2025-09-15 01:49Summary of the Conference Call on China's Semiconductor Supply Chain Industry Overview - In 2Q25, China semiconductor chipmakers (fabless, IDM, foundry, OSAT) reported a revenue growth of 16-21% YoY, indicating a mild recovery in net profit margins (NPM) with fabless/IDM companies' average NPM increasing from 12% in 1Q25 to 13% in 2Q25. Foundry and OSAT suppliers' average NPM improved slightly from 4% to 5% [1][8] - Semiconductor equipment companies experienced a slowdown in sales growth from 42% YoY in 1Q25 to 28% in 2Q25, although their average NPM improved from 16% to 19% [1] - Silicon wafer suppliers, such as NSIG and Lion Electronics, continued to report losses in 2Q25 with NPM at -18% and -5%, respectively [1] Inventory Management - Notable inventory reduction was observed among Chinese semiconductor fabless companies in 2Q25, with inventory turnover periods for MCU, analog, and power discrete segments decreasing by 16-48 days QoQ [2] - Overall inventory levels in the China market remain higher than pre-2022 levels but are healthier compared to 2023-24, where days of inventory (DoI) were between 200-300 days [2] Demand and Supply Dynamics - The integrated circuit (IC) billing volume in China was reported at 12.6 billion units in July, reflecting a 10% YoY increase. This demand growth rebounded from a -1% contraction in June [3] - China's IC import volume grew by 12% YoY, while domestic manufacturing volume increased by 25% YoY. The netting off of a 17% export growth suggests a supply volume increase of 15% YoY on a 3-month moving average basis [3] - The trend of inventory digestion among Chinese chipmakers observed in 2Q25 may be moderating as supply growth has outpaced demand for two consecutive months since June [3] Pricing Trends - The global average unit price for NOR flash was reported at US$0.39 in July, down 6% MoM and 28% YoY, indicating continued price softness [4] - However, major Taiwan and China NOR flash suppliers reported normalized inventory levels, which may support price stabilization [4] - Specialty DRAM contract prices have seen significant increases in 3Q25, with DDR4 prices rising approximately 70% in July and 10% in August, while 4Gb DDR3 prices increased by 20% in July and 50% in August [4] Financial Performance Overview - In 2Q25, the fabless and IDM sectors saw over 20% YoY sales growth, while foundry, OSAT, and silicon wafer sectors grew in the mid to high teens [8] - Despite improvements in net profit margins across sectors, silicon wafer companies like NSIG and Lion Electronics continued to post net losses [8] Future Outlook - Consensus forecasts predict 15%-26% YoY sales growth for the semiconductor industry in 2026, with expectations for further improvement in net profit margins [9] - Specific companies such as SMIC and JCET are projected to see significant sales growth, with SMIC's sales expected to reach US$78.3 billion by 2026, reflecting a 16% YoY increase [9] Additional Insights - The semiconductor supply chain is experiencing a dynamic shift in supply and demand, with potential implications for inventory management and pricing strategies moving forward [3][4] - The recovery in profitability and sales growth across various segments indicates a positive trend for the semiconductor industry in China, despite ongoing challenges in specific areas such as silicon wafer production [1][8]