Jiwei Network News, recently, Luxun Precision issued an announcement that it signed a strategic cooperation agreement framework with Chery Group, invested in Chery Group for tens of billions of yuan, and planned to jointly establish a joint venture with Chery New Energy to specialize in the research and development and manufacturing of new energy vehicles.
As the "fruit chain" foundry leader, Luxshare Precision and Hon Hai are seeking incremental space in the new energy vehicle market, as the next growth driver outside consumer electronics, this action is bound to put up a banner in the "fruit chain" and even the entire electronic parts industry chain. Chery's development of ODM business will also accelerate the development of automotive FOUNDC, such an asset-light model, the future or coexistence with the traditional manufacturing model of self-built integration.
"Fruit Chain" is looking for a second spring, and Luxun has laid out the car track in advance
Luxshare Precision has actually been deeply engaged in the automotive industry for many years. According to its 2020 annual report, the company's automotive business focuses on vehicle automotive electronics and intelligent networking, including low-voltage vehicle wiring harnesses, special wiring harnesses, high-voltage wiring harnesses and connectors for new energy vehicles, high-speed connectors, intelligent electrical boxes, RSUs (roadside units), vehicle communication units (TCUs) and central gateways.
According to the 2021 semi-annual report, The revenue of Luxun Precision's "Automotive Interconnection Products and Precision Components" business increased by 38.99% year-on-year, and its gross profit margin reached 16.48%, an increase of 0.24% year-on-year, becoming the only business in the branch business to achieve gross profit margin growth.
However, it should be pointed out that the proportion of revenue in the consumer electronics business is still higher than 80%, and Apple, which accounts for the top five customers of Lixun Precision, accounts for nearly 70% of sales in 2020, which shows that its dependence on Apple is still very high.
According to IDC data, global mobile phone market shipments in 2021 fell by 1.18% compared with 2019 before the epidemic, generally continuing the downward trend since 2017. On the other hand, the sales of new energy vehicles have steadily increased, showing a different situation from the mobile phone market.
Highly dependent on Apple, the mobile phone market has shown a downward trend, giving Apple concept stocks a reason to seek a way out. In addition to Luxshare Precision, companies such as Lens Technology and Goertek, which shine in apple's supply chain, are also looking for a "second spring". As early as the layout of the automobile industry, Luxshare Precision has conformed to the vigorous development of electric vehicles.
Wang Rongjin, a partner at Jinbang Capital, pointed out to Jiwei Network that the growth of consumer electronics is slowing down, but it is not yet possible to judge whether it has peaked, because new applications will also generate new needs, such as the rise of the concept of meta-universe. But the volume of the automotive market is undoubtedly ten to a hundred times that of mobile phones, becoming the next incremental space sought by many technology companies.
Luxshare Precision pointed out in its record of investor relations activities on February 13 this year that Smart EV is an opportunity that Chinese automakers have not encountered in a century. Smart EV has created a new business opportunity and brought many new entrants to the market. The opportunities brought by the Smart EV include not only the whole vehicle, but also the more vitality of the Tier1. Luxshare Precision focuses on providing industry chain component solutions for the market, and is also committed to becoming the global leader in auto parts Tier1.
The automotive foundry system or will form a new opportunity for the automotive electronics industry
Unlike Luxshare Precision, Hon Hai directly chose to build a car in the next scene. In October last year, Hon Hai officially released three electric vehicles, Model C, Model E and Model T, at the Technology Day event held in Taiwan, all based on The Honghua Advanced Company's independent platform.
At present, Hon Hai's MIH Open Electric Vehicle Alliance has 2249 members, covering 61 countries and regions. MIH CEO Zheng Xiancong said in his New Year's speech that the MIH working group has now launched powertrain power and Energy Management kinetics; in addition, Security Security Security & OTA remote updates, as well as autonomous driving and ADAS assisted driving progress, MIH and Japan's Autoware cooperation in Las Vegas CES jointly released to the public. MIH is a platform for the world.
Wang Rongjin told Jiwei Network that the automotive industry has a high threshold and strict standards. To cut into the automotive track, we must first have a deep understanding of the automotive industry. Second, we must build a professional talent team. Finally, prove your ability and gain the trust of your customers.
Hon Hai chose to build its own electric vehicle platform and build an alliance, with members covering the upstream and downstream of the entire industry chain, while Luxshare Precision chose to rely on Chery's ODM business to accelerate its ranks and technological development among the leading Tier 1.
Wang Rongjin pointed out that in the future, cars will become more and more like electronic products, and the development of the mobile phone industry has also experienced the ODM model, forming an industrial division of labor. The automotive industry is currently on this path.
Luxshare Precision believes that Chery's vehicle research and development base has also improved rapidly in recent years, and in the learning mode of double T (Toyota R&D quality system and Tesla subversive innovation), it grew against the trend last year, and it is also the largest export volume of domestic brand car companies. This is in line with the needs of market development, and it also meets the difficulties of the breakthrough in the growth of Luxshare Tier1. Luxun Precision's ODM business has a relatively clear landing project, which will be put into production in the next 12 to 18 months.
According to Taiwan media reports, Hon Hai's first electric bus Model T will be officially delivered as soon as early March, and the first customer is Kaohsiung Passenger Transport in Taiwan, with a purchase volume of 30-50 vehicles.
Although Hon Hai and Luxshare Precision have different entry angles, the feasibility of automotive OEM has been proven by them.
Last year, the topic of millet car manufacturing turned out, and then whether automobile manufacturing can reproduce the asset-light model of mobile phone manufacturing has been questioned for a while, but from the perspective of the general trend, the added value of the vehicle manufacturing part is getting lower and lower, and the foundry system is more and more favored by latecomers.
Wang Rongjin believes that the future foundry system and the traditional self-built integration system will coexist, for latecomers, especially some consumer electronics brands, will adopt such an asset-light model, and the two models will not have much difference, and the final effect depends on the product.
He further pointed out that under the trend of software-defined cars, the future of cars will not tend to be homogeneous, on the contrary, car brands in the OEM mode can focus on product personalized needs, software and hardware decoupling and functional application development.
"On the supply side, although chip and parts companies want to break into these two manufacturing systems with the same difficulty, the formation of the foundry system will help supply chain companies to open up this market faster." On the manufacturing side, for Companies such as Foxconn and Chery that seek ODM business to get better profits, only to achieve a certain scale effect, operational management efficiency, and cost control. ”
Overall, the increase in the "fruit chain" giant has released a clear signal to the industrial chain, which is positive and positive for the supply chain, and is also a new opportunity for China's automotive electronics industry.
(Proofreading/Sharon)