Third Generation Semiconductor Breaks Through Capital Market

Under the market attention upsurge, the third generation semiconductor company is in the development stage of seizing the opportunity to capitalize. Recently, there have been companies issuing prospectuses, but some companies have terminated the listing process.

Recently, Jiangxi Ruineng Semiconductor Co., Ltd. decided to terminate the listing plan of the science and technology innovation board after the suspension of listing for a time. Before that, there was also Tianke hecda's plan to terminate the listing. Shandong Tianyue, however, recently put up a share offer and began to go through the process of listing on the science and technology innovation board. If it is successfully listed after that, it will be expected to become the first stock in the field of silicon carbide semiconductor materials.

Although there is no definite answer to the reasons for some companies' termination of listing, it is not difficult to find that the third-generation semiconductor industry is in the upstream end, which needs to bear huge capital expenditure in the early stage. The difficulty of mass production and high cost caused by this also lead to the companies in the lower end have not reached the stage of large-scale shipment.

The booming of the third-generation semiconductor industry is closely related to the explosion of 5g base stations and new energy vehicles with high demand in the market.

According to a recent survey by 21st century economic reporter, in addition to the companies that have focused on the development of the third generation semiconductor industry, many companies from other material fields are also exploring the field of compound semiconductor materials based on their research.

A senior executive of a semiconductor material company told the 21st century economic report that among the third generation semiconductor materials, the growth of GaN substrate is more difficult, and the development route of SiC will be more mature, and there are many related companies. On the whole, overseas, many large factories have occupied a large share in the silicon carbide market, and most of them are promoting comprehensive development, which is different from the development route of domestic companies. Of course, he is confident that the market situation will change as the pace of development of domestic companies accelerates in the future.

Product commercialization has not yet exploded

Although the concept of the third generation semiconductor is very popular recently, it has been developing quietly for many years.

Macroscopically, the third generation semiconductor industry can be divided into four parts: substrate epitaxy device manufacturing. The substrate can be understood as the wafer link. Epitaxy is to grow appropriate material structure on the basis of the substrate for subsequent design, while the device is similar to chip design. One of the difficulties of the third generation semiconductor is the substrate.

The above-mentioned executives told the 21st century economic report that the growth rate of GaN substrate is slow, and it is difficult to grow large-size gallium nitride single crystal, which leads to the current use of silicon carbide as the substrate material.

Therefore, in the near future, even for a long time in the future, gallium nitride is mainly used as an epitaxial link.

For example, the current commercial fast charging industry chain of Gan mainly uses silicon substrate as substrate and growth of heterogeneous gallium nitride material as epitaxy to design products; In the mature LED industry, sapphire material was used as substrate, and heterogenous gallium nitride material was used as epitaxy before, and the related display function was designed.

In contrast, silicon carbide as a substrate, and epitaxial growth of homogeneous silicon carbide substrate, and then product design is a relatively feasible route, and at present, the product design of silicon carbide substrate regenerating long Gan epitaxy is also in the process of promotion.

Today's tide of capitalization, on the one hand, is related to the openness of capital market platform to technology companies, on the other hand, under the joint promotion of domestic and foreign manufacturers, the relevant technology business has been accelerated.

In particular, in the past two years, more and more industries and investment capital have become shareholders of these companies. For example, Huawei's Hubble investment has become a shareholder of Shandong Tianyue and tiankeheda in about 2019. The presence of equipment suppliers such as Zhongwei company and national large fund is also actively emerging in these upstream areas.

At the same time, coincidentally, the three enterprises mentioned above are mainly involved in silicon carbide materials. Among them, Shandong Tianyue and Tianke Heda are silicon carbide substrate link companies, while renewables semiconductor is in the device sector.

As for why some of them finally chose not to go public through the science and technology innovation board, we can see some clues from their prospectuses.

Tianke Heda, a silicon carbide substrate company, according to the prospectus, its revenue sources mainly include silicon carbide wafers, other silicon carbide products and silicon carbide single crystal growth furnace. The products mainly used in the downstream design link of the industrial chain come from the silicon carbide chip part. As for other silicon carbide products, part of its use can be used as the "seed" chip for the growth of new silicon carbide crystals, The other part can be used for equipment testing and manufacturing of consumer gem products.

According to the prospectus, the income of "other silicon carbide products" project accounts for about 37% - 39% of Tianke hecda's Q1 from 2018 to 2020, and even as high as 52% in 2017. The income from "silicon carbide chip" will not reach more than 60% of revenue contribution until Q1 2020. This also shows that even at the industrial level, the commercial process of its products has not reached the stage of explosion, and the company's profits still need more support from other businesses, rather than focusing on the design and application contribution from the third generation semiconductor industry.

Ruineng semiconductor may mainly come from R & D investment. According to the prospectus, during 2017-2018, the company's R & D investment accounted for less than 4% of its operating revenue. In 2019, it met the requirements of the science and technology innovation board, but in Q1 2020, the proportion fell again to 4.9%.

These detailed business data show that although the third generation semiconductor industry is facing a huge market in China, it is still on the road of phased development. Some industry insiders have repeatedly told reporters that the current capital market's attention to this concept may be too hot.

High production cost is the bottleneck of reality

The development path and commercial process of the third generation semiconductor industry can also be roughly understood by observing the Prospectuses of these three major enterprises. In particular, companies in the substrate sector, on the one hand, have to bear greater financial pressure, but also maintain the investment in core R & D personnel, which is not so easy to go.

Among them, Shandong Tianyue is a company with greater capital pressure. According to the prospectus, as of December 2020, the company's accumulated outstanding loss was - 157.5809 million yuan. Considering that the company plans to continue to invest in the field of silicon carbide materials, or continue to carry out equity incentive, it may lead to profitability in a certain period in the future.

Specifically, from 2018 to 2020, the company's net profits attributable to the shareholders of the parent company were -42.1396 million yuan, - 200.6836 million yuan and - 64.16132 million yuan, respectively, and faced a large loss performance.

Meanwhile, the company's operating revenue during this period was 136.134 million yuan, 268.5584 million yuan and 424.8119 million yuan respectively. The company explained that the revenue increased year by year, but the net profit decreased year by year, mainly due to the implementation of equity incentive in 2019 and 2020.

Although Tianke Heda has achieved a modest profit, in addition to the contribution of other business income mentioned above, there are more government funding subsidies in support.

According to the company's prospectus, in the three financial periods of 2018, 2019 and 2020 Q1, the proportion of government subsidies received by the company in the total profits of the company in the same period was 534.05%, 73.14% and 144.75%, respectively. From a horizontal perspective, the proportion of government subsidies received by its "peer" Shandong Tianyue in the company's revenue in the same period is about 8% - 10% in recent years.

The executives of the above-mentioned semiconductor materials companies told the 21st century economic reporter that it was indeed very difficult for the semiconductor substrate field to develop in the early stage. At one time, many executives wanted to give up the path of "bleeding" development, and finally suffered a painful loss. However, the continuous evolution of new technologies requires the company to continuously invest in R & D.

In addition, not only in the substrate field, some companies in the semiconductor material field also need to extend to the downstream device field to make products more in line with the market demand.

Fortunately, although they are going through a difficult period of development, these companies have made good achievements in the industry. According to the statistics of yole, an international industry consulting agency, between 2019 and 2020, Shandong Tianyue has ranked among the top three in the world in the semi insulating silicon carbide substrate market.

Horizontal comparison of the world's major manufacturers, the development path of the above-mentioned major manufacturers is also different. At present, Cree, which is in a relatively leading position in the silicon carbide market, adopts a more comprehensive industrial chain covering substrate, epitaxy and device manufacturing, while the main domestic companies that are going to the capital market take part in a single industrial chain.

In terms of advanced technology, the gap between China and overseas is narrowing. According to public information, Cree is able to supply 4-inch to 6-inch conductive and semi insulating silicon carbide substrates in bulk, and has successfully developed and started to build an 8-inch product line. The main products of the above domestic companies are 4-inch semi insulating silicon carbide substrate, and 6-inch related products have formed small batch sales.

Generally speaking, at the present stage, the first generation silicon-based semiconductor materials are still the substrates for nearly 90% of the semiconductor products on the market, and the market base of the third generation semiconductor materials is still small. At the same time, due to the high production cost of high-quality silicon carbide substrate, it has become one of the constraints restricting the large-scale application of silicon carbide substrate devices in the short term.

However, in the long run, the third generation semiconductor materials have the characteristics of high temperature resistance, high pressure resistance, high frequency and high power, which will be able to undertake the opportunities of "new infrastructure" and 5g, which will boost the expectation of faster development of industrial chain companies.

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