HuaChuang Securities: The testing process runs through the entire semiconductor industry chain, and the third-party testing space is vast under specialized division of labor

According to the Zhitong Finance APP, Huachuang Securities released a research report stating that the demand for third-party testing in the industry is related to the development cycle of the downstream industrial chain. The growth in demand from emerging industries and the continuous increase in R&D investment and capacity expansion by downstream integrated circuit companies are driving the growth of testing demand. As semiconductor processes continue to advance, the increasing number of product process steps and the complexity of microstructures are raising the requirements for semiconductor testing services. Under the trend of specialized division of labor in the industry, the third-party testing and analysis industry is expected to capture more market share due to its stronger professionalism, higher testing efficiency, and more neutral and objective testing results. Based on the above, the firm believes that the third-party semiconductor testing market has growth attributes and gives it a "recommended" rating. The main points of Huachuang Securities are as follows: Testing is an integral part of the semiconductor industry chain Integrated circuit testing is crucial for integrated circuit design, manufacturing yield, and quality control, making it an indispensable part of the industry. From the perspective of the industrial chain, the integrated circuit industry mainly includes chip design, wafer manufacturing, chip packaging, and integrated circuit testing. The integrated circuit design process requires chip verification and analysis; the production process of integrated circuits includes front-end quantity testing and back-end testing during wafer manufacturing and packaging; laboratory testing includes failure analysis, material analysis, and reliability testing, with demand coming from various types of customers in the semiconductor industrial chain, mainly focusing on defect localization and failure analysis of failed samples. The integrated circuit industry is moving towards specialized division of labor, benefiting from R&D investment and process development, with vast space for third-party laboratory testing The traditional integrated circuit industry initially adopted the IDM business model. With the rapid updates of integrated circuit technology and the diversification of downstream applications, the integrated circuit specialized division of labor model represented by Fabless + Foundry + OSAT has emerged, gradually pushing the integrated circuit industry towards specialized division of labor. The Labless model has emerged, and currently, third-party semiconductor testing and analysis services mainly focus on back-end testing and laboratory testing. The testing and analysis needs of semiconductor industry customers mainly come from new product design and new process research during the R&D process, as well as new product testing and new production line debugging, benefiting from increased R&D investment and capacity expansion driven by emerging industries. Advanced processes are raising higher requirements for semiconductor testing services; third-party testing laboratories have advantages in professionalism, economy, and neutrality, gradually replacing traditional in-lab laboratories. The market demand for specialized integrated circuit testing is very broad. According to QYResearch, the global semiconductor testing service market size is expected to reach USD 21.02 billion by 2031, with a CAGR of 6.9% in the coming years. The market size of third-party laboratory testing and analysis in the semiconductor sector is expected to reach USD 4.431 billion by 2024 and grow to USD 10.92 billion by 2031, with a compound growth rate of 14% from 2025 to 2031. Key targets for third-party laboratory testing Shengke Nano. Established in 2012, the company is a well-known third-party testing and analysis laboratory in the semiconductor industry, covering failure analysis, material analysis, and reliability analysis. The company is expected to achieve revenue of CNY 415 million in 2024, a year-on-year increase of 5.4%. 2) SuShi Testing In 2019, the company acquired 100% of the equity of Yite Testing for 280 million yuan, officially entering the integrated circuit testing field. In 2024, the company's integrated circuit verification and analysis services achieved revenue of 288 million yuan, a year-on-year increase of 12.3%, accounting for 14.23% of the company's revenue. 3) GRG Metrology & Test. The company continues to independently cultivate integrated circuit testing and analysis business, achieving revenue of 256 million yuan in 2024, a year-on-year increase of 26.3%, accounting for 8% of the company's revenue. 4) CTI. In 2022, the company acquired Weisi Bo to enter the semiconductor testing field, continuously increasing its layout in FA and MA. Risk Warning: Market demand may fall short of expectations, industry competition may intensify, technological updates and iterations may not meet expectations, and capacity expansion may not match demand, etc