57 semiconductor companies in A-shares made profits of more than 70% in the first quarter, and uncertainty increased in the second quarter

Judging from the Chinese economic data for the first quarter released by the National Bureau of Statistics a few days ago, under the influence of the new crown epidemic, the gross domestic product in the first quarter of this year fell by 6.8% year-on-year. All industries have generally been impacted to a certain extent. Among them, service industry production has declined, industrial production has declined, while high-tech manufacturing represented by semiconductors has maintained growth.

Due to the particularity of the semiconductor industry, upstream production lines require continuous production operations, so the production operations of most semiconductor companies remained normal during the Spring Festival. In addition, orders before the New Year were relatively full, so the overall performance of semiconductor companies in the first quarter was good.

According to incomplete statistics from Jiwei.com, as of April 17, 57 semiconductor-related listed companies in the A-share market have disclosed their first-quarter results, of which 44 companies are expected to be profitable, accounting for 77.19%. Overall, domestic semiconductor listed companies were less affected by the epidemic in the first quarter and were within controllable range.

Semiconductor companies accounted for more than 70% of profits in Q1

According to the incomplete statistics of 57 semiconductor-related listed companies on Jiwei.com, 44 listed companies are expected to make profits (mainly the following limits, the same below), accounting for 77.19%; among them, 3 companies have turned losses into profits, namely Beidou Xingtong, Fudan Micro and Dagang Shares, and 26 companies have achieved year-on-year growth in net profit, accounting for 45.61%. Another 18 companies are expected to make profits but their net profits have decreased year-on-year, accounting for 31.58%.

Only 13 listed companies, accounting for 22.81%, are expected to report a net loss. Among them, four companies continue to make losses, namely National Technology, Huacan Optoelectronics, Lianjian Optoelectronics and Gokewei.

In terms of net profit growth, there were 13 companies whose year-on-year growth exceeded 100%, accounting for 22.81%; there were 13 companies whose growth was between 0%-100%, accounting for 22.81%; and there were 31 companies whose net profit decreased year-on-year, accounting for 54.39%.

According to statistics, the company with the largest increase in net profit was Guide Infrared, which increased by more than 19 times year-on-year; followed by Dali Technology, Changchuan Technology and Beijing Junzheng, which increased by 753.38%, 680% and 397.56% year-on-year respectively. In addition, there were four companies with growth rates exceeding 200%, namely Beidou Navigation Technology with a growth of 219.98%, Fudan Microelectronics with a growth of 204.48%, Huatian Technology with a growth of 200.16% and Siyuan Electric with a growth of 200%.

Regarding the substantial growth in performance, Guide Infrared said that during the reporting period, the long-term market demand for infrared thermal imaging equipment products in many emerging civilian fields has become prominent, further stimulating the emerging applications of infrared thermal imaging technology in consumer electronics, smart homes, smart finance, security monitoring, drones and other industries. Dali Technology also said that orders for epidemic prevention products continued to grow rapidly in the first quarter, and the company is now fully operating, giving priority to ensuring domestic epidemic prevention needs while actively supporting the fight against the epidemic in various countries.

Beijing Ingenic said that the company's net profit increased significantly mainly due to the year-on-year growth in sales of smart video chips; BDStar said that the company's chip business benefited from the rapid growth of new high-precision application fields, and the ceramic components business benefited from the rapid growth in demand brought about by the construction of 5G base stations; Huatian Technology said that the performance growth was due to the company's full order book. However, Changchuan Technology relies on government subsidies to "beautify" its performance. If the government subsidies are deducted, the company's net profit will be a loss.

In addition, there are 13 companies that are expected to report losses. Among them, the companies with the largest downward changes in net profits include: Qianzhao Optoelectronics (-2091.4%), Xinlun Technology (-610.74%) and GCL Integration (-573.29%).

As for the reasons for the decline in performance, Qianzhao Optoelectronics said that the delay in the resumption of work in the industrial chain due to the COVID-19 pandemic led to a decline in the company's production. At the same time, the market price of LED chips fell year-on-year, resulting in a year-on-year decline in gross profit margin. Xinlun Technology also said that the overall operating rate in the first quarter was insufficient, resulting in a year-on-year decline in turnover of 40%-50%. Gokewei said that sales revenue increased by more than 50% compared with the same period last year, and the decline in net profit was mainly due to the reduction in government subsidies and investment income, coupled with the increase in R&D expenses and non-operating expenses.

GCL-Poly Integration said that due to the impact of the COVID-19 pandemic, the resumption of work of the company's upstream suppliers was generally delayed, transportation was restricted, raw material prices and logistics costs rose, and customer order delivery was hindered. At the same time, the first quarter is the traditional off-season for the photovoltaic industry, domestic installation demand and EPC start-up rate are insufficient, and overseas market demand has also been delayed and reduced to a certain extent in the first quarter with the outbreak of the overseas epidemic. The company's operating income in the first quarter decreased year-on-year.

Uncertainty intensifies for semiconductor companies in Q2

Although semiconductor companies performed well overall in the first quarter, as the epidemic continues to spread around the world, foreign semiconductor manufacturers have closed factories one after another, and the market is concerned about whether domestic semiconductor manufacturers can continue to maintain a high level of orders. In particular, the decline in terminal market demand may be transmitted to upstream semiconductor manufacturers in the second quarter, thereby reducing orders.

According to a previous report by Jiwei.com, the world's first-tier mobile phone brands will enter a trend of cutting orders in the second quarter. Samsung cut orders by 30%-50% in May, and Apple also cut orders by more than 25%. In June, domestic mobile phone brands followed suit, with OPPO and vivo cutting orders by 30%-40%.

In addition, the construction of overseas 5G base stations will also slow down due to the epidemic. Huawei's rotating chairman Xu Zhijun said that the deployment of 5G in Europe will be delayed, and how long it will last depends on how long the epidemic lasts.

Under the influence of these factors, major analysis agencies have lowered their forecasts for the semiconductor industry. JPMorgan Chase adjusted its forecast for global semiconductor growth in 2020 from an annual increase of 5.3% to an annual decline of 6%. If memory is not included, the decline will be magnified to 8.4%.

IDC also believes that the probability of a significant decline in global semiconductor industry revenue in 2020 is close to 80%, rather than the previously expected slight increase of 2%. There is still a 20% chance of getting rid of the impact of the public health crisis in 2020 and achieving a rapid and strong rebound. However, for now, IDC believes that the most likely outcome of this is that the global semiconductor market revenue will decline by 6% year-on-year in 2020, with a 54% probability of this happening.

At present, under the influence of the epidemic, the global terminal market will shrink this year, which will lead to a decline in demand for semiconductor companies and a reduction in output value. Although domestic semiconductor companies performed well overall in the first quarter, supported by existing orders, starting from the second quarter, the overseas epidemic and the reduction of orders in the terminal market will bring greater uncertainty to the performance of domestic semiconductor companies.