Analyst: Samsung 7nm Customers are Forced to be Transferred to TSMC
The trade war between Japan and South Korea has become more and more intensified, which is followed closely by global market. According to the report released by HSBC Securities in foreign capital circle, if Japan imposes the restriction on the export of semiconductor raw materials, which will results in the fact that Samsung 7nm orders are forced to transfer to TSMC. What's more, the report also puts forward the worst hypothesis: if all Samsung 7nm orders are transferred next year, TSMC's profits will increase by 7%.
According to HSBC 's hypothesis, if Samsung can not receive the orders of 7nm and transfer all orders to TSMC, which will results in the fact that the revenue of TSMC increase by 0.3%, 3.6% and 6.5% in this year , next year and the year after. The potential increase in earnings per share (EPS) is 0.5%, 6.8% and 12.6%. Among them, the profit impact of next year will be explained in advance on the front page of the report.
According to the report, Samsung has received the order of Qualcomm 865 chips , GPU of Nvidia, Power processor of IBM and other advanced process orders which will plan to release by Qualcomm. In addition, there are still some mining machine chip orders. If Japan has not canceled the embargo, Samsung's hard work of advanced process for several years will be in vain.
Ricky Seo, the semiconductor and OLED industry analyst at HSBC in South Korea, pointed out that there are no final conclusion on how Japan and South Korea may develop. But, he maintained that people should prevent Japan's restriction on export from a trade ban, which may further intensify the impact on South Korean semiconductors and global science and technology industry.
Ricky Seo pointed out that if the ban comes true, Samsung's seventy to ninety percent semiconductor raw material relying on the import of Japan, the 7nm orders may be forced to transfer to TSMC. Thus, HSMC team has put forward hypothesis firstly that the worst situation of Samsung 7nm is to lose all orders. And, when one's profits increases and the others' will fall.
Ricky Seo pointed out that the best strategy is to buy in TSMC first. In the long term, the performance of TSMC is better than that of Samsung. At present, HSBC has simultaneously rated the two companies "buy in", and TSMC's target price is CNY271.
In addition, in terms of memory and chemical materials factories, HSMC recommends to consistently buy in Hynix of South Korea and Soulbrain, a South Korean semiconductor chemical material manufacturer that is expected to benefit from the transfer.
Ricky Seo pointed out that whether the impact of the trade war between Japan and South Korea to memory industry depends on the time of deadlock. If the period is short, the inventory of memory factory will be completely consumed lasting within four to six months and the shortage of goods may results in the increase of price, which is conducive to manufacturers. But, if the period is extended, memory factory may lost a lot, the terminal demand cannot withstand the high price, it will be weakened in the opposite direction.
Besides, he also pointed out that after Japan imposed the restrictions on the imports of three semiconductor raw materials, Japan might further imposed restrictions on the import of lithium battery, which is harmful to Korean semiconductor.
Will Japan's Export Controls Hurt Itself?
Someone maintained that Japan's restrictions on the export of South Korean semiconductor raw materials might result in a disorder of international supply chain. If there are problems in semiconductor production of Korean enterprises, it will have an impact on household appliances enterprises such as Japan and the United States which use semiconductor. Because of Japan's enterprises in the field of semiconductor materials accounting for high shares, in the long term, if Korean corporations continue to expand decentralized procurement, it may lead to "de-Japanization".
Zheng Changyuan, the official of the Nomura Securities in South Korea，said on July 12th that Samsung Electronics and SK Hynix may reduce the number of production of semiconductors. More than a week has elapsed since Japan strengthened export controls for three types of products used in semiconductor manufacturing on the 4th. Samsung and other executives responsible for purchasing from China and Taiwan actively ensure raw materials.
In this three type products, it is considered that the influence of the regulation enhancement is prominent in hydrogen fluoride for semiconductor cleaning. For example, Morita Chemical Industry（Osaka City）, which is one of giant corporations, has not received the export license after 4th and has already stopped the supply for Korea.
The market of semiconductor memory that applied for smart phones and personal computers by Samsung and other Korean companies has accounted for 50% to 70% global shares. If the supply decreases, there is a chaos in the production of smart phones.
In addition, the manufacturers of semiconductor materials in Japan have also faced the risk of losing customers and companies. Actually, Chinese corporations are expanding the investments in hydrogen fluoride. Okazaki Mako, the survey analyst of Nomura Securities , pointed out that only China can match the capacity of equipment that will be completed between 2020 and 2021 by 90% of the world's supply capacity by the end of 2018. It is easy for Korean companies to purchase from outside Japan.
Not only China. The Korean newspaper "The Hankyoreh" reported on the 12th that the Russian government has proposed to supply high-purity hydrogen fluoride to South Korea.
Previously, when China strengthened the export control of rare earths, Japanese companies had adopted the way of strengthening development in third countries or the way of studying how to save rare earths.
The topic of the chemical industry was the explosion at the Ehime Plant (Nikkei City, Ehime Prefecture), which was owned by Sumitomo Chemical in 1993. That is the factory for the resin used in semiconductor production. This company has a global share of 60%, but the accident brings supply unrest. Hitachi Chemical, China's mainland and Taiwan's competing companies expanded production and quickly took away market share. Sumitomo Chemical failed to make a comeback and sold the business.
Xiangshan Yingyan, the senior director researcher of Japan General Research Institute, pointed out that Japan and Korea will make a compromise finally owing to the giant effect. Japan and Korea still sustain a sound relationship in economy even if their relationship is getting worse.