Fire in the ASML factory! A-shares plummeted across the board, SMIC’s US$1.2 billion order may be postponed again

News on January 4, 2022, yesterday, ASML, a world-renowned leading lithography machine company, announced on Monday local time that a fire broke out in a parts factory in Berlin, Germany. In response, ASML stated that the fire had been extinguished in time. It has caused casualties, and it is too early to make any statement on whether the incident will have any impact on this year’s production plan. It will take several days for a thorough investigation and a comprehensive assessment to be made, and the results will be updated as soon as possible.

As we all know, the lithography machine is one of the core equipment in the semiconductor manufacturing field, and ASML is the leading company in the field of lithography machine. In the global lithography machine market, ASML has a market revenue share of 87.4%, and it is the only company in the world that can produce EUV lithography machines. As the most advanced chip manufacturing equipment today, EUV lithography machine can produce chips with a process process below 7nm. It is a core manufacturing equipment that breaks through the limitations of Moore’s Law.

Moreover, most of the advanced lithography equipment used by TSMC, Samsung, Intel, and SMIC comes from ASML. If the fire causes the delay in the delivery of ASML lithography machines, it will cause a major blow to the global semiconductor industry.

The lithography machine ordered by SMIC may be postponed again

Coincidentally, as early as 2018, there was a fire in the Prodrive factory of ASML’s component supplier. In this regard, ASML stated that its supply in early 2019 is expected to be delayed.

It is understood that SMIC, the largest domestic chip foundry company, previously spent 120 million U.S. dollars to order an EUV lithography machine from ASML in the Netherlands, and it is expected to deliver it in early 2019. The fire caused the EUV lithography machine ordered by SMIC to fail to be delivered as scheduled, which forced the termination of SMIC’s technology research and development plan originally scheduled to start the 7nm process in 2019.

It is worth mentioning that on March 3, 2021, SMIC issued an announcement stating that the company had purchased the products during the 12-month period from March 16, 2020 to March 2, 2021 according to the bulk purchase agreement. ASML’s lithography machine products signed a purchase order with ASML Company for a price of up to 1.2 billion US dollars.

It is understood that SMIC has had a bulk purchase agreement with ASML since January 2018, and the agreement is now extended for a full year to December 31, 2021. In terms of procurement methods, SMIC needs to pay a 30% down payment, and the rest is paid upon delivery.

However, the $1.2 billion lithography machine order purchased by SMIC this time has not been delivered successfully. Now, ASML has once again reported the news of a fire. I don’t know whether the delivery time of this order will continue to be delayed.

At present, SMIC is an integrated circuit manufacturing company with the most advanced and comprehensive technology, the most complete supporting facilities, the largest scale, and multinational operations in China. It provides foundry and technical services for different technology nodes from 0.35 microns to 14 nanometers.

In terms of production capacity, SMIC has a 300mm wafer fab, a 200mm wafer fab, and a 300mm advanced process wafer joint venture with actual holdings in Shanghai; it has a 300mm wafer fab and a holding 300mm wafer fab in Beijing. Round fab: There are two 200mm wafer fabs in Tianjin and Shenzhen.

Or affect the expansion plan of the chip foundry

Before the ASML fire, the global chip shortage has not been effectively alleviated. The production capacity of many chip foundries in the first half of 2022 has been rounded up, and as consumers’ demand for Electronic consumer products such as computers and smartphones has increased significantly, The demand for semiconductor chips has also increased, leading to an imbalance between supply and demand in the semiconductor market and a state of short supply.

Many chip foundry manufacturers took this opportunity to start their expansion plans.

As the key equipment for semiconductor chip manufacturing, the lithography machine is inseparable from the support of the lithography machine for chip manufacturing and research and development. Therefore, if the chip foundry wants to increase production capacity, lithography equipment is indispensable.

TSMC

In the current global chip foundry market, TSMC is undoubtedly the leading company, with high-quality customer resources such as Apple, MediaTek, and Qualcomm, and is also a global leader in advanced process technology, with a 55% market share in chips. First in the market.

Today, the global semiconductor market is still in a state of imbalance between supply and demand. As the demand for chips from all walks of life continues to increase, global chip production has always been in short supply. In order to meet the needs of major companies and occupy more market shares, TSMC has begun its Chip expansion plan.

In late April 2021, TSMC announced that in order to meet the increase in structural demand and to meet the challenge of expanding the global chip supply from the shortage of automotive chips, it will invest US$2.887 billion in capital expenditures to expand 28nm maturity in the Nanjing plant. The manufacturing process is expected to start mass production in the second half of 2022 and achieve full production in mid-2023, reaching 40,000 pieces/month.

In Japan, TSMC also has plans to build a factory. In November 2021, TSMC decided to establish a JASM joint venture with Sony, adopting a 22/28 nanometer process, with a monthly production capacity of 45,000 pieces. It is expected to start construction next year and realize formal production in 2024. Currently, this project has been approved by the Investment Review Committee of the Ministry of Economic Affairs of Taiwan.

Previously, TSMC had stated that its plant construction plan was in the high-speed implementation and development stage. TSMC’s total investment in the semiconductor industry in the next three years will reach 100 billion U.S. dollars (equivalent to approximately 637.96 billion yuan). This year’s capital expenditure has also been raised from the 25-28 billion US dollars previously announced to 30 billion US dollars, a 74% increase from last year.

Samsung

Samsung is also a leader in the semiconductor manufacturing field. Its market share is second only to TSMC, with a market share of 17%. Like TSMC, Samsung is also increasing its investment in the semiconductor manufacturing industry.

On November 24, 2021, Samsung Electronics officially announced that it will build a new semiconductor manufacturing plant in Taylor, Texas, with an investment of up to 17 billion U.S. dollars. Samsung’s US$17 billion investment includes venues, property improvements, and machinery and equipment. The plant will become Samsung’s largest investment in the history of the United States and will increase Samsung’s total investment in the United States to more than US$47 billion.

At the same time, Samsung’s newly expanded 5nm plant in Pyeongtaek, South Korea, which uses extreme ultraviolet lithography (EUV), has opened new production capacity in June 2021, and the plant is also preparing for 4nm and 3nm risk trial production.

SMIC

SMIC is also carrying out a chip expansion plan.

On March 17, 2021, SMIC will enter into a cooperation framework agreement with the Shenzhen government (through the Shenzhen Reinvestment Group) to jointly invest in SMIC Shenzhen to construct the Shenzhen project. The project is aimed at Shenzhen to carry out its 12-inch wafer expansion plan, focusing on the production of mature chip processes of 28nm and above, and the production target is 40,000 12-inch wafers per month. The investment in the project is estimated to be US$2.35 billion, and production will begin in 2022.

In September 2021, SMIC issued a voluntary announcement. The content of the announcement stated that SMIC signed a cooperation framework agreement with the Management Committee of the Lingang New Area of ​​the China (Shanghai) Pilot Free Trade Zone on September 2, 2021.

According to the cooperation framework agreement, SMIC and the Shanghai Pilot Free Trade Zone Lingang New Area Management Committee intend to jointly establish a joint venture company in the Shanghai Lingang Pilot Free Trade Zone, and plan to build 12-inch wafers with a production capacity of 100,000 wafers per month. OEM production line project.

Today, the chip production expansion plans of various chip foundries are proceeding in an orderly manner, but the expansion of chip production capacity requires the support of a large number of lithography equipment. The sudden fire of ASML may affect the delivery of the lithography machine on schedule. , Thereby affecting the expansion plans of various chip foundries.

Semiconductor stock market plummets

It is worth mentioning that after the news of the ASML fire broke out, the semiconductor sector of A-shares plummeted across the board. Among them, Changchuan Technology, Jingchen shares, and Lihe fell slightly by more than 10%, and the entire sector fell 1.74%. .

Although affected by the ASML fire incident, the semiconductor stock market has declined, but overall, the development prospects of the semiconductor industry are still good.

Public data shows that 2021 is a year of rapid development in the semiconductor industry, with sales of the entire industry increasing by 26% year-on-year to 553 billion U.S. dollars. According to EulerHermes’ forecast, the semiconductor industry’s sales in 2022 will increase by 9% from 2021, and will exceed US$600 billion for the first time in 2022.

Earlier, the International Semiconductor Industry Association SEMI released the year-end total sales of semiconductor equipment. It is expected that the total sales of original equipment manufacturers in 2021 will reach 103 billion US dollars, an increase of 44.7% from the industry record in 2020 (71 billion US dollars). . By 2022, the global semiconductor equipment market will expand to 114 billion U.S. dollars.

From this point of view, in 2022, the semiconductor industry will still maintain a high degree of prosperity.

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