Progress in Localization Impressive
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Recently, the localization of semicon equipment and materials in China has been accelerating, and the share prices of related companies have been rising. In particular, we note that localization is underway for photoresist, exposure equipment, deposition equipment, and ion implanter.
Localization of semicon photoresist in China
The recent progress in the localization of semicon equipment and materials in China has been impressive, with related players showing sound share price returns. As China’s import of semicon equipment has become more difficult due to US sanctions, it has accelerated its own equipment development. Lithography equipment for the 28nm process is set to be released in China by yearend, and headway is also being made for ion implanters, etc.
Photoresist development in China is also accelerating. Nata Optoelectronic (300346.SZ) announced successful ArF photoresist development, which caused its share price to rise 68% in five days. Suzhou Ruihong is also mass producing i-line photoresist which is supplied to Chinese semicon players, and it is developing KrF photoresist, which is currently in the pilot stage with plans to mass produce from 2022.
Chinese semicon equipment and materials makers to perform well
As Chinese government support is concentrated on semicon equipment and materials makers, the share prices of related firms should stand out. We draw attention to MOCVD equipment maker Advanced Technology & Materials (000969.SZ), which can produce GaN semiconductors; CVD and cleaning equipment maker Naura Technology (002371.SZ); and photoresist and deposition precursor maker Nata Optoelectronic (300346.SZ).
Meanwhile, DDR4 19nm process yield at Chinese DRAM maker Hefei Changxin has risen to 75%, which is a sound level considering the firm’s relatively short history. The company plans to start 17nm process mass production by yearend. Its current DRAM capacity stands at 40K WPM, but it plans to upgrade to 60K wpm by end 2021.