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2019

05/16

What is the status quo of taxed semiconductor products such as capacitors, resistors, single crystal silicon rods and communication equipment?

On May 10, according to the news office of the Ministry of Commerce, the United States has raised tariffs on $200 billion of Chinese imports to the United States from 10% to 25%. In order to safeguard the multilateral trading system and safeguard its legitimate rights and interests, China has to impose tariffs on some imports originating in the United States.


In accordance with the Foreign Trade Law of the People's Republic of China, the Import and Export Tariff Regulations of the People's Republic of China and other basic principles of international law, the Tariff Principles Committee of the State Council decided to raise tariff rates on some imported goods originating in the United States from 10:00 on June 1, 2019. Relevant matters are hereby announced as follows:


1. To raise the tariff rate on some commodities in the Notice of the State Council Tariff and Tax Commission on imposing tariffs on imports originating in the United States of America of about 60 billion US dollars (the Notice of the Tax Commission [2018]), in accordance with the Notice of the State Council Tariff and Tax Commission on imposing tariffs on some imports originating in the United States (the second batch) (the Notice of the Tax Commission [20] 18 [6] The tax rate of the announcement shall be implemented. That is to say, an additional 25% tariff will be imposed on 2493 items listed in Annex 1, 20% on 1078 items listed in Annex 2, and 10% on 974 items listed in Annex 3. For 595 items listed in Annex 4, an additional 5% tariff is still imposed.


2. Other matters shall be implemented in accordance with the Notice No. 6 of the Tax Commission [2018].


Annex: 1. Implementing a 25% Tariff List on the United States

2. Implementing a 20% Tariff List for the United States

3. Implementing 10% Tariff List to the United States

4. Implementing a 5% Tariff List on the United States


Based on the information in the above annex, we have sorted out some semiconductor-related projects.

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According to the above table, packaging materials, PCB-related, capacitors, resistors, single crystal silicon rods, communication equipment and so on are listed one by one. So, how is the development of these products in China? Does it mean that local enterprises have some advantages in this respect?

Monocrystalline silicon rod


Monocrystalline silicon rod is the raw material for making chips. At present, 90% of 8 inch single crystal silicon rods in China rely on imports, while 12 inch single crystal silicon rods are monopolized by foreign countries and totally rely on imports.


According to the consultation data of Jinan Research Institute, the export volume of single crystal silicon rods (diameter < 7.5cm) doped for electronic industry in China reached 0.52 tons from January to July 2017, and the export amount was US$63 million. From January to July 2017, China imported 1,237.94 tons of single crystal silicon wafers (doped for electronic industry) with a diameter of 15.24 cm, amounting to US$507.80 million. From January to July 2017, China exported 7,750.47 tons of single crystal silicon wafers (doped for the electronics industry) with a diameter of 15.24 cm, amounting to 617.63 million US dollars.


At present, Anhui Yixin Semiconductor Co., Ltd. in Hefei New Station High-tech Zone has independently developed 12-inch single crystal silicon rods for 8 years, filling the gap in the domestic integrated circuit industry.

Capacitance


Specifically, there are four kinds of capacitors, which are used in different fields because of their different capacitance, voltage and volume characteristics. According to the different raw materials, capacitors can be divided into ceramic capacitors, aluminium electrolytic capacitors, thin film capacitors, tantalum capacitors and other types. In the global capacitor market in 2015, ceramic capacitors and aluminium electrolytic capacitors account for 54%, aluminium electrolysis 23%, thin film capacitors and tantalum capacitors account for 11% and 12% respectively.


According to the data of China Industrial Information Network, the global capacitor market expanded from 17.3 billion US dollars to 20.9 billion US dollars from 2012 to 2017, with CAGR = 384% growing steadily, while the capacitor market in China increased from 72.6 billion US dollars to 98.7 billion US dollars during this period, with CAGR about 633% higher than the world average. At present, the global capacitance industry structure is dominated by Japan, the United States and China, in which Japan is in the leading position, monopolizing high-end components, and has the strongest strength in electrolytic capacitors, ceramic capacitors, thin film capacitors and other industries.


In addition, according to the development prospects analysis and Development Strategy Research Report of China's chip capacitor industry from 2017 to 2022, there are more than 600 capacitor factories with a certain scale in China. Among them, Guangdong Fenghua, Chaozhou Sanhuan, Xiamen Farah and other enterprises are the top 100 electronic components enterprises in China in 2012, most of which have been successfully listed at home and abroad. Many foreign-funded enterprises have become the main force of capacitor export. With the deepening of foreign-related economic system reform and the development of trade and investment facilitation, many foreign-funded enterprises have built factories in China, which have contributed to the upgrading of the technical level of Chinese capacitors and the international market share. In 2017, China's capacitor sales amounted to 63.7 billion yuan, accounting for 4.64% of the electronic component sales of 1373.7 billion yuan, accounting for 24% of the world's sales, second only to Japan (26%).


According to the data of Sky Core, the main capacitor manufacturers are:

USA: AVX, KEMET, Skywell and VISHAY




UK: NOVER




Germany: EPCOS, WIMA




Denmark: God of War (JENSEN)




Japan: ELNA, FUJITSU, HITACHI, KOA, Kyocera0, Matsushita, muRata, NEC, nichicon, Nippon Chemi-Con, Panasonic, Raycon, Rubycon, SANYO, Sun TAIYO YUDEN, TDK and TK




Korea: Samsung Motor (SEM), Sanhe (SAMWHA), Sanying (SAMYOUNG)




Taiwan, China: WALSIN, YAGEO, CAPSUN, CAPXON, Capson, Chocon, Choyo, ELITE, EVERCON, GEMCON, GSC, G-Luxon, HEC, HERMEI, JACKCON, JPCON, LEN, LTEC, Auster (GEMCON), etc. ST, SACON, SUSCON, TAICON and TEAPO




Hong Kong, China: FUJICON and SAMXON




Mainland China: Aihua Technologies, Yuyang Technologies, Torch Electronics, Huawei Electronics, Jinfukang, Fenghua Technologies, Nantong Jianghai, Jiguang Electronics, Foshan Liming, Foshan Sanshui Riming Electronics, Haifeng Sanli, Haimen Sanxin, Shenzhen Xinlongmao Electronics, Yangzhou Shengda Electronics, Taiqing, Nantong Tongfei, Tianyang, Qigeng Electronics, etc.




In the list published this time, Ta capacitors, Al electrolytic capacitors, other Al electrolytic capacitors, single-layer ceramic capacitors, multi-layer ceramic capacitors, other paper or plastic dielectric capacitors, other fixed capacitors, variable or adjustable (fine-tuned) capacitors are all included in the list of 25% tax increases.




resistor




China's resistor industry has made great progress during the Tenth Five-Year Plan period (2001-2005). After joining the WTO in 2001, China has made great efforts to consolidate its leading position in the global resistor Market by opening up international markets and enhancing product research and development.


At the same time, according to the data of China Electronic Components Industry Association, the total output of resistors in 2008 was 708 billion, a huge increase compared with 410 billion in 2005, which accounted for 30% of the total global supply at that time. After more than 20 years, the product quality of our country has been greatly improved. Chip resistor has become the leading role in the market development. At present, China's satellite, missile and other aviation science and technology have applied chip resistors produced by China, and the total output accounts for 85% of the total output of resistors.


According to the data of Full Sky Core, the main manufacturer of resistance is:


USA: AVX, VISHAY


Japan: KOA, Kyocera, muRata, Panasonic, ROHM, Susumu, TDK


Taiwan, China: LIZ, PHYCOM, RALEC, SUPEROHM, TA-I, TMTEC, TOKEN, TYOHM, UniOhm, VITROHM, VIKING, WALSIN, YAGEO.


Mainland China: Fenghua Hi-Tech and Jasperson


Singapore: ASJ


Communication equipment

The history of mobile communication market development is technology-driven. Every ten years, the main equipment manufacturers are the leaders of standard promotion and formulation. For example, WCDMA standards are mainly dominated by Ericsson, Alcatel, Nokia, Lucent, Nortel and other equipment manufacturers. In the past decade, the user value system of "Pay for Access" has been gradually replaced by "Pay for Content". Terminals and service providers have challenged the core position of operators. The changing trend of market value of Internet manufacturers and operators also reflects this phenomenon. In order to meet the needs of transformation, operators and equipment providers will cooperate closely to promote network evolution and innovation, and provide operators with network reconfiguration and business reconfiguration, so as to have the opportunity not to be thoroughly pipelined. The cooperation between operators and equipment manufacturers exceeds the form of purchasing equipment in the contract. If operators want to achieve absolute leading position in technology, they must resort to local communication manufacturing enterprises.


According to China Industrial Network, the revenue scale of domestic equipment manufacturers is gradually increasing. In the past ten years, only Huawei has maintained annual revenue growth, and the annual compound growth rate is relatively high (13.3%). The income gap between Huawei and the other three main equipment manufacturers has been widened continuously. Considering the impact of exchange rate, Huawei is the only one to achieve revenue growth in the three years of 2014, 2015 and 2016, and its revenue scale in 2016 is equal to that of the other three. ZTE operator business and consumer business are beginning to recover, and in the next 5G era ZTE has sufficient strength to squeeze more market share, ZTE has a clear upward trend.

In December 2018, Dell'Oro Group released its latest ranking for the first three quarters of 2018. In the first three quarters of 2018, the top five telecommunications companies were Huawei of China, Nokia of Finland, Ericsson of Sweden, Cisco of America and ZTE of China. These five companies accounted for 75% of the market share in the industry, and two Huawei companies from China accounted for 28% of the market share.


In addition to the tables we have compiled above, we have also found that elements like graphite and ruthenium are on the tax increase list. It is known that the application of ruthenium, a precious metal, can be used for 10 nm and the following nodes. Especially after 5 nm, ruthenium (Ru) and cobalt (Co) with low resistivity are expected to be alternatives to copper as conductors. In June last year, Intel released the highlights of the 10-nm process, including the first use of copper and ruthenium in the BEOL back-end process.


At the same time, we also found that gases such as oxygen and nitrogen, which can be used in ultra-large scale integrated circuits, separation devices, optoelectronics and other high-tech fields, also appeared in this list (but the purity of such gases is not indicated in the list, and the purity of nitrogen and oxygen used in semiconductors is usually more than 99.999%).


Through the above information, we find that our local semiconductor industry has developed to a certain extent. However, most of the semiconductor products in our country are mainly middle and low-end products, which occupy a certain market share. For the semiconductor industry, if we want to be independent of others, we must have our own core technology, and gradually develop to high-end products, so as to seize the market opportunities.