In 2021, an academician predicted that there is a huge gap between domestic wafer demand and current production capacity, and it is expected that by 2025, this gap will be equivalent to at least 8 SMIC's production capacity. However, the data in 2023 reveals another reality, and the three major domestic wafer companies are all showing obvious overcapacity and poor performance. SMIC's capacity utilization rate was only 75%, revenue fell 13% year-on-year, and profit fell by 50%.4%；Hua Hong Semiconductor's revenue fell by 33%, profit fell by 3564%, with a capacity utilization rate of 80%; Crystal integration is a revenue decline of 2793%, and net profit fell as high as 931%。The contradiction between this prophecy and reality makes people wonder why there is a huge disparity between domestic demand and production capacity, but the problem of overcapacity is common among wafer companies.
Of course, from a macro point of view, this is not just a domestic issue, but a question of global competition. Countries around the world have invested in wafer production, the number of global wafer fabs has surged, including Samsung, TSMC, GF, UMC and other multinational companies are actively seeking global orders, which has led to the performance of SMIC, Huahong, Jinghe Integration and other domestic companies have been impacted. Behind the fierce competition, no one can take it lightly, not to mention which company to hand over the order to OEM is not simply to look at the country, but to consider many factors such as **, cycle, process, quality and so on. Therefore, the domestic wafer demand is not only linked to domestic production capacity, but the pattern of global competition makes the market more complex and intense.
When academicians issued a warning in 2021, many people may not be impressed by the domestic wafer situation, believing that expanding production can solve the problem of insufficient production capacity. However, in 2023, reality has brutally lifted this cover. The three major wafer companies, including SMIC, Hua Hong Semiconductor, and Crystal Integration, are facing the dilemma of vacant production capacity despite their huge production capacity. SMIC's capacity utilization rate is only 75%, revenue is down 13%, and profits are even more straight**; Hua Hong Semiconductor's revenue fell 33%, and profits fell by as much as 3564%；Crystal Integration suffered a revenue decline of 2793%, net profit was cut in half.
Such a reality is shocking, on the one hand, the academician seems to fail to foresee the complexity of market changes in time, and on the other hand, it also exposes the dilemma of domestic wafer enterprises in the global market competition. For this situation, it is necessary for us to think more deeply and find out the crux of the problem and seek solutions.
The wafer industry is undoubtedly an industry with a global competitive pattern, and companies from all over the world are competing for layout and market share, which has also led to the rapid growth of global wafer fabs. According to the data in 2023, a full 118 new wafer fabs have been built around the world, which has undoubtedly intensified market competition and the mismatch between supply and demand. International giants such as Samsung, TSMC, GF and UMC have emerged, not only competing for global orders, but also for share of the Chinese market. The fierceness of this global market competition is beyond imagination, and no company can take it lightly.
In this context, it is extremely one-sided to simply link domestic demand and production capacity or to think that domestic production capacity can be expanded at will. The global market makes the order ** no longer limited by geography, and the competitive strength of different enterprises will directly affect the ownership of the order. ** Manufacturing cycle, process, quality and other factors have become important considerations when enterprises compete for orders, all of which have also reshaped the market pattern and challenged the position of domestic enterprises in global competition.
The emergence of overcapacity is not only related to the competitive pressure of the global market, but also related to the company's own development strategy, technological innovation, management level and other aspects. SMIC, Hua Hong Semiconductor, Crystal Integration and other enterprises, although they have huge production capacity, are facing the dilemma of declining efficiency. Overcapacity leads to a waste of resources, a decline in profits, and may even lead to vicious competition in the industry, putting enterprises in a difficult situation.
In this context, enterprises need to assess the situation, adjust their strategies in a timely manner, improve their technical level, and improve management efficiency to better adapt to changes in market demand. At the same time, the first department can also assist enterprises to optimize their structure, improve their competitiveness, promote the sustainable development of the entire industry, and avoid the further deterioration of the problem of overcapacity through policy guidance.
In the face of the current fierce competition in the global wafer industry and the current situation of overcapacity of domestic wafer enterprises, we can't help but think about where the future development will go. How to be invincible in the global competition? This requires the enterprise itself to continue to innovate and improve its core competitiveness, and at the same time, it also needs to guide the healthy development of the industry and build a good market environment.
At the same time, in the context of global competition, enterprises should have a global vision, flexibly respond to market changes, expand international cooperation, and achieve optimal allocation of resources. Only by doing this can we be invincible in the fierce competition and achieve the sustainable development of the industry. For domestic wafer enterprises, they must seize the opportunity, challenge themselves, and keep pace with the times in order to occupy a place in the global industrial chain.