Text | New Knowledge of Science and Technology, Author 丨 Wang Siyuan, Editor 丨 Yi Page
"We still have billions of dollars in cash on our books, which Ansan gave us." Ren Zhengfei said when recalling the cold winter.
In 2000, the rapidly expanding Internet drove the telecommunications industry crazy. Nortel Network, where "optical communication maniac" Luo Shijie is located, supported $30 billion in sales that year by selling network equipment alone.
However, the ensuing bursting of the Internet bubble and the bitter result of excessive investment in the telecommunications industry was the overall oversupply, until 2003, when the fiber utilization rate in the United States was only 10%, and operators were saddled with heavy baggage. Nortel's stock price fell from a peak of $124 to less than $2, and has since stagnated.
At that time, although Huawei in the far east had not yet been affected, Ren Zhengfei keenly smelled the bloody gas coming from the other side of the ocean, "This winter of network equipment supply will be as cold as it is so hot that people don't understand." Whoever has cotton clothes will survive. ”
In Ren Zhengfei's view, it does not involve core business and has high value, and Huawei's "cotton coat" is none other than Huawei Electric.
As a result, Ren Zhengfei did not hesitate to rename Huawei Electric to Shenzhen Ansheng Electric Co., Ltd., transformed it from Huawei's business unit into an independent accounting company, and signed an acquisition agreement with Emerson Electric in October 2001 to get 6 billion yuan of "winter money".
Sure enough, in 2002, Huawei, as an upstream equipment supplier, orders were affected, and profits shrank by 58% compared with the previous year, but Huawei, which wore "cotton clothes", survived.
It's just that the loss of the energy business seems to have been a hurdle that Ren Zhengfei can't get over. In 2008, with the end of the non-compete with Emerson, Huawei returned to the electrical market, taking photovoltaics as the strategic direction of the energy part, and with the first wave of the domestic photovoltaic industry and Huawei's advantages in price, channels, and brands, it quickly achieved the world's first place in the field of inverters.
However, when the photovoltaic industry is gradually entering the era of parity and the industry is accelerating its internal rolling, even Huawei should add a layer of cotton to the former "small cotton jacket".
Crumbling first
In 2013, when Huawei entered the photovoltaic industry as a "barbarian", it shocked four.
Perhaps because it is Huawei, the industry is more concerned about its every move, and it is also more demanding. Of course, with the accumulation of the energy industry in the early years, Huawei did not have the initial hesitation, and broke the situation that the original string inverter could only be applied to the overseas distributed photovoltaic market in one fell swoop.
With the heating up of the domestic string inverter market and Huawei's brand influence in China, only two years later, Huawei's photovoltaic inverter equipment shipments have jumped to the first place in the world and remain so far.
If purely from a financial point of view, the inverter is a good track, horizontal comparison with other subdivisions of photovoltaic tracks, inverter gross margin, ROE, turnover rate is higher, while the market size is not large, it is difficult to be affected by the capital giant, belongs to the high-quality track.
And in this track, there have also been ABB, Schneider, General Electric, Emerson and other Fortune 500 companies, but these giants have invariably chosen to abandon this market.
The reason is also inseparable from the fact that the market size of the inverter track is too small. According to BNEF (Bloomberg New Energy Finance), it is expected that the shipment of photovoltaic inverters will reach 327GW in 2025, and the market space will reach 66.3 billion.
In other words, even if it is the head of the industry, the revenue that this business can contribute to the company may be less than 1% of the total revenue of the giants. At present, it is Huawei's darkest moment, on January 4, 2022, Huawei's rotating chairman Guo Ping revealed in his speech that it is expected that in 2021, Huawei will achieve sales revenue of 634 billion yuan, down about 28.88% year-on-year.
In this case, it is basically unlikely that Huawei wants to rely on the inverter business to stabilize revenue. And what's more, Huawei is currently facing the risk of being replaced at any time.
Because in the inverter industry, the technical barriers between various enterprises are not high, in terms of conversion efficiency, almost all enterprises' products can exceed 98%, the difference is not large, and the core competitiveness is still reflected in the price, brand and channel.
Since the cost of the inverter accounts for only about 8%-10% of the entire photovoltaic system, but if there is a failure, it will lead to a large area of system paralysis, so customers will tend to choose the industry application experience, the market reputation of the head brand. And after customers accept a certain brand, they will tend to establish long-term, stable cooperative relations and high loyalty.
For Huawei, this seems to be only positive. However, in recent years, after the domestic market has been divided up by Chinese companies, the overseas market has become the main market increment, and the overseas market has a higher profit margin. In 2020, the overseas gross profit margins of the four major inverter listed companies of Sungrow Power, Jinlang Technology, Goodway and Shangneng Electric were significantly higher than those in China, and the overseas gross profit margin of Goodway was even 31.6% higher than that in China.
It is only in the case of domestic inverter manufacturers going to sea to "eat meat", Huawei has "eaten" due to non-market reasons.
In 2018, Huawei began to be suppressed by the US government, and in 2019, it began to gradually reduce its solar business in the United States, although the global market share of Huawei inverters was still 22% in that year, maintaining the first, but the second year Huawei's market share increased by only 1%, but the sunshine power supply in the millennium list rose from 13% in 2019 to 19% in 2020. Obviously, in the case of Huawei's increasing suppression by over-the-counter factors, the inverter business has grown weakly.
What is more fatal is that in India, the world's third largest photovoltaic installer, Huawei has also encountered problems. On February 1, 2021, Indian Finance Minister Nirmala Sitharaman said in the presentation of the 2021-2022 national budget that the Indian government will raise the tariff on solar inverters from 5% to 20% and take effect immediately.
For Huawei, which has no factories in India, the impact of the policy is also obvious. According to MERCOM, the top three inverter shipments in the 2021 H1 Indian market are: Sungrow Power, Shangneng Electric, and TBEA. The combined market share of these three companies reached 56%, more than half of the Indian inverter market. You should know that before this, Huawei has been at the top of the list for many years, but now it is missing.
Overseas unhappiness is very likely to make Huawei lose the world's number one inverter in 2021, and how to stabilize it in the short term is a problem.
In the future, inverters will also enter the era of technological iteration. Micro inverter (MLPE) can be regarded as the direction of the next iteration of photovoltaic inverter, and enterprises with early layout have enjoyed the high profits brought by iteration.
Enphase, the leader in the micro-inverter market, has an operating income of $774 million in 2020 and a gross profit margin of 44.68%. The gross profit margin of Hemai and Yuneng Technology micro inverter is 42.00% and 38.45% respectively, which is significantly higher than that of photovoltaic inverter manufacturers mainly in the domestic market.
Compared with the string inverter, the micro inverter can achieve component-level MPPT (maximum power point tracking), bringing a power generation gain of 5%-30, but the disadvantage is that the cost is too high, but with the continuous improvement of penetration, the cost of the micro inverter will continue to decline.
At present, Europe and the United States have become the main shipping area of micro inverters, and some institutions predict that the proportion of the micro inverter market will continue to increase in the future, and the global micro-inverter market will reach 21.213 billion yuan in 2025.
The expectations of the capital market for micro-inverters are directly full. Leaving aside the two ten-fold stocks of SolarEdge and Enphase that have appeared in nasdaq, the recently listed Hemai shares in China are expected to have an issue price of 55.8 yuan / share, but its final issue price climbed to 557.8 yuan / share, and the price-earnings ratio after listing also directly soared to more than 150 times, which is more than twice that of sunshine power, the current inverter listed leading enterprise.
There is no doubt that with the acceleration of the development of distributed photovoltaics, micro-inverters with higher security and higher profits will become the focus of inverter companies, and this upcoming outlet, Huawei must as Ren Zhengfei said, "pounce on it, tear it open." "Otherwise it will fall."
Of course, the photovoltaic inverter obviously cannot meet Huawei's ambitions in the energy field. Since the global measures of energy limitation and power rationing were popularized, Huawei has begun to enter the field of energy storage, opening up a second growth curve for the energy business.
Energy storage is just getting started
"The Burj Khalifa has lit up Huawei again, this time to congratulate it on winning the world's largest energy storage project." Wang Peng looked a little excited, "This is probably the most exciting thing I have encountered in more than ten years in the industry, of course, except for marriage." ”
It can be seen that as an employee of the Ansheng Department before, Wang Peng has different feelings for Huawei. From re-launching the energy business in 2008 into the field of photovoltaic inverters, to entering the energy storage industry today, Huawei's actions in the energy field have always affected Wang Peng.
In fact, Wang Peng had long expected Huawei to enter energy storage, but he did not expect everything to come so quickly. Because energy storage and photovoltaics are inherently inseparable, no one can only generate electricity without storing electricity, and no one can guarantee that the electricity generated can be perfectly distributed. To put it simply, energy storage is an inevitable extension of the development of photovoltaics, and Huawei's entry into the energy storage field is only a matter of time.
However, for Huawei to enter the energy storage field, Wang Peng also expressed his concerns. "Huawei is not the only company that is eyeing this cake, Huawei still faces many challenges, especially to face Tesla."
In the B2B field, Musk's Powerpack has long occupied a place, and even the second-generation product Megapack began to deploy 3MWh projects in the fourth quarter of 2019, according to Tesla's financial report, its orders will increase rapidly in the scale of several GWh by 2023; on the C side, Powerwall has completed more than 250,000 installations and squeezed tens of thousands of orders.
And compared with Tesla, the integrity of Huawei's energy storage products is not strong. According to reports, Huawei will sell large battery systems for renewable energy storage in Japan from March this year, while its procurement channels are battery manufacturers including CATL. Huawei combines small battery packs into container-sized units and sells them to customers in Japan.
That is to say, Huawei essentially provides energy storage battery combination solutions, while Tesla's Megapack is a high degree of integration of all supporting inverters, battery modules, thermal management systems, power electronic components, etc., and even photovoltaic power generation equipment can also be used in its own, which also makes it have great advantages in energy density, safety, easy installation and so on.
"One where all the major parts are one and one is procured, obviously the former is more holistic and more compatible." Wang Peng said.
But even then, there are security issues. In April 2021, a fire accident occurred at the energy storage power station in Beijing's Fengtai District, and in July 2021, a fire broke out at Australia's largest energy storage project using Tesla's Megapack system.
Because the battery in the manufacturing or use process, including insulation, abnormal current, abnormal overheating caused by short circuit, leakage and a series of other problems, there will be hidden dangers. As well as the reliability of battery risks, the ability to adapt to the environment, the logical management ability of the entire energy storage system, the management system, and the hardware failure, etc. may lead to the failure of the entire system, causing some safety risks.
Taking history as a mirror, although Huawei has strong technical support, it is necessary to know that Tesla's emphasis and investment in energy storage systems should not be underestimated, and accidents have occurred, so from this point of view, Huawei, as a "new player" in the energy storage industry, may need to persevere and struggle for a long time if it wants to completely solve the problem of security.
In 1996, Ren Zhengfei told Li Yuzhuo, who was in charge of Huawei's power supply division, "We must make Mobek the first in the domestic power supply industry within three years." At that time, Li Yuzhuo didn't even know who the domestic power boss was, and he didn't know anything about technology and the market, but he still agreed hard.
Unexpectedly, two months later, Ren Zhengfei changed his mouth and said, "Mobeck wants to be the first in Asia." Li Yu pondered, "Isn't it the first in China?" Then Ren Zhengfei said, "Did I say such a thing?" Li Yuzhuo was forced to take on this challenge.
In the late autumn of 2021, the 77-year-old Ren Zhengfei appeared at the inaugural meeting of the Huawei Legion and said, "There is no way back, it is the road to victory." The tone was as if he had "forced" Mobeck to grow up.
Under the pressure and technical blockade of the United States, huawei now has no way to retreat, Ren Zhengfei's sensitive sense of smell has helped Huawei choose the direction, and the five legions of coal mine army, smart highway army, customs and port army, smart photovoltaic army and data center energy army have become the mainstay of the future.
Perhaps in 30 years, Huawei will, as Ren Zhengfei said, "no one dares to bully us anymore", but at the moment, this story has just begun.
*Wang Peng is a pseudonym in the text.