A few days ago, Applied Materials, the world's largest semiconductor equipment company, released its third-quarter financial report for the 2022 fiscal year, with revenue increasing by 5% year-on-year; Kelei, the world's largest semiconductor test equipment company, also achieved good performance in the 2022 fiscal year. After experiencing a super cycle, the semiconductor market is entering a downward phase. Equipment manufacturers upstream of the industrial chain generally have stronger anti-cyclical characteristics. However, as wafer fabs shrink their capital expenditures in the second half of the year and next year, whether semiconductor equipment companies can successfully withstand cyclical turmoil has become the focus of the industry.
equipment company's performance is still stable
Although the semiconductor industry is oversupply, judging from the recent financial reports of the top five semiconductor equipment manufacturers in the world, the overall performance is still stable. Applied Materials, a major semiconductor equipment manufacturer, released its third-quarter financial report for the 2022 fiscal year on August 19, with revenue of US$6.52 billion, a year-on-year increase of 5%; revenue in the fourth quarter is expected to be US$6.25 billion to US$7.05 billion. Among them, wafer foundry, logic and other semiconductor system businesses accounted for 66% of semiconductor system revenue, a year-on-year increase of 3%. Applied Materials said that the company's products are still in short supply and demand, and the backlog of orders continues to rise, and will still be subject to supply factors in the next few quarters.
In the fourth quarter financial report of fiscal year 2022 released by Kelei on August 5, revenue for the quarter was US$2.487 billion, a year-on-year increase of 29.15%; net profit was US$805 million, a year-on-year increase of 27.24%. The revenue for the entire fiscal year 2022 was US$9.212 billion, a year-on-year increase of 33.14%; the net profit was US$3.322 billion, a year-on-year increase of 59.83%.
In the financial report released earlier, ASML, the world's largest lithography machine equipment manufacturer, achieved sales revenue of 5.43 billion euros in the second quarter, an increase of 35% year-on-year, of which equipment revenue was 4.14 billion euros, a year-on-year increase of 40%; Japan's largest semiconductor equipment manufacturer, TEL, in the first quarter of 2022, increased by 14.2% year-on-year; Panlin Semiconductor, a major semiconductor etching equipment manufacturer and thin film deposition equipment manufacturer, increased by 5.5% year-on-year.
2020-2023 global semiconductor equipment market
Source: SEMI
Several major semiconductor equipment manufacturers in China performed well. The 2022 semi-annual performance forecast released by Northern Huachuang recently showed that the company expects to achieve revenue of 5.052 billion to 5.773 billion yuan in the first half of the year, a year-on-year increase of 40% to 60%; net profit of 714 million to 807 million yuan, a year-on-year increase of 130% to 160%. According to the semi-annual report of China Micro Semiconductor, a major domestic etching equipment manufacturer, the revenue in the first half of the year was 1.972 billion yuan, a year-on-year increase of 47.3%; the net profit was 468 million yuan, a year-on-year increase of 17.94%; among which the revenue of etching equipment was 1.299 billion yuan, an increase of about 51.48% over the same period last year, and the gross profit margin reached 46.05%. Shengmei Shanghai, a major domestic cleaning equipment manufacturer, achieved revenue of 1.096 billion yuan, a year-on-year increase of 75.21%; net profit was 237 million yuan, a year-on-year increase of 163.83%.
periodic impact is relatively limited?
The global chip shortage since 2020 has prompted wafer manufacturers to build factories and expand production in an all-round way. Intel, TSMC and Samsung all plan to invest tens of billions of dollars in building new wafer factories. This is undoubtedly a major long-term benefit for semiconductor equipment companies. SEMI predicts that between 2020 and 2024, 86 new fabs or large fab expansion projects will be put into production worldwide, and global fab capital expenditures for equipment are expected to hit a record high.
2020-2023 Global wafer equipment application market
Source: SEMI
However, semiconductors have recently entered a downward cycle, and some news about wafer factories cutting capital expenditures are also constantly circulating. The latest research report of overseas investment banks shows that due to market volatility and environmental uncertainty, TSMC's capital expenditure is expected to decrease by 4% to 10% from 2023 to 2025. TSMC President Wei Zhejia also said at a legal talk meeting held in July that due to unsmooth supply chains, TSMC will postpone some capital expenditures in 2022 to 2023. SK Hynix and Western Digital also sent negative signals: customer demand growth will slow down due to the downward cycle.
Summit Insights Group analyst Kinngai Chan warns of the risks of weak end markets such as electronics.Demand for memory chip makers has also been waning, which have stockpiled inventory in several quarters to meet strong demand but are now facing a decline in sales. Kinngai Chan said: "The supply of semiconductor equipment will catch up with order demand, and order demand will weaken because capital expenditure must match the final demand." Sheng Linghai, vice president of research at
Gartner, is relatively optimistic. Semiconductor equipment companies will definitely be affected to a certain extent in the overall environment, but it is not that serious. "The IC design companies are the most affected by the downward cycle. Generally speaking, for equipment manufacturers, at most, delaying the delivery, migration and installation time of equipment, and there are rarely any complete cancellations. The impact on the company is relatively limited." Gary Dickerson, president and CEO of
Applied Materials, also showed confidence in the earnings call. Applied materials products are still in a state of insufficient supply and demand, and the backlog of orders continues to rise, and will still be subject to supply factors in the next few quarters. He said that it seems that fab equipment expenditure will be around US$95 billion in 2022, and Applied Materials' fab equipment revenue in 2022 is expected to grow by about 15%.
In recent years, China's semiconductor equipment industry has developed rapidly. According to data from the China Electronics Special Equipment Industry Association, the sales of domestic semiconductor equipment in 2021 was 38.55 billion yuan, a year-on-year increase of 58.71%. In response to the current situation of the pullback in terminal market demand, Xu Yinchuan, executive director of Light Source Capital, said that under market changes, the domestic equipment and materials industry should also maintain rationality and make long-term plans while striving to seize the window period to accelerate enterprise development.
Sheng Linghai believes that the downward cycle will not have much impact on domestic equipment manufacturers. Now domestic equipment manufacturers mainly look at investment, and the pressure on market profit is not the greatest for companies. However, Sheng Linghai emphasized that the semiconductor industry, especially the equipment industry, pays great attention to the stability and transparency of planning and business. For example, if TSMC wants to build a wafer factory, it may have started to coordinate with the equipment factory three years ago, which can minimize the influence of cyclical factors. Domestic companies are more random and lack long-term cooperation with equipment companies. This is also an important reason why the total number of equipment orders for domestic enterprises has been increasing year by year in recent years, but it has not become an important customer of international equipment companies and cannot obtain equipment faster after placing an order.
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Author 丨Chen Bingxin
Editor 丨Lian Xiaodong
American editor 丨Maria
Producer 丨Lian Xiaodong
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