suppliers change frequently, and the product verification cycle is long. As a semiconductor special equipment supplier, Nanjing Jingsheng Equipment is mainly engaged in the research, development, production and sales of crystal growth equipment. Its main products include semiconductor -level single crystal silicon furnace, silicon carbide single crystal furnace and sapphire single crystal furnace, which are used in the manufacturing of downstream semiconductor-grade silicon wafer , silicon carbide single crystal substrate and other basic materials of semiconductor devices. has a small scale and a relatively simple business model. It purchases raw materials from upstream, develops and produces crystal growth equipment, and then sells it to semiconductor material manufacturers. Its main products are customized crystal growth equipment such as semiconductor-grade single crystal silicon furnace, silicon carbide single crystal furnace, sapphire single crystal furnace , and its customers include domestic semiconductor-grade silicon wafers, silicon carbide single crystal substrates and other semiconductor material manufacturers, such as Sanan Optoelectronics (600703.SH), Tony Electronics (603595.SH), Jin Ruihong, Shanghai Xinsheng and Zhejiang Jingyue Shanghai Silicon Industry-U (688126.SH), Shengong Co., Ltd. (688233.SH), etc.
From 2019 to 2021, Jingsheng Equipment's revenue was RMB 22.7648 million, RMB 123 million and RMB 195 million, RMB 195 million, RMB 15.1977 million, RMB 29.3353 million and RMB 34.1773 million, RMB 34.1773 million, RMB 34.1773 million, RMB 1, respectively. This time, the company plans to raise 476 million yuan of funds to deploy headquarters production and R&D center construction projects and semiconductor crystal growth equipment assembly and testing plant construction projects to develop the main product production capacity.
prospectus shows that TESLA ENGINEERING LTD, namely Tesla Group, is the largest supplier of Jingsheng Equipment in 2021. Of course, this TESLA has no direct relationship with Musk's Tesla (TSLA), it is just the same name. The group is headquartered in Stollington, England. It was founded in 1973, which is 30 years earlier than the Silicon Valley . It mainly produces products such as regular conduction magnets, superconducting magnets, gradient coils, composite materials, general-purpose coils, motors, etc.
Overview of the UK Tesla Group Source: TESLA ENGINEERING LTD Official Website
In addition, Tianyan Check shows that Huituo Vacuum Valve (Shanghai) Co., Ltd., the second largest supplier of Jingsheng Equipment in 2021, is a subsidiary of VAT Holding AG in China, and Heraeus Shinyue Quartz (China) Co., Ltd. in 2020 is affiliated to Germany's Heraeus Co., Ltd.
In 2020, all the company's top five suppliers were changed, and three suppliers were changed again in 2021. Although the changes were frequent, these foreign companies could not stop.
parts are constrained by overseas companies, which is a major shortcoming of the semiconductor single crystal furnace industry. At present, the semiconductor equipment and materials industry is mainly monopolized by a few international manufacturers. The market concentration is relatively high. The semiconductor single crystal furnace market is still dominated by domestic products such as the United States, Germany, and Japan. The representatives of international single crystal furnace manufacturers include the United States QUANTUM DESIGN, Kayex, Germany's PVA TePla AG, Gero and Japan's Ferrotec.
Although the domestic industry is still in its early stages of development and the degree of domestic production is not high, due to the long delivery period of foreign equipment, there are many domestic manufacturers trying to replace it. Representative manufacturers include Jingsheng Mechanical and Electrical (300316.SZ), Nanjing Jingneng (Jingsheng Equipment Subsidiary), Jingyuntong (601908.SH), Huasheng Tianlong, Shanghai Hanhong, Jinkotech, China Institute of Electrical and Technology, Tiantong Co., Ltd. (600330.SH), Northern Huachuang (002371.SZ), etc. Some manufacturers have achieved domestic substitution between 6-8 inches, but there is still a gap between 12 inches and the international level. At present, only Jingsheng Mechanical and Electrical, Tiantong Co., Ltd., Jingyuntong, and Nanjing Jingneng.
Regarding the current situation of the industry, Jingsheng Equipment believes that although in order to ensure product yield in the short term, semiconductor equipment will still focus on purchasing imported equipment, as domestic equipment continues to make breakthroughs, continue to pass customer verification and downstream customers' production capacity smoothly climb, the domestic production rate is expected to be significantly improved.
In the semiconductor industry with high technical barriers, long R&D cycle, large capital investment and long downstream verification cycle, the above expectations will be a very long process.
competitors are pressing step by step, and sapphire is tragically defeated
Among the many domestic players mentioned above, Jingsheng Mechanical and Electrical, the industry leader from Hangzhou, is undoubtedly the biggest threat to Jingsheng equipment.
In the list of crystal equipment suppliers of mainstream silicon wafer manufacturers disclosed in the prospectus, Jingsheng Mechanical and Electrical Appearance is extremely frequent and has appeared on the list of customers that Jingsheng Equipment has covered many times, which means "snatching food from a tiger's mouth". In the annual report, Jingsheng Mechanical and Electrical stated: "The company's main business activities are the research and development, production and sales of crystal growth and processing equipment in the photovoltaic and semiconductor fields, sapphire materials and silicon carbide materials." It is highly consistent with Jingsheng Equipment business.
At present, in addition to the production capacity of 12-inch single crystal furnaces, Jingsheng Mechanical and Electrical has also developed and produced the third-generation semiconductor material silicon carbide single crystal furnace. This year's first quarter report shows that Jingsheng Mechanical and Electrical has not completed its semiconductor equipment contract and increased to 1.343 billion yuan. Xinsijie Industrial Research Center pointed out that in my country's single crystal furnace market, Jingsheng Mechanical and Electrical are in a dominant position, and its products are supplied to domestic first-tier silicon wafer manufacturers, accounting for the highest share.
In addition to Jingsheng Mechanical and Electrical, Liancheng CNC (835368.BJ), which mainly sells crystal silicon growth and processing equipment in the photovoltaic and semiconductor industries, is quite large. According to the annual report, its sales revenue of single crystal furnace in 2021 was 1.097 billion yuan. In the first quarter report, the company's new contracts for major products were 2.684 billion yuan, and the executable orders for major products were approximately 2.200 billion yuan.
In the company's newly developed silicon carbide single crystal furnace field, it needs to face the leading domestic semiconductor equipment North Huachuang. The large-load furnace volume and high-automated silicon single crystal furnace developed and produced have become the main products of the domestic market. The annual report shows that Northern Huachuang can currently provide long crystal furnaces, epitaxial furnaces, oxidation furnaces, high-temperature annealing furnaces, etching machines, PVD, PECVD, cleaning machines and other equipment for silicon carbide devices. In 2021, Northern Huachuang achieved a total revenue of 9.683 billion yuan, a year-on-year increase of 59.90%; net profit attributable to shareholders was 1.077 billion yuan, a year-on-year increase of 100.66%.
In the future target of Jingsheng Equipment, Northern Huachuang has taken the lead in the Taiwan market. In 2017, its subsidiary Northern Huachuang Vacuum Technology Co., Ltd. signed the first batch of sales contracts for 7 silicon single crystal furnaces with Taiwan AUO Crystal Materials Co., Ltd. Under such a complex competitive landscape of
, it is more interesting to note that Jingsheng Equipment’s previous failure in the sapphire business.
Although sapphire still appears in the prospectus book as the company's main business, in fact, Jingsheng equipment was not sold last year, and its revenue accounted for 0%. The company said that it was mainly due to the adjustment of supply and demand in the sapphire market and the decrease in new demand at the main downstream application ends. "The market in the application field of sapphire is facing the risk of a downstream industry supply and demand adjustment, and the expected decline in product demand scale."
This is completely opposite to Jingsheng Mechanical and Electrical's statement. The latter believes that in recent years, the application of sapphire in the consumer electronics field has been increasing, including smart watch mirror and back cover, smartphone and tablet camera protection lenses, fingerprint recognition lenses, protective covers and other components, and the market has shown a strong demand trend. In 2021, Jingsheng Electric's revenue in sapphire materials was 389 million yuan, a year-on-year increase of 100.78%.
So, it may not be appropriate to simply attribute it to the market environment. In the past few years, the average sales price and gross profit margin of Jingsheng Equipment sapphire equipment plummeted. In 2019 and 2020, 14 units and 2 units were accepted, with gross profit margins of 40.13% and 4.37% respectively.
This also had a great drag on performance. In 2019, the company's operating cash flow was -25.6541 million yuan, net profit loss was 15.1977 million yuan after deducting non-net profit, and accounts receivable bad debt loss was -4.9746 million yuan. These accounts receivable have not been recovered so far. The company stated in its prospectus that accounts receivable are mainly formed by the sales of sapphire single crystal furnace products. Some of the funds sold in the early stage cannot be recovered overdue. The balance and proportion of accounts receivable for more than 1 year have been high. The company has set aside for the full amount of accounts receivable that cannot be recovered.Behind the poor performance of
sapphire, the R&D strength of Jingsheng Equipment cannot be said to be strong. Titanium Media APP noticed that the Jingsheng equipment of 120 people has 38 management personnel, 41 R&D personnel, and only 11 people have master's degree or above. The R&D expenses in 2021 will be 19 million yuan. During the same period, Northern Huachuang, Liancheng CNC and Jingsheng Mechanical and Electrical R&D investment was RMB 2.892 billion, RMB 118 million and RMB 353 million, respectively, an increase of 79.85%, 5% and 55.65% year-on-year respectively.
products fell across the board, and more than 20% of employees did not pay the provident fund
It is worth noting that Jingsheng Equipment's current products are falling across the board. Referring to the previous experience of the company on sapphire, this is an unsettling signal.
prospectus shows that in 2021, the revenue of Jingsheng Equipment semiconductor-grade single crystal furnace declined, and the unit price of the product fell from 15.1125 million yuan/unit to 12.2842 million yuan/unit, with a drop of 23%. Although the sales volume of silicon carbide single crystal furnaces increased significantly, the unit price also fell from 715,900 yuan per unit to 658,000 yuan per unit, a decrease of about 8% from 2020 and a decrease of about 17% from 2019.
In response to this, the company said that it is reasonable: "Because the sales price of a single product is relatively high and the product is customized, the average sales price of various products during each period has fluctuated. "Behind the continuous price reduction of
, Jingsheng Equipment's customer concentration is very high, so the company has only two sales personnel. The prospectus shows that the company's customers are concentrated in five manufacturers, Sanan Optoelectronics, Tony Electronics, Jin Ruihong, Shanghai Xinsheng and Zhejiang Jingyue, with a total sales share of 92.21%, 94.27% and 95.44% from 2019 to 2021, respectively.
Titanium Media APP also noticed that in 2020, 19 employees of Jingsheng Equipment did not pay provident fund, and the payment ratio was only 76.83%. In 2020, 8 employees of Jingsheng Equipment did not pay social security, and the social security payment ratio for that year was 90.24%, which was at a low level.
(This article was first published in Titanium Media APP, author | Huang Tian, editor | Cui Wenguan)
