hold)1EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018ContentsNarrowing

5、 the gap3The rise of Chinas IC makers11Three opportunities20Company updatesNaura (002371 CH)Hans Laser (002008 CH)Tongfu Microelectronics (002156 CH)GigaDevice (603986 CH)4445597283Disclosure appendix98Disclaimer1012EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018Narrowing the gapAs in so many othe

6、r industries, the market for semiconductors in China is the biggest in the world. The problem is that only a fraction are made by domestic companies, creating a technology gap that is too wide for comfort. This report looks at how China plans to close the gap and identifies the most promising A-shar

7、e investments linked to this theme. We initiate coverage on Naura(Buy), Hans Laser (Buy), Tongfu (Buy), and GigaDevice (Hold).Few can dispute that Chinas tech industry is now a force to be reckoned with. In areas such asmobile payments, e-commerce and telecom equipment, Chinese companies are already

8、 the envy of the world. Elsewhere, however, a great deal of work remains to be done.Nowhere is this more apparent than in the realm of semiconductors, the integrated circuits used in everything from telecom equipment and personal computers to giant servers and applications for artificial intelligenc

9、e and robotics. One stat helps to tell the story while China is the worlds biggest chip market, an industry estimate suggests that only 13% of the semiconductors required by the countrys tech industry were manufactured by domestic companies last year(this figure rises to 42% if the output by foreign

10、 companies in China is included).This reliance on products imported from other countries is a concern for Chinas government. It has made technological independence a policy priority, especially now that trade tensions with the US are rising. China has no desire to remain the worlds No 1 assembler of

11、 electronics. It wants to be at the forefront of designing and manufacturing the semiconductors that will drive itsnew, high-tech and smarter economy in the age of artificial intelligence, 5G telecom, the Internet of Things (IoT), and autonomous driving. In this report we:This reliance on products i

12、mported from other countries is a concernIdentify investment opportunities in areas where we believe Chinese companies have competitive advantages or can gain market share, such as the design of integrated circuits (ICs), semiconductor equipment, and IC packaging and testing.Assess the drivers that

13、will help to close the technology gap, including huge investments in capital expenditure and R&D, as well as supportive government policy.Look at the obstacles that stand in Chinas way, such as restrictions on imports, thedifficulty of making overseas acquisitions, and limited domestic supply of key

14、 materials in the semiconductor supply chain.Initiate coverage on four A-share companies in that supply chain Naura (Buy), HansLaser (Buy), Tongfu (Buy) and GigaDevice (Hold).3EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018Investment opportunitiesChina has been looking to accelerate the developmen

15、t its domestic semiconductor market for several years. According the roadmap outlined in the high-profile “Made in China 2025” industrial development policy, Chinas self-sufficiency in integrated circuits will increase to 49% in 2020 and 75% in 2030, including production by foreign companies. The re

16、cent trade tensions with the US have underlined the importance of this policy. For example, the ban on US sales to domestic telecom equipment manufacturer ZTE Corp since lifted highlighted the dependence of Chinese companies on imported chips.The recent trade tensions with the US have underlined the

17、 importance of this policyIts a huge market. China is the biggest consumer and importer of semiconductors, accounting for USD193bn of USD343bn of global sales of integrated circuits last year. China produced 1.9bn smartphones, 307m PCs and 172m TVs in 2017, accounting for over 90%, 70% and 80% of gl

18、obal supply, respectively. At the same time, we estimate that Huawei and ZTE share over 50% of the global telecom equipment market. So, given current trade relations with the US, theneed for technological independence has never been greater.As usual in China, growth has been remarkable. According to

19、 data from PWC, Chinas semiconductor consumption growth exceeded worldwide growth for the sixth consecutive year in 2016. Domestic semiconductor consumption grew 2.9% in 2016 to reach record 60.6% of the global market, while the worldwide semiconductor market only grew 1.1%. During the past 10 years

20、, semiconductor consumption in China has grown at CAGR of 12%, far ahead of the globalrate of 3.2%.And, as always in China, policy support is a major factor. To accelerate efforts to gainself-sufficiency in semiconductors, in 2014 the government set up the China National Integrated Circuit Industry

21、Investment Fund. According the Ministry of Industry and Information Technology(MIIT), the goal is to invest in chip manufacturing, boost industrial production and research, and promote mergers and acquisitions.As always in China, policy support is a major factorThe fund operates as a corporate entit

22、y under the MIIT and the Ministry of Finance. Commonly referred to as the “Big Fund”, it has previously backed major projects including a Tsinghua Unigroup memory chip plant worth USD24bn that is under construction in the city of Wuhan (source: Reuters, 25 April 2018). A second fund is being put tog

23、ether to provide further support for the sector.In another policy move, Chinas finance ministry has introduced tax breaks for domestic chipmakers (Reuters, 30 March 2018). Chipmakers will be exempt from corporate taxes for two tofive years followed by partial deductions. The exemptions cover a range

24、 of products, from very basic to cutting-edge chips, for use in computers, smartphones and other electronic devices.We think that all these developments create opportunities for investors, especially in areaswhere we believe Chinese companies have a competitive edge or are well positioned to gain ma

25、rket share. They include:IC designTen Chinese companies were ranked in the worlds top 50 IC design companies last year, up from one in 2009. Their market share has increased from 5% in 2010 to 11% in 2017. Chinese companies have a particularly strong presence in application-specific integrated circu

26、it (ASIC) based artificial intelligence (AI) and blockchain as well as the NOR flash memory segment. The addressable market size of ASIC-based AI chips will surge from USD1bn in 2017 to USD4.6bn in 2020, according to Frost & Sullivan, and account for 30% of the total chip market in 2020, up from 19%

27、 in 2017. We see a balanced demand and supply outlook for NOR flash in 2018-19, which would favour leading suppliers such as GigaDevice.4EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018EquipmentChinas spending on fab equipment is set to increase by 57% y-o-y in 2018 and 60% in 2019 according to SEM

28、I, a provider of data on the electronics supply chain. This means China is likely to overtake Korea, the worlds biggest spender in this area, in 2019. Since May last year Chinese companies have been able to mass produce over 16 kinds of front-end wafer fabrication equipment (mainly covering 28nm and

29、 above). The issue here is that their aggregate market share in equipment installation in Chinese foundries is still only 5%. The big gap between the high capex cycle and the low self-sufficiency ratio creates ample opportunities for domestic semi equipment makers. We believe Naura will be the major

30、 beneficiary in this localization trend in wafer fabrication.Packaging and testingIC packaging and testing is the sector where the technology gap between Chinese companies and global rivals is the smallest. Industry consolidation via M&A has increased the competitive strength of Chinese vendors in t

31、he past three years. Among the global top 10 outsourced assembly and test (OSAT) companies the revenue contribution from Chinas three leaders JECT, Huatian, Tongfu has increased from 6.6% in 2011 to 21.2% in 2017, driven by organic growth and acquisition. We think a shift in industry drivers from sm

32、artphones to automobiles and the Internet of Things (IoT) will change the competitive landscape. We like Tongfu due to its strategic acquisition of two packaging and test fabs owned by Advanced Micro Devices (AMD), a US company, and its customer base that includes NXP, MediaTek, Texas Instruments, I

33、nfineon, and STMicro.IC packaging and testing is the sector where the technology gap is the smallestExhibit 1. China IC supply chainEDAsoftwareICScapeFabless designHiSiliconFoundrySMICOSATJCETEquipmentNauraMaterialShanghai SinyangAllwinner TechGoke Micro Ingenic Fullhan Bitmain CambriconGigaDevice S

34、preadtrum RDAGoodix Guoxin MicroHuahong HualiHuatian Tongfu WLCSPSJ Semi Universal ScientificAMECZhejiang JingSheng Hans LaserACM Research Shanghai Micro Electornics PiotechNingbo Konfoong KumpurSuzhou RuihongWill SemiCanaanHangzhou Silan Microelectronics Yangtze Memory/Wuhan XMC Hefei ChangxinFujia

35、n JinhuaNote: listed companies are highlightedredSource: Company data, HSBC Qianhai SecuritiesStock initiationsNaura (002371 CH, Buy)Naura Technology is a leading advanced electronic equipment and precision component maker, with products covering the semiconductor, LED, photovoltaic, display, and ae

36、rospace industries. It is Chinas largest semiconductor equipment company in terms of revenue, with a comprehensive product portfolio covering etcher, physical vapor deposition (PVD), chemical vapor deposition (CVD), oxidation, and cleaning. Its customers include SMIC, Huali Microelectronics, SanAn,

37、HC SemiTek, BOE, and Longi Silicon. The company provides 28nm and above and is in the R&D stage for 14nm. We forecast Naura to achieve a 52% net profit CAGR over 2017-20e. Catalysts include design wins from foundry customers, R&D breakthroughs in 28nm, plus IC equipment. We initiate coverage with a

38、Buy rating and a target price of RMB63.97, based on one standard deviation above the mid-cycle price to sales (P/S) ratio of 8.4x.5EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018Hans Laser (002008 CH, Buy)Hans Laser is a leading laser and automation equipment and system provider. It supplies produ

39、cts for laser labeling/cutting/welding equipment for consumer electronics and industrial applications, PCB/LED/semiconductor special equipment, robots, automation equipment and system solutions. We believe a recovery in orders for Apple in 2019, structural growth in high power lasers and wider laser

40、 applications, and growing vertical integration will enable the company to achieve a 29% net profit CAGR over 2017-20e. Moreover, we think the strategic move into semiconductor equipment through the acquisition of US company Fortrend will be a new growth driver. Catalysts include order wins in high

41、power and semiconductor equipment, as well as the self development of high power laser generators. We initiate coverage with a Buy rating and a target price of RMB50.59, based on 22x mid-cycle PE.Tongfu Microelectronics (002156 CH, Buy)Tongfu is the third largest packaging & testing company in China

42、. The company is enhancing its competitiveness via the acquisition of an 85% stake in AMDs packaging and testing fabs in Suzhou and Penang in 2016 (in collaboration with Chinas national IC fund). Tongfu now captures over 80% of AMDs total packaging & testing business and AMD accounted for 45% of tot

43、al revenue in 2017. The company is set to benefit from AMDs potential market share gains in PC, server CPU, and graphic cards in the coming years. Meanwhile, new orders from Bitmain and Broadcom in 2018-19 and its high exposure to auto IC customers also serve as a long-term driver. We forecast a 44%

44、 net profit CAGR in 2018-20e, which is slightly higher than the A- share sector average CAGR of 37%. Catalysts include new customer acquisitions, improved product mix, and breakthroughs in advanced packaging. We initiate coverage with a Buy rating and a target price of RMB12.05, based on 35x (A-shar

45、e semiconductor sector average) forward PE.GigaDevice (603986 CH, Hold)GigaDevice is Chinas primary memory IC design house, with strong exposure to NAND flash, microcontrollers (MCU), and NOR flash. It had a 13% global market share in NOR flash in 2017. Its key customers include Spreadtrum, RDA, Med

46、iaTek and Samsung. Leveraging its close relationship with SMIC, we believe the company will continue to gain market share in low- density NOR flash while seeking opportunities in advanced NOR flash and SLC NAND flash markets. Moreover, its strategic partnership with the Hefei city government in Anhu

47、i Province to develop 19nm DDR4 DRAM should be a long-term growth driver. We forecast the company will register a 37% net profit CAGR over 2017-20e; catalysts include R&D progress in DRAM and NAND flash. We initiate coverage with a Hold rating and a target price of RMB107.19, based on 45.3x historic

48、al average forward PE.Key customers include Spreadtrum, RDA, MediaTek and Samsung6EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018Exhibit 2. 2017 revenue breakdown for covered semiconductor stocksProductNauraHans LaserGigaDeviceTongfuIC DesignNAND0%Packaging & testing99%IC/Semiconductor LEDSolar Di

49、splayLithium battery PCBLaser18%23%14%6%4%2%5%Equipment10%81%Component34%TotalSource: Company data, HSBC Qianhai Securities100%100%100%100%Exhibit 3. Valuation summary tableCompany NameHSBCRatingBuyMarket capUSDm3,257ADVT USDm 142EPS CAGR 2017-20e52%TickerCP53.26TP Upside Valuation methodology002371

50、 CHNaura63.9750.5920% 12m forward PS of 8.4x, +1 std above mid-cycle 18% 12m forward PE of 22x, mid-cycle20% 12m forward PE of 35x, A-share sector average multiple-3% 12m forward PE of 45.3x, mid-cycle002008 CHHans Laser002156 CHTongfu603986 CHGigaDeviceBuy Buy Hold6,4271,7164,5141292211942.7710.051

51、10.0029%74%37%12.05107.19Source: Company data, HSBC Qianhai Securities. Note: share prices as at close of 3 Sep 2018.Where we are different from consensusOur earnings estimates for 2019-20e for Hans Laser and Tongfu are generally in-line or higher than Bloomberg consensus. We are more optimistic on

52、Hans Lasers long-term growth potential of sales in high power lasers, semiconductors, and OLED equipment sales. We also see revenue upside for Tongfu as it switches AMDs two in-house fabs to OSATs, as well as order wins from domestic customers in the long term.Our estimates for GigaDevice and Naura

53、are much lower than market expectations. For GigaDevice, we model a flattish pricing trend for NOR flash as the company focuses on low- density product categories which are not facing supply shortages. Our 2018 revenue and profit estimates for Naura are in line with company guidance. For 2019-20, we

54、 remain positive on the sales growth of IC equipment its core business but are cautious on solar and LED equipment revenue.Exhibit 4. Our EPS growth forecasts vs consensusHSBCStock code CP RMB rating HSBC Qianhai Consensus HSBC vs ConsensusCompanyTP RMB2018e2019e0.622020e0.972018e0.532019e0.812020e1

55、.122018e-30%2019e-24%2020e-14%002371 CH002008 CH002156 CH603986 CH53.26Buy42.77Buy10.05Buy110.00Hold63.9750.5912.05107.190.371.820.271.93Naura Hans Laser Tongfu GigaDevice2.600.402.693.550.553.631.950.292.272.470.4014.21-6%-8%-14%5%-1%-12%5%8%-12%Source: Bloomberg, HSBC Qianhai Securities

56、 estimates (priced at close of 3 Sep 2018)7Others1%2%0%1%MCU14%NOR flash85%EQUITIES SEMICONDUCTORS & EQUIPMENTSeptember 2018Risk factorsRestrictions on component, equipment and IP imports from the USFriction between China and the US over trade and intellectual property have resulted in the US govern

57、ment imposing sanctions on certain Chinese technology companies. In April, US companies were banned from exporting products/services to ZTE; the ban was lifted after ZTE paid a USD1.4bn penalty. Then, in August, sanctions prohibited the export of products and technology to 44 Chinese technology companies and research institutes with exposure to the military and aviation.Meanwhile, Chinas regulator has still not approved Qualcomms proposed acquisition of NXP Semiconducto