01. Electronics industry review and outlook: a new main line, relay growth
Review the electronics sector and focus on long-term investment opportunities
Since December 2021, the sector has pulled back significantly, including capital factors and fundamental concerns. Among them, liquidity and capital factors are difficult for us to judge, but we can judge the company's short-term performance and long-term market space based on fundamental analysis, industrial chain tracking, etc. We recommend paying attention to the investment opportunities in the electronics sector. This report will also focus on the trend of prosperity and explore the long-term value of the sector.
Position analysis
The electronics sector 4Q21 position ranked first: for a long time, electronics has been an important institutional allocation sector. In the early days, the electronics sector was dominated by consumer electronics, and Apple Chain Company blossomed. Then, under the background of the Huawei incident and the tide of shortages, the semiconductor company opened a domestic substitution, and relayed consumer electronics to become the main line of investment. Although the electronic fluctuations are large, it is still a long bull plate in elongation. In Q2 of 2019, due to trade disputes and Huawei incidents, the proportion of institutional positions was only 5.01%; in Q4 of 21, the proportion of institutional electronic positions increased to 14.41%, ranking first among all sectors.
The mainstay of semiconductors, undervaluing The top ten companies in the market value of institutional positions in the fourth quarter of 2021, namely Luxun Precision, Hikvision, Tsinghua Unigroup Guowei, Weier Shares, Goertek Shares, Sanan Optoelectronics, Northern Huachuang, Shengbang Shares, Gigabit Innovation, and Sunwoda, of which semiconductors account for 6. Compared with the top ten in the previous quarter, Zhuoshengwei was listed, and Sunwoda was listed. The total market value of the top ten companies is 220.421 billion yuan, accounting for 54.61% of the electronics sector.
Long-term outlook: new products and new markets, leading a new main line
Looking forward to the future industry trend and investment line, we believe that: 1) there is still a lot of room for domestic substitution of semiconductors, and at present, China's semiconductors have made zero breakthroughs in different products and fields, and the trend of domestic comprehensive breakthrough has taken shape. 2) Focus on the main line of investment driven by new products and new markets, the current smart phone has entered the stock market, traditional consumer electronics companies have begun to transform; in contrast, tram intelligence, VR/AR, server cloud computing, IOT wearable and other new market-driven new opportunities are more worthy of grasp.
According to Gartner statistics, the global semiconductor market space will reach $474.1 billion in 2021. Mobile phones and PCs remain important downstream markets, but growth is slowing. In terms of growth, the fastest growth rate of automobiles, reaching 25.3%,, followed by IOT, with a growth rate of 18.7%. In addition, AR/VR is also maturing; in 22 years, server demand will accelerate after the introduction of DDR5. Many new products and new markets will drive the long-term growth of the electronics sector.
02. Electronic terminal: innovation is not stopped, the track wins
2.1 Smartphones: Entering the stock market, but there are still structural innovations
Global smartphone sales peaked at 1.47 billion units in 2016 and have been slowing down year by year since then. In 2020, it fell sharply due to the impact of the epidemic, and in 2021, it picked up to 1.35 billion units. Given the post-covid-19 recovery and growth in emerging markets, we expect global smartphone sales to rebound to 1.4 billion units in 2022. The concentration of global smart phone brands has increased year by year, and the proportion of CR6 has increased from 53.85% in 14 years to 83.07% in 21 years. Whether from the perspective of sales volume or market share, the smart machine market has long entered the stock competition market.
Under the stock competition market, the focus of hardware innovation is shifting from optical camera to folding screen. Referring to IDC data, in 2021, the global folding screen mobile phone shipments are expected to reach 8 million. Because the cost of folding screen is still high, it is generally used for the differentiated solution of flagship machines. We have counted the shipments of high-end models above 5,000 yuan (800 US dollars) in the Android camp, and the shipment volume of 1H in 2021 is 26.94 million units, and it is expected to exceed 50 million units for the whole year. Considering that the total amount of mobile phone market is close to steady state, we judge that the upper limit of the market space of the Android camp folding screen is between 50 million and 60 million units.
2.2 Automotive electronics golden decade, electrified intelligent two-wheel drive
Analogous to mobile phones, from 2005 to 2015, the penetration rate of smart phones increased from 5% to more than 70%, and a large number of consumer electronics international leaders were born in ten years. At present, the penetration rate of automobile electrification and intelligence has crossed the stage of 5%-20% improvement, and the penetration rate of 20% will become a key node for the industry to mature, and the golden decade of automotive electronics will grasp the parallel investment opportunities of the dual main line of electrification and intelligence
New energy vehicles are unstoppable
In 2021, global sales of new energy vehicles continued to exceed expectations, with annual sales of more than 6.5 million units and a penetration rate of 8%, while the trend of domestic electrification was more obvious, with annual sales of 3.521 million units in 2021, with a penetration rate of 13%. Looking forward to the future, the demand for new energy vehicles continues to improve, the penetration rate growth rate is broad, we assume that in 22-25 years, the average annual compound growth rate of domestic/global automobile sales is 3.3%/3%, and in 2025, domestic/global new energy vehicle sales are 106.3 billion units/252.4 billion units, respectively, the penetration rate can reach 35%/26%, respectively.
In the past 22 years, the new energy vehicle market has continued to boom, and Tesla, BYD and SAIC-GM-Wuling are still the main sales force. In terms of new energy vehicle sales in 2022, we expect Tesla to sell 900,000 vehicles, a year-on-year growth rate of 90%, and BYD expects to sell 1.5 million new energy vehicles, a year-on-year growth rate of 152%. Weilai and Xiaopeng product matrix is further improved, and it is expected to achieve sales of 200,000 and 250,000 vehicles in 22 years, with a year-on-year growth rate of 100%.
IGBT power semiconductors bear the brunt
Automobile electrification has brought about a significant increase in the value of power devices, new energy vehicle electric drives need IGBT, SiC module control drive system straight, AC conversion, internal conversion of different power systems and engine control, body control need MOSFET and a large number of power devices. According to Infineon data, the value of power semiconductors for new energy vehicles is about 350-400 US dollars, far exceeding that of traditional fuel vehicles.
The value of IGBT for single-vehicle electric drive is generally about 700 yuan, A class is generally more than 1000 yuan, B class (four-wheel drive) is 2000-3000 yuan, and some high-end models even need 4000 yuan +. Single electric drive SiC module is generally above 5,000 yuan, and it is expected that the price will decline year by year as the cost of the industrial chain decreases in the future. Wolfspeed expects the automotive SiC device market size to approach 30 billion yuan in 2026.
High-end intelligent driving models are listed, and 2022 is a big year for intelligent landing
Intelligence has become the core of differentiated competition of car companies, L1/L2 is the initial stage of the five levels of automatic driving, and future automatic driving urgently needs a qualitative leap.
The L2-level assembly rate has been greatly improved, and the L3 leapfrog period is coming: in 2019, the L2 intelligent driving rate of domestic independent + joint venture brand new cars will be 2.04%, the L2-class new car occupancy rate will increase to 12.02% in 2020, and the L2-class new car occupancy rate will be 18.61% from January to November 2021. It is expected to continue to improve in the future.
The volume and price of on-board optics have risen to the golden track, and the international expansion route has begun
The on-board optical volume and price are rising together, and the penetration rate is increased + the number of bicycles is increased + ASP is increased by three-dimensional resonance. The working environment of the car camera changes greatly, and the requirements for frame rate, reliability and stability are high. According to the "Automotive Camera Industry Standard" issued by the Ministry of Industry and Information of the People's Republic of China in 2019, the on-board camera is required to work continuously in an environment of -40 °C to 85 °C, can not be affected by moisture immersion, anti-magnetic and earthquake-resistant, and has a service life of 8 to 10 years.
Lidar stars the sea, the domestic supply chain has just grown
The lidar ADAS field ushered in the first year of amplification, with a CAGR of 94% in 2021-2026. According to Yole data, the overall market size of lidar is expected to reach $5.7 billion by 2026, with a 5-year CAGR of 23%. Laser thunder in the ADAS field is expected to reach $2.3 billion in 2026, and the FIVE-year CAGR is as high as 94%, ushering in the first year of release.
The lidar technology route is full of flowers and is currently in the stage of technological innovation. Low-cost 905nm wavelengths with EEL transmitters are still the first choice of OEMs, and 1550nm lidar is gradually maturing. MEMS and Flash lidar are on the rise, with mechanical lidar widely used accounting for 66%.
2.3 VR terminal amplification is imminent, AR waiting for the product to mature
VR/AR short-term look at the popularity of Oculus Quest 2 brought about by the volume of VR terminals: According to VR gyro data, VR headset shipments in 2021 are 11 million units, and it is expected to reach 20 million units in 2022. The Quest 2 will ship 8.8 million units in 2021, with a maximum of 3.4 million units shipped in Q4 2021. The VR industry benefits from the Oculus Quest 2's product drive, with 20 million units expected to be shipped in 2022. In the second quarter of 2021, Facebook's shipments accounted for 75%, and ByteDance's acquisition of Pico accounted for 6%.
VR: The terminal volume is imminent, and AR is waiting for the product to mature
VR/AR has long seen AR break through from the B-end, benefiting from the new product sales of industry giants, driving the rapid growth of AR on the C-end. Subject to optical technology and cost, AR helmets are currently mainly used in the B-side, and the shipment growth of AR on the B-side is slow, only 570,000 units in 2022. According to The Verge, Google is developing an AR headset code-named Project Iris, which is expected to be available as soon as 2024; Apple's first high-end MR product is expected to be released in 2022-2023, and after 2-3 years of iteration, its cost can be lowered to the consumer level; Microsoft's Hololens 3 is also under development. According to IDC, in the second quarter of 2021, Microsoft's Hololens, Mad Gaze and Shadow Creator all had more than 20% market share.
Wearable: The wearable market space is huge, and the smart watch blue ocean market
With the popularization of 5G technology and the maturity of audio and video technologies, the smart wearable device market has developed rapidly in recent years. According to IDC data, global wearable device shipments reached 444.7 million units in 2020, an increase of 28.4% over 2019; global wearable device shipments reached 138 million units in 2021Q3, an increase of 9.9% year-on-year.
TWS headphones: Global brand TWS headphones shipped about 250 million pairs in 2020, and it is expected to ship 551 million pairs by 2024, and CAGR is still 19.8%;
Smart watches: 21Q3 smart watch product shipments for the first time more than smart bracelets, more powerful functional needs (communication, health monitoring, etc.) so that consumers gradually from bracelets to watch products, now the price of less than 100 US dollars in smart watch types and bracelets comparable, entry-level products in India has grown significantly.
03. Semiconductor: the prosperity continues, grasp the opportunity of replacement
3.1 22 years of semiconductor boom continues
In 2021, semiconductors experienced an unprecedented tide of core shortages, the prosperity continued to rise, SIA statistics in 2021 global semiconductor sales growth rate of 24.35%. Looking forward to 22 years, with the structural easing of missing cores, the growth rate is expected to slow down slightly, but the semiconductor market as a whole still maintains a high degree of prosperity. Semiconductor Intelligence expects the global semiconductor market to grow by 15% in 2020 in August 2020, WSTS expected to grow by 8.78% in November, and IC Insights expected 11% growth in January 22 in January 2022.
Inventory tracking: Distributor inventory water level increased significantly
3Q21 The inventory level of the global semiconductor industry chain has reached a new high, but the number of days of inventory turnover (DOI) of the semiconductor industry chain remains at a healthy level. 3Q21 distributor inventory level has increased significantly, and the number of turnover days has also been extended.
Price tracking: Fab and IC design, boom divergence
Chip foundry prices, according to the Industrial and Commercial Times: the prices of major fab foundries in 2022 have increased: TSMC mature process prices increased by 15 to 20%, advanced processes increased prices by 10%; UMC Q1 increased prices by about 10%; Liji Electric Q1 increased by more than 10%; the world's advanced Q1 prices increased by about 10%.
Channel prices, taking the MCU as an example, fell rapidly after the initial price surge, and has gradually stabilized.
3.2 Electrification
The 800V platform accelerates SiC penetration
At present, SiC is mainly used in electric vehicles for main drive inverters, OBC car chargers, DC-DC converters: SiC has lower losses than Si-IGBT switches, and the on-resistance is not easy to increase at high temperatures. The use of silicon carbide devices for inverters can not only reduce power losses, improve power controllability, but also make the equipment smaller (about 50%) and lighter weight, so that the driving mileage of the car can be increased by 5 to 10%, or the battery cost can be reduced by 5% to 10%. This advantage is even more prominent in the 800V system.
IGBT & Silicon Carbide Market Space
The traditional downstream of IGBT is relatively stable. The main attractions come from new energy vehicles, photovoltaic wind power and so on. It is estimated that the global IGBT market space will reach more than 110 billion yuan in 2026, with a compound growth rate of up to 20%+. Among them, the IGBT for new energy vehicles is more than 40 billion. New energy vehicles are the largest application market for SiC. According to Wolfspeed data, the global SiC device market size will grow from 28 billion yuan to 58 billion yuan from 2022 to 2026. Among them, new energy vehicles are the largest downstream market of SiC, about 30 billion yuan, accounting for more than 50%, and CAGR reaches 30.2%.
3.3 Intelligence
Perception layer CIS chips are core increments
According to the association, global car shipments in 2019 were 93 million and have grown over the past 10 years. Based on the global shipments of 100 million vehicles in 2025, we expect that the global automotive CIS market size will reach about 5 billion US dollars, and it is expected to exceed 10 billion US dollars in 2030, and the number of cameras on bicycles is also expected to grow from the current 2 + to more than 10.
Smart cockpit SoC, Qualcomm hegemony, domestic chip manufacturers strive to catch up
"One core multi-screen" intelligent cockpit solution, Qualcomm market share of up to 90%, has released four generations of intelligent cockpit chips, the fourth generation and mobile phone top SoC a generation; domestic chip manufacturers to accelerate catch-up, listed companies, Rockchip micro in December 2021 released RK3588 high-end flagship chip, using 8nm advanced process technology, "8CPU + 8GPU + NPU" heterogeneous design architecture, 6T computing power, the highest support for 7 screens of 1080p high-definition display The 6nm smart cockpit chip of Ambience Co., Ltd. has been sent to the tape-out in December 2021; Quanzhi Technology also has the T7 chip for the smart cockpit SOC that has passed the AEC-Q100 vehicle specification certification.
3.3 Wafer Fabrication: Fab expansion leads to industry opportunities
According to IC Insights, the total global pure wafer foundry market size in 2020 is 70.94 billion US dollars. Among them, TSMC, GROFOUNDRIES, UMC, etc. occupy the vast majority of the market share. Chinese mainland manufacturers SMIC and Huahong Hongli rank among the top ten in the world, but they are small, with combined sales accounting for about 7% of the entire industry. SEMI predicts that global 8-inch wafer capacity will increase by 950,000 units/month in 2020-2024 and reach a new record of 6.6 million units/month in 2024; from 2020 to 2024, at least 38 new 12-inch fabs will be added worldwide, and the monthly wafer production capacity will increase by about 1.8 million pieces to more than 7 million pieces.
04. Investment analysis: how to lay out the next stage?
Grasp the three major tracks of electrification, intelligence and localization
Electrification: The IGBT market is the first, and the undervaluation of PCBs is prominent. Automotive electrification mainly revolves around IGBTs, PCBs, and automotive capacitors. Among them, IGBT, as an electric drive core, has experienced the surge of the plate at the end of 21 years, and the market has recently diverged on the prosperity of IGBT. Compared with the pessimism of the market, we believe that IGBT will remain in short supply in the medium and long term, and the performance flexibility of related companies is worth looking forward to. Focus on IGBT faucet times electric, Silan micro, Star semi-guide; as well as SiC faucet Tianyue advanced, Phoenix optics, Sanan optoelectronics, etc. In addition, the value of PCBs for new energy vehicles has also increased significantly: electric drives, electronic controls, and intelligent cockpit upgrades have driven HDI demand; millimeter-wave radar has led to an increase in the use of high-frequency PCBs.
Intelligent: Focus on the incremental market and grasp the golden track. Automotive intelligence has spawned two major incremental markets for autonomous driving and intelligent cockpits. Perception layer cameras, laser radars, intelligent cockpit central control screens, acoustic tracks, etc. all have great growth potential. It is recommended to pay attention to Weier Shares, Lianchuang Electronics, Yongxin Optics, Beijing Junzheng, Jingchen Shares, Torch Technology, Changxin Technology and other track leaders. In 21 years, each subdivision track has risen generally, and in 22 years, it is necessary to track the breakthrough of on-board orders and revenue recognition of various manufacturers.
Production: Since the beginning of the year, the semiconductor sector has experienced a deep correction, including capital factors and fundamental concerns: 1) after the price increase and retreat tide, the market is worried about the reversal of the semiconductor boom; 2) the demand for traditional consumer electronics terminals, especially mobile phones, is weak. However, we believe that in the medium and long term, semiconductors will still maintain structural tension, and the prosperity of automotive electronics, IOT Internet of Things, and AR/VR metaversals will continue to improve.
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