上市捷报丨沙利文助力优博控股有限公司成功赴港上市(8529.HK)

Yubo Holdings Limited (Stock Code: 8529.HK) successfully listed on the Hong Kong Growth Enterprise Market on June 3, 2024. The company is a manufacturer of precision-engineered plastic castings for semiconductor transmission media, and in terms of sales revenue, it ranks third among global manufacturers of trays and tray-related products for semiconductor transmission media in 2023. Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') provides exclusive industry advisory services for Yubo Holdings Limited's listing, and we hereby extend our warmest congratulations on its successful listing.

Youbo Holdings Limited (hereinafter referred to as 'Youbo Holdings') was successfully listed on June 3, 2024, with a total issuance of 13.75 million shares. The final issue price was HK$0.5 per share, raising approximately HK$31.32 million in net proceeds.

During this Hong Kong listing process, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business, and other important sections), helping the issuer communicate with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange, etc.

Investment highlights

The company is a leading designer, developer, manufacturer, and seller of tray and tray-related products, carrier tapes, and other semiconductor transmission media for the back-end industry, as well as providing MEMS and sensor packaging solutions.

The company owns four production facilities, two of which are responsible for manufacturing trays and tray-related products, while the others are dedicated to producing carrier tapes and MEMS and sensor packages;

The company has developed a diversified product portfolio of over 1,500 different sizes, each with varying thermal, mechanical, and physical performance indicators to meet customers' specifications and required quality standards;

After more than 15 years of development, the company has established a wide customer base including several international IDM companies, foundry-free semiconductor companies, and IC packaging and testing institutions.

According to a report by Frost & Sullivan,

Ranked third among global manufacturers of tray and tray-related products for back-end semiconductor transmission media in 2023, based on sales revenue.

Global Semiconductor and Integrated Circuit (IC) Industry Overview

Definition and Classification

Semiconductor materials exhibit conductivity between conductor and insulator at room temperature. Semiconductor devices are used in integrated circuits, consumer electronics, network communications, automotive electronics, and other fields.
An integrated circuit is a set of electronic circuits on a small semiconductor material (usually silicon) flat plate (or chip).

Industry Overview

The value chain of the semiconductor and integrated circuit industry consists of upstream, midstream, and downstream industry participants. The varying degrees of specialization and functional division within the value chain lead to two key operational models in the semiconductor industry: (i) foundries; and (ii) integrated device manufacturers (IDMs). In the foundry model, production is divided into (i) design; (ii) IC/waf fabrication; (iii) IC assembly, packaging, and testing. Under the IDM model, one company completes all or most of the production stages including design, manufacturing, assembly, testing, and packaging, and several production processes of the IDM may also be subcontracted to other contract manufacturers.

The upstream participants mainly include:

The R&D company focuses on drafting, advancing, and simplifying technologies across the entire supply chain.
Design companies (without wafer fabs) focus solely on IP and IC design as well as contract manufacturing. Wafer fabs can benefit from lower capital costs while concentrating their R&D resources on the end market.
IC/wafery manufacturing companies (foundries) focus on front-end semiconductor manufacturing, from blank wafers to finished products. These foundries specialize in contract manufacturing, processing, testing, photomasks, and chemical procedures.
The IC assembly, packaging, and testing company (the downstream segment) acts as a subcontractor for assembling, testing, and packaging tasks, and then supplies ICs for the production of various semiconductor products. The raw material supplier provides lead frames and packaging materials to complement this production stage.
The transmission medium company is a professional manufacturer focusing on producing carriers for accommodating semiconductor components at all stages of the manufacturing process. The post-manufacturing semiconductor transmission medium company provides post-functionality services (i.e., assembly, packaging, and testing) for the semiconductor and IC industries.
Semiconductor device manufacturers provide semiconductor manufacturing equipment, such as cleaning tracks, diffusion furnaces, and plasma etching machines for IC/wafers, while raw material suppliers provide manufacturers with original chips and chemicals.

Midstream participants include distributors and sales channels, while downstream participants encompass various electronic manufacturers in fields such as automotive, consumer electronics, industrial and construction, aerospace and defense, as well as communications and networking.

Global electronic industry market scale

Semiconductors, as an essential element in various electronic products, will grow with the continuous development of terminal electronic products. The application depth of semiconductors is constantly increasing. For example, sensors and actuators are increasingly used in various fields. The demand for devices empowered by artificial intelligence, 5G, and the Internet of Things is booming, which in turn further drives the demand for semiconductors as a necessity.

The global electronic market size continued to grow from $1999.7 billion in 2019 to $2155.9 billion in 2023, with a compound annual growth rate of 1.9%. In particular, the automotive electronics industry is expected to grow at a compound annual rate of 5.2% from 2024 to 2028, mainly due to the integration and implementation of advanced safety systems such as automatic emergency braking, lane departure warnings, and intelligent parking assistance systems, in order to reduce vehicle road accidents. Affected by factors such as population aging, advanced medical equipment, increased demand for customized and precise medical services, and other factors, the medical electronics market is expected to grow rapidly at a compound annual rate of 4.0% over the next five years.

Source: Global Electronics Industry Data Yearbook, Frost & Sullivan report

Global semiconductor industry market size

Semiconductors are the foundation and driving force for the rapid development of the information technology industry. The industry has become highly integrated and embedded into all fields of economic and social development. Its technical level and scale of development have become one of the important indicators for measuring a country's industrial competitiveness and comprehensive national strength. The growth of regional economies and leading technological progress have increased the market size of the semiconductor industry from about $412.3 billion in 2019 to about $573.5 billion in 2022, with a compound annual growth rate of 11.6%. However, in 2023, it decreased by 8.1% to $526.8 billion.

The short-term decline in the global semiconductor market size is mainly the result of a combination of various factors, including but not limited to cyclical effects of the industry, exacerbated inflation, geopolitical tensions, and the downturn in the global macroeconomy. However, driven by rapid technological development and the recovery of demand for semiconductor devices from downstream industries such as automotive and consumer electronics, the semiconductor industry is expected to rebound in 2024. It is estimated that by 2028, the market size of the semiconductor industry will reach approximately $832.7 billion, with a compound annual growth rate of 8.8% from 2024 to 2028. Considering the potential growth rate, it is expected that the slowdown in market demand in 2023 will be a short-term adjustment rather than a long-term trend for the semiconductor industry. The global semiconductor industry is highly competitive, and industry standards are constantly changing. Among major countries and regions, it is expected that China will occupy the largest market share (31.3%) in the global semiconductor industry in 2024, followed by the United States (27.8%) and the Asia-Pacific region (excluding China) (20.2%).

Source: Frost & Sullivan report

Global Overview of the Back-End Semiconductor Transmission Media Industry

Definition and Classification

The latter semiconductor transmission medium refers to all stages used in the manufacturing process, such as during component assembly operations, transportation from the manufacturing plant to the board assembly site, and storage, as well as during the process of sending components to automatic mounters for surface mounting on board assemblies.

Since semiconductor devices are composed of precise components and structures, carriers used for transporting, processing, or handling semiconductors are carefully designed and follow specific industry standards. In addition to protecting the leads of components from damage during transportation, processing, and placement, carriers must also have a high degree of uniformity and consistency to facilitate automatic component placement and high-speed feeding parts in delivery systems. Generally speaking, the post-transmission media for semiconductors are classified by configuration, mainly including trays and tray-related products, as well as tapes and rolling strips.

Value chain of the back-end semiconductor transmission medium

The upstream suppliers of the semiconductor transmission medium manufacturers include raw material suppliers, such as pre-dried granular plastics or special engineering molding compounds, as well as related manufacturing facilities and molds, such as injection molding machines. In addition to serving as the medium for storing and processing semiconductor components, these products are also used in various stages of the semiconductor manufacturing process. For example, trays and carriers facilitate the display of semiconductor components to automated pick-and-place machines for placement on printed circuit boards. Although most downstream customers are semiconductor manufacturing companies, there are other industries that require semiconductor transmission media, in addition to traditional electronics, such as the solar photovoltaic industry, medical devices industry, and automotive industry. Before establishing business relationships with suppliers, semiconductor companies generally need to conduct factory audits of their suppliers and related audits of their semiconductor transmission media.

Source: Frost & Sullivan report

Global market scale

Due to the continuous increase in global digitalization, the demand for semiconductors for commercial, industrial, and consumer electronics products has surged, driving the semiconductor transmission medium industry downstream. The total market value increased from $7.675 billion in 2019 to $9.625 billion in 2022, with a compound annual growth rate of 7.8%. However, it decreased by 17.3% to $7.96 billion in 2023. Looking ahead, as the semiconductor industry continues to benefit from the development of advanced technologies such as artificial intelligence and machine learning, the semiconductor transmission medium industry downstream is expected to grow from $8.546 billion in 2024 to $11.561 billion in 2028, with a compound annual growth rate of 7.8%.

Note: Others include transport tubes, custom injection molded parts, and other accessories, such as end pins, plugs, and connectors.

Source: Frost & Sullivan report

Main growth drivers and market opportunities

The downstream demand for semiconductor products is strong.

The demand for the post-semiconductor transmission medium highly depends on brand owners and end-users' downstream demand for electronic products embedded with integrated circuits. Affected by fluctuations in downstream demand and macroeconomic uncertainties, the global semiconductor industry market size experienced a brief downturn in 2023. Although the semiconductor industry occasionally experiences short-term weakness, the long-term outlook remains optimistic. Chips play a key role in driving major emerging technologies such as artificial intelligence, the Internet of Things, and 6G. In addition, these chips are indispensable for medical progress and the development of innovative medical devices. Moreover, our power grids and climate solutions rely heavily on these tiny silicon components, highlighting their critical importance in our lives. The post-semiconductor transmission medium is a necessary and supplementary sealing product for the transportation of semiconductors, especially with the recent surge in demand, where semiconductor post-products and sub-components are frequently transported along supply chain regions and globally to accelerate turnover. Therefore, the post-semiconductor transmission medium will continue to be driven by strong growth in the semiconductor market. In addition, technological homogenization has driven innovation, especially during the COVID-19 pandemic, leading to demand for various electronic products such as mobile phones, laptop computers, telecommunications servers, automobiles, smart homes, and smart wearable devices. The penetration rate and digitization of electronic devices continue to increase in various application environments, coupled with strong product renewal cycles for emerging technologies such as 5G networks and the Internet of Things, stimulating demand for semiconductor products and thus driving the demand for post-transmission media as an indispensable medium. With the development of the semiconductor industry, chip miniaturization has become an inevitable trend. Although chip miniaturization brings challenges, technological progress, diverse applications, and increasingly complex chip designs continue to drive the growth of the post-semiconductor transmission medium market. For example, the trend towards smaller and more compact electronic control units (ECUs) in the automotive industry is an important achievement of chip miniaturization, allowing for higher integration on a single semiconductor. Although this may mean reduced demand for post-semiconductor transmission media due to smaller semiconductor sizes, the increasing popularity of automotive electronic systems and the demand for advanced functions offset the potential decline in post-semiconductor transmission media sales.

In addition, the emerging applications of semiconductors are also reflected in their integration with various fields such as smart home devices, automotive industry, and healthcare equipment. For instance, semiconductors are embodied as basic components of smart refrigerators, used for temperature control, display panels, and smart connectivity. In the automotive sector, the continuous growth in global new energy vehicle sales has driven the demand for semiconductor power devices used in advanced driver assistance systems (ADAS), infotainment systems, and more. Moreover, healthcare equipment such as medical imaging devices, patient monitoring devices, wearable devices, and diagnostic tools are increasingly adopting semiconductor technology to enhance functionality. It is worth noting that not all semiconductors are suitable for miniaturization. In some cases, larger and more robust semiconductors are required to meet specific application requirements. For example, power electronics involves the control and conversion of electricity, and miniaturization may not be the primary consideration. Instead, semiconductors capable of handling high power levels, high voltages, and high temperatures are more important. Similarly, in the automotive sector, semiconductors are used for engine control, safety systems, and other important industry applications, so robustness, reliability, and durability are prioritized over miniaturization. Therefore, the market demand for semiconductor transmission media in the back-end is continuously increasing and remaining stable.

Upstream manufacturers' production capacity increases

The scalability of upstream semiconductor product capacity is a key factor in the demand for downstream semiconductor transmission media industries. Since 2020, several specialized semiconductor foundries have invested a great deal of effort to increase production, with capacity utilization rates almost reaching 100%. In addition, companies such as UMC, TSMC, and GlobalFoundries have announced plans to invest heavily in increasing their capacity, while Samsung plans to build a dedicated factory for manufacturing 5G networks and machine learning integrated circuits. In addition to investing in physical factories and assets to increase production, alternative and emerging technologies in semiconductor production (such as robots, automated machinery, and smart factories) help shorten delivery times, reduce production cycles, and expand output. Service providers in the downstream semiconductor transmission media industry will in turn benefit from the expansion of upstream production and the growing turnover required for transportation. Despite these positive developments, the upstream semiconductor industry has faced challenges since 2022 due to a downward cycle caused by global economic conditions, trade tensions, and geopolitical uncertainties. These unpredictabilities have led to investment in the semiconductor industry and consumer spending being suppressed. However, industry prospects show a recovery in 2024. This forecast is based on the expectation that macroeconomic uncertainties will subside, leading to a rebound in terminal demand for semiconductor products. The industry (including major participants) is preparing for a recovery through strategic investments in capacity and technology. The impact of increased upstream production is expected to benefit service providers in the downstream semiconductor transmission media industry. As upstream capacity expands, so does the transportation demand for semiconductor products. Overall, the industry is responding to challenges with a forward-looking perspective, combining capacity expansion with technological innovation to meet the ever-changing market demands.

Advanced specifications and value-added services

Technological innovations such as integrated circuit configuration and structural upgrades, miniaturized MEMS embedded integrated circuits, etc., have raised the standards for the post-transmission medium. The accelerated launch of integrated circuit varieties in the market has also driven research and development of compatible and standard post-transmission media. Semiconductor tray and reel service providers not only need to ensure basic performance such as good compatibility, electrostatic protection, mechanical integrity, and thermal stability, but also increasingly important additional service scopes are provided, such as (i) providing stackable trays with packaging matrices similar to those of other suppliers according to customer needs; (ii) managing the lifecycle of used products, including collection, sorting, cleaning, measurement, testing, and packaging processes, to ensure that recycled tray products operate normally during the next use; (iii) providing a sufficient number of standardized molds and ready-made mold designs to accommodate custom cases, and equipped with extensive design and mold expertise to quickly meet custom requirements; and (iv) comprehensive services such as logistics handling and arrangement, after-sales customer service, etc. Service providers in the post-semiconductor transmission medium industry with core technical knowledge and expertise should provide value-added and customized services according to dynamic technical needs. Comprehensive service providers offering one-stop services will benefit from the expanding service scope and opportunities to adapt to more business prospects.

There has been a surge in demand for tape-based solutions

The packaging methods for semiconductor devices have evolved towards miniaturization and higher final product efficiency. The latest packaging methods using protocol code, namely QFN, DFN, and WLCSP, have simplified manufacturing processes for rapidly growing areas such as surface mount and wafer-level technology and are increasingly being applied to different types of electronic products, such as electric vehicles, consumer electronics, and medical devices. Since tape-on configurations are commonly used to feed components into automated mounters for surface mount of board-mounted components, the continuous progress of surface mount packaging methods will drive demand for tape-on configurations in the long run.

Market development trend

The Rise of Manufacturing Origins in China and Southeast Asia

Over the past few decades, semiconductor production and supply chains have been concentrated in a few major production locations such as South Korea, Taiwan, and the United States. In recent years, more and more companies from China, as well as Southeast Asian countries such as Malaysia and the Philippines, have taken on roles as IC/wafers manufacturers (i.e., front-end manufacturers and foundries), as well as IC assembly, packaging, and testing (i.e., back-end manufacturers). This is due to the local governments' joint support for the development of the semiconductor industry to avoid a technological disconnection of the entire local supply chain. For example, the Chinese government has promulgated policies related to the semiconductor industry, supporting research and development in the upstream academic community, implementing tax incentives, enforcing laws related to intellectual property protection, and accelerating further international cooperation. Back-end semiconductor transmission medium service providers, as one of the indispensable stakeholders in the industry, are increasingly present in this field to adapt and complement upstream manufacturers, with cooperation opportunities with upstream manufacturers continuously expanding.

Automation and technology integration in tray, roll tape, and scroll bar production

Tray and roll-to-roll service providers are more committed to accelerating automation and integrating CNC machinery into production and inspection lines. In view of the COVID-19 outbreak, under operational pressure of labor shortages and rising labor costs, industry-leading companies are using the combination of this technology to implement automation in order to improve overall output and efficiency. For example, visual inspection combined with artificial intelligence technology helps identify defects and monitor production anomalies in complex situations, and can automatically remove faulty trays in real time.

The adoption of lean management is increasing day by day.

In recent years, suppliers of semiconductor transmission medium services have adopted lean management practices. Management involves revising operational plans to save inefficient costs, reduce inventory of materials and tools, and minimize waste by protecting valuable materials. The introduction of digital resource management systems also facilitates decision-making, identifies root causes, and promotes continuous improvement in the implementation of lean management.

Competitive landscape of the global back-end semiconductor transmission medium industry

The global back-end semiconductor transmission medium industry is a concentrated market with fewer than 30 participants, with leading players occupying the majority of market share. The main reason behind this market structure is that the cost of transmission medium defects at printed circuit board assembly plants is high, so they tend to purchase from reputable market participants and will not sacrifice quality for more competitive price products. The top five participants are headquartered in South Korea, Japan, Taiwan, and China. UBM Holdings accounted for approximately 2.6% of the global back-end semiconductor transmission medium market industry's market share in 2023. In 2023, the combined market share of the world's top two tray and tray-related product manufacturers was about 26-37%, with UBM Holdings' market share in 2023 being about 8.4%.

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Frost & Sullivan has extensive research experience in the TMT industry and has assisted well-known enterprises in successfully listing on the capital market. Successful listings include: MFS Group (2556.HK), ZBAO.US, LGCL.NASDAQ, Ubuy (9880.HK), Beike Microelectronics (2149.HK), Willis (SIX:WILL), ICG.NASDAQ, AIXI.US, Kingsoft Holdings (3896.HK), HaoDong Technology (2440.HK), Xuanwu Cloud Technology (2392.HK), Huitongda (9878.HK), iFlytek (2121.HK), SenseTime (0020.HK), Qinhua Data (CD.NASDAQ), Mingyuan Cloud (0909.HK), CenturyLink Group (1849.HK), Weimeng Group (2013.HK), WanKaiYilian (1762.HK), AsiaInfo Technology (1675.HK), Hong Kong Asia Holdings (1723.HK), Aurora Mobile (JG.NASDAQ), Jingguan Holdings (8606.HK), Qiyi Technology (1739.HK), Weixin Jinko (2003.HK), Huifu Tianxia (1806.HK), Atlinks (8043.HK), Zioncom (8287.HK), ISP Global (8487.HK), Vobile (3738.HK), Abbot Technology (2708.HK), iClick (ICLK.NASDAQ), Shengye Capital (6069.HK), Anlink International (8410.HK), Anke Systems (8353.HK), Junmeng International (8062.HK), Feisida (8342.HK), Future Data (8229.HK) and YASIB Backup (8290.HK), among others.

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