Weekly market overview: Last week, semiconductor market led all major indexes. Last week, the GEM index rose 3.86%, the Shanghai Composite Index rose 0.76%, the Shenzhen Composite Index rose 1.99%, the SME Board Index rose 1.82%, the Wandequan A Index rose 1.96%, the Shenwan Semiconductor Industry Index rose 5.39%, and the semiconductor industry index led the main indexes. All segments of semiconductor rose, and other segments rose the most. In the semiconductor segment, IC design sector rose 5.5% last week, semiconductor materials sector rose 4.1% last week, discrete devices sector rose 1.6% last week, semiconductor equipment sector rose 5.3% last week, sealed test sector rose 5.4% last week, semiconductor manufacturing sector rose 2.8% last week, and other sectors rose 6.6%.
The industry cycle is currently in a relatively low range. We believe that in the short term, we should improve our sensitivity to changes in the demand side. The financial statements of the varieties that have priority in recovery are expected to give priority to improvement. In the long term, the semiconductor blue chips covered by the Tianfeng Electronics team are currently at a low level of valuation, Companies that continue to optimize and iterate in operation are expected to achieve better market share and profitability at the high point of the next cycle. In terms of innovation, artificial intelligence/satellite communication/MR is expected to be a major industrial trend, and individual stocks in the industrial chain are expected to continue to reflect thematic opportunities with the progress of technological innovation.
Huawei's 1Q24 mobile phone sales in mainland China returned to the first place, which is expected to drive the recovery of the domestic supply chain. According to Canalys' data, Huawei's 1Q24 mobile phone shipments in mainland China reached 11.7 million units, with a market share of 17% and 1Q23 10%, a significant increase year on year. This time, Huawei's share returned to the top of China's smartphone market after 13 quarters of sanctions. In 2024, as AI drives the change of mobile phones in the mobile phone market, we are optimistic that Huawei's share of mobile phones will continue to increase under the AI wave. In terms of supply chain, we are optimistic about AI increment (NPU+storage) and domestic supply chain opportunities brought by the increase of mobile phone share.
A-share quarterly reports have been released successively, and some semiconductor companies have marginal improvement. They are optimistic that the industry will recover in the four quarters of the year on a month on month basis. Near the end of April, A-share semiconductor first quarter reports disclosed in succession that the first quarter of some companies was not weak, and their revenue grew slightly month on month (such as Huiding/Hengxuan/Aiwei, etc.), with a significant year-on-year increase. We believe that this is driven by the recovery of local demand and the iteration of the company's new products. Some companies walked out of the predicament first, in line with our early judgment. As stated in our previous report "AI is expected to drive a new round of semiconductor cycle upward" 2024.4.12, we expect the industry inventory will return to normal level at 1H24. The demand side will see the pull of AI on hardware, and the semiconductor industry is expected to enter a new growth cycle. Considering the off-season effect in the first quarter and the successive release of AI products in the second half of the year, It is optimistic that the sector will continue to recover month on month in the four quarters of the year.
The capacity utilization rate of some sealing and testing plants returned to a higher level, and the metal price rose or drove the sealing and testing prices to rise. In the first quarter, driven by Huawei's mobile phone demand for domestic chip supply chain and the growth of AI demand, the capacity utilization rate of some packaging and testing plants (such as Huatian/Yongsi) returned to a high level. The off-season was not weak, exceeding market expectations. With the recent rise in metal prices, the cost end of the closed test is expected to increase. In addition, the industry chain has entered the traditional peak season in the second half of the year, we expect the closed test price to have the impetus to increase. It is suggested to focus on the investment opportunities of companies related to the industry chain.
Suggested attention:
1) Semiconductor design: Jiang Bolong (jointly covered by Tianfeng Computer)/Puran Shares/Dongxin Shares//Ziguang Guowei/Fudan Microelectronics/Lihewei/Juquan Technology/Huiding Technology/Jingchen Shares/Ruixin Micro/Quanzhi Technology/Hengxuan Technology/Lexin Technology/Cambrian/Longxin Zhongke/Haiguang Information (covered by Tianfeng Computer) /Beijing Junzheng/Lanqi Technology/Juchen Co., Ltd./Dior Micro/Nanochip Micro/Shengbang Co., Ltd./Zhongying Electronics/Star Semiconductors/Hongwei Technology/Dongwei Semiconductors/SRIPP/Yangjie Technology/New Clean Energy/Zhaoyi Innovation/Weier Co., Ltd./Sitwei/Aiwei Electronics/Zhuoshengwei/Jingfeng Mingyuan/Xidi Micro/Anlu Technology/Zhongke Lanxun 2) Semiconductor materials and equipment parts: precision measurement electronics (jointly covered by Tianfeng Machinery) /Changchuan Technology (covered by Tianfeng Machinery)/Essen/Zhengfan Technology (jointly covered by Tianfeng Machinery)/Jiangfeng Electronics/North Huachuang/Yingjie Electric (covered by Tianfeng Power)/Fuchuang Precision/; Jacques Technology/Shanghai Silicon Industry/Huafeng Measurement and Control (covered by Tianfeng Machinery)/Shanghai Xinyang/Zhongwei Company/Dinglong Co., Ltd. (jointly covered by Tianfeng Chemical)/Anji Technology/Tuojing Technology (jointly covered by Tianfeng Machinery)/Shengmei Shanghai/Zhongjuxin/Qingyi Optoelectronics/Youyan New Material/Huate Gas/Nanda Optoelectronics/Kaimei Special Gas/Heyuan Gas (jointly covered by Tianfeng Chemical) 3) IDM OEM seal test: Times Electric/SLV/Yangjie Technology/Wentai Technology/San'an Optoelectronics; Huahong Company/SMIC International/Changdian Technology/Tongfu Microelectronics
4) Satellite industry chain: CETC chip/Huali Chuangtong/Fudan Microelectronics/Beidou Xingtong/Liyang chip Risk tip: unpredictable risks brought by geopolitics, demand recovery less than expected, and technology iteration less than expected
