Huawei actively stocks up, Win Semiconductors' 5G orders are ahead of schedule, and capacity utilization rate soars from 55% to 90%

5G orders are “really” coming!

The 5G business opportunity that was originally expected to arrive next year or the year after has unexpectedly arrived earlier due to the fierce trade war between China and the United States! Originally, everyone expected it to happen next year or even after 2021, but unexpectedly, starting from the second quarter of 2019, 5G orders have arrived earlier.

The gallium arsenide wafer factory, WIN Semiconductors, is located in the Huaya Technology Park in Linkou District, New Taipei City. The huge factory building is still standing. At first glance, it seems that there is no change, but there are significant differences inside the factory.

Spring Swallows Arrive

One product line increased capacity utilization from 55% to 90%

Three months ago, Win Semiconductors' capacity utilization rate was only 55%, which is embarrassing even for traditional industries, let alone high-tech industries. But in just five months, the capacity utilization rate jumped to 90%, and the number of employees has just exceeded 3,000 from more than 2,600 at the end of last year.

"5G orders came earlier than we expected, and the volume was larger than expected!" said Chen Jincai, chairman of Win Semiconductors. "I thought this year would be difficult because 5G has just started, but I didn't expect that many countries and telecom cloud providers would be very active in promoting 5G, which led to strong growth in our base station and mobile phone orders."

WIN Semiconductors' main product, gallium arsenide semiconductors, is the most critical core of radio frequency components for communications. A set of radio frequency components is composed of several power amplifiers (PA), switches, filters, low noise amplifiers and other parts. Not only does every mobile phone need radio frequency components, but every base station also needs radio frequency components, otherwise the signal cannot be transmitted.

Apple analyst and TF Securities high-tech analyst Ming-Chi Kuo pointed out that each 4G iPhone requires three PAs, while a 5G iPhone requires at least nine, six of which are used for 5G signal transmission.

The 5G business opportunity arrived early, thanks in part to US President Trump's "ban on the sale" of high-end semiconductor products to Huawei. The ban on Huawei has not only failed to slow down China's 5G development, but has even aroused China's greater ambitions. Huawei has actively stockpiled inventory, and even prepared a year's worth of inventory for many "hard-to-obtain" components.

Industry research firm Gartner predicts that due to the recession and the Sino-US trade conflict, global semiconductor revenue will decline by as much as 9.6% this year. However, TSMC CFO Ho Lai-mei released good news at the second quarter earnings conference that third quarter revenue is expected to grow by 17-18% compared to the second quarter. Based on this calculation, as long as TSMC's fourth quarter revenue grows by more than 1% compared to the third quarter, it is expected to maintain positive growth in 2019 and get rid of the overall recession in the environment. The biggest contributor is the "strong growth of 5G-related chip orders."

Highlight Group

PA demand is rising like the Big Dipper in the dark night

2019 has been described as the "dark night" of the electronics industry, but 5G-related industries, from the upstream integrated device design factories (IDMs), wafer foundries, chip testing factories, and chip testing equipment factories, are as dazzling as the Big Dipper shining in the dark night.

Avago, an IDM (integrated device manufacturer) with communications as its main market, saw revenue growth of 9.3% in the first half of the year, while Qorvo grew by 7.5%. These two companies achieved these results despite the impact of the US ban on the sale of high-end chips to Huawei. Skyworks, another IDM manufacturer of power components, was hit the hardest by the ban because Huawei accounted for too high a proportion of its revenue, resulting in a 9.3% decline in revenue in the first half of the year.