Tianjin Zhonghuan shares issued an announcement that the total amount of funds to be issued will not exceed RMB 500 million. According to their plan, the funds will be mainly used for the construction of 8-12 inch semiconductor wafer production line projects for integrated circuits. The goal is to build a production line with a monthly output of 750,000 8-inch polishing pads and 150,000-inch 12-inch polishing pads within three years.
In its announcement, Zhonghuan pointed out that silicon wafers are the carriers used in the production of semiconductors and are the most important upstream raw materials for semiconductors. The global semiconductor raw material market size was approximately US $ 27.125 billion in 2017, of which the silicon wafer market was the largest, reaching US $ 8.713 billion, accounting for 32.12%. In addition to silicon wafers, electronic gases, photomasks, photoresists and their auxiliary materials, and CMP polishing materials are also important raw materials for semiconductor manufacturing.
The global semiconductor wafer market has a relatively high concentration. The top five suppliers, Shin-Etsu Chemical Co., Ltd., Japan's Katsugo, Taiwan Global Wafer, Germany Siltronic, and South Korea's SK Siltron, have occupied more than 90% of the semiconductor wafer market. In mainland China, only a few companies including our company have the capacity to produce 8-inch semiconductor wafers, and 12-inch semiconductor wafers are mainly imported.
However, in recent years, more and more integrated circuits have been used in information, communications, computers, consumer electronics, automotive, aerospace and other fields, especially with the popularization of personal computers and smart phones, as well as artificial intelligence and blockchain technology. The development of the company has continued to increase global semiconductor sales. According to WSTS statistics, global semiconductor sales increased from US $ 291.6 billion in 2012 to US $ 412.2 billion in 2017, with a compound annual growth rate of 7.17%. It is expected that the market size in 2018 will reach US $ 463.4 billion, a year-on-year increase of 12.42% This has led to a further increase in demand for silicon wafers.
Zhonghuan pointed out that silicon wafers are the most important raw materials for semiconductor production. The market scale of silicon wafers and the prosperity of semiconductors have a mutually promoting and restrictive relationship. The increase in the size of the semiconductor market has led to the development of semiconductor wafers. In 2012, the global semiconductor wafer shipment area was 9.931 billion square inches. By 2014, it had exceeded 10 billion square inches to 10.098 billion square inches. In 2017, it grew to 11.810 billion square inches, with a compound growth rate of 5.51%. situation. Especially the mainstream eight-inch and 12-inch silicon wafers are in short supply.
As we all know, the efficiency and cost of semiconductor production are directly related to the size of the silicon wafer. In general, the larger the size of the silicon wafer, the higher the production efficiency for the production of semiconductors, and the less the raw materials consumed per unit. With the continuous improvement of semiconductor production technology, the overall trend of silicon wafers has evolved to large sizes. The size of silicon wafers has grown from the early 2 inches and 4 inches to the current 6 inches, 8 inches, and 12 inches. Among them, 8-inch and 12-inch wafers have become the mainstream products of semiconductor wafers, and they have occupied more than 90% of the market share of semiconductor wafers since 2014.
In the selection of semiconductor materials, semiconductor manufacturers will comprehensively consider factors such as production efficiency, process difficulty, and production costs, and use different sizes of silicon wafers to match semiconductor products of various specifications in order to maximize operating benefits. For example, power semiconductor production mainly uses 6-inch silicon wafers, 8-inch silicon wafers, microcontroller production mainly uses 8-inch silicon wafers, and logic chip and memory chip production mainly uses 12-inch silicon wafers.
According to statistics and forecasts from Japan's Katsuo and SEMI, the global demand for 8-inch and 12-inch silicon wafers in 2017 was 5.25 million wafers / month and 5.47 million wafers / month, and the capacity of 8-inch and 12-inch silicon wafers was 5.58 million. Tablets / month and 5.4 million tablets / month. By 2020, demand for 8-inch and 12-inch tablets is expected to exceed 6.3 million tablets / month and 6.2 million tablets / month, respectively. But because the construction period of the silicon wafer production line is generally 2-3 years, and the time to recover the investment cost is long, the investment recovery period is about 6-7 years. Therefore, the traditional silicon wafer manufacturers lack the power to build new capacity. The production capacity does not have a foundation for rapid increase. At the same time that demand is expected to grow rapidly, the large-size silicon wafer market will be in short supply. This makes it even more urgent to build a domestic silicon supply chain.
Zhonghuan said that after the completion of the investment project, it will help consolidate and expand the company's competitive advantage in the field of semiconductor wafers, and will help the company's sustainable, rapid and healthy development. They also disclosed in the announcement that among the company's existing semiconductor materials, the production and sales of 5-6 inch silicon wafers have rapidly increased, and 8-inch silicon wafers have achieved mass production. After the fund-raising project is put into operation, the capacity of 8-inch silicon wafers will be further increased, and mass production of 12-inch silicon wafers will be realized. The implementation of this fundraising project will further increase the proportion of semiconductor materials in the company's products, the company's product structure will be optimized, and the product composition will be richer.
Through this non-public offering, the company will make full use of the advantages of the listed company's financing platform, seize market development opportunities, enrich the company's product structure, enhance the company's overall profitability, enhance its ability to resist risks and sustainable development, and maximize shareholder benefits. . According to Zhonghuan, the project has an internal rate of income of 12.64% after income tax, and a static investment payback period of 7.33 years after income tax.