The semiconductor industry is experiencing a demand recovery, and Willsemi expects significant growth in its performance for the first half of the year.

Recently,Willsemi (603501.SH) released its 2024 semi-annual performance forecast, predicting that the company will achieve net profit attributable to shareholders of the parent company in the first half of 2024 ranging from 1.308 billion yuan to 1.408 billion yuan, representing a year-on-year increase of 754.11% to 819.42%, with performance data exceeding expectations.

In addition to Willsemi, companies such as Montage Technology (688008.SH) and BIWIN (688525.SH) are also expected to see over 100% year-on-year growth in net profit attributable to shareholders of the parent company in the first half, indicating a clear recovery in the global semiconductor industry. Industry insiders suggest that the industry has entered an upcycle after a downturn. The market generally holds an optimistic outlook for the semiconductor industry's prosperity in the second half of the year.

Market Demand Recovery and Continuous Performance Improvement

According to Willsemi's semi-annual performance forecast disclosed on the evening of July 5, the company expects to achieve revenue of 11.904 billion yuan to 12.184 billion yuan in the first half of this year, representing a year-on-year increase of 34.38% to 37.54%. It is estimated that the net profit attributable to the owners of the parent company will range from 1.308 billion yuan to 1.408 billion yuan, a year-on-year increase of 754.11% to 819.42%. The net profit attributable to the owners of the parent company, excluding non-recurring gains and losses, is expected to be between 1.318 billion yuan and 1.418 billion yuan, representing a year-on-year increase of 1769.15% to 1895.79%.

Willsemi stated that in the first half of 2024, market demand continued to recover, with increased demand from downstream customers. Accompanied by the company's product introductions in the high-end smartphone market and the continuous penetration of autonomous driving applications in the automotive market, the company's operating revenue achieved significant growth. Additionally, the company actively promoted product structure optimization and supply chain structure optimization, leading to a gradual recovery in the company's product gross margin and a significant improvement in overall performance.

Public information reveals that Willsemi is a Fabless chip design company primarily engaged in chip design services, ranking among the top ten fabless semiconductor companies globally. As a globally renowned chip design company providing advanced digital imaging solutions, the company's products have been widely applied in consumer electronics and industrial applications, including smartphones, automotive electronics, medical imaging, and other fields.

In fact, signs of a turnaround in Willsemi's operating performance emerged in the second half of last year. In 2023, the company's main business revenue reached 20.966 billion yuan, an increase of 4.65% compared to the same period in 2022. Among them, the semiconductor design and sales business generated revenue of 17.94 billion yuan, a year-on-year increase of 9.34%, accounting for 85.57% of the main business revenue, indicating steady growth in the company's core business.

Lanfu Finance Network notes that Willsemi's semiconductor design service business boasts a gross margin of 98.72%, but the revenue from this business is relatively small, accounting for only 0.27%, contributing less to the company's performance in the short term. Moving forward,Willsemi should focus on expanding this business to form new profit growth points and achieve sustained performance growth.

Expected to Return to Growth Trajectory Across Cycles

Compared to a year ago,Willsemi's current situation has improved significantly.

Looking back at 2023, due to the weakness in consumer electronics,Willsemi's performance was significantly impacted. Facing continuous declines in performance,Willsemi attributed the decline to "declining sales revenue." Interestingly, despite the significant decline in Willsemi's performance, its share price was not significantly affected, remaining in a sideways trend.

From a product classification perspective,Willsemi's core product is the CMOS image sensor, which is widely used in mobile phone cameras, automotive cameras, and other fields. As the mobile phone industry and the new energy vehicle industry have experienced improved prosperity since 2024, this has driven Willsemi's performance recovery.

It should be noted that the semiconductor industry is cyclical, but the development of enterprises is closely related to their own products and technological capabilities. Whether a company's technology is leading, whether its intellectual property (IP) is of sufficient quality, and whether its product line is sufficiently comprehensive will all play a crucial role in the company's sustainable development.

Willsemi stated that the company's current growth in market share in the mobile phone and automotive markets is primarily attributed to its technological leadership. Going forward, the company will strive to maintain its leadership position over the next few years to resist the risks of cyclical fluctuations in the industry.

Huajin Securities pointed out in a research report that Huawei Mate 70 is expected to be equipped with the OmniVision OV50 series sensor. The successive launches of new models in the second half of the year will drive the continued growth of 50MP series chips. Meanwhile, rear configurations such as mobile phone secondary cameras are gradually being upgraded to 50MP. Industry leader Willsemi is expected to cross cycles and return to its growth trajectory.

Multiple Companies Double Net Profit

In addition to Willsemi, many other semiconductor enterprises have also announced positive news.

As of July 7, A-share semiconductor industry listed companies including Willsemi,Montage Technology,BIWIN,SOUTHCHIP (688484.SH), and Hubei Dinglong (300054.SZ) took the lead in disclosing their semi-annual performance forecasts, all predicting over 100% year-on-year growth in net profit attributable to shareholders of the parent company in the first half.

Overseas manufacturers such as Samsung Electronics and Micron Technology have also disclosed performance data far exceeding expectations.

This semiconductor cycle is the fifth global cycle. Similar to previous cycles, industry development has been driven by new technologies. However, what is different is that the application scenarios of semiconductors are significantly expanding.

Analysts believe that with the recovery of the global consumer electronics market and the development of the AI industry, the future prosperity of the chip industry will continue to improve, marking the advent of a "chip" moment for semiconductors.

Zhongtai Securities stated that the electronics sector experienced an inventory inflection point in the third quarter of 2023, gradually emerging from the trough of the cycle in the first quarter of 2024, with an earnings inflection point already visible. As the second and third quarters gradually enter peak consumption seasons, semiconductor companies' performance is expected to continue. Attention can be paid to directions where downstream demand is expected to exceed expectations.

From a trading perspective,Willsemi opened higher on its first trading day after the performance disclosure (July 8) but later retreated, ultimately closing up 4%. Montage Technology also opened significantly higher before retreating, ultimately closing up 3.87%. Perhaps due to long-term price adjustments, even though these semiconductor enterprises delivered impressive financial report data, they failed to please investors.