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Main Points
◼ Market Overview
In the past week (04.07-04.11), the SW Electronics Index fell by 3.89%, underperforming the CSI 300 Index by 1.01 percentage points. Among the six major sub-sectors, the semiconductor, electronic chemicals II, other electronics II, optical optoelectronics, components, and consumer electronics sectors experienced changes of 0.56%, -1.91%, -7.48%, -8.60%, -9.26%, and -9.60%, respectively.
◼ Core Insights
On April 11, the China Semiconductor Industry Association issued an “Emergency Notice on the Rules for the Recognition of the ‘Place of Origin’ of Semiconductor Products”: “According to the relevant provisions on non-preferential origin rules, the place of origin for ‘integrated circuits’ is determined based on the four-digit tariff number change principle, meaning the wafer fabrication location is recognized as the place of origin. It is recommended that for integrated circuits, whether packaged or unpackaged, the place of origin declared during import customs clearance should be based on the location of the ‘wafer fabrication factory.'” Previously, customs policy recognized the place of origin for semiconductors based on the location of the packaging and testing factory.We believe that the core content of this notice is that “the wafer fabrication location is recognized as the place of origin.”According to reports from Kuai Technology, wafer manufacturing (fabrication) is the most critical and technically challenging stage, directly determining the chip’s process technology. Han Juke, Vice President of the China Communications Industry Association, stated that using the fabrication location as the place of origin can more accurately identify the true technological source of the chip, avoiding the ambiguity of key technology attribution through the packaging location (usually labor-intensive areas). At the same time, we believe thatchanging the place of origin from packaging to fabrication is expected to accelerate the trend of semiconductor localization to some extent,as companies may transfer the fabrication process to within China, thereby encouraging domestic wafer fabs like SMIC and Hua Hong Semiconductor to take on more international orders; as companies gradually shift core manufacturing processes domestically, the expansion of wafer fab capacity will drive demand for semiconductor equipment, compounded by rising import costs for U.S. equipment (such as increased tariffs), which is expected to accelerate the domestic substitution of semiconductor equipment.
In 2024, investment in semiconductor equipment in mainland China continues to rise, with Northern Huachuang reporting positive results.According to SEMI data, in 2024, the global front-end semiconductor equipment market is expected to grow significantly, with wafer processing equipment sales increasing by 9% and other front-end sub-market sales increasing by 5%. This growth is primarily due to increased investments in advanced and mature logic, advanced packaging, and high-bandwidth memory capacity expansion, along with a significant increase in investments from mainland China. Regionally, mainland China, South Korea, and Taiwan remain the top three markets for semiconductor equipment spending, accounting for a combined 74% of the global market share. Mainland China has solidified its position as the largest semiconductor equipment market, with a projected investment increase of 35% year-on-year in 2024, reaching $49.6 billion, primarily due to its proactive capacity expansion and government support aimed at increasing domestic chip production. This week, Northern Huachuang announced its Q1 2025 performance forecast, with operating revenue expected to grow by 23.35%-50.91% year-on-year, and net profit attributable to the parent company expected to grow by 24.69%-52.79% year-on-year. The company disclosed that the revenue growth in Q1 2025 is due to key technological breakthroughs in several new products in the integrated circuit equipment field, such as capacitive coupling plasma etching equipment, atomic layer deposition equipment, and high-end single-wafer cleaning machines, significantly increasing process coverage, while market share for several mature products steadily rises.
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Risk Warning
Increased Sino-U.S. trade friction, terminal demand falling short of expectations, and domestic substitution not meeting expectations.
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Report Source
Report Title: “Wafer Fabrication Location Recognized as Place of Origin, Continuing the Push for Semiconductor Localization – Electronics Industry Weekly Report (2025.4.07-2025.4.11)”
Analyst: Wang Hongbing
SAC Number: S0870523060002
Analyst: Fang Chen
Tel: 021-53686475
E-mail: [email protected]
SAC Number: S0870523060001
Report Release Date: April 14, 2025
Publishing Institution: Shanghai Securities Co., Ltd.
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Disclaimer
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