[Value Catalog]: Research report center with opinions.
Investment Essentials
Marginal improvement in terminal demand and continuous upgrading of technological innovation: Electronics has experienced nearly two years of sluggish demand, and from Q3 2023, terminal demand has improved one after another. In the short term, the inventory depletion of all links in the industry is nearing the end, and the global smartphone sales will increase by 14% quarter-on-quarter in 2023Q3, and the year-on-year and quarter-on-quarter growth rates have improved for two consecutive quarters, and the industry inflection point has initially emerged. In the medium and long term, the external factors that suppress the demand for replacement machines have shown signs of improvement, and with the technological innovation of end applications, we judge 2024Electronics industryFocusing on the recovery of demand and technological innovation, the theme of superimposing the in-depth layout of the industrial chain of major terminal manufacturers will lead to growth opportunities in each industrial chain.
(Please read the original article for a high-resolution large picture).
Semiconductors
Focus on cycle recovery, domestic substitution and technological innovation: The recovery of consumer electronics and the trend of domestic substitution caused by independent and controllable demand have jointly driven the demand growth of the domestic upstream semiconductor industry. Consume in 2024Electronics industryIn the context of the expected recovery of prosperity, foreign policies continue to become stricter, and the logic of domestic substitution such as equipment, materials, and high-end chips continues to strengthen. Domestic semiconductor manufacturers are expected to benefit from the dual catalysis of upward cycle and domestic substitution, bringing growth opportunities to representative industries such as RF, analog, storage, and power.
In terms of technological innovation, the development of AI technology has led to an increasing demand for advanced packaging chips. From the perspective of industry demand, NVIDIA's follow-up demand for AI top-spec chips for ChatGPT and related applications has increased significantly, but due to the need for one-stop advanced packaging capacity, the company has recently urgently booked CODOS advanced packaging capacity with TSMC.
The main means of upgrading the performance of chips at this stage of advanced packaging is expected to directly benefit equipment and material manufacturers. Advanced packaging.
It can break through the constraints of a single chip and realize system-level mobility, and at the same time improve communication bandwidth and alleviate storage intensity problems through high-density and high-speed packaging. In the case of mass production at this stage, it is the economic benefits that need to be considered (because 3nm is limited by the yield of the lithography process, and the cost exceeds 5nm and 7nm), and advanced packaging can improve the performance and power consumption advantages of the overall chip by cutting, splicing, and stacking to form performance and large sizes. The key to reducing costs lies in the use of advanced packaging technology, so under the trend of new technologies, related semiconductor equipment manufacturers and material manufacturers are expected to directly benefit.
Consumer Electronics:
New technologies for mobile phones and PCs have emerged, and the global shipments of folding screens have exceeded 10 million, and they are transitioning from niche single products to mass consumer goods. According to Counterpoint data, the global shipment of folding screen mobile phones in 2022 has exceeded 10 million, and the increase in the shipment base will help the folding screen enter the public eye, from niche products to mass consumer goods.
The XR industry chain is accelerating: Apple's mobile phone is equipped with a periscope lens for the first time, the growth momentum of the folding screen mobile phone market continues to be strong, the introduction of titanium alloy materials into high-end mobile phones has promoted the growth of the upstream 3D printing industry, and Huawei's new phones are equipped with satellite calls, all of which can promote the growth of related links; In 23 years, Apple released the MR headset VisionPro, leading the development of the spatial computing market, and Meta has launched many products in recent years to promote the shipment of VR glasses, and the MR application scenarios have gradually expanded, and the industrial ecology has been continuously improved.
Automotive Electronics:
Focus on the leap from electrification to intelligence: With the development of technology, consumers' acceptance of autonomous driving has increased significantly, and the demand side of the domestic intelligent driving industry has reached an inflection point, driving the accelerated development of relevant links in the industrial chain.
For example, Huawei's autonomous driving sector development is mainly driven by four aspects: cameras, radars, connectors, and ARHUDs. The main modules inside the high-pixel camera include CMOS image sensor, optical lens, and ISP image signal processor, which need to be assembled separately and finally assembled with the DSP chip to complete the system integration. The laser radar system mainly includes a transmitting module, a receiving module, a control and signal processing module and a scanning module (if any), and the laser emission includes an emitting optical system and a laser; Laser reception includes a detector and a receiving optical system; The scanning system includes motors, MEMS, and scanning mirrors; Information processing includes DSPs and FPGAs. Among the connectors, minifakra becomes the short-term optimal solution, and Ethernet connectors become the final solution; The AR-HUD is split into PGUs, windshield systems, optical components, software, and other parts, and the PGUs include chips, optical machines, and light sources; Optical elements include freeform mirrors; The windshield system includes a wedge-shaped PVB and a front windshield; The software includes optical design and AR navigation.
We focus on:
1. The volume and price of on-board cameras have risen, and laser and millimeter-wave radar have accelerated to get on the car; Demand-driven cost reduction, lidar is expected to become the standard for intelligent driving. Driven by the perception demand for autonomous driving solutions, lidar manufacturers have received a number of designated points from car companies, prompting lidar manufacturers to rapidly increase volume and large-scale mass production, and then the cost has dropped rapidly, from the initial 18,000 yuan to the lowest of about 3,000 yuan this year**.
2. The market demand for high-frequency and high-speed connectors continues to grow with the increase in the penetration of autonomous driving.
3. The decline in the cost of AR-HUD has driven the rapid expansion of the industrial chain. For example, Huawei's upcoming M9 uses AR-HUD to implement functions such as safe driving assistance, lane-level AR navigation, and projection of 360° reversing images. According to the data, in 2022, 1.5 million units of the Chinese market will be delivered with W AR-HUD as standard equipment in the front of passenger cars, and the penetration rate of AR-HUD is low, and there is a lot of room for growth. In the first half of 2023, AR-HUD ** is expected to be in the range of 2000-3000 yuan, and it is expected to drop to about 1,000 yuan in the future, accelerating the popularity of AR-HUD.
Huawei's in-depth layout of multiple industrial chains, and the most advanced chain opportunities are highlighted
In recent years, Huawei has stepped up its determination to deploy its own industrial chain, and has conducted in-depth R&D, cooperation, and investment in various "bottleneck" fields, striving to achieve comprehensive domestic substitution. In addition, Huawei also uses cooperation + R&D + investment to promote the localization of various product industry chains to cope with the changing international situation. Therefore, Hubble Capital was established in 2019 to invest in the upstream ecosystem dominated by semiconductors, covering semiconductor materials, RF chips, displays, analog chips, EDA, testing, CIS image sensors, lidar, lithography machines, artificial intelligence, etc.
The listed companies invested by Hubble mainly include: Siruipu (base station chips), Canqin Technology (5G filters), Dongxin (memory chips), Tianyue Advanced (silicon carbide substrates), Dongwei Semiconductors (power semiconductors), Changguang Huaxin (optoelectronic chips), Focuslight Technology (laser components), Jiehuate (power management chips), Yuanjie Technology (optical chips), Weijie Chuangxin (analog chips), Yutai Micro (automotive chips), Huahai Chengke (semiconductor packaging).
Focusing on Huawei's industrial chain, we focus on: 1. In the field of mobile phones, with the hot sales of Mate60, the king of high-end mobile phones has returned, and at the same time, the domestic market share in the field of folding screens ranks first; 2. In the automotive field, Huawei empowers autonomous driving and accelerates the development of the intelligent driving industry. 3. In the server field, it is expected to build a "Kunpeng + Ascend" dual engine; 4. In the field of charging piles, Huawei has a leading position in liquid-cooled supercharging technology, and 2024 will be the first year of accelerated construction.
Combing of investment targets:
1. Semiconductors pay attention to the inflection point of the cycle + domestic substitution + technological innovation
1) Storage industry chain: GigaDevice, Beijing Junzheng, Longsys, BIWIN Storage, Dongxin, Wanrun Technology, Hengshuo Shares, Langke Technology, Montage Technology, etc.; 2) RF chips: Zhuosheng Micro, Weijie Chuangxin, etc.; 3) Silicon carbide industry chain: Tianyue Advanced, Jingsheng Co., Ltd., Xinlian Integration, Star Semiconductor, Tony Electronics, etc.; 4) Advanced packaging and testing: Changdian Technology, Tongfu Microelectronics, Jingfang Technology, Yongsi Electronics, Xingsen Technology, etc.; 5) Others: Wafer foundry (SMIC), optics (Weir), fingerprint recognition (Goodix), FPGA (Fudan Microelectronics, Unisplendour), analog chips (NOVOSENSE, SRP, Shengbang), power (Dongwei Semiconductor, Wingtech Technology), etc.
2. Consumer electronics pays attention to traditional hardware innovation and new innovative hardware
1) Hardware innovation: HW (Guanghong Technology, OFILM, Taijia Co., Ltd.), Satellite Calling (Xinwei Communication), Folding Screen (United Precision, Dongmu Co., Ltd.), Titanium Alloy (Golden Sun), Periscope Lens (Crystal Optoelectronics, Lante Optics), AIPC (Spring and Autumn Electronics, Longyang Electronics, Everbright Tongchuang, Lenovo Group), etc.; 2) Innovative hardware: MR direct suppliers (Lixun Precision, Goertek, Zhaowei Electromechanical, Lingyi Intelligent Manufacturing, Changying Precision), equipment suppliers (Jieput, Zhicube, Yitian Shares, Shenzhen Keda), XR core technology (Sanlipu, Stick, Qingyue Technology, Emdoor Information, Skyworth Digital), etc.
3. Automotive electronics pay attention to the incremental link of intelligent driving
1) Vehicle optics: OFILM, Lianchuang Electronics, Yongxin Optics, Gaowei Electronics, Crystal Optoelectronics, Lante Optics, etc.; 2) Vehicle connectors: ECT, Yonggui Electric, Weifeng Electronics, etc.; 3) Integration: Xingrui Technology, etc.
4. In the pro-cyclical field, pay attention to the leading companies of traditional electronic components
1) Passive components: Sanhuan Group, Fenghua Hi-Tech, Shunluo Electronics, Aihua Group, Jianghai Co., Ltd., etc.; 2) Panel: BOE A, TCL Technology, Visionox, etc.; 3) LED: Leyard, Unilumin Technology, Colorlight, Mulinsen, Absen, etc.; 4) CCL: Shengyi Technology, Huazheng New Materials, etc.
5. Technological innovation focuses on the progress of high-temperature superconductivity industrialization: leading companies in each link of superconducting magnets, strips, equipment and components - Lianchuang Optoelectronics, Yongding Co., Ltd., Guoguang Electric, etc.
This is an abridged excerpt from the report, the original PDF of the report
Electronic Equipment-Electronics Industry In-depth Report: 2024 Strategy: Technological Innovation in Full Bloom! -Soochow** [Ma Tianyi, Bao Xianying, Zhou Gaoding, Jin Jing, Wang Runzhi, Li Lutong]-20240110 [p. 69].
Report**: Value Catalog