With a profit of 1.7 billion, China's Jinghe Integrated Circuit made a lot of money with 90nm amid the chip shortage

There are many foundry companies in mainland China, of which three have entered the top 10 in the world, namely SMIC, Huahong Group, and Jinghe Integrated Circuit. According to the ranking in Q4 2021, SMIC ranked fifth, Huahong ranked sixth, and Jinghe Integrated Circuit ranked tenth. This is the first time that three companies from the mainland have entered the top 10, which shows that China's chip manufacturing industry is indeed developing rapidly.

According to the prospectus recently released by Jinghe Integrated, we can see that Jinghe Integrated was established in May 2015 and is also the first 12-inch wafer foundry company in Anhui. The planned total investment exceeds 100 billion yuan, and the final planned total production capacity is 320,000 pieces/month. In terms of revenue, the growth of wafer integration is too fast. From 2018 to 2021, the revenue is 218 million, 534 million, 1.512 billion, and 5.421 billion yuan respectively.

Mainly relying on 90nm, the revenue accounts for 55.95%, followed by 110nm, accounting for 24.41%, and then 150nm, accounting for 19.64%. The main foundry type of Jinghe Integrated is DDIC (display driver chip). In addition, it also has foundry capabilities for process platforms such as CIS, MCU, E-Tag, Mini LED, but the main direction is display driver. In this way, we can easily analyze why it can make a lot of money in 2021 and achieve a big turnaround in performance. In 2021, there is a severe shortage of mature chips, especially IC driver chips. As long as there is production capacity, manufacturers will be snatched up. The wafer fabs are also constantly raising prices. Considering the increase in Jinghe Integrated's production capacity and the price increase, although it relies on 90nm, it can still make a profit of 1.7 billion.

In the short term, the global semiconductor industry is still in an upward stage, which will drive the industry's profit elasticity upward this year; in the long term, the scale of the global semiconductor industry has long-term demand growth: Over the past 20 years, the global semiconductor industry's revenue has maintained healthy growth, mainly due to the rapid growth of the technology industry. Semiconductor chips play a unique role in the computing performance, connection perception, and storage expansion of electronic products. According to Gartner's forecast, the scale of the global semiconductor industry will grow by 17% in 2021, 10% in 2022, and the compound growth rate from 2021 to 2025 will reach 4.5%. The industry's growth space mainly comes from the increase in the value of stand-alone semiconductors in large categories such as smartphones and the demand for semiconductor chips in smart hardware such as watches and headphones.

As the leader, TSMC mostly produces high-end CPUs, GPUs and advanced nodes of mobile SoCs, because advanced chips are the main driving force for technological progress. However, many devices use mature or special process chips, which are used in combination with complex advanced processors, and have a significant impact on the lives of ordinary consumers. In recent years, the surge in demand for various computing and smart devices has led to a global chip shortage, impacting automobiles, consumer electronics, PCs and many related products. After entering 2022, more and more people speculate that TSMC will slow down its pace of investment in factory construction to cope with some potential crises reflected by changes in the global chip market. Especially after the decline in domestic consumption power and the sharp drop in shipments in the mobile phone market, many people have become more determined to think so. Previously, TSMC has spent a lot of financial resources on factory construction, but now it has the risk of overcapacity. On the one hand, people doubt whether the global chip market demand will continue to grow like this, and on the other hand, they doubt whether TSMC's continuous increase in production capacity means that there is really business to do. But now TSMC's behavior is obviously slapping these people in the face. It can be seen that TSMC has not only not slowed down its pace of investment in factory construction, but has added a dose of strong medicine, which is simply the rhythm of swallowing the entire semiconductor manufacturing market in one breath. This is really puzzling. Is TSMC too confident or too inflated? Can it really sell as much as it produces? In fact, TSMC's operation this time is both ambitious and forced.

Starting at the end of last year and continuing until now, there has been a wave of global chip price increases. The shortage of automotive chips has led to price increases, which then slowly spread to mature chips, and finally to all chips, and then to all chip-related industrial chains. In this wave of shortages and price increases, chip-related companies have made a lot of money, such as upstream raw material factories, semiconductor equipment, wafer foundry, and finally chip companies. As a result, major wafer factories have expanded production frantically, hoping to make a fortune from such opportunities.

There are many foundry companies in mainland China, of which three have entered the top 10 in the world, namely SMIC, Huahong Group, and Jinghe Integrated Circuit. According to the ranking in Q4 2021, SMIC ranked fifth, Huahong ranked sixth, and Jinghe Integrated Circuit ranked tenth. This is the first time that three companies from the mainland have entered the top 10, which shows that China's chip manufacturing industry is indeed developing rapidly.