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“Chips”, “semiconductors”, “domestic substitution”…
These are some of the hottest topics in the recent A-share market. So, what exactly are semiconductors and chips, and how are they manufactured? What processes are involved, and which key enterprises are at play? It is essential to understand these aspects.
Understanding the differences and connections between semiconductors and chips is also important. Although they are often mentioned together, they refer to different levels of concepts within the electronics industry.
| Comparison Dimension | Semiconductor | Chip |
|---|---|---|
| Essence | Base Material (e.g., silicon, germanium, gallium arsenide) | Application Product (the final form of integrated circuits) |
| Core Function | Provides Controllable Conductivity (between conductors and insulators) | Realizes complex Data Processing, Storage, Control and other specific functions |
| Manufacturing Focus | Material Purification, Wafer Preparation, Doping Process | Integrated Circuit Design, Photolithography, Etching, Packaging Testing |
| Industry Role | Upstream Basic Support (materials, equipment) | Midstream and Downstream Core Applications (design, manufacturing, packaging testing) |
| Typical Applications | Diodes, Transistors, Solar Cells, Sensors | CPU, GPU, Memory Chips, Power Management Chips |
| Common Analogy | ⛏️ “Bricks”, “Paper”, “Flour” | 🏢 “Skyscrapers”, “Books”, “Bread” |
🧠 How to understand their relationship?
- Semiconductors are Base Materials, determining the physical properties and manufacturing possibilities of chips.
- Chips (or integrated circuits) are functional units manufactured on semiconductor materials through extremely complex processes, representing the core application and value embodiment of semiconductor technology.
The manufacturing process also reflects this relationship:
- Preparation of Semiconductor Materials: First, high-purity semiconductor materials (e.g., silicon) are prepared and processed into wafers.
- Front-end Process (Chip Processing): A large number of identical integrated circuits are produced on the wafer through hundreds of precise steps such as oxidation, photolithography, etching, ion implantation, and thin film deposition. Each small unit (Die) on this wafer is an unpackaged chip.
- Back-end Process (Packaging Testing): The wafer is cut into individual bare chips (Die), packaged (dressed with an “outer layer” and lead out pins), and then tested, ultimately becoming the “chip” we see.
🌍 Industry Perspective
- Semiconductor Industry: Covers a broader scope, including Materials (wafers, photoresists, etc.), Equipment (photolithography machines, etching machines, etc.), Chip Design, Manufacturing, and Testing and other processes.
- Chip Industry: Typically focuses more on the design, manufacturing, packaging, and testing of integrated circuits, which is the core part of the semiconductor industry. The term “chip industry” often refers to the entire semiconductor industry.
Chip manufacturing is a complex and precise industrial process. To quickly understand, let’s first look at the following flowchart that showcases the entire chip manufacturing process and the corresponding key domestic enterprises:
Below are detailed descriptions of these processes and key enterprises
Chip Design ➡️ Preparation of Silicon Wafers (Silicon → Silicon Dioxide)➡️ Coating Photoresist ➡️ Photolithography (Photolithography Machine: Shanghai Microelectronics) ➡️ Development (Coating Development Equipment) ➡️ Etching (Dry Etching, Wet Etching)【Plasma Implantation Machine ~ Wanye Enterprises】 ➡️ Doping (Adding Phosphorus Atoms) ➡️ Thin Film Deposition (Target Materials, Thin Film Deposition Equipment) ➡️ Metallization (Forming a wafer covered with chips, followed by cutting, packaging, testing, etc., ultimately forming usable chips)
🔧 Chip Design
Chip design is the starting point of the industrial chain, mainly involving design tools, instruction set architecture, and specific integrated circuit design.
- Design Tools (EDA):Huada Empyrean (301269) is the largest EDA company in China with the most complete product line. Its full-process EDA tool system for analog circuit design is one of the four major EDA tool companies globally.
- Instruction Set Architecture:Loongson Technology has launched its own LoongArch instruction set architecture and is developing CPUs based on it, aiming to build a self-controllable ecosystem.
- Integrated Circuit Design (Fabless): Several listed companies are deeply engaged in this field:
- Weir Shares (603501): A globally renowned CMOS image sensor (CIS) design company, with products widely used in mobile phones, automobiles, and other fields.
- GigaDevice (603986): Specializes in NOR Flash memory chips and microcontrollers (MCUs), a leading enterprise in the domestic market.
- Lanqi Technology (688008): A global leader in memory interface chips, benefiting significantly from DDR5 memory upgrades and the growth of AI server demand.
- Zhuosheng Micro (300782): A domestic leader in RF front-end chips, with products mainly used in smartphones and other wireless connection devices.
🏭 Wafer Manufacturing
Wafer manufacturing is the most capital and technology-intensive stage, mainly involving silicon materials, manufacturing equipment, and wafer foundry.
- Silicon Wafers and Materials:
- Shanghai Silicon Industry: A domestic leader in semiconductor silicon wafers, dedicated to the localization of 300mm large wafers.
- Liang Micro: Specializes in semiconductor silicon wafers and power devices.
- Jiangfeng Electronics (300666): A domestic leader in high-purity sputtering targets, with a high market share in the 12-inch target market and successfully developed electrostatic chucks.
- Manufacturing Equipment:
- Zhongwei Company (688012): A domestic leader in plasma etching equipment, with technology nodes covering 5nm and below.
- North Huachuang (002371): A domestic semiconductor equipment platform enterprise, with products covering etching, PVD, CVD, cleaning furnaces, and more.
- Shengmei Shanghai: A major supplier of semiconductor cleaning equipment, recognized for its technical strength in the industry.
- Wafer Foundry:
- SMIC (688981/00981.HK): The largest and most advanced wafer foundry in China, providing logic process foundry services from 0.35 microns to 14 nanometers. In the second quarter of 2025, its capacity utilization rate reached 92.5%.
- Huahong Company (688347): A global leader in specialty process wafer foundry, focusing on embedded non-volatile memory, power devices, analog and power management, and other specialty process platforms. Recently announced plans to acquire 97.5% of Huali Micro to further enhance 12-inch wafer foundry capacity.
📦 Packaging Testing
Packaging testing is the final step before chips leave the factory, mainly involving packaging and testing.
- Packaging:
- Changdian Technology (600584): The third-largest packaging and testing company globally, providing comprehensive, one-stop chip manufacturing solutions for global customers.
- Huatian Technology (002185): The second-largest packaging and testing factory in China, focusing on sensor and power device packaging.
- Tongfu Microelectronics (002156): A strong packaging and testing enterprise with deep cooperation with international clients like AMD.
- Testing Equipment:
- Changchuan Technology: Specializes in testing machines, sorting machines, and other integrated circuit-specific equipment.
- Huafeng Measurement and Control: An important enterprise in the domestic semiconductor testing equipment field.
💡 Industry Trends and Investment Focus
Understanding industry development trends can help us better grasp investment opportunities and risks:
- Technology-Driven: Advanced Processes (e.g., SMIC’s 14nm/7nm FinFET) and Specialty Processes (e.g., Huahong’s embedded/standalone non-volatile memory, power devices, etc.) continue to develop.Third-Generation Semiconductors (e.g., Sanan Optoelectronics’ silicon carbide) have broad prospects in high-voltage, high-temperature, and high-frequency application scenarios.Advanced Packaging (e.g., Changdian Technology’s Fan-out, SiP, Chiplet technology) has become one of the key ways to enhance chip performance.
- Market Demand: AI and Data Centers (e.g., Lanqi Technology’s memory interface chips), Automotive Electronics (e.g., Weir Shares’ CIS, Silan Micro’s IGBT), Domestic Substitution (opportunities across the industry) are the current core growth drivers.
- Competitive Landscape: Leading domestic enterprises are gradually narrowing the gap with international giants, focusing on High-Value-Added Fields.
⚠️ Important Notice
- The above information is mainly based on announcements from listed companies, periodic reports, official websites, and authoritative financial media reports (e.g., Shanghai Securities News, China Securities Journal, etc.), please pay attention to the timeliness of the information, and specific situations should be based on the latest announcements.
- The semiconductor industry is characterized by technology-intensive, capital-intensive, and strong cyclicality, and may also be affected by industrial policies, international trade environments, and other factors.
- This article is for informational reference only, and does not constitute any investment advice. The market has risks, and decisions should be made cautiously.
I hope the above summary can be helpful to you.
Disclaimer
This content is provided by Chengxi Investment Research.
The content of this article does not constitute any investment advice, guidance, or commitment. All views are for reference and learning purposes only. Any mention of individual stocks is for case analysis only; investors should make their own decisions!
Relevant information is sourced from publicly available data, company financial reports, industry research reports, institutional research, official media, etc. If there are any discrepancies, please refer to the latest official information, and corrections are welcome.
The stock market has risks; investment requires caution!
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