How Does "Lack Of Core" Affect Semiconductor Packaging Industry?

With a new round of new coronal pneumonia spreading to Southeast Asian countries and Taiwan, the global major semiconductor packaging industry is facing new challenges.

Among the Southeast Asian countries that have been greatly affected this time, Malaysia and the Philippines are relatively concentrated in the sealing test, among which there are some global sealed test and IDM giants, and some leading companies in mainland China have deployed there in recent years.

Taiwan, China, is the real key town for sealing and testing, but the epidemic has spread in Zhunan, involving many factories. Jingyuan Electronics Co., Ltd. was the first to be exposed. Later, the company predicted that under the current situation, the personnel and operation schedule adjustment brought by the epidemic situation would reduce the company's production by 30% - 35% in June. In addition, there are other large factories are also constantly affected by the epidemic.

Some industry insiders roughly estimated to the 21st century economic reporter that from the perspective of global semiconductor packaging capacity in the past, Taiwan accounted for about 30%, mainland China accounted for about 20%, South Korea and Southeast Asia accounted for about 10% to 20%, and the rest were mainly IDM manufacturers.

However, the sealed test link itself is also very complex. Among the two places affected by the epidemic situation, Taiwan of China bears the main high-end closed test production capacity, while Southeast Asia is the relatively low-end sealed test link. Although reasonable analysis shows that mainland China, which is not affected by the epidemic situation, has certain high-end sealing test capability and may be able to undertake certain sealed test demand transferred out during the period, the main manufacturers are currently in full load state, which is not easy to adjust.

At present, on the demand side, smart phones seem to be cooling down under the background of demand reduction, but in the long run, it is an indisputable fact that the global core shortage will last until 2022.

The sealing and testing industry was disturbed by the epidemic situation

The new coronavirus variant is spreading rapidly in these semiconductor towns.

"In the past year, Samsung, Hynix and other manufacturers have also reported confirmed cases, but it was later proved that the infection in the wafer plant will not have a significant impact on the entire production line of the company." The people mentioned above said that, but the sealing and testing industry is a relatively small environment with dense distribution of personnel, which is more susceptible to infection. In addition, the cycle of seal test is short, but the cycle of wafer production is long, so the impact on the factory in a short time is inevitable.

It has been disclosed that the spread of the epidemic in Taiwan's factories was mainly caused by the gathering of foreign migrant workers. At present, more detailed control measures have been taken by various factories for these migrant workers.

"Considering the cost of staff, about one-third of the foreign migrant workers from Southeast Asia account for about one-third of the total number of workers in Taiwan's sealing and testing plant." Therefore, the management of foreign migrant workers is not so easy, and the measures taken to prohibit such employees from entering the factory and excessive mobility are crucial.

The action of Jingyuan electronics has attracted much attention because of its important position in the global sealed test. According to the latest statistics of trendforce Jibang consulting, in the first quarter of 2021, Jingyuan electronics ranked eighth among the world's top ten sealing and testing plants, with a market share of 3.7%. "As far as I know, MediaTek accounts for a large proportion of the sealing and testing capacity of Jingyuan, and its main customers include Intel, Qualcomm, NVIDIA, and Xilinx."

It is reported that the sealing and testing plants in Southeast Asia are mainly concentrated in Malaysia and the Philippines. Among them, Malaysia has implemented comprehensive action control since June 1, but the semiconductor industry with high output value is not restricted. According to the survey conducted by trendforce Jibang, the local sealing and testing related enterprises or production lines are still in normal operation.

Cinno research told reporters that there are two main reasons for Malaysia to become a centralized testing center: under the fluctuation of global macro environment, Malaysia has become one of the important regions for Asian supply chain transfer and tariff reduction; Moreover, Malaysia and other Southeast Asian countries have relatively sufficient manpower and have certain cost advantages.

"At present, Malaysia's restrictive measures against the epidemic are short-term, and they intend to avoid the semiconductor industry. Therefore, the impact on the packaging and testing industry in Malaysia is limited in the short term. In the long run, under the influence of the recent international situation and severe global health emergencies, manufacturers will further consider the risk of excessive regional concentration when selecting production lines in the future The agency said so.

Gai Xinshan, director of semiconductor research at counterpoint research, told the 21st century economic report that the sealed products in Southeast Asia mainly involve low-end consumer chips and general communication equipment, while relatively high-end smart phones and computer chips are mainly sealed and tested in Taiwan and Mainland China.

"Although riyueguang has factories in Southeast Asia, it also has deployment in mainland China; Jingyuan electronics also has a factory in Suzhou, so it is not ruled out that part of Taiwan's production capacity can be transferred to Suzhou in the short term. " "If the epidemic situation in Southeast Asia and Taiwan in China can be controlled by July, I predict that it will have a 10% - 20% production impact on the closed test," he added

Global short-term volatility is large

What is the significance of the overseas market's influence on the development of China's semiconductor industry?

Many securities dealers have pointed out that this will bring opportunities for the transfer of sealing and testing capacity to the mainland of China, after all, the technical strength can be carried out. According to the statistics of Jibang consulting, in the first quarter of 2021, Jiangsu Changdian, Tongfu micro power and Tianshui Huatian ranked third, sixth and seventh respectively, accounting for about 27% of the global market share.

Cinno research told the 21st century economic report that Chinese manufacturers account for about 6% of the output value of the sealing and testing industry in Malaysia. Among the leading manufacturers, such as Tongfu micro power, its Chaowei Penang is an important advanced sealing and testing plant. In 2020, the revenue contribution rate of Tongfu micro power is about 27%, and the contribution rate of net profit is about 32%, which should not be underestimated“ Therefore, the impact of the Malaysian blockade on mainland Chinese manufacturers is not small. In the long run, the blockade has some stimulating effect on the transfer of sealed production capacity and orders back to China, but in the short term, the blockade will lead to tight production capacity, or further push up the price of sealed test. "

In the current state of full industrial chain, it may mean more choices for manufacturers. For example, factories in mainland China can respond by adding orders or allocating orders, and different downstream industries will face varying degrees of impact.

"For example, it will be more inclined to large customers or parts with higher output value, but if it is the product part with low-end production capacity or low gross profit margin, it will be more affected by the current capacity transfer." "Compared with the wafer segment, the investment amount of the sealing and testing link is smaller and the return cycle is faster. Therefore, I believe that manufacturers in mainland China will have a single digit increase in global share." But in the long run, he doesn't think that it will bring too much change to the investment pattern of the sealing and testing industry in mainland China.

At the same time, the global supply and demand environment is constantly adjusting. In the next year, the specific progress of core shortage will be closely related to this dynamic change.

Gai hinshan told the 21st century economic reporter that in 2018, many large terminal factories in the world once adopted the development mode of low investment and low inventory. However, due to the lack of core caused by various factors last year, this mode is undergoing great changes.

"I think by 2022, the world will be on the high side of investment and inventory." He pointed out that, however, after the demand of some industries has been weakened and adjusted, the original reserve actions of terminal manufacturers far exceeding the actual demand will be adjusted, "the order volume will be relatively consistent with the actual demand, and there will be no double order phenomenon before."

At the same time, the drastic changes in the global trade environment also make manufacturers agree that low inventory will be a dangerous development behavior. If there is a sudden phenomenon such as the new epidemic situation, it will be easy for the manufacturers to meet the risk that the subsequent new demand can not be made up“ Therefore, at present, it is reasonable to judge whether the core shortage will be relieved by 2022 and there will be no excess demand, but there will be differences on whether there will continue to be over supply. " He pointed out.

(Editor: Li Qingyu)

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