Author | Zhou Zhiyu, Chai Xuchen
Source | See and hear Auto
As electronic products such as mobile phones are close to saturation, and Apple introduces more foundry suppliers to distribute product manufacturing to different baskets, a number of foundry giants have become more and more obvious in recent years, and they have all felt the crisis.
Luxshare Precision, which is Apple's top supplier, has also entered the automotive field, and it is ten billion yuan as soon as it is sold, and it has invested in Chery Automobile.
On the evening of February 11, Luxshare Precision (002475. SZ) invested 10.054 billion yuan to acquire 19.88% of the shares from Qingdao Wudaokou, the largest shareholder of Chery Holdings, becoming the fourth largest shareholder. In addition, it also obtained 7.87% of Chery shares and 6.24% of Chery New Energy.
This is after Foxconn, the electronic consumer foundry giant has once again entered the car manufacturing field. Previously, Gou launched three new electric cars independently developed by the company in one go, showing a wave of "muscle" to the industry.
Electronic manufacturing companies have transformed into cars, reflecting the trend of the electronic foundry model and the rise of the new energy industry chain. At the same time, it also implies the anxiety of the foundry giants.
Foundry enterprises such as Foxconn, Luxshare Precision, and Lens Technology were once the stars of the Apple industry chain that attracted much attention in the market. However, in the past two years, the heat of the OEM and Apple concepts has cooled, and they have had to find new footholds and growth points.
As an Apple foundry giant, the market value of Luxun Precision has evaporated by about 1/4 of the 110 billion yuan from the highest point in 2020, and the market value of the Apple industry chain has been revalued.
Boom also apples, decline also apples. Luxshare Precision, which relies too much on Apple's foundry, must be "self-reliant". How should it grasp a new era, and can it get rid of "middle-aged anxiety"?
The "Queen" is big
Among China's foundry enterprises, Luxshare Precision is a unique presence. Its founder and chairman Wang Laichun is known as the "Queen of Chinese Foundry". She was a Foxconn employee, and later founded Luxshare Precision, and also worked as an electronic foundry and entered the forefront of the industry.
The market did not expect that the cooperation between Luxun Precision and Chery was so large-scale. 10 billion, almost a year and a half of luxshare precision net profit.
According to the company's financial report, the net profit attributable to the mother in 2020 was 7.225 billion yuan, while the profit attributable to the mother in the first three quarters of 2021 was 4.690 billion yuan, and the two added up to earn the "dowry money" to Chery.
The money is not a direct investment in car building. According to the cooperation agreement, in addition to equity investment, Luxun will form a joint venture with Chery. The shareholding structure of the joint venture company is 3/7 kai, of which Lixun Precision and Chery New Energy will invest 500 million yuan and 1.167 billion yuan respectively.
At the investor meeting on February 13, Wang Laichun said that Luxun Precision does not build complete vehicles. Chery is good at the vehicle business, the joint venture company will be led by Chery, and Luxshare Precision will contribute to the business, customers and other resources. The two companies work together to develop the vehicle ODM model.
Unlike OEMs, the ODM (Original Design Manufacturer) model has more autonomy, and producers are also responsible for design and development. Wang Laichun's goal is to become the head player in the auto parts Tier1 (the first-tier supplier of the depot).
Wang Laichun believes that the market size of Tier1 is almost 70% of the total output value of car companies. The world's four major Tier1 manufacturers Bosch, Denso, ZF and Magna have revenues of more than 30 billion US dollars. Chinese companies are not prominent in this field at present, and she hopes that in 3-5 years, the joint venture company can run to the forefront.
In fact, for many years before this cooperation, Luxshare Precision had a layout in the automotive field and made some achievements.
In August last year, Luxshare Precision said in an institutional survey that the company is leading the industry in automotive power solutions such as high voltage and high current, as well as related automotive wiring harnesses, electronic modules and other products and services. Its customers include Great Wall, Zotye, BMW and Mercedes-Benz and other brand customers.
However, the automotive business accounts for a small proportion of Luxshare Precision's revenue. According to the semi-annual report of 2021, consumer electronics accounted for 83.9% of the main business, with revenue of 40.4 billion yuan, while the proportion of automobile-related enterprises was only 3.68%, and the revenue was 1.774 billion yuan.
After this cooperation with Chery, Luxun has officially entered the mainstream vision of automobiles. For Chery, it is also in urgent need of new business and model breakthroughs.
In fact, in the past two years, Chery has been quietly engaged in OEM, and the newly emerged small brands such as Qilu Automobile and Ruiteng are Chery customers.
It seems that the marriage between the two sides is based on complementary resources, and they work together to enter the blue ocean of ODM car manufacturing.
In addition, Chery's long-tangled equity problem and the bottleneck of mixed reform with Qingdao Wudaokou have also been solved. After Wang Laichun took over the market, Qingdao Wudaokou's shareholding dropped to 26.89%, and Wuhu Construction Investment returned to the position of the largest shareholder.
For Wang Laichun and Chery founder Yin Tongyue, they hope that this is a win-win move to keep each other warm, but the future of joint venture cooperation still needs to be tested.
Transformational anxiety
At the end of 2017, Apple CEO Tim Cook visited Luxshare Precision's Kunshan plant. Afterwards, he published an article: "They are super first-class factories, incorporating remarkable craftsmanship and thoughtful thinking into the manufacture of AirPods. ”
With a market capitalization of nearly 300 billion yuan, Luxshare Precision is the second largest foundry manufacturer of Apple products after Foxconn and is an important partner in its supply chain. Long-term assembly of iPhone, iPad, AirPods and other products for Apple, which means that its foundry manufacturing level is at the forefront of the industry.
But OEM has always been a double-edged sword. As electronic products such as mobile phones are close to saturation, and Apple introduces more foundry suppliers to distribute product manufacturing to different baskets, a number of foundry giants have become more and more obvious in recent years, and they have all felt the crisis.
Compared with similar enterprises, Luxshare Precision is more dependent on Apple. In 2020, Apple accounted for 69% of Luxun Precision's revenue, higher than Goertek and Lens Technology, which are also Apple suppliers.
In the first three quarters of 2021, Luxshare Precision's revenue was 81.013 billion yuan, an increase of 36% year-on-year, mainly for Apple headphones and watches. However, the net profit attributable to the mother recorded a year-on-year increase of 4.69 billion yuan by only 0.21 percentage points. Well below market expectations, profit growth showed weakness.
Foundry giants have ridden donkeys to find horses and find other ways, and the automobile industry has become the focus of their attention.
In mid-last year, Foxconn announced that it had joined hands with Geely Holdings to establish a joint venture, and soon established the electric vehicle brand Foxtron, launching three pure electric models. Gou said that he will provide FOUNDC production and customization consulting services for global automotive and mobility companies. This is very close to Luxshare Precision's ODM mode.
The transformation of the car means that the foundry giants hope to get rid of the low profit margins of Apple's industrial chain while also pulling up the company's valuation. More critically, we must get rid of the heavy dependence on Apple and gain more autonomy.
However, the new track chosen by the foundry giant, the seemingly glamorous and promising new energy automobile industry, a full "gold sucking beast", requires very heavy capital investment.
At present, Luxun's investment of 10 billion yuan may only be a "ticket to the park". For the protracted war of car building, is the company's ammunition depot sufficient?
Judging from the financial reports over the years, Luxshare Precision, which has long relied on financing, does not have a very rich family foundation. Investing in Chery's bet on the car is a bit of a "backwater war".
However, Luxshare Precision is not "self-made" like Evergrande Automobile. In addition to its own electronic manufacturing expertise, the marriage with Chery is a short way, which can both diversify risks and learn from each other's strengths. At present, on the track of the new energy ODM car manufacturing model, there are not many players competing on the same stage.
CITIC Securities proposed that Apple, Huawei, Millet, etc. have entered the game of car manufacturing, even if some of them choose to build their own production lines in the early stage, but considering the economy and rationality of the long-term production line capex investment, it is expected to copy part of the mobile phone industry division of labor model (that is, ODM or OEM production) in the later stage, and reshape the industrial chain pattern.
Guotai Junan said that Luxshare Precision will break the original growth curve with the support of the joint venture company and the Chery brand, and quickly grow into an important player in global automotive electronics and become the global automotive Tier 1 leader enterprise.
It can be said that the bottom card in the hands of Luxun and Chery is not bad, and the route chosen is relatively clear. But in the new energy car that is as good as lin, how to "grab" a piece of the pie depends on the ability of the combination.
