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TSMC Samsung launched a chip foundry war, and SMIC's profits plummeted
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The current situation of the semiconductor wafer manufacturing industry, and the reasons for the deterioration of SMIC's operating conditions.
SMIC announced its 2023 earnings report, with revenue of 452500 million yuan, a decrease of 861%；Net profit was 482.3 billion yuan, down 6025%。This figure greatly surprised the market. Although there is a huge demand for chips in China, by 2023, its imported chips will reach 2.5 trillion yuan. SMIC is the largest semiconductor manufacturer in China, but its revenue has been cut in half. Due to the downturn in the world semiconductor industry, weak demand and high inventories, the company's profit margin fell from 38% in 2022 to 19 in 20233%；The competition in the industry is becoming increasingly fierce, TSMC and Samsung have started a major war; SMIC's expansion of production capacity has resulted in some idle capacity, which has reduced the company's profitability.
1. The global chip industry is in a downturn.
In 2022, mobile** shipments worldwide continue to decline and will reach 11700 million units, the lowest level in almost 10 years. Due to the launch of the Huawei Mate 60 series and Apple's iPhone 15 series, which led to a decline in demand for smartphones, the sales of this product did not increase significantly. At the same time, with Dell's sales of products such as "de-Chinaization", the world's PC sales have also seen a significant **, compared with the same period last year, **14%. The sales of personal computers have been greatly affected, both commercial and civilian.
2. TSMC, Samsung's war.
In response to dwindling orders, TSMC, Samsung, and other manufacturers are lowering**. Samsung has taken the lead in ** and has made a large number of orders; Then TSMC also announced the news of the ** decline, forcing other manufacturers to follow suit. In order to win the number of customers to put in chips, the ** of chip manufacturers has been greatly reduced, and most of them are 28nm and later chip manufacturers. The downgrade of chip manufacturers is caused by the downturn in the chip market.
3. Expand the scale of production.
Although the cost of silicon wafers has decreased, the production capacity of foundries is expanding. TSMC, Samsung and others have set up new factories in the United States and China, while SMIC has set up factories in Beijing, Shanghai, Shenzhen and Tianjin. Although production has increased, it is not used efficiently, and some production capacity is idle. Chip manufacturers are worried about the war caused by overproduction, but if they do not expand production, they will face greater difficulties. Therefore, in order to maintain a competitive advantage in the market, major chip manufacturers have decided to expand production capacity.
The chip contract industry is moving towards artificial intelligence.
Due to the downturn in the smartphone and PC market, the chip contract industry is expected to face difficulties in 2023. Due to the decline in profitability of companies such as SMIC, foundries have begun to turn to AI, hoping to gain new growth opportunities through AI. If production continues to grow, there is a risk that this chip will run out of stock. Therefore, in order to find new growth space in the recession environment, the integrated circuit manufacturing industry has also begun to research artificial intelligence.
Overview and prospects.
In 2023, the semiconductor manufacturing industry will face serious challenges due to the downturn in the market, as well as due to the excessive consumption of production capacity and the intensification of market competition. On the one hand, in order to cope with the impact of the market, foundry companies have adopted the strategy of reducing production capacity and expanding production capacity; On the other hand, in the long run, the industry as a whole still needs to find a breakthrough in the fierce competition. The rapid development of AI provides a new opportunity for the chip manufacturing industry, and is expected to achieve healthy development in emerging industries such as artificial intelligence. In the next period of time, the entire semiconductor industry will undergo a revolutionary change, driving the development of the entire industry.
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