Local IC support policy was issued

Since the official release of the National Outline for Promoting the Development of the Integrated Circuit Industry (the “Outline”) in June this year, local governments have responded with each other. Beijing, Tianjin, Anhui, Shandong, Gansu, and Sichuan have successively issued local integrated circuit support policies. , The establishment of investment funds to support local leaders in the field of integrated circuit mergers and reorganizations have become a consensus.

The vigorous support of government policies is the only way for the integrated circuit industry to catch up. As the most upstream of the electronic industry chain, the integrated circuit industry has very high technical barriers and also has a strong scale effect, especially in wafer manufacturing. Therefore, it is basically impossible for the wafer manufacturing industry to achieve catch-up through endogenous growth. For example, the global leader TSMC has annual capital expenditures of nearly US$10 billion, while the domestic leader SMIC’s revenue is only US$2 billion.

The strength of wafer manufacturing directly determines the overall strength of the entire IC industry chain. From the historical experience of the rapid rise of the integrated circuit industry in Taiwan and South Korea, we can see that in the two to three decades before catching up with the world’s leading level, it is relying on the government’s continuous and strong support. This is a must for the integrated circuit industry to catch up. The road.

SMIC is expected to become a key supporter of national policies and bring huge investment opportunities to the upstream and downstream industries.

In the past ten years, the domestic integrated circuit industry has been unevenly developed, the design and packaging and testing links have developed rapidly, and the development of wafer manufacturing links has lags behind, which has become a major bottleneck for limiting the sustained and rapid growth of the domestic integrated circuit industry chain. As the leading wafer manufacturing company in China, SMIC is expected to become a key supporter of national policies and funds, and it will be the key to breaking the bottleneck of growth. As early as 2012, Beijing government and SMIC invested US$7.2 billion to build SMIC Beijing Phase II. The "Outline" on the establishment of the National Industry Investment Fund clearly pointed out that we must focus on supporting the integrated circuit manufacturing field, taking into account design, packaging and testing, equipment, and materials. Beijing’s newly established integrated circuit industry development fund has invested 6 billion in the first phase of 8 billion in manufacturing and equipment. We believe that SMIC will hope to achieve leap-forward development in the overall strength under the joint promotion of national policies and funds, which will bring huge investment opportunities to the upstream and downstream of the industry chain. Just as the rise of BOE created a large shareholder Xuguang Optoelectronics.

Highlights include Shanghai Xinyang, Changjiang Electronics, and Huatian Technology. Shanghai Xinyang is a leading semiconductor chemical company in China. It is a supplier of SMIC and Changjiang Electronics products. As the most upstream industry chain benefiting the industry chain, it has the highest elasticity; currently, the company's product layout has extended from the middle and low end packages to wafers. In the fields of manufacturing, advanced packaging, and dicing saws, the market space has grown by nearly four times; these products have basically started to supply small-scale products or have entered the end of certification. Once they enter large-scale supply, they will greatly increase company performance. Changjiang Electronics is the leading domestic sealing and testing company. The short-term performance inflection point is established. Medium-term Bumping+FC brings about decisively high growth. Long-term TSV and MIS materials provide room for growth. This time, the Bumping Plant, which is jointly owned with SMIC, landed in Jiangyin and heralds the cooperation between the two leading companies. It will be closer and the future of SMIC will benefit significantly. Huatian Technology has completed the layout of the three places, with both cost and technical advantages; the management directly controls the company; the corporate governance structure has obvious advantages; the Bumping+FC business starts at the end of the year and the future high growth can be expected.