On August 30th, influenced by Huawei‘s sudden release of the Mate 60 Pro smartphone, the semiconductor sector in A-shares quickly surged after the market opened. V-Test Technology and Maxic Technology both rose more than 10%, while Leadyo IC Testing, Vanchip, XDLK, Semiconductor Manufacturing International Corporation (SMIC), and Hua Hong Company all rose more than 5%.
Just yesterday, Huawei’s latest flagship phone Mate 60 Pro quietly went on sale at the Huawei online store and some offline flagship stores, with a starting price of 6999 yuan ($960). The official website shows that the first batch of goods has been sold out, and pre-orders are currently available.
Of note, Huawei has not previously disclosed any information about the smartphone chip and has not indicated whether this is a 5G phone. On August 29th, many people purchased this phone at some Huawei stores. User tests have shown that its download speed exceeds 500Mbps (megabits per second) – only 5G phones can achieve such download speeds – while the maximum download speed of 4G is only 100Mbps. In addition, the Mate 60 Pro supports satellite calls and editing satellite information.
Prominent analyst Guo Mingji believes that the Mate 60 Pro displays three major investment trends: first, the localization of semiconductors, mainly in RF and power-related areas. Benefiting companies include Semiconductor Manufacturing International Corporation (wafer foundry), Vanchip (L-PAMiD), Sg Micro Corp (power supply), Southchip (power supply), and Maxic Technology (wireless charging – in collaboration with JCST (Close Beta); second, leading satellite communication providers among Android brands. Benefiting companies include Hwa Creat (chips); third, improving the average specifications of high-end models’ optical systems. Benefiting companies include Largan (lenses), Sunny Optical Technology (modules), Will Semiconductor (CIS), SmartSens(CIS), and B.L Electronics(VCM).
But Huawei’s self-developed chips still face many challenges, such as yield rate and support for advanced semiconductor equipment. Guo Mingchi also mentioned that there are still some semiconductor components that cannot be localized, mainly including filters, SOI (Silicon on Insulator), and gallium arsenide.
Apart from Huawei, another leading smartphone company Apple has also announced news of a new product. They stated that they will hold a special event at 1:00 am on September 13th Beijing time, with the theme “Curiosity Above All”. It is speculated that this launch event will introduce the new generation iPhone 15 series, as well as the new generation Apple Watch S9 and second-generation Apple Watch Ultra. These new products are expected to be officially available for sale on September 22nd.
In the personal computer market, chip giant Intel will also launch its latest processor chips for the consumer market in September, promoting the iteration and update of personal computers. With the arrival of the back-to-school season, there is a certain increase in personal computer sales, which is also a traditional peak season for offline and online merchants. Previously, Interface News reporters saw at this year’s Bilibili World and ChinaJoy exhibitions held during the summer that gaming laptops equipped with Intel’s latest Core high-end processors and targeting young student groups were popular. Gaming computers are also a major highlight in the personal computer market.
From this perspective, the intensive release of high-end smartphones and the entry into an iterative cycle in the personal computer market are expected to drive a recovery in upstream wafer foundries.
In the first half of the year, mainland China’s major wafer foundries were affected by a sustained downturn in the consumer market and inventory reduction falling short of expectations. Semiconductor Manufacturing International Corporation (SMIC), CEO Zhao Haijun openly admitted that although both China and the rest of the world have resumed normal economic and social operations, demand for electronic products is lower than expected. Inventory levels for integrated circuit products remain high, market confidence is lacking, and chip companies still need to cut expenses. From an overall market perspective, the mobile phone and consumer electronics sectors are still experiencing an innovation bottleneck with no new highlights. Demand is decreasing rather than increasing, replacement cycles are lengthening, while segments such as personal computers, industrial applications, and new energy vehicles are gradually approaching supply-demand equilibrium.
Zhao Haijun believes that the chip industry has already hit bottom, but still faces many challenges including slower destocking than expected, lack of momentum in demand growth, and geopolitical influences. “Currently, China remains the largest consumer market for integrated circuits and discrete devices globally, accounting for 35%-40% of the global market. Considering the changes in the industrial chain pattern and resource reallocation, it is foreseeable that future competition will become more intense.
Another major domestic wafer foundry, Hua Hong Semiconductor Limited, was listed on the Science and Technology Innovation Board on August 7th. The main business of Hua Hong Semiconductor Limited includes power devices, embedded non-volatile memory, analog chips, and other products that do not rely on advanced process technology. The company’s disclosed performance for the second quarter of 2023 showed a sales revenue of $631.4 million, a year-on-year increase of 1.7%. The net profit attributable to shareholders of the parent company was $78.5 million, a year-on-year decrease of 6.4%. The gross margin was 27.7%, a decrease of 5.9 percentage points compared to the same period last year but higher than the previous quarter’s guidance.