Connectors are electronic components that transmit and exchange currents or signals between electronic system devices. Connector assemblies are components that integrate connectors with corresponding cables (including optical fiber cables, wire cables, microwave coaxial cables, etc.) into corresponding circuit loops to realize signal connection and transmission between electronic devices. Connectors in electronic equipment to form a circuit is mainly through cables or PCB (printed circuit board) connection, of which the use of cable circuit connection has the advantages of long-distance transmission, flexible wiring and so on.
Connector module is a collection of electronic devices assembled into module products, usually need to be connectors, printed circuit boards, protective sealing devices, sheet metal structural parts, relays and other composite assembly into modules. Connector assemblies are components that integrate connectors with corresponding cables (including optical fiber cables, wire cables, microwave coaxial cables, etc.) into corresponding circuit loops to realize signal connection and transmission between electronic devices. Connectors in electronic equipment to form a circuit is mainly through cables or PCB (printed circuit board) connection, of which the use of cable circuit connection has the advantages of long-distance transmission, flexible wiring and so on.
(1) According to the transmission medium, it can be divided into electrical, optical and microwave connectors
According to the different media of transmission, connectors are mainly divided into electrical connectors, microwave connectors, and optical connectors.
Different types of connectors have different performance requirements: (1) Electrical connectors must meet the requirements of good contact and reliable operation. Among them, the transmission of high-power electrical energy also requires low contact resistance, high current carrying, low temperature rise, and high electromagnetic compatibility; the transmission of high-speed data signals requires good impedance continuity, small crosstalk, low latency, and high signal integrity. (2) In addition to the reliability requirements of contact, microwave RF connectors have strict requirements for impedance design and compensation, and need to meet the performance requirements of insertion loss, return loss, phase and third-order intermodulation. (3) Optical fiber connectors have strict requirements for the alignment accuracy of components, so the processing accuracy of contact parts is higher, the cleanliness is high, and the positioning is accurate.
Due to the different requirements of the connector manufacturing process, the connector manufacturer is generally a single electrical connector, RF connector or optical connector manufacturer. Foreign Tyco, Amphenol and other connector giants have the ability to produce electrical connectors, RF connectors, optical connectors; most of the domestic manufacturing enterprises are limited to a single type of product production, the domestic also has electrical connectors, RF connectors, optical connector production capacity of enterprises are not many, Ruida is one of them.
(2) According to the downstream scenario, it can be divided into communications, automotive, industrial connectors, etc
According to different application scenarios, connectors are mainly divided into communication connectors, automotive connectors, consumer electronics connectors, industrial connectors, etc. Automotive connectors are mainly based on electrical connectors, but with the development of automotive intelligence and networking, automotive RF connectors have also begun to be applied.
Automotive connectors are the number one application area for connectors. The automotive sector is the largest market for connectors, accounting for 22% of the global connector industry. According to Bishop & associates data, the global connector market size reached 64.2 billion US dollars in 2019, with an average annual compound growth rate of about 4.3% in 2014-2019; the global automotive connector market size in 2019 was 15.210 billion US dollars, and the average annual compound growth rate in 2014-2019 was 5.33%, higher than the growth rate of the total global connector market size in the same period.
Due to the special safety requirements in the automotive field, connectors, especially new energy vehicle connectors, focus on high voltage, large current, anti-interference and other electrical properties, and need to have long mechanical life, anti-vibration shock and other long-term dynamic working environment good mechanical properties.
1.2 Automotive connectors: various types, used in different automotive systems
New energy vehicles are a set of products, including safety, entertainment, information transmission, power, energy storage, etc. Different types, different fields of demand, which means that on different modules, according to the different directions of their application, the performance requirements of connectors will also be different.
At present, the types of mainstream vehicle connectors are: 1, high voltage connectors, mainly used in power motors, distribution boxes, inverters, AC/DC and other batteries and electric drive units; 2, power exchange connectors, which belong to a kind of high voltage, installed in the car to achieve rapid power exchange; 3, RF connectors, mainly used for sensors, cameras and entertainment terminals and other fields. 4, Ethernet connector, connected to the vehicle high-speed network - Ethernet system, the various core domain controllers are connected together; 5, low-voltage wiring harness connector, responsible for brake system, door wiring harness, speed and steering system and other body control areas.
1.3 Communication connector: the second largest downstream, rapid iteration of technology
Communication connectors: Communication connector products need to meet the characteristic impedance, insertion loss, voltage standing wave ratio and other electrical indicators, and need to achieve low signal loss, low standing wave ratio, microwave leakage and other functional requirements. Communication connector products are mostly customized products, which will use electrical connectors, RF connectors, and optical connectors at the same time.
In different segments of the communication sector, the types of connectors are also different: (1) in the communication data center or server side, the demand for high-speed connectors accounts for a higher proportion; (2) on the wireless base station side, due to the emergence of 5G MASSIVE MIMO technology, the demand for RF connectors accounts for a relatively high proportion. In the process of microwave signal transmission, communication high-frequency connectors are prone to loss attenuation, waveform interference and other conditions that affect communication quality; at the same time, 5G communication technology puts forward higher requirements for the floating tolerance function of connectors. Therefore, the impedance compensation design and simulation ability of the connector are the technical difficulties in the product design process. According to the data of the Prospective Industry Research Institute, the value of connectors in general communication equipment accounts for about 3-5%, while the value of some large equipment accounts for more than 10%.
Communications is the second largest downstream of connectors, accounting for about 20% of the global connector market. In 2019, the global communication connector market size grew to 14.269 billion US dollars, and the average annual compound growth rate of the market size in this field from 2014 to 2019 was 5.85%, which was higher than the growth rate of the total market size of global connectors in the same period.
Second, the construction of new energy vehicles & 5G two-wheel drive, open up the long-term growth space of the connector industry
2.1 Domestic connectors: 30% of the world, the market size of about 20 billion US dollars
The global connector market size increased from 48.9 billion US dollars in 2011 to 64.2 billion US dollars in 2019, with an average annual compound growth rate of about 3.46%, and it is expected that by 2023, the global connector market size will exceed 90 billion US dollars; and thanks to the rapid development of China's communications, automotive, consumer electronics and other connector downstream application industries, The size of China's connector market increased from 11.296 billion US dollars in 2011 to 19.477 billion US dollars in 2019, with a compound annual growth rate of 7.05%, significantly higher than the global growth rate in the same period, and in 2019, China accounted for about 30.35% of the global connector market share.
From the perspective of regional market size, China has surpassed Europe and North America to become the world's largest connector market, and the market size has increased from 23.10% in 2011 to 30.35% in 2019. With the rapid development of downstream new energy vehicles and the Internet of Things, the market size of automotive connectors and communication connectors will continue to expand in the future.
2.2 The value of new energy vehicle connectors is much higher than that of traditional car connectors
Price: There are nearly 100 kinds of electronic connectors needed for traditional cars, and the connectors used in a single model reach about 600, which are mainly used in engine management systems, safety systems, entertainment systems and other aspects. Compared with traditional fuel vehicles, the demand for connectors in new energy vehicles has increased significantly. The value of low-voltage connectors used in traditional fuel vehicle bicycles is about 1,000 yuan, while the value range of connectors used in pure electric passenger bicycles is 3,000-5,000 yuan, and the value range of connectors used in pure electric commercial vehicles is 8,000-10,000 yuan, which is significantly higher than that of traditional vehicles.
Volume: The penetration rate of new energy vehicles continues to increase, and the connectors of new energy vehicles are expected to rise in volume and price. In 2018, the market size of China's new energy vehicle connectors was 3.373 billion yuan. Global new energy vehicle sales increased from 546,000 units in 2015 to 1.621 million units in 2017, with a compound annual growth rate of 72.30%, and sales are expected to reach 6 million units by 2022, with an average annual compound growth rate of 29.92%. With the rapid growth of new energy vehicle production and sales, the market size of new energy vehicle connectors is expected to exceed 10 billion yuan by 2024, with an average annual compound growth rate of more than 24%.
2.3 The construction of 5G base stations has accelerated, and the demand for connectors has grown geometrically
The development of mobile communication technology has gone through the GSM (2G), 3G, LTE (4G) stage, is gradually evolving to 5G, 5G transmission speed is about 100 times higher than 4G, and its transmission speed and channel function requirements for the connected system have increased significantly. For example, 4G single base station is basically 4-8 channel transmission, while 5G base station is basically 32-64 channel transmission, not only the number of connectors is geometrically increased, the performance requirements are more stringent.
According to the data of the Ministry of Industry and Information Technology, the number of 5G base stations in China has reached 1.159 million, accounting for more than 70% of the world, and the number of 5G terminal connections has reached 450 million households, an increase of 247 million households compared with last year. According to the Prospective Industry Research Institute, the pace of 5G base station construction in China will show a trend of accelerating and then falling back but still maintaining a high level, and the number of new 5G base stations is expected to reach a peak in 2024, which is expected to reach 2.65 million stations.
According to the current mainstream antenna scheme, each base station will use 64 RF connectors. According to the current mainstream architecture of 5G base stations, each macro base station requires 192 sets (using dielectric filter structure) or 384 sets (using metal filter structure) board-to-board connectors. The increase in the number of 5G base stations has brought broad growth space to the communication connector market, and communication connector companies have ushered in continuous development, and by 2025, the global and domestic communication connector market size will reach 21.5 billion US dollars and 9.5 billion US dollars, respectively.
Third, the competitive landscape: European and American and Japanese companies are leading, and domestic enterprises actively layout automotive electronics
3.1 The domestic start is late, and the trend of manufacturing & consumption transfer is obvious
Global connector market concentration is high: the connector industry is a fully competitive industry, with many product categories, highly fragmented market segments, and many small and medium-sized connector companies focusing on market segments have a low market share. At the same time, the global connector market gradually showed a trend of centralization, forming a situation of oligopolistic competition, and the market share of the top ten companies in the global connector industry increased from 41.60% in 1995 to 61.44% in 2019. TE Connectivity(Tyco Electronics), Molex (Molex), Amphenol (Amphenol) these three large U.S. manufacturers in each segment ranked high, Tyco, Ampino and Moshi, the three manufacturers of the market share accounted for more than 30% of the global overall share. (Source: Future Think Tank)
The status quo of China's connector industry: started late, mainly small and medium-sized enterprises, the market concentration is low, and mainly low-end products. In addition to the military industry, China's high-end markets such as automobiles, medical care, and communications are occupied by foreign enterprises. Under the active guidance of Chinese policies and the promotion of downstream automotive, communications and other fields, the overall technical level of China's connector industry has been greatly improved and is in the process of catching up rapidly. With the rise of large electronics manufacturing services (EMS) providers such as Celestica, Foxconn, Jabil and Sanmina, Asia's supply chains, labor costs, and consumption have all shown clear advantages. At present Chinese mainland ranking among the world's top ten connector companies is only Luxun Precision, and there is a certain deviation in the changes in supply and demand in the Chinese market, and there is a broad domestic alternative space for domestic enterprises.
3.2 The industry concentration is high, and the head competition pattern is relatively stable
The connector industry has been continuously acquired, and the industry concentration has increased. According to the statistics of the world network, between 1985 and 2018, there have been 589 mergers and acquisitions in the connector industry. Among them, 126 were carried out from 1985 to 1999, and 463 were carried out from 2000 to 2018, and mergers and acquisitions accelerated significantly. In the wave of mergers and acquisitions, the three major connector giants Amphenol, Tyco and Molex have been actively acquiring some competitors. From 1999 to 2018, Amphenol acquired 52 companies, and over the same period, Molex acquired 27 and TE acquired 25.
Although the position of the top ten manufacturers in the global connector industry has changed greatly, the overall competition pattern of the industry head is relatively stable. TE Connectivity has been the largest connector company since 1980, undergoing several name changes and finally changing to its current name TE Connectivity, with both Molex and Amphenol remaining in the top ten. Companies that ranked in the top ten in 1980 but failed to remain in the top ten in 2018 include ITT Cannon, Berg 3M, Winchester, August, Cinch Connectivity Solutions and Burndy, most of which were acquired by head companies as the main reason.
3.3 Major manufacturers have laid out automotive electronics, and there is a broad space for domestic substitution
In the automotive electronics upstream market, enterprises in developed countries and regions such as Europe, the United States, and Japan are still in a competitive position with long-term technology and customer accumulation. For example, Tyco Electronics, Moshi, Amphenol and other companies have a strong competitive advantage in the field of automotive connectors; Lenny, Yazaki and other companies occupy a large market share in the field of automotive wiring harnesses.
Foreign manufacturers such as Tyco, Amphenol, Rosenberg, and other automotive connector categories are more complete, in the high voltage, high-speed connectors have a deep accumulation; domestic manufacturers such as AVIC Optoelectronics, Ruida, Yonggui Electrical Appliances and other main automotive connectors in the high-voltage connectors, electric connection technology, Yihua shares specializing in high-speed connectors.
Fourth, the analysis of key companies
4.1 Leimu shares: constantly increase the automotive business, and actively expand to new forces
The company's customer resources are of high quality. In the field of automotive electronics, it has supplied products to well-known companies such as Valeo Group, Kosta Group, Visteon, BYD, Harman, Continental Automotive Electronics, Trina Automobile Group, Magna, AND NINGDE Times, and will apply products to models of large vehicle manufacturers such as Volkswagen, General Motors, Mercedes-Benz, Ford, Toyota, Honda, SAIC, FAW, BYD, Great Wall, Geely, and Nissan.
Continuous investment in automotive product research and development. With the continuous progress of the automobile industry, new energy vehicles have accelerated the replacement of traditional fuel vehicles, automatic driving technology has accelerated penetration, the degree of automobile intelligence and electronicity has been continuously improved, the number of connectors used in automobiles has increased, and the automotive electronic connector market has a broad space for growth. In order to seize the development opportunities of automotive electronics, the company continues to invest in research and development of automotive products, and in the past three years, more than 70% of the company's R& D expenses have been invested in automotive products.
Fundraising projects increase the new energy vehicle business. In June 2021, the Company announced a preliminary plan for the non-public issuance of A-shares, in which the total amount of funds to be raised in the non-public offering shall not exceed RMB700.00 million (including RMB700.00 million), of which RMB400 million is planned for the new energy vehicle connector project and RMB100 million is used for the construction of a new energy vehicle R&D center. After the project reaches production, the annual production capacity of 5 million high-current voltage connectors for new energy vehicles and 12 million (sets) of auxiliary driving module connectors will be added.
4.2 Shenglan shares: automotive connectors and blade battery components ushered in an outbreak
Founded in 2007, Shenglan Co., Ltd. is a high-tech enterprise focusing on the research and development, production and sales of electronic connectors and precision components, and its main products have been widely used in consumer electronics, new energy vehicles and other fields. The company has established stable cooperative relations with well-known customers at home and abroad such as Foxconn, Luxun Precision, Xiaomi, TCL, Nidec, Hitachi Group, BYD, Great Wall Motors and so on. The company's new energy-related business includes automotive connected machines and PACK components.
From 2017 to 2020, the company achieved revenue of 460 million yuan, 645 million yuan, 724 million yuan and 915 million yuan, with an average annual compound growth rate of 25.7%, and operating income in the first three quarters of 2021 was 940 million yuan, an increase of 62% year-on-year. From the perspective of the revenue structure of 2021H1, consumer products accounted for 71.5%, while automotive products accounted for 21%, but the growth rate was 274%, and the downstream market demand for major companies' products increased and deepened cooperation with original customers. In addition, from January to September 2021, the company's net profit was 0.75 billion yuan, an increase of 8.69% year-on-year, and the growth rate was lower than the revenue growth rate mainly due to the impact of rising costs such as copper prices, and it is expected that the gross profit margin is expected to bottom out with the subsequent cost easing.
Excerpts from the report:
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