There is such an industry that from the first generation to the second generation, China has not caught up in time, and now it is severely constrained. Entering the third generation, it was also nearly 20 years behind, but it retained the hope of reversal.
There is such a company in this industry, established in 2010, focusing on “opening up” in a segmented field, and in 2019, it broke through and became the third largest company in the world. In the same year, Huawei subsidiary Harper invested 110 million yuan to acquire shares. The company went public three years later.
However, since the end of October last year, this company called Tianyue Advanced has dropped by more than 40%. It has just rebounded this year, and on January 30, it released the announcement of the annual report performance loss in advance.
It has been established for 9 years and won the third place in the world
Semiconductor is known as the “grain” of modern industry and is widely used in mobile communication, computer, power electronics, medical electronics, industrial electronics, military and aerospace industries. Because of the high technical difficulty, large investment scale, long industrial chain and fast update iteration, countries that start late will be passive and targeted at all times, which is also the current situation facing China.https://forum.stoneitech.com/
Semiconductor materials are generally divided into three generations. The first generation is represented by element semiconductors such as silicon and germanium, which are mainly used in low voltage, low frequency and low power transistors and detectors. At present, more than 90% of semiconductor products are made of silicon-based materials. The second generation of semiconductor materials, represented by gallium arsenide, are widely used in optoelectronics and microelectronics, and are key substrate materials for making semiconductor light-emitting diodes and communication devices.
The third generation refers to wide band gap semiconductor materials represented by silicon carbide and gallium nitride. Compared with the previous two generations, the third generation of semiconductor materials has the advantages of high breakdown electric field, high thermal conductivity, high electron saturation rate, and strong radiation resistance. The semiconductor devices prepared by this method can not only operate stably at higher temperatures, but also be suitable for high voltage and high frequency scenarios, and can obtain higher operating capacity with less power consumption. 5G, new energy vehicles and photovoltaic are the main application scenarios of the third generation of semiconductors.
It is worth noting that each of the three generations of semiconductor materials has its own advantages and disadvantages, and there is no absolute substitution relationship. Instead, they have their own comparative advantages in specific application scenarios.
The substrate is at the upstream of the semiconductor industry. Silicon carbide substrate can be divided into semi-insulating silicon carbide substrate with high resistivity and conductive silicon carbide substrate with low resistivity. The former is mainly used for radio frequency devices and is oriented to the field of wireless communication; The latter is mainly used for power devices, for electric vehicles/charging piles, photovoltaic, rail transit and smart grids. The larger the substrate size, the more chips can be manufactured per unit substrate, and the lower the unit chip cost. Moreover, the smaller the waste of the edge is, which is conducive to further reducing the cost of the chip.
From the perspective of market structure, the current silicon carbide substrate market is basically occupied by the West, among which Kerui and Erlu are the two largest companies, with global market share of more than 30% in 2020. Both of them produced 4-inch semi-insulating silicon carbide substrates in 1999 and 2005, and 8-inch products were also mass produced. In 2008, the Wassenaar Agreement clearly restricted semi-insulating silicon carbide substrate materials. Therefore, if China wants to develop, it can only rely on independence.
Tianyue Advanced was founded in 2010, focusing on the research and development, preparation and sales of silicon carbide substrates, and has a layout of semi-insulating and conductivity, focusing on semi-insulating silicon carbide substrates. In 2015, Tianyue Advanced achieved the mass production of 4-inch semi-insulating silicon carbide substrate, 16 years later than that of American Kerui; In 2019, the mass production of 6-inch products will be realized, and the gap with the American Kerui will be shortened to 10 years.
In the same year, according to the statistics of Yole, an internationally renowned industry consulting agency, Tianyue Advanced ranked third in the global market share of semi-insulating silicon carbide substrate with 18%; It still ranks third in 2020, but its share has increased to 30%.
The yield rate gradually increased and the performance was unstable
The R&D capability is the basis for Tianyue Advanced to reach today.
Under the leadership of Zong Yanmin, the actual controller and chairman of the board who enjoys the special allowance of the State Council, Tianyue Advanced has achieved the research and development or industrialization of 2-6-inch silicon carbide substrate. Over the years, it has undertaken a number of national, provincial and ministerial projects such as the national nuclear high-tech major project, the national high-tech research and development plan project, the national major scientific and technological achievements transformation project, and has won the first prize of the National Science and Technology Progress Award and the first prize of the Shandong Province Science and Technology Progress Award. In 2021, Tianyue Advanced was rated as the national manufacturing single champion demonstration enterprise and the national specialized “small giant” enterprise.
By the end of June 2022, Tianyue Advanced and its subsidiaries had obtained a total of 110 domestic invention patents, 320 utility model patents, and 8 overseas invention patents, covering multiple aspects of silicon carbide substrate preparation technology.
Tianyue’s advanced business can be divided into semi-insulating substrate, conductive substrate and crystal rod, unqualified substrate and other businesses. Among them, crystal bars and unqualified substrates refer to materials such as crystal bars or unqualified substrates that cannot meet the requirements of semiconductor grade in the production process. Non-semiconductor-grade crystal bars can be processed into gemstone jewelry or used for equipment research and development and testing, and unqualified substrates can be used for equipment research and development testing or scientific research purposes. Semi-insulated substrates are the core business of Tianyue Advanced, accounting for 81.62% of revenue in 2020, while conductive substrates only account for 0.58%.
Yield is the embodiment of enterprise strength. Through continuous process improvement, the yield of Tianyue’s advanced products has also been steadily improved. Among them, the yield of crystal rod increased from 41% in 2018 to 49.9% in 2021H1; The substrate yield increased from 72.61% to 75.47%.
With the development of semi-insulating substrate business and the improvement of yield, the operating revenue of Tianyue Advanced has increased from 136 million yuan in 2018 to 494 million yuan in 2021; The net profit attributable to the shareholders of the parent company also lost for three consecutive years from 2018 to 2020, and became positive in 2021, reaching 89951500 yuan in the same year. After deducting non-recurring profit and loss, it will be positive for three consecutive years from 2019 to 2021, which are 5.2291 million yuan, 22.6878 million yuan and 12.9739 million yuan respectively.
Moreover, the gross profit rate of Tianyue’s advanced main business (semi-insulating substrate and conductive substrate) has increased from 8.45% in 2018 to 32.83% in 2021, close to the overseas leaders Erlu and Wolfspeed.
In the first half of 2022, Tianyue Advanced passed the certification of IATH16949 system of vehicle specification level; In July, a long-term agreement with the estimated amount of 1.393 billion yuan was signed with the customer to guarantee the sales of 6-inch conductive silicon carbide substrate.
However, in 2022, Tianyue’s advanced performance suffered a setback. The total operating revenue in the first three quarters was 269 million yuan, down 27.19% year on year; The net profit attributable to shareholders of the parent company was a loss of 117 million yuan, down 319.17% year on year. After deducting non-recurring profit and loss, the loss expanded to 169 million yuan. On January 30, Tianyue Advanced released the performance forecast of its annual report. It is estimated that the net loss in 2022 will be 155 million to 185 million yuan, from profit to loss on a year-on-year basis.
Chain reaction of the epidemic
The decline in performance stems from the passive product adjustment under the influence of the epidemic.
In the face of the rapid development of new energy vehicles, photovoltaic, energy storage and other industries, the demand for conductive substrates continues to release. According to Yole’s prediction, the global market size of GaN devices fabricated on semi-insulating substrates will reach US $2 billion by 2025, with CAGR of 12% from 2019 to 2025. The global market size of SiC devices fabricated on conductive silicon carbide substrates will reach 2.562 billion US dollars by 2025, and the CAGR will be 30% from 2019 to 2025. Among them, new energy vehicles and photovoltaic and energy storage are the main application markets of SiC devices. The market size in 2025 will be 1.553 billion dollars and 314 million dollars respectively.
To this end, Tianyue Advanced plans to invest the 2 billion yuan raised during its IPO into the silicon carbide semiconductor material project located in Lingang, Shanghai, which includes conductive substrates. However, due to the epidemic in Shanghai in the first half of 2022, the normal construction of the project was affected, and the planned trial production in 2022 was forced to be postponed. For the delivery of 6-inch conductive products, Tianyue Advanced transformed part of the production capacity of Jinan Plant into conductive products. In the research announcement released in early December, Tianyue Advanced said that the production capacity of conductive products of Jinan Project was climbing rapidly.
This adjustment not only means that the supply rhythm of conductive substrates may be delayed, but also affects the production and sales of semi-insulating substrates. Under normal circumstances, such emergency changes may not have a major impact on enterprise orders. However, considering the situation in 2022, next year may be different.
On December 7, the General Administration of Customs released data showing that the total value of China’s imports and exports in November fell 9.5% year on year, with exports down 8.7% year on year and imports down 10.6% year on year. In RMB terms, the total import and export value in November also increased by only 0.1% year-on-year. Similarly, according to the data of Vietnam’s Ministry of Industry and Trade, Vietnam’s exports fell by 14% year-on-year in December, the second consecutive month of decline, and the decline was expanded, with a year-on-year decline of 8.4% in November; Vietnam’s imports fell 8.1% year-on-year in December and 7.3% year-on-year in November.
Global demand has declined significantly, and the global economy will face considerable pressure in 2023. In combination with the news of layoffs and layoffs of global technology giants and financial giants in the past year, it is difficult not to doubt the stability of downstream demand.
Not only that, the rapid development of new energy vehicles has lasted for many years, and the power of Tianyue Advanced on conductive products has been half slow. In the research announcement at the beginning of December, Tianyue Advanced was very secretive about the long crystal thickness, yield and parameters of its products. This may increase investors’ doubts about Tianyue’s advanced products and progress, so they can vote with their feet, which is reflected in the decline of share price.
Of course, with the release of the epidemic, the uncertainties affecting production capacity will gradually disappear, and Tianyue’s advanced production will slowly return to the right track.
The silicon carbide leader invested by Huawei has just dropped by 40%, and has lost more than 100 million yuan in advance
