"Core" war "epidemic": the resumption rate exceeds 60%

Source: The content comes from " China Business News ", thank you.

"We have implemented closed management of the factory. The 300 employees who worked overtime during the Spring Festival are the safest. The overall attendance rate is currently over 60%. We have divided the employees into several stages to return to work in an orderly manner according to their travel history and physical condition. " A person from a semiconductor company in Guangdong that focuses on the research and development, production and sales of semiconductor components told a reporter from China Business News that the company's current production capacity recovery rate is close to 70%.

The semiconductor industry is a relatively special industry, especially in the manufacturing process. Once the machine starts, it cannot be stopped. It needs to produce 24 hours a day. Stopping it means a major loss. Therefore, for the semiconductor manufacturing industry, there is only the problem of "full load or not full load" of production capacity. This is also the reason why Yangtze Memory Technologies, Wuhan Xinxin, Huaxing Optoelectronics, Tianma, BOE and other companies located in Wuhan, the center of the epidemic storm, are still operating normally during the Spring Festival.

"According to market research, the resumption rate of the semiconductor industry nationwide exceeds 60%. The semiconductor industry has a high degree of automation, and the IC design link is technology-intensive, so it can resume work online. The production and manufacturing links are capital-intensive, and wafer fabs are basically open all year round. The factory buildings are dust-free clean rooms with high-level cleanliness, and the risk of virus infection is extremely low. The packaging and testing links are labor-intensive, and the resumption of work and production has been affected to a certain extent, but the current order demand is full, and the capacity utilization rate of some domestic manufacturers has reached 80%. " Deng Yao, an industry analyst at Guotai Securities, said.

A survey conducted by the China Enterprise Confederation from February 18 to 20 on the resumption of work and production of the "Top 500 Chinese Manufacturing Enterprises" showed that the employee return rate of three semiconductor companies was 55%, the operating rate of member companies was 60%, and the capacity utilization rate was 60%.

On January 23, Wuhan was “locked down”. For the semiconductor industry, the production and operation issues of memory chip manufacturers such as Yangtze Memory Technologies and Wuhan Xinxin have attracted much attention. In fact, manufacturers such as Yangtze Memory Technologies and Wuhan Xinxin have applied for special licenses at the beginning to maintain normal shipments.

A person related to Yangtze Memory Technologies said that the company actively coordinated with government departments to ensure the health of employees while ensuring safety, while also avoiding possible risks of power outages and production stoppages.

In terms of specific practices, Yangtze Memory adopted closed management, zoning and other measures to ensure that its own employees and partner employees stationed in the factory during the Spring Festival were free of infection. At the same time, a shift system was adopted to maintain the normal operation of the production line, so the lockdown did not interrupt production. For returning to work after the holiday, Yangtze Memory delayed the return time of non-local employees on the one hand; on the other hand, it applied to local operators for bandwidth expansion support, and currently it can ensure that more than 5,000 employees can work remotely online at the same time. In addition, based on the purchase of a large number of raw materials before the Spring Festival, Yangtze Memory maintained close contact with suppliers based on production capacity status and material inventory to ensure that there would be no shortage of materials.

Wuhan Xinxin also stated that the company's production was not interrupted during the Spring Festival. The arrangement for resuming work is that employees working in Shanghai, Shenzhen, and Suzhou will go to work normally from February 10, and non-(Spring Festival) shift employees working in Wuhan will go to work normally from February 14. However, due to traffic control in various provinces, the current production staff's attendance is lower than expected. Therefore, Wuhan Xinxin expects that production capacity will be affected and has appropriately lowered its production capacity in the first quarter of 2020.

It is understood that in addition to Yangtze Memory and Wuhan Xinxin, panel factories such as Huaxing Optoelectronics, Tianma, and BOE in Wuhan are also operating normally. Among them, Li Dongsheng, chairman of TCL Group, publicly stated, "I will go to the TCL Huaxing factory to distribute red envelopes on the first day of the Chinese New Year every year, but this year it was cancelled due to the epidemic." However, "Under the pressure of the epidemic, TCL Huaxing people in Shenzhen and Wuhan are still on duty to ensure the normal operation of the factory. "

However, it is worth noting that the normal operation of the semiconductor manufacturing industry and the "full load" of production capacity are two different things. The reporter noticed that in terms of employee attendance rate and capacity utilization, the semiconductor industry is also an industry that performs well. For example, the attendance rate of Huada Semiconductor employees exceeds 70%, and the resumption rate exceeds 90%. Chip design, processing, and product delivery are all progressing in an orderly manner. For another example, according to official news from SMIC on February 27, the company has achieved a resumption rate of more than 90%, and all production lines and R&D lines have achieved 100% operation, and production capacity is expected to be fully loaded in the first quarter.

Some semiconductor manufacturers resumed work before February 10, including manufacturers of infrared thermometers, a powerful tool for epidemic prevention.

It is understood that relevant member companies of HuaDa Semiconductor have entered working state since the end of January, because the company's independently developed microcontroller unit (MCU) chip products are widely used in key epidemic prevention medical electronic products such as forehead thermometers and blood oximeters. In addition, the company's subsidiaries Shanghai Jetta Semiconductor, Shanghai Belling, Nanjing Weimao, etc., provide battery management chips, photosensitive chips and other components for electronic products such as infrared thermometers.

Public information shows that relevant semiconductor component suppliers such as Youyan New Materials, Guide Infrared, and Taijing Technology all applied to their local governments for early resumption of work after receiving emergency orders from downstream thermometer manufacturers in early February. Even so, due to the critical period of epidemic prevention and control, thermometers are still in short supply.

Labor-intensive semiconductor packaging and testing factories face greater difficulties in resuming work and production, but reporters learned that domestic packaging manufacturers that meet the standards, such as Changdian Technology, Huatian Technology, and Tongfu Microelectronics, did not perform well during the Spring Festival. In particular, the packaging business of infrared sensors related to epidemic prevention thermometers is a key business, mainly due to the problem that all employees cannot be in place. The current capacity utilization rate of the packaging production line needs to be improved, and planned new projects are the most affected.

Industry insiders believe that although the semiconductor industry has resumed work in a good situation compared with other industries, it also faces many problems when interviewed by reporters.

On the one hand, the production lines of the semiconductor manufacturing industry are now mainly supported by those who stay behind during the Spring Festival and some employees who have returned to work and have increased shifts. However, if this working mechanism continues for a long time, the work pressure of existing employees will increase and some problems will definitely arise.

On the other hand, as controls on road transport have not been relaxed in most parts of the country, cargo transportation for semiconductor companies will become increasingly problematic, and there may even be delays or shortages in the supply of raw materials, which will in turn affect capacity utilization.

The reporter noticed that BOE pointed out in its official announcement that the company had resumed work in full on February 10, but the supply of raw materials faced certain challenges, and the delivery cycle of display products will be slower than expected.

Another person from a domestic packaging factory said that the raw material inventory of a semiconductor packaging factory would not be very high. Usually the inventory preparation cycle is about two weeks, and the special raw material preparation cycle is about four weeks. This is mainly to consider the issue of reducing capital costs. Therefore, the biggest challenge facing packaging factories, besides the issue of employee attendance, is the supply of raw materials.

Some industry experts have publicly suggested that governments at all levels should coordinate with important companies in the domestic semiconductor supply chain to allow early shipments and resumption of work on the premise of implementing epidemic prevention measures. In particular, vehicles transporting production supplies across provinces should be subject to quick inspection and release.

Han Xiaomin, general manager of CCID Consulting's Integrated Circuit Center, mentioned that the current epidemic will affect the operation of some new semiconductor projects, such as Yangtze Memory's capacity expansion project, which involves a large amount of equipment procurement, installation, and debugging. If the technical support of some manufacturers is difficult to provide, the progress of the new project may be affected.

In fact, the three major domestic packaging manufacturers, Changdian Technology, Huatian Technology and Tongfu Microelectronics, have many planned new projects, such as the Changdian Integrated Circuit (Shaoxing) Company's cash packaging project which started at the beginning of the year, the Tongfu Microelectronics Xiamen Integrated Circuit Advanced Packaging and Testing Phase I project which was originally planned to be put into use in the first half of this year, and the Huatian Technology Nanjing project, all of which are likely to be affected to a certain extent.

The consensus in the industry is that the epidemic will definitely have a significant impact on the semiconductor industry in the short term. Fortunately, the first quarter of each year is traditionally the off-season for the semiconductor industry, so the impact may be limited.

According to traditional management in the semiconductor industry, the first and second quarters of each year generally account for 15% and 20% of revenue respectively. Strategy Analytics predicts that the full-year revenue of the semiconductor design industry may generally drop by about 10% compared to previous expectations, while the semiconductor manufacturing industry may be about 5% lower than previously expected.

An expert from Strategy Analytics pointed out that the key to the short-term impact is whether the epidemic can be brought under control in the first quarter. Looking at the whole year, it is possible that subsequent changes in the epidemic, supply chain transmission, and changes in consumer demand will have a greater impact on the industry. In the long run, as the industry is currently in the start-up phase of new technologies such as 5G and AIoT, industry confidence should recover quickly after the epidemic is brought under control.