The future "core" of domestic chip

Semiconductor boom is still rising. The trend of chip industry transferring to the mainland is irresistible.

According to the data of WSTS, global semiconductor sales increased by 21.6% in 2017 and 400 billion US dollars for the first time. By the end of the 18 year, global semiconductor sales have been around 18 months in a row, and the prosperity is still rising. Since its development in the 50s of last century, the chip has gone through three stages of development: the origin of invention in the United States - accelerated development in Japan - mature and differentiated in Taiwan, South Korea. The first two reasons for the transfer of semiconductor industry are: Japan has been recognized by the United States in the PCDRAM market; South Korea has become a new major producer of PCDRAM and Taiwan has become the leading producer in the field of wafer generation and chip sealing. Now China has become the largest market in global semiconductor. With the strong demand and strong policy, the chip industry is entering the third industrial transfer, and the trend of transfer to the mainland is unstoppable.

Manufacturing, sealing and testing links are relatively easy to break through.

Integrated circuit industry chain mainly includes three aspects of chip design, manufacturing, packaging and testing. Besides, it also includes related industries such as equipment manufacturing, material production and other related industries. Among them, the design links are mainly monopolized by leading technology giants such as Samsung, Qualcomm, AMD and so on because of their large investment and high risk. The manufacturing and sealing areas of the middle and lower reaches are relatively labor-intensive. China's chip industry is more suitable for breakthroughs from these two directions. At present, some outstanding local enterprises, such as the core international and the long power technology, have been sprung up. But overall, the chip industry in China is still in the early stage of development, and the chip self-sufficiency rate is very low in key areas. Recently, ZTE's sanctions by the US Department of commerce also reflected China's fragile position in the chip industry. The development of integrated circuits has risen to the top priority of the country, and the localization rate of chips needs to be improved.

Policy and demand driven industry rise, domestic chip future "core" glory

With the gradual slowdown in the sales of PC and mobile products, the downstream driving force of the development of the integrated circuit industry has begun to change to the emerging needs of automotive electronics, AI, and the Internet of things. In addition, China will become the largest investment area in the global integrated circuit industry, and the tide of factory building in mainland China is expected to drive the local industry chain to achieve leaping development. In terms of policy, the state has promulgated the national integrated circuit industry development program and other encouraging documents. The two phase of "big fund" has also been in the middle of the collection. It is expected to raise the scale of financing in 1500-2000 billion yuan, and it is expected to end up to the trillions of funds. The domestic chip industry will cooperate with all aspects of capital, policies, talents and needs. It will develop rapidly with the trend of prairie fire.

It is recommended to focus on subdivision industries with a higher core competitiveness and a higher certainty of benefit logic, including long power technology (global third in the field of encapsulation), megabyte innovation (coordinated development in the field of NORFlash+MCU+NAND three), Jiangfeng electronic (domestic high pure target dragon head) and crystal Sheng Mechatronics (the overall layout of crystal growth equipment) ) Fu Han Wei (the leading video surveillance chip designer in China).

Risk warning: the semiconductor industry is less prosperous than expected; the impact of technological innovation on traditional industrial structure.

Changdian Technology: the leading position of the industry is stable, and the ability to release profitability is a multi pronged approach.

The 2017 annual report of long power technology is issued. In 2017, the company achieved operating income of 23 billion 856 million yuan, an increase of 25% over the same period last year. The company realized a net profit of 343 million yuan attributable to shareholders of the parent company, and achieved net profit of -2.63 billion yuan, an increase of 223% and -28% respectively over the same period last year.

Revenue and net profit continued to grow, and the cost rate continued to decline.

In 2017, Changdian technology realized business income of 23 billion 856 million yuan, an increase of 25% over the same period. In recent years, the company's business revenue has maintained a relatively fast growth trend. In 2017, the company achieved a net profit of 343 million yuan, an increase of 223% over the same period last year. The net profit growth attributable to shareholders of listed companies is mainly related to the large increase in net profit of the original long electric power and JSCK attributable to shareholders of listed companies during the reporting period. In 2017, the company achieved net profit of -2.63 billion yuan, an increase of -28% over the same period last year. Non recurrent gains and losses have been expanded.

From the situation of each quarter, the non recurrent profit and loss of Q4 fell sharply, the net profit of the return mother, the net profit of the non return to the mother had increased significantly, and the net profit of the non return to mother was first corrected since 2015Q2. Q4 gross margin has risen sharply. Net interest rates began to change from negative to Q3 and began to rise. Q4 company's performance is clearly upwards, and it is expected that the company may usher in a turning point for its performance.

In 2017, Changdian technology sales revenue ranked third in the top 10 outsourcing circuits of the global IC. In terms of advanced packaging wafer share, the company's global market share ranks third (7.8%). In the future, the company releases the profitability through the smooth integration of star Cox, the co effect of virtual IDM, the development of advanced packaging technology, the reduction of the financial cost, and the promotion of labor productivity.

The company's EPS is predicted to be 0.62, 0.88, and 1.35 yuan in 2018~2020, corresponding to 35X, 25X and 16X PE respectively.

The risk of fluctuation in semiconductor industry, the risk of R & D progress is not as good as expected, the risk of integration is not as good as expected, and the risk of exchange rate fluctuation.