The Zhitong Finance App learned that Zhishang Securities released a research report saying that since November 2023, global and Chinese semiconductor sales have achieved three consecutive months of positive growth and expansion over the same period last year, reflecting the upward trend in the industry. In January 2024, global semiconductor sales were 47.6 billion US dollars, up 15% year on year, and the growth rate increased by 3.6 pcts. Judging from downstream demand, global smartphone shipments in 23Q4 were positive year on year, and sales of new energy vehicles continued to rise high. Looking at downstream prices, the global storage market grew rapidly in 23Q4, and DRAM prices picked up significantly. Demand for terminals is picking up, product prices are rising, and the semiconductor cycle is now showing a positive signal.

The views of Zheshang Securities are as follows:

The global semiconductor boom cycle is gradually progressing, and terminal demand and product prices are picking up

Since November 2023, global and Chinese semiconductor sales have achieved three consecutive months of positive growth and expansion over the same period last year, reflecting the upward trend in the industry. In January 2024, global semiconductor sales were 47.6 billion US dollars, up 15% year on year, and the growth rate increased by 3.6 pct; of these, China's semiconductor sales were 14.8 billion US dollars, up 27% year on year. Judging from downstream demand, global smartphone shipments in 23Q4 were positive year on year, and sales of new energy vehicles continued to rise high. Looking at downstream prices, the global storage market grew rapidly in 23Q4, and DRAM prices picked up significantly. Demand for terminals is picking up, product prices are rising, and the semiconductor cycle is now showing a positive signal.

The global semiconductor equipment market declined in 2023, and mainland China bucked the trend and expanded production

In 2023, the ten major overseas semiconductor equipment companies had revenue of US$108 billion, down 2% year on year, and net profit of US$27.2 billion, or -2% year on year. The performance of companies with a high share of storage and back-end test equipment companies declined significantly. Global semiconductor equipment quarterly sales in 2023Q3 were US$25.6 billion, -11% year-on-year, and -0.9%; mainland China actively expanded production. In 2023Q3, with overseas key equipment stocking and some key equipment shipments, mainland China's sales increased 42% year on year to US$11.1 billion, accounting for 43% of the market. SEMI estimates that global semiconductor equipment will grow 4% year on year in 2024, and the market will grow 18% year on year to reach 124.1 billion US dollars in 2025.

The share of semiconductor equipment sales in mainland China reached a record high in 2023. We are optimistic about capital expenditure in mainland China in 2024

In 2023, mainland China accounted for 35% of the revenue of overseas semiconductor equipment companies, an increase of 10 pcts over the same period last year. Mainland China accounted for 44% of revenue in 2023Q4. Since the introduction of the control policy in October 2022, domestic fabs have increased their stocks of key equipment overseas. With the gradual arrival of key equipment, it is expected that tenders for domestic equipment will gradually follow up in 2024. Optimistic about the steady expansion of production of mature manufacturing processes in mainland China in 2024. According to the latest quarterly reports and exchanges of various companies, ASML said that demand for mature process equipment in mainland China will continue to be strong, DNS expects capital expenditure from mature nodes in China to remain positive, and LAM and KLA expect capital expenditure in mainland China to be stable.

Global semiconductor equipment market demand will be strong in 2025, and the expansion of HBM and advanced logic will drive demand growth

According to the latest quarterly reports of key overseas semiconductor equipment companies, the global equipment market will usher in a weak recovery in 2024, and AI and advanced logic will drive rapid market growth in 2025. ASML believes that judging from the company's equipment utilization rate and chip inventory level, the market will gradually recover from the slump in 2024, and demand for advanced AI-related storage technologies such as DDR5 and HBM will be the main driver this year; strong demand in 2025 is mainly due to AI demand, cycle reversal, and the construction of new fabs around the world. AMAT believes that demand for advanced logic foundries will be strong in 2024, demand for ICAPS will decline, demand for NAND will grow, and DRMA will be driven by strong demand from HBM. LAM believes that storage is expected to recover moderately in 2024. The global semiconductor equipment market is expected to be in the middle to high range of 80 billion US dollars. DRAM growth is driven by HBM and node upgrades, NAND growth is mainly due to technological upgrades, and foundry/logic is expected to be driven by investment in advanced manufacturing processes. TEL believes that the global semiconductor equipment market will be 100 billion US dollars in 2024. The growth is mainly driven by mainland China's continued investment and recovery of high-end DRAM investment in the second half of the year, and AI, consumer electronics recovery, and advanced manufacturing processes will drive market growth in 2025. DNS believes that in 2024, the global semiconductor market will grow by single digits year on year, investment in advanced processes in foundries will proceed according to plan. Logically, new plants in North America will begin equipment installation, storage is expected to recover at the end of 2024, and artificial intelligence will drive DRAM growth. Kelei believes that demand in the global measurement equipment market in the second half of 2024 is expected to be stronger than in the first half of the year. Edwin believes that the testing machine market will recover in the second half of 2024.

Investment advice: Driven by cyclical recovery and advanced breakthroughs, optimistic about the acceleration of capital expenditure and the increase in localization rate

Key recommendations: 1) Underrated platform leader, North China Huachuang (002371.SZ); 2) Benefiting from the expansion of storage production, China Micro (688012.SH), Tuojing Technology (688072.SH), Microconducting Nano (688147.SH); 3) Low localization rate, high elasticity from 0 to 1 companies: Core Source Micro (), Precision Electronics (300567.SZ), etc. 688037.SH

Risk warning: risk of market demand falling short of expectations, risk of overseas semiconductor regulation, risk of technological breakthroughs falling short of expectations