Guosheng Securities: Stricter rules of origin, domestic chips ushered in historical opportunities

The Zhitong Finance App learned that Guosheng Securities issued a research report stating that the China Semiconductor Industry Association issued an urgent notice on the “origin” certification rules for semiconductor products. According to the relevant regulations of the General Administration of Customs, the place of origin of an “integrated circuit” is determined according to the four-digit tariff code change principle, that is, flow sheet is recognized as the place of origin, whether packaged or not, and the place of origin at the time of import customs declaration is based on the location of the “wafer flow sheet factory”. Overseas companies such as Skyworks, Qorvo, TI, ADI, and Intel mainly manufacture wafers in the US, and exports to China may be pressured by tariffs. This will open a new chapter in IC design and domestic substitution.

Guosheng Securities's main views are as follows:

TI&ADI is constrained by tariff countermeasures, and industrial+automotive customers accelerate domestic introduction

TI's wafer manufacturing is mainly concentrated in the mainland of the United States, distributed in Texas and Utah. ADI's fab plants are mainly concentrated in Washington State and Oregon in the US, and are also distributed in Ireland. In 2024, TI&ADI's revenue in China was about 5 billion US dollars, and there is plenty of room for domestic replacement. Currently, Nanoscin Micro currently has about 3,300 models. Shengbang has more than 5,200 marketable models in 32 categories. The number of material numbers is constantly increasing, and the product performance is in line with TI. In the context of tariff countermeasures, industrial and automotive customers are expected to accelerate the introduction of domestic customers, and the release of new products from local analog chip companies is expected to accelerate.

RF: The core wafer manufacturing of Qorvo & Skyworks is located in the mainland of the United States. Total revenue in mainland China in FY2024 exceeds 1 billion US dollars

1) Qorvo: FY24's revenue in mainland China was 730 million US dollars, accounting for 19%. All wafer manufacturing is located in the mainland of the United States. In terms of sealing and testing, the Texas base in the US is responsible for the production and testing of the most important BAW filters. Other overseas sealing and testing production capacity is mainly in Costa Rica, Beijing and Shandong in China, and Munich, Germany.

2) Skyworks: FY24 has revenue of 300 million US dollars in mainland China, accounting for 7%. Wafer manufacturing is mainly located in the mainland of the United States, and overseas test production capacity is mainly in Mexico, Costa Rica, and Suzhou, China.

At present, domestic manufacturers have strong strength in the field of discrete devices and modules

In terms of product categories, domestic Zhuosheng Wei already has strong strength in the field of discrete switches and LNA, and is gradually entering receiver modules and filters to seize overseas share; while Weijie Chuangxin relied on its strength in the PA field to take the lead in breaking through the L-PAMID problem, and has a good card position in the field of transmitter modules.

1) Zhuo Shengwei: Relying on the Xinzhuo production line, the product category of the 6-inch filter production line has achieved a comprehensive layout, and the product category of the 6-inch filter production line has been integrated. The first generation has entered mass production and the second generation has completed technical upgrades. In addition, the production capacity of the company's 12-inch production line has reached 5,000 pieces/month, and the first-generation process production line for RF switches and LNA has reached the mass production stage.

2) Weijie Chuangxin: It has strong strength in the PA field. It was the first to break the monopoly of overseas manufacturers and launched the L-pamid highly integrated module in 2023, and introduced many brand customers one after another in 2024. The company's subsequent L-PAMID plus products are expected to accelerate the replacement of overseas leading domestic brand customer flagship aircraft.

3) Huizhiwei: The company's 5G MMMB PA module can output high power Class 2 power at a low voltage of 3.4V to meet the requirements of high bandwidth and high linearity. It has good performance in key performance parameters and is highly competitive.

Computing power chips: Intel's revenue in China will reach 15.5 billion US dollars in 2024, and the latest CPUs will be produced in the US

The computing power chips affected by the tariffs are mainly Intel CPUs. In addition, Xilinx special application chips (such as defense FPGAs) and FPGAs manufactured by Altera at Intel's US fab may be affected by certain tariffs. Tariff countermeasures should mainly focus on domestic replacement of Intel CPUs in the computing power chip sector. Furthermore, in an international context where Sino-US relations are tense, domestic alternatives such as domestic GPUs and FPGAs need to be promoted urgently.

Looking specifically at the CPU, Intel's last-generation AI PC chip Meteor Lake's Compute Tile was manufactured by Intel's US fab using the Intel 4 process process based on EUV technology, while the other cores (GPU Tile, SoC Tile (including E-core and NPU), I/O Tile, etc.) were manufactured by TSMC. Currently, the 18A process node has entered risky production, and Intel's 18A production node will be used to manufacture Intel Xeon 7 processors codenamed Clearwater Forest for use in data centers.

The manufacturing process used by Intel's latest products is the Intel 18A process from its own fab. If you want to switch to TSMC production, it may take some time. Looking at Intel fabs, Intel's highest-end production capacity is basically in the US. Intel's revenue in China in 2024 will reach 15.5 billion US dollars, and exports to China will be under greater tariff pressure in the context of tariff countermeasures. In the context of improving the performance of domestic products and the imposition of tariffs overseas, local CPUs are expected to welcome historic replacement opportunities.

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