Benefiting from the growth of downstream market demand, the performance of the semiconductor industry chain has increased significantly.

On the evening of July 5, Weil Shares (603501) and Montel Technology (688008), two chip design companies, released a semi-annual performance forecast for 2024, which showed a high growth trend.

Among them, Weil is expected to net profit in the first half of 2024 to 1.308 billion yuan to 1.408 billion yuan, an increase of 754.11% to 819.42%; Montage expects to record a net profit of RMB583 million to RMB623 million in the first half, an increase of 612.73% to 661.59% year-on-year.

After excluding non-recurring gains and losses, the two firms' performance is even more fragmented. The net profit of Weil stock in the first half of the year was 1.318 billion yuan to 1.418 billion yuan, an increase of 17.69 times to 18.96 times. Montsun Technology withholding non-post-net profit of 535 million yuan to 565 million yuan, an increase of 139.25 times to 147.12 times, of which the second quarter of the quarterly withholding non-post-net profit of 315 million yuan to 345 million yuan, a record high for the company's quarterly withholding non-post-net profit.

For the reasons for the growth, both companies said that the main driving force came from the recovery of demand growth in the downstream chip market.

Weil pointed out that in the first half of 2024, market demand continued to recover, the company's product introduction in the high-end smartphone market and the continued penetration of automated driving applications in the automotive market, and its operating income is expected to be 11.904 billion yuan to 12.184 billion yuan, an increase of 34.38% to 37.54%, and the growth trend is obvious.

Montide Technology said that since the beginning of this year, the company's memory interface and module supporting chip demand to achieve recovery growth, DDR5 downstream penetration rate increased and DDR5 child iteration continued to advance, the first half of the DDR5 second generation RCD chip shipments have exceeded the first generation RCD chip; At the same time, some new AI "transport capacity" chip products began to ship on a large scale, contributing to new performance growth points for the company. In the first half of 2024, Montage Technology is expected to achieve revenue of 1.665 billion yuan, an increase of 79.49%.

In addition to the recovery of the industry, the competitiveness of the main products has increased, and the gross profit level has continued to improve, which is also an important factor to promote the growth of performance.

In recent years, Weil has continued to promote product structure optimization and supply chain structure optimization, and product gross profit margin has gradually recovered. Specifically, after the company hit a low gross margin of 17.3% in the second quarter of 2023, the gross profit level stabilized in the third quarter of 2023 and the fourth quarter of 2023, and the single-quarter gross margin was 21.78% and 22.98%, respectively. In the first quarter of this year, the comprehensive gross margin further increased to 27.89%, an increase of 3.17 percentage points and 4.99 percentage points respectively.

Data show that Montel Technology's core product interconnect chip product line gross margin in the first quarter was 60.93%, and the gross margin of the product line in the second quarter has climbed to 63% to 64%.

In terms of new products, Montel Technology's three high-performance "transport capacity" chip markets were rapidly released, and sales revenue reached 130 million yuan in the second quarter, with significant quarter-on-quarter growth. Among them, about 300,000 PCIe Retimer chips were shipped in the second quarter, doubling from the first quarter; MRCD/MDB chip sales revenue in the second quarter exceeded 50 million yuan, with a quarter-on-quarter increase of more than 100%; CKD chip began large-scale shipments in the second quarter, and the sales revenue in a single quarter exceeded 10 million yuan for the first time.

Montage Technology said that since the beginning of this year, the demand for memory interface chips has achieved recovery growth, and the industry is expected that the downstream penetration rate of DDR5 will continue to increase this year and next. With the continuous improvement of DDR5 penetration rate and the increase in the proportion of revenue brought by new product shipments of high-performance capacity chips, the gross margin level of the interconnect chip product line is expected to remain at a high level in the future.

Looking forward to the trend of the semiconductor industry, the industry is mostly optimistic. Tianfeng Securities pointed out that in the second half of the year, as the semiconductor industry enters the traditional peak season, it is expected that the research and development breakthroughs of AI mobile phones, AI computers and domestic servers will bring important highlights to the market, and the growth of semiconductor companies in China is prominent.

In the view of Weil shares, the semiconductor industry is cyclical, but the development of enterprises and the technical strength of the company's own products have a greater relationship, whether the company's technology is leading, whether the IP is high enough quality, and whether the product line is rich enough, is more important for the development and growth of the company. At present, the company's share growth in the mobile phone, or the automobile market is based on technology leadership, and it will strive to continue to lead the technology in the next year, the year after and longer to resist the risk of cyclical fluctuations in the industry.

As of the close of trading on July 5, the market value of Weil shares was 118.8 billion yuan, and the market value of Montage technology was 65.4 billion yuan.