Xinlai Materials: The company has sufficient product orders and good production capacity

Recently, Xinlai Materials said in an institutional survey that at present, the company's semiconductor industry mainly involves IC, LED, LCD and photovoltaic. It is mainly used in equipment and factory, including vacuum system and gas transmission control system. Business model: direct sales on the equipment side, factory owner specifies the brand and the engineering company purchases it.

It is reported that the company's semiconductor products are aimed at many domestic and foreign customers, including American Applied Materials and LAM, and domestic well-known customers such as North Huachuang, Yangtze Memory Technologies, Hefei Changxin, Wuxi Hynix, Zhengfan Technology, Pure Technology, and Asia Space Integration. As a qualified supplier for many customers, the company has sufficient product orders and good production capacity. At present, the company's semiconductor vacuum system products have many customers, and in the future, gas system products will be the company's key focus. At the end of 2019, it issued convertible bonds to raise 280 million yuan to increase investment in semiconductor gas systems.

Xinlai Materials said that the company has more than ten years of OEM experience for international semiconductor ultra-high purity application materials manufacturers. In particular, in 2017, it introduced a person with 40 years of experience in the semiconductor field to form a team to focus on the research and development of a full range of products required for the transmission and control system related to semiconductor gas systems. The gases used in the semiconductor process are highly corrosive, so the surface corrosion-resistant electrolytic polishing (EP) treatment of the product is very important. This technology has been certified by American American Materials. The product production standards must comply with the US SEMI standards, and the important product testing indicators must be sent abroad for testing, which takes a relatively long time.

This part of the products is currently monopolized by the United States and Japan, and it takes a long time for the products to be certified by customers. Semiconductor vacuum systems provide a clean vacuum environment for terminal products. Products must meet the requirements of ultra-high vacuum 10-9Pa, so product welding technology is very important. The company's welding technology can meet the standards of different countries. At the same time, this product has also been approved by American American Materials. In terms of semiconductors, the company has production bases in mainland China, Taiwan and the United States, which can serve semiconductor FAB factories around the world more quickly.

According to the company's accumulated experience, the use of Xinlai's semiconductor products accounts for about 3%-5% of the total investment of chip factories, and about 5%-10% of the raw material purchases in semiconductor equipment factories. The benchmark competitors of semiconductor industry products are mainly foreign-funded enterprises in the United States, Japan and other countries. The market space for this business product exceeds RMB 50 billion. In the future, the company will vigorously develop Bihai products. Tetra Pak is a benchmark company in this industry. According to Tetra Pak's public data, the annual income is about RMB 100 billion.

Regarding the price increase of bulk commodities, Xinlai Materials believes that the price increase of bulk raw materials this year has a greater impact on the cost of the company's packaging materials. At present, the company's domestic and foreign competitors have not increased their prices, so we have not increased prices either. The prices of bulk raw materials have fallen recently, and the company expects that the impact will be weakened in the second half of the year. At the same time, if the prices of raw materials continue to be high, the selling price of packaging materials is expected to increase to a certain extent next year to pass on the impact of the increase in raw material prices to customers. The company has issued price increase notices to customers for products other than packaging materials in the first half of this year, which basically has no negative impact on the company.

According to Xinlai Materials, the company is the first company in Asia to pass the dual certification of ASME BPE pipes and fittings in the biopharmaceutical sector, and is currently the only domestic brand, which is crucial for biopharmaceutical companies to apply for FDA certification. The company's major customers in the biopharmaceutical sector include Dongfulong, Chutian Technology and other companies.