Mantis observation | Wen
The author | Ye Xiaoan
Midea, which has continuously won the first place in the home appliance industry, is striding forward, constantly diversifying its layout in the fields of automobiles and chips, and expanding its business boundaries.
According to the Securities Times, on January 10, Midea Group said on the interactive platform, "In the second half of 2018, Midea entered the chip field and began mass production in 2021, and the main chip type put into production was MCU control chips, with an annual output of about 10 million." At the same time, it plans to ship 80 million chips in 2022. ”
It is worth noting that Hisense released a fully developed 8K AI picture quality chip the next day and handed over the report card of the home appliance industry power chip. Up to now, domestic home appliance giants such as Gree, TCL Technology and Konka have launched a layout in the chip field. So, can midea stand out? Can it solve the problem of the industry's general lack of cores?
Midea's core "Wild Hope"
Midea's core manufacturing is not uncommon.
As early as December 2018, Midea Group established Shanghai Meiren Semiconductor Co., Ltd. through its subsidiary Midea Innovation Investment Co., Ltd., focusing on the development, design and sales of semiconductor chips.
Prior to this, Midea also cooperated with a number of semiconductor companies to expand its layout in the chip field. In 2019, Midea and Sanan Optoelectronics reached a strategic cooperation, focusing on the research and development of GaN (gallium nitride) and SiC (silicon carbide) semiconductor power device chips; in early 2021, Midea and Foshan Midea Air Conditioning Industry Investment Co., Ltd. jointly invested in the establishment of Meiken Semiconductor Technology Co., Ltd., focusing on integrated circuit chips and product manufacturing and sales.
Nowadays, midea's MCU control chip has achieved mass production, which means that midea's core manufacturing process is officially on the right track. However, the field of Midea's entry chip is not too early, and most of the home appliance companies such as Hisense and Konka have also realized the mass production of self-developed chips.
In 1999, TCL co-invested with SDIC Electronics in the field of chip design for Aceco Microelectronics, which is a national "nine O'nine" engineering integrated circuit design company, and its products include consumer chips and communication chips.
In 2005, Hisense developed the first digital video processing chip "Xinxin" with independent intellectual property rights and industrialization in the mainland; in 2017, 2018 and 2020, it successively developed the second, third and fourth generation ultra-high-definition image quality engine chips; and then at the beginning of this year, Hisense released China's first fully self-developed 8K AI picture quality chip.
Konka entered the chip research and development field for the same time as Midea, in 2018 Konka established a semiconductor technology division; by 2020, its first embedded storage master control chip KS6581A will also achieve large-scale mass production.
It can be seen that the home appliance industry has opened a "core war", but why do you want to build a core? Where is the beauty of the bottom?
Why make a core?
The home appliance industry has long entered the stock dispute, in the context of chip technology being necked by foreign card necks and intelligent upgrading of home appliances, enterprises need to survive or increment the core to enhance competitiveness and diversify revenue.
According to the data of Aowei Cloud Network, the year-on-year growth rate of the retail scale of all categories in the domestic home appliance market has fallen below 10% on average since 2011, and by 2020, the scale of China's home appliance retail market has dropped by 11.3% year-on-year. At the same time, with the continuous impact of new home appliance forces, including Huawei, Xiaomi and other brands, the traditional home appliance enterprise brand has been squeezed again.
The downward pressure on the entire industry is gradually increasing, and it is also facing the competitive pressure of new and old forces, so home appliance companies must accelerate the development of diversification to share the pressure on revenue.
According to Ericsson statistics, semiconductors account for about 10% of the value of the AIoT industry chain, and according to the global AIoT market size of 374 billion US dollars in 2021, the value of semiconductors is expected to reach 37.4 billion US dollars, about 250 billion yuan. With the improvement of landing applications and demand, the chip sector will focus on benefiting.
However, for a long time, the chip on the mainland's white goods controller has long been "stuck neck" overseas. According to IHS data, the size of China's MCU market is expected to reach 26.88 billion yuan in 2020, and the CAGR of China's MCU market from 2020 to 2022 is 8.99%. However, the mainland MCU market accounts for only about 23% of the global market, and the market has long been dominated by more than 75% of the seven overseas MCU giants ST, NXP, Microchip, Renesas, etc.
Moreover, with the advent of the digital wave, the importance of chips is increasing. Huaxi Securities Research Report once said, "With the intelligent upgrade, air conditioners, washing machines, dishwashers, etc. usually need to use 2 or 3 groups of intelligent power modules, power management chips 1 to 8, the main control MCU from 8 bits to 32 bits, communication units to add Wi-Fi6 / Bluetooth protocol, the number of sensors and perception accuracy increased." ”
It is based on the above trends that home appliance companies have poured into the team of core making. However, where is the support point for the recent increase in core making measures of the United States, which entered the market late?
On the one hand, Midea's revenue, net profit and accounts receivable have maintained positive levels, and the advantage of achieving a leading position in the home appliance industry has also laid the foundation for chip research and development.
According to the financial report, in the first half of 2021, Midea Group surpassed Gree's revenue scale of 92.011 billion yuan with a revenue scale of 178.4 billion yuan, ending the latter's 24-year leading position in air conditioning. In terms of net profit, in 2019, 2020, and the third quarter of 2021, the net profit growth rate of Midea reached 19.68%, 12.44%, and 6.53%, respectively.
It can be seen that the growth rate of Midea's revenue and net profit has maintained a growth trend.
In terms of accounts receivable (prepaid), in the first half of 2021, Midea's bills receivable were 5.9 billion yuan, accounts receivable were 27.6 billion yuan, and advance payments were 3.5 billion yuan, totaling 37 billion yuan, accounting for 9.73% of total assets; and accounts receivable, as an asset, can reflect the company's capital occupation by its upstream and downstream suppliers and sellers, and the total revenue of Midea's accounts receivable accounted for less than 15%, maintaining a controllable level.
But chip development is a costly project. Gree has said, "The company spends about 4 billion yuan a year on air conditioning chips." ”
Midea's perennial R & D investment costs are also expanding, the financial report shows that in Q3 2021, the United States' research and development expenses reached 8.765 billion yuan, an increase of 30.51% year-on-year.
It is foreseeable that Midea's self-developed chips are used in their own products, or can bring higher gross profit margins to the company's expense throttling. In the context of the lack of cores in the entire industry, it also needs self-developed chips to enhance the competitiveness of its own products.
On the other hand, self-developed chips can also help the company's diversified strategic layout.
At present, Midea Group has five major business segments, not only the familiar home appliance business, but also industrial technology, building technology, robotics and automation, and digital innovation business segments. Among them, in the layout of the home appliance product line, Midea is not limited to common products such as refrigerators and air conditioners, but also occupies a high market share in small household appliances such as electric fans, induction cookers, and rice cookers.
It is also this strategy of diversified product layout that allows Midea to maintain steady growth in terms of revenue, surpassing its peers to win the first place in the home appliance industry.
And now in the field of chips vigorously developed, the future or can also open the second or third curve of the United States.
In addition to home appliance chips, Midea is also currently laying out in the field of automotive chips. The company said, "The automotive chip will be mass-produced in 2024 and first applied to the control of the new energy vehicle pump." ”
The company's intention to enter the field of automotive chips is also to hope that the United States can blossom more in the chip field; on the other hand, it hopes to enhance the company's competitiveness in the automotive field through self-developed automotive chips.
As early as 2004, Midea entered the commercial vehicle field through the acquisition of "Yunnan Bus Factory", but ultimately failed; now Midea is increasing the layout of the automotive field, and its "Midea Electromechanical" was renamed "Midea Industrial Technology" and began to manufacture automotive chips.
The above measures prove midea's determination in the field of chip research and development, and also prove midea's determination to diversify its revenue structure and expand its business boundaries. However, if Midea wants to gain a firm foothold in the chip market, it is still a long way to go.
Technology is still "stuck in the neck", and the core is just a "pseudo-proposition"?
At present, whether it is mobile phones, automobiles or home appliances industry, the core-making technology of domestic enterprises is not yet mature. This has also led to the mainland chip market being monopolized by overseas markets for many years. As mentioned above, in the MCU market, the mainland MCU market only accounts for about 23% of the global proportion, and the remaining 75% or more market share is covered by the seven overseas MCU giants.
This is because the chip manufacturing chain is too long, and the current chip development process includes IC design, wafer manufacturing, packaging, testing and other scattered links. Most home appliance companies do not have the strength to cover the whole chain, coupled with research and development costs, manpower, technical restrictions, which also leads to some enterprises to develop chips are often in entry-level products.
Ni Guangnan, an academician of the Chinese Academy of Engineering, once said in an interview with the media: "The processing and production of chips is often only undertaken by a few large enterprises, and the scale of production is very large, and it is difficult to promote too little investment." However, there are many chip design companies in China, because design can often be application-oriented, and small companies can also do it, so there is no problem in gree scale chip design. ”
It is based on this that most of the chips developed by home appliance companies are entry-level chip design products and tend to develop and use themselves. For example, Midea's self-developed MCU chips are also entry-level products and are mainly used for their own home appliances, but its Meiken Semiconductor Company is currently focusing on the field of chip packaging and testing, and has realized the "material to finished product" semiconductor production line.
In addition, most of the self-developed chips such as Hisense and Konka are also provided for their own home appliances. For example, Hisense's fourth-generation picture quality chip is also mainly used in its flagship TV U7G-PRO products, thus realizing XDR display.
However, entry-level products do not mean that they are useless, just like the application scenarios of MCU chips in the entire home appliance industry are very extensive and in huge demand.
According to Deloitte's forecast, many types of chips will still face shortages during 2022, and the shortage will last for 24 months before it is alleviated. However, in this shortage situation, the demand for MCUs does not decrease but increases. According to industry research Rest AndMarkets, global MCU shipments in 2020 will be more than 28 billion.
It is understood that the MCU application scenario includes all the home appliances in life, such as refrigerators, air conditioning chargers, mice and keyboards, etc., so this also spawned a huge demand for the chip.
The Midea mass-produced MCU, on the one hand, realizes the self-sufficiency of the chip and reduces the dependence on chip suppliers to ensure the company's product capacity; on the other hand, it can be supplied to other manufacturers to solve the problem of lack of core in the industry under the premise of expanding chip production capacity and types in the future.
However, it is still worth noting that due to the lengthy of the technology and industrial chain, this also causes the lack of core in the home appliance industry to surround everyone for a long time in the future. Ni Guangnan also stressed that "the industrial chain of chips is very long, it is not realistic for home appliance companies to cover the entire industrial chain, and the lack of cores in the home appliance industry is still difficult to solve in a short period of time." ”
Therefore, if The United States wants to build a good chip, it must also be prepared for long-term investment in capital, as well as the accumulation of talents and technology.
Overall, making cores is not an easy task, but with more and more entrants, this will also promote the chip industry to develop more stably and rapidly. After the United States continues to expand its business boundaries into the wave of core manufacturing, it may also be able to open a second growth curve for itself, but whether it can overcome many difficulties and win the chip market still needs time to verify.
"Midea's annual output of tens of millions of MCUs, behind the tide of home appliance core manufacturing" - Times Finance
"New Progress of Home Appliance Enterprises in Core Manufacturing" - Observation of semiconductor industry
"Home appliance companies join the tide of core manufacturing: seeking change, but also survival" - Leitech
*The pictures in this article are from the Internet