ZTE made a car core, facing Geely and avoiding BYD

Abstract: Choosing soC as the basis for entering the automotive field, for ZTE, it not only stands on the future trend, but also avoids fierce competition, which can be described as "killing two birds with one stone".

Choosing soC as the basis for entering the automotive field, for ZTE, it not only stands on the future trend, but also avoids fierce competition, which can be described as "killing two birds with one stone".

Since last year, the price increase of automotive chips has not subsided. According to merchants in the Shanghai SEG electronics market, the core chip of the body electronic stabilization system produced by STMicroelectronics, STL9369, has risen from about 20 yuan to 2800 yuan in just one year.

The "myth" of tens or even a hundred times is not uncommon in car chips.

Recently, chip giant Infineon has released data that the total value of the company's backlog of orders in 2022 will reach 31 billion euros, more than 2 times the revenue forecast of 13 billion euros in 2022. Of the 31 billion euros of orders, 80% are expected to be delivered in 2022, and the capacity of the whole year of 2022 is still in short supply, especially in the automotive sector.

The beautiful "money scene" brought by the rise in volume and price has made automotive chips a target for capital pursuit, which has also attracted ZTE (000063, which is groping for a second growth curve. SZ) concern.

Today, in the automotive business, ZTE has set up an automotive electronics line, laid out and developed automotive SoC chips, and reached strategic cooperation with FAW Group and SAIC Motor and established a joint innovation center. What is the value of the automotive SoC chip? Can ZTE achieve growth through this?

How to solve the imbalance of the main business

Business development has entered a new stage, seeking high growth and thick profit growth poles

ZTE, which has been "low-key" for many years, has once again shown its sharp edge.

On January 29, ZTE announced that it expects to achieve a net profit attributable to the mother of 6.5 billion yuan to 7.2 billion yuan in 2021, an increase of 53% to 69% year-on-year. Even if the final accounting performance falls in the low range, the net profit attributable to the mother of 6.5 billion yuan has hit a new high in nearly five years.

Among ZTE's three major businesses, the operator business that provides operators with technologies and product solutions such as wireless access, wired access, and core network accounts for the largest proportion of profits, reaching 70%-80%; the consumer business of smart phones and home information terminals, as well as the government and enterprise services that provide government enterprises with product information solutions based on "communication networks, Internet of Things, big data, cloud computing" and other product information solutions, have remained at 7%-15%.

Although the consumer business and government and corporate affairs carried the banner in the first half of 2021, driving ZTE's revenue to increase by 12%, the gross profit margin of these two businesses was in a state of decline, but the revenue increased slightly by 0. 23% of the operator's business, due to the reduction of operating costs of nearly 2 billion, resulting in an increase in gross profit margin 6. 47 percentage points, driving the growth of ZTE's profits.

The gross profit margin of the high-growth business is reduced, but the growth of the high-gross profit margin is slowing down, and this "imbalance" makes ZTE's performance not easy at the same time.

In addition, in the first three quarters of 2019, 2020 and 2021, ZTE's gross profit margin was 37.5%. 11％、31． 61％、36． 82%; net profit margin was 6. 37％、4． 65％、7． 38%, single-digit net interest rate also makes it long questioned "technology gold content".

To this end, ZTE invests heavily in research and development every year, on the one hand, to maintain the competitiveness of existing products, on the other hand, it is also seeking new growth points. From 2018 to 2020, ZTE invested 10.9 billion, 12.5 billion and 14.8 billion yuan in research and development, accounting for 12.5 billion yuan in revenue. 75% increased to 14. 59%, while the number of R&D personnel also increased from 2. 590,000 to 3. 170,000 people, an increase of 22%.

By 2021, ZTE has no shortage of explorations in "fashionable" fields such as meta-universe and new energy. The smart car market has become the target of ZTE with a broad market space and mature intervention opportunities, and the car chip is one of the appropriate entry points.

From its own point of view, ZTE is not a "new recruit" in the chip field, but has more than 25 years of research and development history. As of June 2021, the company has nearly 4400 chip patent applications and about 1950 authorized chip patents. At the same time, in the January 2022 edition of the "Recommended Catalogue for the Promotion and Application of Automotive Chips" released by the China Association of Automobile Manufacturers and the China Semiconductor Industry Association, ZTE's two vehicle-scale module products have been successfully shortlisted.

On this basis, ZTE began to develop a vehicle-grade SoC chip, which is obviously prepared.

Grasp the combination of soft and hard in the air outlet of intelligent vehicles, and look forward to the layout

The chips used in a smart car include sensor chips (CMOS, TPMS), power semiconductors (MOSFETs, IGBTs), memory chips (DRAM, NAND, Nor Flash), and computational control chips (MCUs, SOCs).

Among them, the MCU is mainly based on control instruction operations, and the computing power is weak, while the SoC chip is mainly based on intelligent operations and has stronger computing power.

This difference is mainly determined by its structure, MCU, also known as single-chip microcomputer, is a chip-level chip, generally only contains the CPU of this one processor unit, it often integrates the CPU, memory chip and interface unit; SoC is a system-level chip, generally contains a plurality of processor units, such as can integrate CPU, GPU, DSP, NPU, memory chip and interface unit.

In recent years, we have seen the price of automotive MCUs soar, this is because there are many MCU application scenarios, simple such as fans, air conditioners, wipers, sunroofs, windows, seats, door locks, etc., complex such as intelligent dashboards, multimedia information systems, powertrain systems, assisted driving, etc. need to use MCU. This has also led to the addition of many chip manufacturers such as BYD Semiconductor, Gigabit Innovation, Jingfeng Mingyuan, Core Sea Technology, etc., and the cross-border layout of home appliance companies such as Midea.

However, compared with the traditional MCU master control scheme, The SoC not only has obvious advantages in power consumption, but also can better meet the evolution trend of intelligent terminal equipment in terms of performance, such as increasing audio and video processing capabilities and AI processing capabilities. As cars become more intelligent, SoCs that can better calculate and process data and realize autonomous driving functions may replace some MCU solutions.

Compared with the lively scene of the car regulation MCU entrants, there are not many domestic companies that do car regulation SoCs. The main one in front is Geely Automobile's Core Engine Technology. In November 2021, Geely announced the self-developed smart cockpit chip SE1000, which is a 7nm process of vehicle-grade SoC chip, which is reported to compete with qualcomm Snapdragon 8155. Geely said that after the chip completes the vehicle level certification, it can be mass-produced in 2022. After that, it will also launch the 5nm process of the vehicle integrated supercomputing platform chip and high computing power automatic driving chip, the computing power can reach 256TOPS, on the basis of the realization of L3 level intelligent driving, to achieve "computing power can be expanded" to meet the computing power needs of higher level automatic driving.

Therefore, the choice of vehicle specification SoC as the basis for entering the automotive field, for ZTE, not only stands on the future trend, but also avoids fierce competition, which can be described as "killing two birds with one stone".

In addition, ZTE will also make efforts in the basic software and hardware platform for vehicles, intelligent driving algorithms, intelligent networking products for vehicle-road collaboration and other products. From the underlying chip to the mid-level software to the upper-level products, ZTE looks ambitious, and it is worth looking forward to whether it can make a breakthrough in the next era of intelligent cars.

The author of this article is | Gu Tianjiao

Source | Talent Magazine