Founded in 2004, Luxshare Precision is a national high-tech enterprise focusing on the research and development, production and sales of connectors, and its products are mainly used in 3C (computer, communication, consumer electronics), automotive and communications fields. In 2021, Shenzhen-based Luxshare Precision replaced Foxconn as Apple's top supplier.
In this issue of intelligent internal reference, we recommend Tianfeng Securities' report "AR/VR Accelerates the Growth of Consumer Electronics, and a New Platform for the Automotive Era Is Established" to analyze the business layout of Luxshare Precision.
Source Tianfeng Securities
Original title:
"AR/VR Accelerates the Growth of Consumer Electronics, And a New Platform for the Automotive Era Is Established"
Author: Pan Huan et al
First, precision manufacturing platform type faucet
Luxun Precision is a leading precision manufacturing enterprise in China, and its product and business layout show the characteristics of diversification + vertical integration. The company's R&D, manufacturing and sales products mainly serve consumer electronics, communications and data centers, automotive electronics and medical fields, covering components, modules and system assembly.
▲The expansion process of the company's products and business layout
Consumer electronics business. The company's consumer electronics terminal products cover acoustics (TWS headsets, etc.), smart life (5G routing, etc.), smart terminals (wearable watch bracelets, etc.), computer accessories (docking stations, smart stylus, etc.) and various wired and wireless charging accessories. Based on the core capabilities of consumer electronics precision manufacturing, the company provides connecting wires, connectors, motors, wireless charging, FPC, antennas, acoustics and electronic modules for consumer electronics terminals, and its product line is rich and diverse.
▲The company's main products in the field of consumer electronics
Communication services. In the field of communications and data centers, the company deeply covers products including high-speed interconnection, optical modules, heat dissipation modules, base station antennas, base station filters, etc. The company has achieved global leadership in some subdivisions through the integration of technology and industry-university-research integration.
▲The main products in the field of corporate communications
Car. In the automotive field, the company focuses on the vehicle "blood vessel and nervous system", specific products include vehicle wiring harness, special wiring harness, new energy vehicle high voltage wiring harness and connector, intelligent electrical box, RSU (roadside unit), vehicle communication unit (TCU) and central gateway.
Second, the layout of the automobile business is far-reaching
As a leading company in consumer electronics, Luxshare Precision is widely known for its OEM Apple wireless headphones AirPods and iPhone mobile phones, and its performance has also made great progress. However, like most "fruit chain" companies, Luxshare Precision also faces the risk of single customer concentration due to excessive dependence on Apple.
The new energy automobile industry with a capacity of 10 trillion is undoubtedly the preferred track for Luxshare Precision Transformation. If the leap from the mobile phone field to the automotive field is successfully realized, Luxshare Precision will open up new growth space. Some market participants believe that with the approaching landing of Apple's car, Luxun Precision's move contains the motivation to make an early card slot for the Apple car industry chain.
In fact, the layout of Luxshare Precision in the automotive field has been more than ten years.
At present, the company focuses on the automotive electrical and intelligent networking of the vehicle "blood vessel and nervous system", 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-mounted communication units (TCU) and central gateways. The automotive industry is in the process of transforming from traditional manufacturing to technological manufacturing, developing from a simple means of transportation to an "interconnected space on wheels" that integrates entertainment, office and consumption. The intelligent cockpit creates a rich human-vehicle interaction experience, and the penetration rate of ADAS and the Internet of Vehicles accelerates the advent of the era of automotive intelligence. The company's automotive business will benefit from the golden decade of electrification, intelligence, networking and sharing.
▲The development history of Luxun automobile business
1. Three main products, the market space continues to expand
The company's automotive products mainly include automotive wiring harnesses, automotive electrical appliances (mainly power products), connectors and structural parts. Under the background of the transformation of automobile electrification, intelligence and networking, the market space of the main products continues to expand: 1) the demand for new high-voltage wiring harnesses (600V+) for new energy vehicles; 2) the demand for automotive electrification + automotive electronic and electrical architecture upgrade + intelligent new high-speed connectors.
▲The main product of the company's automobile business
The penetration of new energy vehicles increases the demand for high-voltage wiring harnesses, and new energy vehicles put forward higher requirements for the transmission capacity, mechanical strength, insulation protection and electromagnetic compatibility of wiring harnesses. At present, new energy electric vehicles usually use a drive voltage of up to 600V or higher, which is much higher than the 12V voltage of fuel vehicles, requiring the wiring harness to have stronger pressure resistance and sealing to avoid the short circuit of the high-voltage line after the collision and cause combustion accidents. In addition, the application of new energy vehicles is an AC motor, electromagnetic interference is relatively strong, the design of new energy vehicle wiring harness must consider electromagnetic interference to ensure the reliability of the wiring harness application.
The change of the power system of new energy vehicles has significantly increased the value of bicycle connectors. Traditional fuel vehicle connectors are widely used in power systems, body systems, information control systems, safety systems, on-board equipment, mainly low-voltage connectors, the value of a bicycle ~ 1000 yuan, the amount of about 600. The change of the power system of new energy vehicles has added high-voltage connectors, charging/swapping connectors, high-speed connectors, wire-to-wire/wire-to-board connectors, board-to-board connectors, FPC/FFC connectors, busbars, etc., and the value of single vehicles has increased significantly, with pure electric passenger cars 3000-5000 yuan and pure electric commercial vehicles 8000-10000 yuan.
In addition, automotive intelligence has led to an increase in the amount of sensors + an increase in data acquisition accuracy, and an increase in the amount of data returned to the perception layer, but automatic driving is extremely sensitive to latency, data transmission bandwidth is increased, and high-speed connectors are required. Autonomous driving is divided into three links, perception + decision -- execution. The perception link is mainly to collect environmental information through environmental sensors such as cameras, millimeter-wave radar, lidar, and infrared night vision systems. The automatic driving level has been upgraded from L1 to L5, which requires higher requirements for the perception of the surrounding environment of the vehicle, and the number of sensors installed on the vehicle has increased, while the accuracy of sensor data collection has been improved, and the overall transmission data volume has been significantly improved.
Luxun acquired Fujian Source Optoelectronics in 12 years to expand the automotive wiring harness business into Japanese customers, and the accumulation of technology for many years has helped the company's products and customers expand. Relying on the company's good customer channels, the company's low-voltage, high-voltage, high-speed wiring harness can quickly enter the supply chain of first-line customers at home and abroad, and has accumulated rich application cases and customer recognition. Luxshare Precision has previously entered the supply chain of bmw, Mercedes-Benz and other first-line automakers.
In the field of connectors, the company started with computer connector business and gradually expanded the application field to consumer electronics, automotive, communications, the company has rich experience in the field of connectors, according to Bishop Associates data, in 2020 Luxun precision connector field ranked 6th overall, consumer electronics / computers and peripherals / telecom and digital communication equipment ranked 5/3/3, all entered the top 5. The company is expected to seize the development opportunities of this round of vehicle electrification and intelligentization of the connector market space expansion + the rise of domestic new energy vehicles to support the domestic supply chain by virtue of its leading position in the connector field + long-term layout.
The Gigabit Ethernet connector developed and produced by Luxun adopts a fully shielded twisted pair cable connection structure with a maximum bandwidth of 20Ghz. Can be widely used in central control, instrumentation, ADAS, domain controllers and other products. The Coaxial Cable Mini Frkra solution supports radar, camera, sensor products. In the new energy high voltage connector products, Luxun has a complete set of perfect systems for forward-looking design, product design, manufacturing design, prototype design, testing and verification.
The automotive business mainly consists of BCS (the parent company of Lisheng Automobile Technology (Suzhou) Co., Ltd.) and Lijing Innovation. The company's automotive business is focused on automotive electrical and connected products. The BCS product line focuses on smart cockpits, smart networking, and autonomous driving. As the world's leading manufacturer of mobile phone camera modules, Lijing Innovation obtained the TS16949 qualification in 2020, and will provide various types of internal and external camera module products for Luxshare Automobile Division, OEMs and tier 1 manufacturers.
BCS (parent company of Lisheng Automotive Technology (Suzhou) Co., Ltd.), focusing on human-machine interface (HMI) solutions for 70 years, is the world's leading automotive manufacturer, formerly known as TRW Automotive, a subsidiary of ZF in Germany
Inc's Global Body Control Systems Division (BCS) was acquired by Luxshare Group in 2018. BCS has high-quality customer resources, with ford, Fiat, GM, Volkswagen, Chrysler and other global well-known brand customer base for more than 50 years, and has worked with Toyota for more than 25 years. In addition, it has also developed new customers such as BMW, Daimler, Honda, PSA, Geely, and Changan.
BCS has global competitiveness in switches, integrated circuit control panels, steering shaft control systems, entry systems, sensors and other fields, and synchronously cooperates with its parent company Luxshare Group to step into intelligent networking and autonomous driving products to penetrate intelligent vehicles in an all-round way. The future product line is divided into three categories: intelligent cockpit, intelligent network connection, and automatic driving, of which the intelligent cockpit is subdivided into sensors, human-machine interface systems, controls, actuators, intelligent network connections are subdivided into antennas, gateways, etc., and intelligent driving is divided into cameras, millimeter wave radar, etc.
2. Cooperate with Chery to empower vehicle manufacturing across borders
On February 11, 2022, the Company and Chery Group jointly signed the Strategic Cooperation Framework Agreement in Wuhu, laying a strategic partnership between the two sides. The Company and Chery New Energy intend to jointly establish a joint venture company based on the Strategic Cooperation Framework Agreement, and the cooperative subsidiary intends to adopt an equity structure in which Party A subscribes 30% of the registered capital of 500 million yuan and Chery New Energy subscribes 1.167 billion yuan to hold 70% of the registered capital.
With the help of Chery Group's deep technology precipitation in the field of new energy vehicles and the establishment of terminal brand resources and the establishment of joint ventures, the company is expected to carry out cross-border empowerment of the technology accumulated in the field of consumer electronics over the years and customer resources, and dynamically enter the bureau and quickly improve the company's core components comprehensive capabilities as a Tier 1 manufacturer under the strong support of the vehicle joint venture platform as a cutting-edge R&D design, mass production platform and sea exit, and quickly polish, optimize and increase in practice. Achieve the diversification and large-scale development of the company's core components, achieve the medium- and long-term goal of becoming a leading tier 1 manufacturer, and lay a solid foundation for the company's future sustainable development.
Chery's vehicle manufacturing independent platform and the "full range + 457" clear new energy technology planning system have strong competitiveness in vehicle manufacturing. Chery Holdings and its affiliated subsidiaries have been deeply engaged in the automotive industry for many years, have a complete technology and product research and development system in the field of vehicles, especially in the vehicle manufacturing process, have an independent platform, and can provide Chery Automobile and other brand owners with comprehensive services from vehicle development to mass production, and have a strong and leading core competitive advantage in the industry.
▲Chery @Life platform comprehensively empowers automotive intelligence
3. Cooperation with Sagitar Juchuang, in-depth collaboration in the field of lidar
Reached a strategic cooperation with Sagitar Juchuang, a leading domestic lidar manufacturer, to conduct in-depth coordination around lidar in the field of automotive industry and improve the layout of the automotive industry chain. Under the comprehensive and profound accumulation of LiDAR technology by RoboSense and the professional and diversified intelligent manufacturing capabilities of Luxshare, the two sides integrate upstream and downstream advantageous resources, deeply integrate industrial capabilities, continue to innovate, from technology research and development to precision intelligent manufacturing, comprehensively break through business barriers, and create a new template for deep integration of industrial chain and strong cooperation of advantageous enterprises.
Sagitar Juchuang is the world's leading intelligent lidar system enterprise, and the second generation of intelligent lidar mass production and delivery has formed an industry-leading advantage. In the first half of 2021, the company's second-generation intelligent lidar M1 completed a series of strict vehicle specification tests, completed the SOP version locking and vehicle specification-level mass production, and successfully delivered to customers, becoming the only second-generation intelligent solid-state lidar in the world to achieve the mass production and delivery of vehicle specifications, and obtained many fixed-point orders for passenger cars and commercial projects from BYD, GAC Eian, WM Motors, Extreme Krypton, Lotus, Yinche Technology, Zhitu Technology and other enterprises, covering various types of models such as supercars, coupes, SUVs, and heavy trucks. In 2021, Sagitar Juchuang won the fixed order for the front-loading mass production of more than 40 models.
▲LiDAR competition pattern
4. The production capacity of the automobile business is intensively laid out in many places, and the automobile business can be expected to become bigger and stronger
The company has been cultivating the field of consumer electronics for a long time, quickly building production lines, flexibly deploying production experience, and the capacity bottleneck is not a key factor restricting the growth of the company's automotive business. The company has intensively laid out the production capacity of automotive products in many places since 21 years, including Hubei Macheng, Anhui Xuancheng, Jiangsu Yancheng, Hebei Baoding and other places, which we believe fully confirm the company's long-term confidence in the development of the automotive business, as well as the expansion of market space brought about by the electrification and intelligent transformation of automobiles + the opportunity of wire harness and connector localization brought about by the rise of domestic new energy manufacturers + the synergy effect of the group business + the company's active external cooperation, the automotive business ushered in new opportunities for rapid growth, and it is expected to become bigger and stronger.
▲Luxun's automotive business capacity expansion since 21 years
Third, actively layout AR/VR, benefit from a new round of innovation cycle to accelerate growth
Metacosm is an Internet complex that integrates the next generation of virtual reality produced by integrating a number of new technologies, based on VR/AR, brain interface and other extended reality technologies to provide immersive experience, using AI and digital twin technology to produce scene content, and then building an economic system by blockchain technology, closely integrating the virtual world and the real world on the social system, and allowing each user to produce content and edit the world, while following economic laws such as transaction autonomy and clear property rights. The core connotation of the metaverse includes five points, namely the integration of virtual and real, the user-produced content as the main body, the physical interaction, the unified identity, and the economic system.
AR/VR devices are an important physical entrance to the metaverse, providing display and virtual connections, and are the hardware basis for the corresponding software ecology. The metacosm includes five technical bases, network connectivity, virtual-real interface, data processing, authentication mechanisms, and content production. Extended reality includes VR (Virtual Reality), AR (Tower Strong Reality), AND MR (Fusion Reality). VR provides an immersive experience that takes over human vision by fully taking over.
Apple has been singing all the way in the field of consumer electronics, 11 years to define smart phones, 10 years to define tablets, 15 years to define smart watches, 16 years to define TWS headsets, Apple's first generation of MR devices can redefine VR/AR devices, leading a new round of AR/VR attention climax?
Apple has been developing MR headsets for many years, and since 2010, it has been acquiring VR and AR-related technologies and enterprises to patent ar/VR devices. Apple has a large number of patent layouts in the fields of near-eye display, sensor, perception interaction, head-up display structure, head-up display navigation, etc., and many years of technical reserves are expected to create the ultimate human-computer interaction and lead the VR/AR experience to a new level.
As Apple's supply chain giant, from the perspective of parts and components, the company has rich experience in the field of precision manufacturing of consumer electronics, and has a comprehensive layout of machine light, sound and electricity. From the perspective of the whole machine FOUNDRY dimension, Luxun has rich experience in the field of wearable device (AirPods, apple watch) assembly. At the same time, the company has a layout in the field of VR/AR parts + machines, and is expected to make efforts from parts and components and machines to enjoy a new round of consumer electronics innovation cycle dividends.
Fourth, traditional consumer electronics business
The company's "components - modules - machines" development path is clear, in the components part: the company from the connector, continue to accumulate customer resources, cultivate precision, miniaturization, integration capabilities, and then through the extension of the industrial chain + epitaxial acquisition of successful card slot wireless charging, antenna, FPC, acoustics, motors and other fields, sound and optoelectronics have reached the industry-leading level; Under the general trend of modularization, the product line expands to the module /machine manufacturing, continuously improves the vertical production capacity of the module /machine, cuts into the AirPods assembly link to drive the company's high revenue growth, and the value of the company's various product lines of hardware continues to increase.
Looking forward to the follow-up, the company still has a lot of room for improvement in the assembly of parts, modules and machines, and is optimistic about the category expansion + share increase brought about by the company's continuous and firm layout: 1) parts link: acquisition of Rikai computer to improve the layout of structural parts, and full penetration of the integrated layout of machine, photoacoustic and electrical integration; 2) SiP: increase the gross profit margin of assembly; 3) Optics: Lijing Innovation acquisition of Gao Wei Electronics to cut into the pre-camera module link (outside the body), synergy with Guangbao, optical strength further enhanced; 4) Assembly link: acquisition of Wistron cut into iPhone Assembly (in vitro), undertaking the share of the taiwan factory Apple watch assembly share increased. Continue to be optimistic about the company's parts- module - machine assembly vertical integration business model efficiency improvement + core competitive advantage enhancement.
1. Acquire Nichiren Computer to improve the layout of structural parts
On the evening of January 28, 2021, Luxshare Precision announced that the company and its wholly-owned subsidiary, Luxshare Precision Co., Ltd., jointly invested in Rijiao Computer Accessories Co., Ltd. (Nichiko Computer) with its own funds of 5.76 billion yuan and 240 million yuan with Changshu Lijiao, respectively. After the completion of the investment, the company directly and indirectly holds 50.013% of the equity of Nichio Computer, forming a holding. Founded in 2017, Rijiao Computer was originally a wholly-owned subsidiary of Rili International, and its main business is highly synergistic with Luxshare Precision.
The business scope of Nichio Computer covers technology development, technical consultation, technical services in the field of computer accessories technology, design, research and development, production accuracy higher than 0.02 mm (inclusive) precision stamping die, precision cavity mold with accuracy higher than 0.05 mm (inclusive), metal product mold, non-metallic product mold and mold standard parts, the production of 3C electronic products with high temperature resistant insulation material molding parts, hardware stamping parts, rivets, shafts, mechanism parts and other spare parts. Holding Nichio Computer further improves the company's strategic layout in the field of computer and consumer electronics precision structural parts modules, and enhances the synergy benefits of vertical integration and synchronous development of computers and consumer electronics.
▲Apple case supplier
Japanese armor computer parent company Jiaosheng Holdings (2020 Pegatron acquisition of all equity) for iPad, Macbook structural parts manufacturers, in 2020 to break through the iPhone structural parts, responsible for surrounding the iPhone screen metal circle, but also responsible for assembling OLED screen and metal ring, OLED module link shipment price is expected to be close to the metal frame, successfully cut into the iPhone structural parts, stand-alone value further increased.
2. The extension to SiP is expected to improve profitability
SiP (System in Package) is a system-level package, specifically refers to the electronic components with different functions into a system or microsystem. The SiP package can effectively reduce product size and power consumption. SiP is widely used in the field of consumer electronics, including mobile phones, watches, and TWS, and the proportion of applications has gradually increased.
1) Mobile phone: The mobile phone adopts SiP package in circuit modules such as power management, RF transceiver, RF front-end, RF power amplifier, RF switch, antenna tuner, Bluetooth, WIFI, DC-DC conversion, multiplexer and so on;
2) Wearable devices: the whole machine SiP, apple watch circuit in a single piece of SiP presentation, 2019 launch of Airpods Pro also uses the whole machine package, with SiP modules to replace the traditional soft and hard combination of design, package design is exquisite, the shape fits the small space of the headset, improve the utilization of space.
The company has a comprehensive layout in the application of SiP technology, and the company is an apple watch and airpods assembly manufacturer, extending the industrial chain to the SiP module link, and the Self-production of the SiP link can improve the gross profit margin of the company's assembly.
3. Cut into the iPhone front camera module, and the optical strength is further enhanced
Lijing Innovative acquisition of Gaowei Electronics cut into the front camera module link of major customers, and the optical strength was further enhanced. Camera module is the core application field of smart phone optical applications, the current popular camera module packaging technology is CSP (Chip Scale Package), COB (Chip On Board), COF (ChipOnFlex), FC (FlipChip) and so on.
Compared with the COB package, the FC package substrate has the shortest path to the base, providing a good transmission path for high-speed signals, and because it does not use a lead frame or plastic tube, the weight and size are also reduced, which is the first choice for high-end mobile phone camera packaging processes. The mainstream Android model camera module adopts COB package, and Apple uses the FC process to package the camera from the iPhone 5, and is the only mobile phone manufacturer that uses this technology to package the camera. Lijing Innovation has mastered the FC packaging process through the acquisition of Gaowei Electronics, which helps to further improve the optical module process capabilities.
▲Apple camera module assembly supplier
4. Cut into miniLED SMT
Cut into the miniLED SMT field. Apple has launched three products with miniLED displays, namely the iPad Pro released in the spring of 2021 and the 14.2-inch and 16.2-inch MacBook Pro released in the fall of 2021. MiniLED production needs to go through a process. Apple uses the SMT process to transfer miniLED chips. The iPadPro midsheet technology released in spring 2021 is exclusively available for miniLED SMT. According to CINNO Research industry information, the low SMT production efficiency of Table Technology has affected the time to market of iPad Pro, and Apple will launch a MacBook pro model equipped with miniLED, and Apple will add other SMT suppliers. According to DigiTimes, Luxshare Precision has now entered the miniLEDSMT link as a second supply.
▲Apple miniLED products
Zhidong believes that as a star enterprise in Apple's supply chain, Luxshare Precision has achieved rapid growth in recent years. However, with the continuous introduction of Apple products, Luxshare Precision's dependence on Apple is also increasing year by year. However, relying too much on large customers also has the risk of hanging on an "apple tree", fortunately, now it seems that Luxun itself is aware of this risk.