Taiwanese media: BYD Semiconductor hurts Taiwanese companies the most
Latest update time：2020-04-20
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Taiwan media Economic Daily pointed out that mainland automobile and new energy giant BYD announced that it will focus on semiconductors. Its subsidiary BYD Microelectronics was reorganized and renamed BYD Semiconductor. With its advantages such as 6-inch wafer manufacturing and integrated design and packaging and testing, huge terminal outlets, and investment from Hong Kong's richest man Li Ka-shing, it will set off a new red supply chain force. Small and medium-sized Taiwanese wafer fabs such as Mosel, Epistar, and Chia-Chien will be the first to bear the brunt.
According to BYD's plan, BYD Semiconductor will not compete head-on with leading wafer foundry manufacturers such as TSMC, Samsung, UMC, and SMIC in advanced processes, but will focus on niche businesses such as power semiconductors with mature processes and automotive insulated gate bipolar transistors (IGBTs), and will seek an independent listing in the future.
The industry believes that BYD's semiconductor strategy is consistent with the group's automotive and new energy development blueprint. With the group's resources, it poses a considerable threat to Taiwanese manufacturers such as Mosel. In particular, the relevant Taiwanese manufacturers have generally "made little profit and suffered more losses" in recent years. BYD's large-scale pressure may further limit the development space of Taiwanese manufacturers, and even make it more difficult for them to escape the quagmire of losses.
Taiwan's small and medium-sized wafer fabs have been struggling to operate in recent years. From 2008 to last year, Mosel made a profit only in 2018 out of 12 years. It lost money in the other 11 years and reduced its capital due to huge losses. Hanlei made a profit only in 2018 in the past six years by taking advantage of the MOSFET shortage, with a small profit of NT$0.26 per share that year. It suffered losses in the other five years. Although Chip Semiconductor has made profits in the past six years, only the net profit per share of NT$1.57 in 2018 was better. The net profit per share in the other five years was only a few cents or even a few cents.
In recent years, Taiwanese manufacturers such as Mosel have been actively exploring ways to break through, focusing on niche businesses such as power semiconductors and automotive insulated gate bipolar transistors (IGBTs), while developing a new generation of SiC (silicon carbide) materials to seek new blue oceans.
However, the transformation direction of Taiwanese factories is in direct competition with BYD Semiconductor, and BYD's process technology is faster. In addition to silicon-based IGBTs, it has also made major breakthroughs in the popular SiC materials earlier than Taiwanese factories, becoming a strong rival in the transformation of Taiwan's small and medium-sized wafer factories.
Legal persons pointed out that the mainland is the world's largest electric vehicle market, and BYD is a mainland electric vehicle and new energy giant. In addition, with the advantage of investment from Hong Kong's richest man Li Ka-shing, it simultaneously promotes the development of semiconductors in industrial and consumer fields, and becomes a new type of efficient, intelligent and integrated semiconductor supplier.
BYD Semiconductor focuses on automotive applications and other niche areas. Its joint venture with Japanese company Toyota in mainland China is expected to start up in May. BYD Semiconductor is not only about five years ahead of Taiwanese manufacturers in automotive IGBT, but also has breakthroughs in the popular SiC material. Investors are worried that if BYD integrates the group's resources and a large number of troops enter the country, it will be even more difficult for Taiwanese manufacturers to cope after it goes public in the future to obtain more funds.
Looking at the progress of Taiwanese manufacturers in IGBT layout, they are all behind BYD. Mosel plans to complete the construction of a clean room for 8-inch and 6-inch IGBT back-end process in the second quarter, complete the installation of key equipment in the third quarter, and enter trial production in the fourth quarter. The initial monthly production capacity is about 5,000 pieces, becoming Taiwan's first automotive IGBT production line.
Hanlei is optimistic about the market opportunities for electric vehicles and other automotive and industrial uses. It has invested in the power semiconductor market of new-generation wide bandgap (WBG) materials such as gallium nitride (GaN) and silicon carbide (SiC) for many years, and is also developing towards the GaN and SiC-related foundry fields with higher gross margins.
Further reading: BYD reorganizes semiconductor company and seeks independent listing
BYD issued an announcement on the evening of the 14th, stating that the company has recently completed the internal reorganization of its wholly-owned subsidiary Shenzhen BYD Microelectronics (BYD Microelectronics) through equity transfers and business transfers among its subsidiaries, and has changed its name to BYD Semiconductor. In the future, it plans to introduce strategic investors through capital increases and stock expansions, and actively seek an independent listing at an appropriate time.
Jiemian News reported that the establishment of BYD Semiconductor marked the beginning of the marketization of the businesses of BYD's subsidiaries and the vigorous entry into the semiconductor supply market.
The announcement shows that through internal reorganization, BYD Microelectronics acquired 100% equity of Ningbo BYD Semiconductor and 100% equity of Guangdong BYD Energy Saving Technology, and acquired Huizhou BYD's smart optoelectronics, LED light source and LED application related businesses. After the reorganization, BYD will complete the focus and deep integration of semiconductor business.
At the same time, BYD also announced that in order to enhance the independence of BYD Semiconductor and promote the long-term sustainable development of BYD Semiconductor, the company's vice president Chen Gang has submitted a written resignation report to the board of directors on the 14th. After his resignation, he will serve as a full-time chairman and general manager of BYD Semiconductor and focus on the operation and development of BYD Semiconductor.
According to information, BYD Semiconductor's main business covers the research and development, production and sales of power semiconductors, smart control ICs, smart sensors and optoelectronic semiconductors. It has an integrated business chain including chip design, wafer manufacturing, packaging and testing, and downstream applications.
According to reports, BYD acquired Ningbo Zhongwei Semiconductor Wafer Factory in 2008 and began to independently develop automotive-grade IGBT chips. After more than ten years of development, BYD has become the only company in mainland China that can independently manufacture automotive-grade IGBT modules.
In this regard, BYD stated that in the future it will focus on automotive-grade semiconductors and simultaneously promote the development of semiconductors in industrial, consumer and other fields, becoming a new type of semiconductor supplier that is efficient, intelligent and integrated.
Regarding the introduction of strategic investors for the semiconductor business, BYD said that this is based on its own strategic positioning and future development plan, which will enable the company's semiconductor business to develop faster under independent operation. The adoption of a diversified shareholder structure will expand its capital strength and achieve capacity expansion.
The announcement shows that BYD Semiconductor will remain a holding subsidiary of BYD in the future. While making full use of capital market financing, it will also actively seek independent listing at an appropriate time.
*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.
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