Before applying for the board, Hejian Chip applied for listing on the Shanghai Stock Exchange in mid-2018. It is expected that no more than 400 million new shares will be issued, and the total amount will not exceed RMB 2.5 billion. The technology is still planning to raise 2.5 billion yuan in Science and Technology, and the highest amount among the first nine companies.
As a foundry company, Hejian Chip ranked among the top ten enterprises in China's IC manufacturing industry in 2017. Lianhua Electronics, the parent company in Taiwan, has enjoyed many policies and talents after entering the Suzhou Industrial Park. It has also established a complete set of foundry production ecology.
However, the ship's chip in the lineup of the company's board of directors also includes the subsidiary of Lianhe Integration and Lianhua Semiconductor. Due to pressure from the previous construction, Xiamen Lianxin suffered losses for three consecutive years, which also seriously affected the performance of the parent company. The annual loss of Hejian Chip 2018 is 2.6 billion yuan, and the net loss after deducting non-financial debt is 146 million, and it has suffered losses for three consecutive years.
The picture shows the shareholding structure of the ship chip
In recent years, China, as one of the world's largest economies, has upgraded its local semiconductor industry, which will bring about a broad market demand. The mainland capital market can provide more funds for Hejian chips and promote the effective expansion of wafer fab production capacity. As the basic material for manufacturing semiconductor chips, wafers have been paid more and more attention to the optimization and breakthrough of their production technology.
Hejian chip mentioned in the prospectus that the company insists on market demand-oriented, and rationally expands the 8-inch wafer manufacturing capacity through this fundraising, and continues to differentiate on the existing 12-inch and 8-inch advanced and special processes. Process research and development, while continuously expanding the production capacity of advanced processes such as 28nm and 40nm, increasing the abundance of product lines, and achieving sustained and steady growth in the company's main business income.
The picture shows the growth of the integrated circuit industry.
The listing of Hejian chips is expected to accelerate the deep integration of UMC and the mainland semiconductor industry. This move not only brings greater competition challenges to local semiconductor manufacturers in mainland China, but also has great significance for China's entire chip industry.
When it comes to the ship chip, it may not be known. However, United Microelectronics Corporation (hereinafter referred to as "Lianhua Electronics"), the parent company of Taiwanese chips in Taiwan, is a world-renowned chip company.
Taiwan is currently the largest wafer producer in the world, and the most well-known companies include TSMC (Taiwan Integrated Circuit Manufacturing) and Taiwan Unicom (Lianhua Electronics).
UMC is the earliest semiconductor company in Taiwan and a US-listed company with the highest market share in the global market.
On August 20, 2018, the foundry of Lianhua Electronics held a temporary meeting of shareholders to announce the initial public offering of A shares through the listing of subsidiaries and ship chips on the Shanghai Stock Exchange.
The Hejian chip, which was established in 2001, is said to have been taken from the "Zhenghe Fleet Xiayang" allusion. Since the first 8-inch wafer fab was put into production in 2003, the Hejian chip has been developing steadily. Since then, there have been many major changes to the ship.
On May 15, 2018, the new investor of Hejian Chip was Fulakai Consulting (Shanghai) Co., Ltd., which became a limited liability company (sino-foreign joint venture) from a limited liability company (foreign capital), and the total investment increased by 88.14%, from 38000. Ten thousand yuan became about 320.051 million yuan.
In recent years, a number of Taiwan-funded background companies have listed on A-shares, especially on June 8, 2018, after Foxconn Industrial Internet successfully landed in A-shares.
At present, Taiwanese manufacturers listed in mainland China are also under the Sun Moonlight's Huanxu Electronics, Yaxiang's Yaxiang Integration, Huaying's Huaying Technology, and Nanxun's Hudian shares. The companies planning to list in the A-share market include Nanqiao, Huge Machinery, Yuding and Rongcheng.
However, Taiwan-funded enterprises, including Foxconn, performed well in A-shares, and Foxconn fell below the issue price only after four trading days.
In order to land in the A-shares, the Hejian chip has also made sufficient preparations to integrate the Xiamen 12-inch wafer fab, the integrated circuit manufacturing (Xiamen) Co., Ltd., and the IC design service company, Lianhe Semiconductor (Shandong) Co., Ltd. Formed a strong "fleet."
However, chip manufacturing is a typical capital-intensive industry, with a 28-nm process IC production line investing approximately $5 billion and a 20-nm process line reaching $10 billion. According to industry practice, the depreciation period of equipment is generally short, the high investment amount and the short equipment depreciation period, leading to the general loss of chip manufacturing companies in the initial stage of production. Xiamen Lianxin, a subsidiary of Hejianchip, was established in 2015. Up to now, the depreciation of fixed assets and the amortization of intangible assets have caused the gross profit margin to be negative, and the inventory impairment and estimated liabilities have been accrued, which led to the overall loss of the parent company. .
According to the prospectus published by Hejianchip, the net profit attributable to the owner of the parent company is -14,390,500 yuan, 71,278,900 yuan, and 29,927,200 yuan. After deducting non-recurring gains and losses, it belongs to the owner of the parent company. The net profit was -15,579,200 yuan, -2,962,200 yuan, and 144,644,300 yuan. By the end of 2018, the company's accumulated undistributed profit was -92,672,440 yuan. This means that the company has not been profitable at the time of listing and has unrecovered losses.
The main financial data of the ship chip in the past three years
Judging from the current market environment and A-share market, Hejian chip has suffered losses for three consecutive years, and there are uncertain factors in the prospect of landing A shares. After more than half a year of waiting in line, Hejian chip chose to look for opportunities in the science and technology board, but the complicated background of overseas Chinese businessmen and the loss of the subsidiaries were serious, and it was undoubtedly a fog for the ship's chip landing.
Lianhua Electronics CFO Liu Qidong mentioned at the shareholders meeting that the main focus of applying for A-share listing is long-term development. In the future, through the A-share market, UMC can have another financing channel, which is also conducive to expansion and capital utilization in Taiwan.
According to Lianhua Electronics' fourth-quarter earnings report in 2018, total revenue fell by about 10%. UMC believes that the decline in revenue is due to the sluggish demand for cryptocurrencies and the reduced demand for mining, which reduces the demand for mining hardware.
In the mainland, for Lianhua Electronics, on the one hand, it can find a cheaper OEM environment, on the one hand, it can also be closer to the mainland market and talents. After the listing, UMC can also obtain investment in the mainland.
In the first half of 2018, the world's top five foundries were divided into TSMC, Grofund, UMC, Samsung and SMIC. The market share (in terms of revenue) was 56.1%, 9.0%, and 8.9. %, 7.4% and 5.9%.
For UMC, it is a very important step to use the mainland market resources to promote the listing of Hejian chips on the Shanghai Stock Exchange, expand the production capacity of Hejian and Lianxin, explore the mainland market and improve market competitiveness.
In 2009, UMC acquired an 85% stake in Hejian Chip for US$285 million. In 2016, UMC acquired a remaining 8.92% equity interest in Best Elite International Limited, the holding company of Hejianchip, at a cash price of US$1.1 per share. After the completion of the acquisition, UMC will hold 100% of the ship.
The Hejian chip was chosen to settle in the Suzhou Industrial Park at that time, thanks in large part to local preferential policies.
The Suzhou Industrial Park is jointly managed by the Chinese and Singaporean governments, and the project approval efficiency is much higher than other places in the same city. Yu Chaosheng, vice chairman and chief financial officer of Hejian Chip, once recalled to the media that he was departing from Taiwan on Wednesday and was transferred to Suzhou via the third place. After the application for the application, he was already given a business license before he was ready to return to Taiwan on Friday. From the first visit to Suzhou, and the official break-up of the ship, it took only three months, and the efficiency was amazing.
You Zhaosheng mentioned that the foundry has a high demand for hydropower. The operation is limited by water and the power limit is big. "But in the Suzhou Science and Technology Park, the ship was put into production in 2003 and has been in production for 15 years. I have never worried about these things."
After the ship chip entered the Suzhou Industrial Park, it will also introduce the upstream and downstream industries into the Suzhou Industrial Park, forming a clustering effect and completing the first step in the layout of the integrated circuit industry in mainland China.
Since its establishment, Hejian Chip has won many awards from the Suzhou Municipal Government. For example, Hejian Chip has won the “2017 Suzhou Industrial Park Demonstration Intelligent Workshop” and was also named as one of the top ten technology innovation enterprises in Suzhou in 2018.
The current products of Hejianchip are made of 40nm and 28nm of the original Suzhou Hejian and Xiamen Lianxin Integrated Circuit Manufacturing Co., Ltd. (hereinafter referred to as "Xiamen Lianxin"). Xiamen Lianxin was jointly funded by the Xiamen Municipal Government, Lianhua Electronics and Fujian Electronic Information Group. The semiconductor industry observation mentioned that after Lianhua Electronics exported 28nm wafer technology to Xiamen Lianxin in 2017, Xiamen Lianxin realized mass production yield of 94%, which proves the stability of UMC 28nm products. .
The picture shows the main source of revenue for the ship chip.
The picture shows the main market of the ship chip
Lianhua Electronics' main and ship chips are listed in China, to a certain extent, in order to improve the flow of funds, retain talents, and ease the pressure of competition.
In an interview with Taiwan’s “Caixin Biweekly”, Wang Shi, the co-president of UMC, mentioned that UMC had to change. One of the most obvious indicators is that due to over-investment in the past, UMC must maintain a capacity utilization rate of more than 90% in order to make money. Our EP is squeezed out of the towel. Wang Shi bluntly said that in the past, UMC had sacrificed profits in exchange for revenue growth.
In the future, UMC will not participate in the advanced process competition, and will no longer follow up on investing in 7nm technology. It will rely on mature processes to squeeze out companies smaller than him.
According to the latest domestic integrated circuit industry list released by the China Semiconductor Industry Association in 2017, Hejian chips ranks in the top ten among national semiconductor manufacturing companies.
The picture shows 2017 China Semiconductor Manufacturing Enterprise Ranking
However, the current position of the ship chip and the core integration is relatively embarrassing. The 28/14nm competitiveness of UMC and Lianhe is not strong. In the second quarter of 2018, the 28/14nm revenue of Hejianchip was NT$7 billion, accounting for 18% of total revenue. Lianxin Integration has received subsidies from the Xiamen government and adopted a low-price grab policy.
In the case of a profit of NT$2 billion in 2015, Hejian chips lost NT$700 million in 2016. In the case of tight global 8-inch aluminum production capacity, the company returned to profit of NT$700 million in 2017.
According to UMC's plan, part of the funds raised by the ship's chip is used to expand the monthly capacity of the 8-inch and 10,000-piece chips, which is expected to be completed in the second quarter of 2019; part of it is to improve the financial structure of the core integration. In the future, the monthly capacity of the integrated core will be expanded from 17,000 to 25,000. For the integration of the core, the financial pressure is quite huge. And the second phase of the launch will test the financial strength.
It is worth noting that the 16-year development history of the ship chip has formed a sound industrial chain, with a stable source of customers. Hejian chip has reached long-term good cooperation with many leading semiconductor companies in China, such as North Huachuang and Yaxiang Integration.
At the same time, Hejian is extremely demanding in selecting upstream IC design company customers, and the company must have design and marketing capabilities. However, after the cooperation began, the ship will provide customers with a full set of services. In addition to complete design support, it also includes helping customers to arrange packaging and testing in China. This has created a stable customer and order for the ship. A benign ecosystem of semiconductor design, production, packaging, and testing.
Lianhua Electronics CTO Liu Qidong also mentioned at the shareholders meeting that a very important reason for promoting listing is to retain relevant talents.
By applying for listing on the Science and Technology Board, you can retain talent through the benefits of allotment, and also stabilize employee mobility. It is reported that the brain drain rate of Hejian Chip in 2017 exceeded 15%. If it can provide a reward mechanism linked to equity, it will definitely help retain talents.
The Chinese chip manufacturing industry is still in a period of growth. During this period, more chip manufacturers have made some major technological breakthroughs in the process technology, which will promote the faster development of China's chip manufacturing industry.
Author | All-weather technology