In semiconductor chip manufacturing, "lithography" and "etching" are two closely linked steps, they are also very critical steps. "Lithography" is the equivalent of "drawing" a circuit diagram on a wafer by projection. At this point, the circuit diagram is not actually drawn on the wafer, but on the photoresist on the surface of the wafer. The surface layer of the photoresist is a photoresist, and the photosensitive material will degrade after exposure. The "etching" is actually developing a pattern along the surface of the photoresist to engrave the circuit diagram on the wafer.

Semiconductor chip equipment etchers are at the forefront of domestic alternatives in the field of chip manufacturing. There are three core aspects, namely, thin film deposition, photolithography and etching. Etching is the process of selectively etching or stripping the surface of a substrate or surface covering film by chemical or physical means to form a circuit pattern defined by photolithography.

Of these, lithography is the most complex, critical, expensive, and time-consuming. Etching is second only to lithography in cost and is increasing in importance. Thin film deposition is also an essential and important process. The process of deposition-etching-deposition needs to be repeated in order to realize hierarchical structures for large integrated circuits.

With the development of international high-end mass-produced chips from 14nm to 10nm to 7nm, 5nm and even smaller chips, immersion lithography, which is commonly used in the current market, is limited by the wavelength of light, and the key size does not meet the requirements, so multiple stencil processes must be used. The use of etch processes to achieve smaller sizes has further increased the importance of etch technology and related equipment.

The etcher is one of the most important pieces of equipment for chip fabrication and microprocessing. It uses plasma etching technology and uses reactive chemicals to etch microcircuits on silicon wafers. The 7nm process is equivalent to one-thousandth of the diameter of a human hair, which is the smallest integrated circuit wiring pitch that can be manufactured on a large production line, approaching the limits of microprocessing. Although there is still a gap between China's semiconductor equipment industry and the international giants, we can see that, whether driven by the environment, downstream demand or R&D capabilities, the domestic semiconductor equipment industry has undergone a qualitative leap.

Sinomicro is mainly engaged in high-end semiconductor chip equipment, including semiconductor chip IC manufacturing, advanced packaging, LED production, MEMS manufacturing and other high-end equipment with micro-processes. The company's plasma etching equipment has been specialized in the processing and manufacturing of integrated circuits and 65nm to 14nm, 7nm and 5nm advanced packages for international tier-one customers. Among them, 7nm / 5nm etching technology is a scarce technology in China. The company's MOCVD equipment has been put into mass production on the production lines of industry-leading customers, and has become a leading global manufacturer of GaN-based LEDs.

The company's customers include mainstream domestic and international foundries and LED manufacturers. As the performance of the company's products continues to improve, so does the recognition and abundance of customers. The main customers of the etching equipments produced by the company include global foundry leader TSMC, mainland foundry leader SMIC, UMC, Hynix, and Changjiang storage, etc., and optoelectronic manufacturers Huacan Optoelectronics, Can Yang Optoelectronics, and San'an Optoelectronics. With SMIC's continuous development in the field of semiconductor chip equipment, the company's penetration rate in the IC manufacturing, IC packaging and testing, and LED industry continues to increase, and more and more international manufacturers have become the company's main customers. The 5nm etching machine developed by the company has been validated by TSMC. Prismo A7 equipment is leading the global GaN-based LED MOCVD market, successfully outperforming traditional leaders Veeco and Aixtron.

Sinomicro's primary business is the manufacture and sale of etch equipment and MOCVD equipment, and it is at the forefront of the domestic semiconductor equipment market. Comparable companies to the company include leading international etch equipment LAM and MOCVD equipment leader Veeco, as well as two tiers of domestic semiconductor equipment companies, Beifang Huachuang and Precision Measurement Electronics. In the etch equipment market, there is a large gap between SMIC and LAM, and in the MOCVD equipment area, SMIC has similar strengths to Veeco. From the domestic point of view, Zhongmicro and Precision Measurement Electronics are at the same level, second only to North Huachuang, mainly because the company is a rising star in semiconductor chip equipment. Overall, the company is in the domestic semiconductor chip equipment in the first echelon.

In the first three quarters of 2020, operating income was 1.48 billion yuan, up 21.3% year-on-year, and net profit attributable to owners of the parent company was 280 million yuan, a sharp increase of 105.3%. Non-deductible net profit was -45.473 million yuan, down 138.1 percent year-on-year. Among them, non-recurring gains and losses in the first three quarters amounted to RMB 244 million. Excluding government subsidies, the recognized gain or loss from changes in fair value was 155 million yuan, which was mainly due to the company's investment in the change in the value of SMIC's A-share equity and the oversupply of LED chips. As prices continue to fall, downstream companies are facing double pressure on gross margins and inventories.

A-share listed semiconductor chip etching equipment dark horse stock SMIC since the top in July 2020 to maintain a medium-term downward trend, the main chip relatively fewer control of the disk is insufficient, according to big data statistics, the main chip is about 21%, the main control ratio of about 31%; trend research and long and short research and development, you can refer to the 15 days and 45 The 15-day averages are arranged in relation to each other, with the 15-day averages as a reference for short and medium term, and the 45-day averages as a reference for short and medium term.