Driven by the strong demand for chip cost reduction, the mainstream wafer size has gradually evolved from 4-inch, 6-inch and 8-inch to the current 12-inch. The increase in wafer size means a higher complexity of production processes, and any minor error in a production link of a FAB plant will directly affect the wafer yield and production efficiency.

CIM (Computer Integrated Manufacturing) is a comprehensive solution in the semiconductor field, covering multiple key links from equipment monitoring, production scheduling to process control and product traceability. By collecting, processing and analyzing real-time operation data of factory equipment, it can realize the optimized management of the entire manufacturing process, thereby improving the yield and efficiency of the factory. CIM software consists of dozens of systems such as MES (Manufacturing Execution System), EAP (Equipment Automation Platform), SPC (Statistical Process Control), YMS (Yield Management System), APC (Advanced Process Control), FDC (Fault Detection and Classification), and RCM (Remote Control Management System). As an indispensable and highly complex core software in the semiconductor manufacturing process, its importance is similar to that of EDA tools in the chip design link.

At present, two American companies, Applied Materials and IBM, occupy about 80% of the global CIM software market. Domestic CIM software companies are in a situation of being numerous but not strong, and no leading listed company has yet emerged. According to the results of public information inquiry, the main domestic CIM software manufacturers and their latest financing situations are shown in the figure below:

How to conduct legal due diligence on domestic CIM software projects is the key topic discussed in this article.

Since CIM software covers dozens of subsystems, among which the MES system has the highest technical threshold and value, the project party may claim that its CIM system has been verified by benchmark customers, but in essence, the sales content may only be low-value partial subsystems.

By sorting out the project company's sales contract ledger and verifying large-value sales contracts, we can focus on counting the subject matter of signed contracts, including the number of MES system sales contracts during the reporting period, the proportion of sales amount, and the changes in the sales proportion of other subsystems except MES. Such statistical results can clearly show which system is the company's core advantage and whether the company has the delivery capability of a full-stack solution. If there are few MES-related contracts in the sales contract subject matter or even only sales of other subsystems, it indicates that the products currently output by the company still belong to the low-value category.

In addition to selling standard software modules, some customers now require the company to provide integrated software and hardware delivery services. In this case, it is necessary to obtain the corresponding hardware procurement contracts, check the special agreements between the project company and hardware suppliers on software development, and confirm whether the project company is licensed to modify the software part of the hardware equipment to avoid the risk of subsequent infringement.

In addition, special attention should be paid to the composition of the project company's contract types. If most contracts focus on providing customers with highly labor-dependent services such as customized development technical services or software upgrade and maintenance, rather than the sale or license of standardized software modules, it is necessary to carefully demonstrate its core value and business model, and guard against the fact that it is essentially more like a technical service outsourcing company rather than a company with core software products.

Through the verification of the project company's signed sales contracts, we can further classify and count the proportion of the project company as a subcontractor and a general contractor. If the proportion of sales contracts signed by the company as a subcontractor is relatively high, it means that the company acts more as a subcontractor, only undertakes the work related to a single software module in specific projects, and has a relatively weak contractual position. From an indirect perspective, end customers may also more intuitively recognize the technical capabilities and integration capabilities of general contractors.

On the other hand, if most of the signed sales contracts are subcontracts, the difficulty of the project company's payment collection will be further increased. Because general contractors are in a stronger position, they generally stipulate in the contract terms that they will pay the project company's purchase price only after receiving the payment from end customers. Therefore, the project company faces additional advance payment risks, and special attention should be paid to the company's overall cash flow situation at this time.

By counting the repurchase situation of major customers during the reporting period, we can further verify the end customers' recognition of the company's products. If end customers do not purchase continuously, it is necessary to further verify the specific reasons, such as whether the company's products fail to meet customer requirements, whether the end customers' factory construction speed slows down due to cyclical fluctuations, or whether the end customers build their own software development systems; at the same time, it is necessary to conduct classified analysis combined with the existence of original factory upgrade and replacement.

CIM software itself belongs to the broad category of industrial software. In addition to its extensive application in the semiconductor field, it can be used for quality management and production efficiency improvement in any high-end manufacturing industry involving multi-process production processes and high automation requirements. During the due diligence process, focus can be placed on the breadth of the project company's end industry coverage. Through the analysis of the customer structure during the reporting period, the changes in the application of the company's products in end industries can be clearly seen.

Customers deploying CIM software often require the project company's employees to be stationed on-site for a long time to provide technical support. To reduce operating costs, software companies often use a large number of labor outsourcing personnel to complete this work. For projects with a large number of labor outsourcing, special attention should be paid to the contracts signed between the company and labor outsourcing companies, clarify the specific responsibilities of outsourcing personnel, especially whether outsourcing personnel are involved in the development of the project company's core software products.

The due diligence party may require the company to provide the outsourcing personnel management ledger, verify the number of labor outsourcing personnel corresponding to each specific project, and obtain the working hour sheets and corresponding settlement documents during the reporting period; special attention should also be paid to whether the outsourcing company is established specifically to serve the project company and whether there is an associated relationship with the project company.

In addition to specialized human resource outsourcing companies, if a third-party outsourcing company itself operates other businesses, special attention should be paid to whether its other businesses are related to the CIM software business, the rationality of the project company's use of the outsourcing party, and the risk of trade secret leakage.

The data collected by CIM software needs to cover all production links of wafers. A company capable of producing a CIM software system not only needs a group of excellent software engineers, but also a group of industry insiders who are very familiar with all production links of wafers. By checking the past employment experience of core personnel, we can simply count the proportion of software personnel and hardware personnel. If the core personnel of the project company lack FAB plant production experience, it is difficult to truly launch a reliable CIM software only by relying on pure software development personnel.

In summary, when selecting investment targets for CIM software projects, the following factors should be considered as much as possible: ① A rich matrix of software modules with a high reusability rate; ② A large number and high proportion of sales amount of MES product sales contracts; ③ A large proportion of direct sales to end customers; ④ Possessing stable and sustainable benchmark customers and broad coverage of end industries; ⑤ Projects where core personnel have both high-end software development experience and rich FAB plant production experience.