SMIC International’s over raised and reinvested mature process production line capital expenditure to increase more than 50% of mature capacity still needs funds

On Thursday night, SMIC announced that the initial public offering of shares raised an excess of 25.66 billion yuan, which will be used for the 12 inch chip SN1 project, mature process production line construction project, advanced and mature technology R & D project reserve funds and supplementary working capital, accounting for 38.97%, 19.48%, 11.69% and 29.86% respectively.

analysts pointed out that with the new round of expansion of SMIC’s production, relevant equipment manufacturers such as SMIC, North Huachuang and shengmei semiconductor are expected to usher in the intensive bidding period.

SMIC international pointed out in the announcement that the construction of mature process production line is conducive to strengthening the company’s ability to OEM integrated circuit wafers with various technical nodes and different process platforms, further meet the different needs of customers and enhance the company’s market competitiveness.

SMIC also said that in the mature logic technology field, the company is the first foundry enterprise in China to provide 0.18/0.15 micron to 28 nanotechnology nodes. The chip products made by the company’s mature logic technology platform have been widely used in processor, mobile baseband, wireless interconnection chip, digital TV, set-top box, smart card, consumer products and many other fields. With the rapid development of downstream applications of integrated circuits, the trend that the IC industry chain will shift to mainland China will bring strong demand for capacity in the mainland market.

this is also SMIC’s second mature process in two weeks. On July 31, the company announced that it plans to cooperate with the Management Committee of Beijing Development Zone to carry out an integrated circuit project of 28nm and above. The goal is to achieve the production capacity of about 100000 12 inch wafers per month in the first phase of the project. The estimated investment and initial registered capital for the first phase of the project will be US $7.6 billion and US $5 billion respectively.

in the second quarter performance conference call held on Friday, Zhou Zixue, chairman of SMIC international, also admitted that mature production capacity is really tight at present, and a lot of capital is needed.

Guangfa Securities Xu Xingjun reported on the 2nd that most product platforms except high-end logic / high-end RF have been gathered in mature processes at 28nm and above, occupying the wafer foundry industry More than 60% of the revenue source is also the main product platform of domestic IC design companies. It is believed that with the implementation of the new project of SMIC, the capacity ceiling of domestic IC design companies will be opened, and the process of China’s substitution will be accelerated marginally.

SMIC also released its second quarter financial report, with revenue and net profit reaching a record high in a single quarter, with sales of $938.5 million in the second quarter, an increase of 18.7% compared with the same period last year. Net profit reached 138 million US dollars, up 644.2% year on year.

it should be pointed out that the proportion of advanced process revenue of the company increased in this quarter. The revenue share of 14 / 28nm increased from 7.8% in the first quarter of 2020 to 9.1%, which was more significant than that of 3.8% last year.

in addition, capital expenditure reached US $1.34 billion, with a month on month increase of US $570 million, a month on month increase of 73.9%, and a year-on-year increase of US $430 million, a year-on-year increase of 47.8%.

according to the 19 annual report plan of SMIC, the capital expenditure in 20 years is about 3.1 billion US dollars. In the first quarter, it is planned to increase the capital expenditure of 1.1 billion US dollars to about 4.3 billion US dollars. The additional part is mainly used for the machinery and equipment and other mature process production lines in SMIC south. This time, the company will add 2.4 billion US dollars of capital expenditure on the basis of 4.3 billion US dollars. The annual capital expenditure will reach 6.7 billion US dollars. The additional part is mainly used for the capacity supplement of machinery and equipment.

Southwest Securities analyst Ni Zhengyang pointed out in the report on the 6th that SMIC’s advanced technologies of 14nm and below and mature processes above 28nm will become the focus of future expansion. This round of international expansion of SMIC will bring a lot of equipment demand. At present, domestic manufacturers have a high localization rate in the fields of etching, cleaning, furnace tube, degumming and other equipment fields. With the new round of SMIC international production expansion, the relevant equipment manufacturers such as Zhongwei company, North Huachuang and shengmei semiconductor are expected to meet the tight target period.

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