The electronics industry is constantly innovating: the electrification and intelligence of automobiles have spawned incremental demand

Huaan Securities recently released an in-depth research report on the electronics industry, and pointed out that the current electronics industry has accelerated the pace of innovation, and the semiconductor industry has continued to grow. At the same time, the electrification and intelligence of automobiles have spawned incremental demand, which has made the electronics industry have a different development path than in the past.

Semiconductors: Terminal innovation is not stopped, and chips are blooming

Terminal innovation + domestic substitution, domestic semiconductor demand has grown steadily

Huaan Securities pointed out that the global semiconductor industry continues to grow, and the ceiling continues to move. Global semiconductor sales were $142.2 billion in 2002, $291.6 billion in 2012 and $440.4 billion in 2020. At present, terminal innovation is not stopping, such as automotive intelligence, electrification, photovoltaic wind power energy storage, 5G, Internet of Things, AI/cloud computing and ARVR, etc., are promoting the continuous growth of semiconductor demand.

The mainland has a large trade deficit in the integrated circuit industry every year. According to Chinese customs statistics, China's integrated circuit imports in 2019 were $304 billion, down -2.2% year-on-year. China's integrated circuit exports amounted to US$101.5 billion, an increase of 20.1% year-on-year. The overall trade deficit narrowed to $202.5 billion, down 10.94% year-on-year, but still about twice the value of exports. In recent years, although the export value of mainland integrated circuits has increased in tandem with the increase in import amounts, the overall trade deficit is still very large.

Data from IC insights shows that the self-sufficiency rate of domestic semiconductors has been steadily increasing from 2012 to 2019, and the self-sufficiency rate in 2019 is about 17%. Referring to "Made in China 2025", the target localization rate in 2025 will reach 50%, which means that China needs assets to produce at least $100 billion of products, but now China can only provide about $20 billion of products, which is more than 5 times the replacement space compared to 2019, and at the same time, China is still a long way from the goal of "Made in China 2025".

Power Semiconductors: Core semiconductor components that contribute to carbon neutrality

Power semiconductors are the core of electrical energy conversion and circuit control in electronic devices, and are mainly used to change voltage and frequency in electronic devices, DC AC conversion, etc. Power semiconductors are subdivided into power devices (one discrete device) and power ICs (one integrated circuit). Ideally, the perfect converter does not have any voltage loss when it is opened, and there is no power loss when opening and closing the conversion, so the product and technological innovation in the field of power semiconductors is aimed at improving the efficiency of energy conversion.

According to Yole's relevant statistics, about 50% of the current global power semiconductors are power ICs, and the remaining half are power discrete devices; in the proportion of power discrete device sales in 2017, MOSFETs account for the highest proportion, accounting for about 31%, followed by diodes/rectifier bridges accounting for about 29%, thyristors and BJTs accounting for about 21% of discrete devices, IGBT accounting for 19%, but its compound growth rate is the fastest of all products.

Huaan Securities pointed out that IGBT has a wide range of applications in industrial control and automation, new energy vehicles, motor energy saving, solar power generation, wind power generation and many other fields, used to improve the efficiency of power conversion, transmission and control in various circuits, of which the drive system in new energy vehicles is the most typical application.

At present, the downstream application of IGBT is new energy vehicles, photovoltaics, wind power and other emerging areas, the mainland's voice in the world is higher than the past traditional fuel vehicle field and industrial control field, therefore, more than half of the demand in the incremental space of IGBT is in China. In the next few years, the proportion of IGBT market demand in the mainland will increase from 35% in 2019 to 50% or more in 2025, creating good conditions for the mainland's IGBT manufacturers to increase their share and competitiveness, and the market share and business volume of domestic IGBT manufacturers have great potential to increase.

FPGA: high prosperity and high barriers, domestic manufacturers in many fields to catch up

FPGAs: Programmable chips with flexible architectures that combine parallelism with low latency

FPGA chips belong to the logic chip category. Logic chips can be divided into four major categories of chips according to function: general-purpose processor chips (including central processing chip CPUs, graphics processing chips GPUs, digital signal processing chips DSPs, etc.), memory chips (Memory), application-specific integrated circuit chips (ASICs), and field programmable logic array chips (FPGAs).

The Chinese market is growing faster than the world, with an average annual compound growth rate of 23.1% in the next five years. China's FPGA market grew from about 6.55 billion yuan in 2016 to about 15.03 billion yuan in 2020, with an average annual compound growth rate of about 23.1%. With the further acceleration of the domestic substitution process, it is expected that the scale of China's FPGA market will reach about 33.22 billion yuan by 2025.

Multi-point blossoming of downstream applications: Growth analysis of FPGA segmentation

FPGA downstream applications are widespread, and 5G+AI+ automotive electronics leads the industry growth. Thanks to the high flexibility and scalability of FPGAs, the downstream applications of FPGAs are very broad, including network communications, consumer electronics, data centers, automotive electronics, artificial intelligence and other fields. At present, with the rapid penetration of 5G communications, the vigorous development of artificial intelligence and the continuous strengthening of the trend of automotive intelligence, it is expected that the demand for FPGAs in the three fields of communications, AI and automotive electronics will continue to increase in the future, and the market size is expected to continue to benefit.

The field of network communication is one of the main application markets for FPGA chips, Frost & Sullivan data show that in 2020, the Chinese sales of FPGA chips applied to this field will reach 6.21 billion yuan, accounting for 41.3% of China's FPGA chip market share, and the average annual compound growth rate of 2021-2025 will reach 17.5%.

The FPGA chip can be used to realize the signal bridging of multiple image sensors, 3D surround view video fusion, reversing assist video, driving assistance video and other functions. In the field of assisted driving and autonomous driving, FPGA chips can be used to achieve various functions such as machine vision and object detection.

Competition pattern: absolute monopoly abroad, domestic leading companies to catch up

FPGA chips started earlier abroad, with deep technology accumulation and a high degree of monopoly on the market. According to Frost & Sullivan's statistics, in terms of shipments, more than 80% of China's FPGA chip market in 2019 was occupied by foreign investors, and the top three suppliers were Xilinx, Intel and Letis, with shipments of 52 million, 36 million and 33 million, accounting for 36.6%, 25.3% and 23.2%, and domestic manufacturers Anlu Technology ranked fourth, accounting for only 6%.

If the sales caliber statistics, the market presents a duopoly form, in 2019, the total share of Xilinx and Intel reached 91.1%, and Anlu Technology ranked fourth, accounting for 0.9%, ranking first among domestic manufacturers.

Sensor: The eye of the intelligent car, the core hardware of the perception layer

The higher the level of autonomous driving, the greater the number of sensors required. The Tesla Model 3 sensor array contains 8 cameras and 12 ultrasonic sensors. Three cameras are responsible for the forward field of view, and the main camera has a detection distance of up to 250 m.

With the gradual deepening of ADAS and autonomous driving, it is expected that the size of the in-vehicle camera market will continue to grow at a high speed in the future, according to ICVTank forecast, the global in-vehicle camera market size is expected to grow from $6.2 billion in 2015 to $27.3 billion in 2025, and CAGR of 16.0% in 10 years. The domestic market is expected to exceed 10 billion yuan in 2022 and 23.7 billion yuan in 2025, with a compound annual growth rate of 32.7%, higher than the global growth rate.

The center frequency of the on-board millimeter wave radar has been increased from 24 GHz to 77 GHz. Because 77GHz has the advantages of small size, easy single-chip integration, good performance (higher speed resolution, improved signal-to-noise ratio, higher output power) and less R&D costs and radar system bill of materials compared to 24 GHz. Taking the ACC scenario as an example, the volume of 77 GHz millimeter wave radar is 1/3 of that of 24 GHz millimeter wave radar, and the detector accuracy is 3 to 5 times that of 24 GHz millimeter wave radar. Therefore, 77 GHz millimeter wave radar will become an important direction for the future development of the industry.

Connectors: small parts, large space, domestic suppliers to break the game

According to Bishop & Associates data, the global connector market sales scale in 2020 is 62.73 billion US dollars, and the CAGR from 2010 to 2020 is 2.7%, and it is expected to exceed 90 billion US dollars in 2023. In 2019, the automotive sector surpassed communications to become the largest market segment, accounting for 23.7%.

New energy vehicles use large-capacity lithium batteries, and their working voltage range has jumped from 12 V to 400 to 600 V in traditional cars, and the number of electric drive units and electrical equipment has increased significantly, which puts forward higher requirements for the reliability, volume and electrical performance of connectors.

Under the trend of automotive intelligence, the penetration rate of ADAS (intelligent driving assistance system) has increased rapidly, the amount of on-board sensors has increased, the data transmission requirements (high-speed and high-frequency big data volume) have increased accordingly, and the use of on-board RF connectors has also increased, and the demand for high-speed high-frequency connectors has emerged.

Driven by the rapid development dividend of new energy vehicles, the new domestic market for new energy vehicle connectors will be about 6.9 billion yuan in 2021, optimistically calculating that it will reach 14 billion yuan in 2022, an increase of 102.9% year-on-year, and 35 billion yuan in 2025. Coupled with the demand for traditional fuel vehicle connectors, the total market size will reach 34 billion yuan in 2022 and 50 billion yuan in 2025. The CAGR from 2021 to 2025 is 14.7%.

Huaan Securities pointed out that automotive connectors have a high threshold, overseas giants occupy a monopoly position, industry concentration is high, and the market share of the top ten manufacturers exceeds 60%. In the past 40 years, the market share of the world's top ten connector manufacturers has increased from 38% in 1980 to 61% in 2020, and after 2015, it has maintained a long-term proportion of 60%, and the head concentration pattern is stable. The top three giants - Tyco Electronics, Amphino and Moshi have a market share of more than 35%, forming a relatively stable global leader position, leading the industry technology trend, and having a monopoly position in the high-end market.

PCB: Material prices are expected to pull back slightly, and cars and servers will work together

The operating costs of PCB manufacturers are more sensitive to the price of upstream raw materials. At present, 50% to 75% of the operating costs of relevant leading enterprises are composed of raw material costs. Copper clad laminate is the core raw material of PCB manufacturing, is the electronic glass fiber cloth and other reinforcing materials soaked in resin, one or both sides covered with copper foil and hot pressed and made of a plate-like material, mainly play the role of electrical connection, insulation and support. With reference to the prospectus of Shengyi Electronics, the cost of copper clad laminate accounts for 43.59% of its raw material cost.

Trends such as vehicle electrification and intelligence will bring about a market pattern of increased PCB usage. Huaan Securities pointed out that the new energy power system is an electric motor, and the amount of PCB has increased significantly. Compared with traditional energy vehicles, the degree of electronicity of new energy vehicles is improved, the value of single-vehicle PCB is improved, and the PCB increment mainly comes from the three major control systems VCU, BMS and MCU.

In traditional fuel vehicles, the average amount of PCB is 1 square meter, the amount of high-end models is 2 to 3 square meters, and the value of the PCB of the bicycle is about 400 yuan. The value of new energy vehicle PCBs is more than 2,000 yuan, and the increase in the penetration rate of new energy vehicles in mainland China will bring a lot of incremental space to automotive PCBs.

epilogue

Today, the electronics industry is accelerating the pace of innovation, and the semiconductor industry continues to grow. At the same time, the electrification and intelligence of automobiles have spawned incremental demand, which has made the electronics industry have a different development path than in the past.

Automobiles use electric energy as an energy supply, which has the characteristics of energy saving and zero emission. At the same time, a new generation of cars with autonomous driving functions that use new technologies such as artificial intelligence are gradually becoming intelligent mobile spaces and application terminals. Trends such as electrification and intelligence have made automobiles put forward incremental demand for high-voltage connections, intelligent sensing, body control chips, and power devices.