▍This Issue's Enterprise
Youyan Silicon
▍Company Overview
Youyan Silicon is primarily engaged in the R&D, production, and sales of semiconductor silicon materials. Its products include semiconductor silicon polished wafers, silicon materials for etching equipment, and semiconductor float-zone monocrystalline silicon, which are used in the manufacturing of discrete devices, power devices, integrated circuits, and silicon components for etching equipment. These products are applied in automotive electronics, industrial electronics, aerospace, and other fields.
▍Company Highlights
The company was the first in China to achieve the industrialisation of 6-inch and 8-inch silicon wafers and to develop 12-inch process technology, significantly supporting the development of China's integrated circuit industry.
▍Profit Model
The company generates revenue and profit by selling semiconductor silicon wafers to downstream chip manufacturers and silicon monocrystals for etching equipment to downstream etching equipment component manufacturers.
"Sci-Tech Innovation Board Daily," January 6 (Reporter Xuguang Wu)Recently, Youyan Silicon held its third extraordinary general meeting of shareholders for 2024 at its Beijing headquarters.
The meeting adopted on-site voting and online voting to review and approve proposals such as "The Proposal on Capital Increase and Related Transactions with Shandong Youyan Ace Semiconductor Materials Co., Ltd." and "The Proposal on Amending the Articles of Association and Filing for Registration."
According to the meeting's resolutions, the company plans to jointly increase the capital of its associate company, Shandong Youyan Ace Semiconductor Materials Co., Ltd. (referred to as "Shandong Youyan Ace"), with its affiliate, China Youyan Technology Group Co., Ltd. (referred to as "China Youyan"), at a price of 1.02 yuan per registered capital unit, for a total of 760 million yuan. The company intends to use its own funds to contribute 380 million yuan, of which 371 million yuan will be added to registered capital, and 9.0992 million yuan will be added to capital reserves.
After the transaction, the company will hold a 28.11% equity stake in Shandong Youyan Ace.
As one of the few domestic companies capable of stable mass production of 8-inch semiconductor silicon polished wafers and float-zone monocrystalline silicon,Youyan Silicon's external investment in 12-inch semiconductor polished wafers is also aimed at strengthening its core business.
In recent years, with the development of integrated circuit processes and technologies, silicon wafers have been trending toward larger sizes, and 12-inch large silicon wafers have become the mainstream product for the present and the foreseeable future.
"Sci-Tech Innovation Board Daily" reporters noted that, in addition to Youyan Silicon, companies such as Huanxu Electronics, TCL Zhonghuan, and Xi'an ESWIN have also achieved mass production capabilities for 12-inch semiconductor silicon wafers through self-built production lines.
However,unlike the latter companies, Youyan Silicon has chosen to strengthen its 12-inch semiconductor polished wafer production capacity through external investment and equity participation.
When discussing the investment plan for 12-inch silicon wafers, a company representative stated that the 12-inch silicon wafer project requires significant investment, has high technical difficulty, and involves a long market validation cycle, making it challenging to achieve good economic returns in the short term.By investing in Shandong Youyan Ace and entering the 12-inch silicon wafer industry, the company can accelerate development with relatively low investment, catch up with domestic and international peers, and gain more time for technology and product development, laying a solid foundation for future growth.
In terms of performance, from 2023 to September 2024, Shandong Youyan Ace's net profits were -105 million yuan and -61.4452 million yuan, respectively, and it has not yet achieved profitability.
Youyan Silicon explained that the main reasons are the high investment intensity of the 12-inch silicon wafer production line, second only to wafer fabs, and the high depreciation of fixed assets, as Shandong Youyan Ace has already reached full production capacity of 100,000 wafers per month. Additionally, the company's products are still in the validation stage, and product promotion and capacity ramp-up require more time.
"The certification barriers for downstream customers of 12-inch silicon wafers are high. As a key market participant in 12-inch silicon wafer products, certification involves multiple stages, including supplier qualification, test wafer certification, and final wafer certification, before mass production orders can be secured. The certification process typically takes about two years," Youyan Silicon further elaborated.
A representative from the company's Board Secretary Office told "Sci-Tech Innovation Board Daily" reporters thatas the production capacity of its associate company, Shandong Youyan Ace, continues to expand, the company does not rule out the possibility of acquiring the latter through capital increases or equity expansion.
A company representative stated that the construction of Shandong Youyan Ace is progressing as planned, and capacity expansion will continue based on market development, ultimately achieving a production capacity target of 300,000 wafers per month.
While building new production capacity for 12-inch polished wafers, Youyan Silicon has also been expanding its 8-inch silicon wafer capacity and improving its product portfolio in recent years.
A representative from the company's Board Secretary Office stated thatthe capacity utilisation rate for the company's 8-inch polished wafers is currently high, and market demand continues to grow.The representative further noted that the company's revenue from 8-inch polished wafers is entirely derived from the domestic market. Currently, with stable demand in the automotive-grade and consumer electronics markets, the company's shipments for the full year of 2024 are expected to show steady growth.
Additionally,regarding the progress of the 8-inch silicon wafer fundraising project, the company's expansion project for 8-inch silicon wafers for integrated circuits is proceeding as planned. Production is expected to commence by the end of 2024, with capacity gradually ramping up in 2025. The company's 8-inch silicon wafer capacity is projected to reach approximately 250,000 wafers per month for the full year of 2025.
In terms of differentiated product development, the company has rapidly developed specialty 8-inch silicon wafer products such as MCZ, low-defect, heavily doped ultra-low resistance, and ultra-low oxygen wafers. It has also completed the R&D of 8-inch float-zone silicon materials, creating new profit growth points for its 2025 performance.
Looking ahead, according to SEMI forecasts, global demand for 8-inch silicon wafers will reach 7 million wafers per month, and demand for 12-inch silicon wafers will reach 9.2 million wafers per month by 2025.
When asked about the company's focus on capacity planning for 8-inch and 12-inch silicon wafers, the aforementioned representative from the Board Secretary Office stated that while global shipments of 12-inch silicon wafers have maintained high levels and the highest market share in recent years, it is worth noting that shipments of 8-inch silicon wafers have also grown significantly, with strong market demand remaining. In the short term,there is no scenario where 12-inch silicon wafers will replace 8-inch silicon wafers.
