The strategy of "strengthening the army with science and technology" has created a historic opportunity for the development of the military microcircuit module industry
At present, the national defense industry is in line with the national strategic development direction, and at the same time by the first equipment informatization, modernization, intelligent trend to promote, the industry is in a high prosperity development stage, in the downstream demand rapid growth at the same time, upstream business is also actively expanding production capacity, although there may be a short-term capacity bottleneck, but in the long run, the overall competition pattern of the industry is relatively stable. The military microcircuit module is in the midstream industry, and its main market players include the 43rd Research Institute of China Electronics Technology Group, Xi'an Microelectronics Technology Research Institute of China Aerospace Science and Technology Corporation (771 Institute), the 24th Research Institute of China Electronics Technology Group, and Qingdao Coolcore Electronics Research Institute Co., LtdThe supporting enterprises related to the industry chain include Zhenhua Technology, Xinlei Neng, etc.
During the "14th Five-Year Plan" period, China accelerated the strategy of strengthening the army with science and technology, focused on independent innovation and original innovation in national defense science and technology, accelerated the development of strategic, cutting-edge and disruptive technologies, and accelerated the upgrading of equipment and the development of intelligent equipment. The state has issued a series of laws and regulations and related policy documents, which provide a good policy environment for the in-depth development of national defense science and technology industry in the future, and also clarify the process of China's national defense modernization, bringing huge market opportunities and market demand for military microcircuit modules.
1. The competition pattern of the subdivided industry to which the military microcircuit module belongs
At present, the national defense industry is in a stage of high prosperity development, while the downstream demand is growing rapidly, the upstream business is also actively expanding production capacity, and the overall competition pattern of the industry is relatively stable.
On the demand side, during the "14th Five-Year Plan" period, a large number of new third-generation and above-class equipment in China have been installed in batches, and the strike capabilities in key areas such as precision guidance, air supremacy, and electronic countermeasures have been significantly improved, and the rapid transformation of "science and technology" to "combat effectiveness" has stimulated the demand for military electronic products. At the same time, because military manufacturing is an industrial highland of scientific and technological innovation, its technology radiation is wide, the industrial driving force is strong, and the added value of products is high, and it also has a prominent spillover effect and economic driving role in the civilian field.
On the supply side, military electronics companies are actively deploying production capacity to meet the procurement needs of downstream machine manufacturers. At the same time, participating companies also continue to increase investment in innovation and research and development to promote the iterative development of core technologies. However, due to the production mode of "sales and production" in the military industry, the expansion of production capacity is relatively lagging behind, and the characteristics of military technology-intensive, long development process and large R&D investment have led to the lack of enthusiasm of some private enterprises to actively expand production.
2. The industry overview and technical level of military microcircuit modules
China's national defense science and technology industry takes the research and development and production of military equipment as the core, mainly covering six industrial clusters: aviation, aerospace, shipbuilding, weapons, nuclear industry and military electronics. Among them, the military electronics industry, as an independent industrial cluster, mainly undertakes the functions of informatization and intelligent supporting equipment, serving the aviation, aerospace, shipbuilding, weapons and nuclear industries. Therefore, the military electronics industry is a vital part of China's national defense science and technology industry. In recent years, the state has attached great importance to the modernization of national defense and the armed forces, and China has deployed the goal of strengthening the armed forces in the new era, and put forward the "three-step" strategy of national defense and military modernization by 2027, the centenary goal of the founding of the armed forces, the basic realization of national defense and military modernization by 2035, and the comprehensive construction of a world-class military by the middle of this century. As a link leading the development of first-class equipment informatization and intelligence, the military electronics industry has become a sunrise industry with a relatively fast growth rate in the national defense and military industry.
The military electronics industry chain from top to bottom, including components, devices, functional components, modules, microsystems and equipment upstream components and devices, is the foundation of the entire military electronics industry, with good compatibility, can meet the customized needs of customers for different application scenarios;Midstream functional components Modules and microsystems are important subsystems of the whole machine, which realize specific functions: the downstream electronic equipment includes electronic information equipment and the electronic information system on the platform, which is an important support for informatization and intelligence. The specific situation of the industrial and electronic industry chain is as follows:
3. Overview of the hybrid integrated circuit industry in the military electronics subdivision to which the military microcircuit module belongs
The microcircuit module belongs to the hybrid integrated circuit products in the field of military electronics. According to the manufacturing process, integrated circuits can be divided into monolithic integrated circuits based on silicon planar process and hybrid integrated circuits that combine standardized monolithic integrated circuits with active and passive components. Compared with monolithic integrated circuits, hybrid integrated circuit products have flexible design, convenient process, wide range of component parameters, high precision and strong reliability, and can be applied to a variety of scenarios.
Based on different production processes, hybrid integrated circuits can be further divided into thin-film integrated circuits (generally less than 1 micron thick) and thick-film integrated circuits (generally greater than 10 microns thick). In general, thin-film integrated circuits have good temperature and frequency characteristics, high integration and small size, and are suitable for analog circuits that require high accuracy and good stabilityThick-film integrated circuits have high withstand voltage, withstand power and withstand current, which are suitable for large-power application scenarios, and have been widely used in military fields such as avionics and satellite communications, as well as civilian fields such as mobile communications, computers and automotive electronics. With the continuous development of thick film integrated circuit design and packaging technology, related products are developing in the direction of miniaturization, lightweight and high reliability, and their applications in airborne communications, satellite communications, radar and other fields are deepening.
4. Downstream industries
(1) The basic situation and characteristics of the field of precision guidance equipment
A missile is an aircraft that is equipped with a warhead and propelled by its own power plant, and the guidance and control system controls the flight track to hit and destroy the target, and its structure can be divided into guidance system, power system, warhead, steering gear system and missile body structure. Among them, the steering gear system controls the flight direction, attitude and altitude of the missile after receiving the data of the guidance system, and guides the missile to fly to the target accurately.
Compared with conventional missiles, precision-guided equipment has the advantages of long range, high hit rate and high accuracy, and is more widely used in modern warfare, with the proportion of use greatly increased from 8% in the 1991 Gulf War to 91% in the Libyan War in 2011. At the same time, precision-guided equipment also has the characteristics of high value and high consumption, and is one of the key areas of national defense budget investment of various countries. According to the U.S. Department of Defense's FY 2023 budget, precision guidance equipment and precision guidance equipment defense-related areas together account for 12 percent of the equipment procurement budget13%, accounting for 14 percent of the equipment R&D budget91%, which is one of the key areas supported by the U.S. defense budget.
At present, China is speeding up the pace of updating and iterating of first-class equipment, and a new generation of first-class equipment has entered the stage of mass production. Benefiting from this, the demand for consumable ** represented by precision-guided missiles has risen sharply. In addition, since China promulgated the "Interim Regulations on Strengthening Actual Combat Military Training" in 2016, actual combat exercise training has become the focus of training and preparation, and it is expected that our army will continue to maintain a relatively high intensity of actual combat training for a period of time in the future, and the ammunition consumption of the whole army will also maintain a continuous growth trend.
(2) The basic situation and characteristics of the field of military aviation
At present, there is still a gap between the overall strength of China's aircraft and that of developed countries, and it needs to be improved urgently. On the one hand, the number of various types of military aircraft in China is still quite insufficient compared with that of the United States. According to World Air Forces 2023, the number of military aircraft in service in China in 2022 is 3,284, far lower than the number of military aircraft in service in the United States (13).300, which is only 25% of that of the United States. Among them, there are 1,570 fighter planes, 913 armed aircraft, 288 transport aircraft, and 112 special aircraft. On the other hand, the structure of our first generation is in a relatively backward state. According to the current Western four-generation classification standard, in 2022, the number of second-generation fighters in service in China will be 931, the number of third-generation fighters will be 620, and the number of first-generation fighters will be 19, and the proportion of new-generation fighters will significantly lag behind the United States.
Therefore, China urgently needs to make up for the gap in the number of aircraft and carry out generational updates and upgrades. Military microcircuit module light source driver products play an important role in the take-off, landing and navigation process of aircraft, and are expected to benefit from the industrial dividend in the field of military aviation.
5. The main driving factors for the development of the military microcircuit module industry
(1) The requirements for independent and controllable national defense and military industry continue to be replaced by localization
The "14th Five-Year Plan" puts forward the requirements of adhering to "independent and controllable, safe and efficient" for industrial development, and at the same time requires accelerating the modernization of advanced equipment to help national defense science and technology achieve independent innovation and original innovation. As an important pillar industry with strong basic attributes and high strategic value, the national defense industry can withstand high R&D investment and trial-and-error costs, which has a good economic driving effect on the civilian field, and has become a test field for cutting-edge technology.
(2) The policy of strengthening the military promotes the acceleration of the process of military informatization
With the gradual improvement of the informatization construction and national defense strength of China's industrial industry, the demand for various electronic components in the first equipment has become increasingly prominent, and at the same time, the demand for independent and controllable import substitution in the military industry has been increasing. Based on this, around the military electronics industry, China's leading ministries and commissions have issued a series of supportive industrial policies to encourage enterprises to attach importance to independent innovation, independent controllability, and achieve breakthroughs in key areas and key technologies. Driven by the favorable policy of high density, the development of China's national defense industry and military microcircuit module industry will enter the fast lane.
(3) Encouraging private enterprises to participate in the national defense and military supporting industries has become the development direction supported by national policies
In recent years, machine manufacturers have implemented the development strategy of "small core, big collaboration", attached importance to absorbing excellent private enterprises, and established a market-oriented industrial ecology. More and more private enterprises are also participating in the construction of national defense science and technology on a larger scale, at a higher level, and to a deeper extent. At the same time, the products provided by private enterprises have also moved rapidly from general supporting products to integrated products and sub-system products, and some private enterprises have also entered the core business list of military industrial groups. On the one hand, the structure of military scientific research capabilities has been optimized and adjusted, and social forces can contribute to national defense scientific research, especially in the fields of electronics, semiconductors, computers and other civilian technology advantages: on the other hand, the competitive environment for military products has also developed in a more market-oriented direction, promoting military central enterprises to take the initiative to seek changes, participate in market-oriented reforms, and better play the leading role of the industrial chain leader.
(4) The development trend of equipment miniaturization and lightweight promotes the rapid iterative progress of microcircuit module technology
Scientific and technological progress has profoundly affected the confrontation mode of modern warfare, and miniaturization and lightweight have become an important development trend of advanced equipment. Taking air-to-air missiles as an example, due to the stealth performance of the first-class fighter jet, the space of the bomb compartment is limited, and the emergence of new targets such as early warning aircraft, electronic warfare aircraft, and UAV swarms also requires the fighter to be loaded with more types and higher density missiles, and miniaturization has become a feasible technical path. Therefore, as the core of the servo control system, the microcircuit module product must also adapt to the requirements of miniaturization to further save the space in the bullet body, and the related technology is rapidly iteratively progressing.
(5) The strategy of "strengthening the army with science and technology" has created a historic opportunity for the development of the military microcircuit module industry
Comprehensively implementing the strategy of "strengthening the army through science and technology" and taking scientific and technological innovation as the core engine for strengthening and rejuvenating the army has become an urgent requirement for solving the bottleneck problem of the army's development and construction and changing the production mode of combat effectiveness. As an important supporting product for strengthening the army with science and technology and the development of equipment informatization and modernization, the military microcircuit module industry will develop more rapidly with the installation of the third generation and the backbone of the industry.
(6) Precision guidance is of great strategic significance in modern warfare, and the value of servo control system is highlighted
Precision guidance is the key element for winning a decisive victory in modern warfare, which can effectively enhance combat efficiency and has the advantages of high hit accuracy, great killing power, good versatility, and high comprehensive benefits. As one of the core components of precision guidance, the servo control system directly affects the flight trajectory and guidance accuracy, especially for cruise missiles, intercontinental missiles, etc., long endurance, micron-level deviation may cause the missile to deviate from the target, and will cause serious personnel and strategic losses, therefore, the whole machine manufacturers pay more and more attention to the value of the servo control system, and gradually increase the scientific research strength, improve its accuracy and reliability.
(7) Microcircuit module products are developing in the direction of integration
In order to adapt to the development trend of miniaturization and lightweight equipment, and at the same time take into account the installation cost and production efficiency of the whole machine manufacturer, high-reliability microcircuit module products show an integrated development trend. Due to the increasingly complex internal functional structure of modern equipment, integration can effectively reduce the length of internal leads and parasitic parameters, thereby reducing the design cost of the module system. For example, modular products that integrate motor drivers, signal controllers, power modules and other components have been recognized by downstream machine merchants because of their advantages of small size, convenient installation and high reliability, and have also become one of the development directions of military microcircuit module products.
(8) Defense budget expenditure maintained steady growth
For more industry information, please refer to Pricewater's Strategic Consulting2024-2030 Military Microcircuit Module Industry Market Research and Development Trend Report**At the same time, PwC Consulting also provides services such as industrial research reports, industrial chain consulting, project feasibility reports, specialized and special new little giant certification, national manufacturing single champion enterprise certification, 14th Five-Year Plan, post-project evaluation report, BP business plan, industrial map, industrial planning, blue IPO fundraising and investment feasibility study, IPO working paper consulting and other services.