Supported industrial chain companies have been listed, Xiaomi Group (01810. HK) and its founder Lei Jun, investment in the industrial chain of home appliances, smart phones and other industrial chains, is entering the harvest period.
Jiangsu Diao Microelectronics Co., Ltd. (hereinafter referred to as "Diao Micro") is sprinting to list on the Science and Technology Innovation Board, sponsored by CITIC Construction Investment (601066. SH）。 Xiaomi Group and OPPO, which are both customers and shareholders, have been questioned by regulators about the fairness of the price of their stake in Diaowei. After the acquisition of shares, the two have greatly increased their procurement efforts for Diao Micro, and their revenue contribution has increased from 4% to nearly 40% in three years. On the other hand, Diowei's high dependence on upstream Korean wafer suppliers is also a hidden danger.
According to the prospectus, Lei Jun holds 77.80% of the equity of Xiaomi Technology Co., Ltd., indirectly controls the Xiaomi Yangtze River industry, and indirectly holds more than 5% of the issuer's shares.
Xiaomi and OPPO contribute to Dio's micro revenue: from 4% to nearly 40%
According to the prospectus, Diao Micro is an integrated circuit design enterprise focusing on the research and development, design and sales of high-performance analog chips. According to different functions, Diao micro products are mainly divided into two series: signal chain analog chips and power management analog chips, which are mainly used in consumer electronics, intelligent LED lighting, communication equipment, industrial control and security, and medical equipment.
According to the prospectus, Xiaomi Group and OPPO hold 7.5% and 4.33% of the shares of DiaoWei through their subsidiaries.
"The process, basis and fairness of determining the shareholding price of Xiaomi and OPPO; before and after Xiaomi and OPPO's shareholding in the issuer, the issuer sells product structure to the above-mentioned end customers, the changes in distributors and the reasons", the regulatory authority's inquiry letter put forward such requirements to Diaowei.
Diao Wei replied that the related parties Xiaomi Investment Fund, Xiaomi Industry Investment Management Co., Ltd., Xiaomi Technology Co., Ltd., and OPPO Guangdong are the shareholders of the issuer, and Xiaomi and OPPO are important end customers of their main products. From 2018 to the first half of 2021, the amount of Dior microchips finally applied to Xiaomi products accounted for 0.58%, 0.71%, 9.32% and 7.98% of the operating income, respectively, and the amount finally applied to OPPO products accounted for 3.63%, 14.38%, 19.01% and 29.58% of the operating income, respectively.
It can be seen that as a major customer, before and after investing in Diaowei in 2020, Xiaomi and OPPO accounted for the operating income of Diaowei, from less than 4% in 2018, to nearly 40% in the first half of 2021.
DiaoWei explained: The cooperation time between the company and Xiaomi Group is earlier than the time of Xiaomi's shareholding. Before and after Xiaomi's shareholding, the company's final sales of products to Xiaomi shifted from power management analog chips and signal chain analog chips to signal chain analog chips. "Xiaomi and OPPO are optimistic about the company's development, shareholding, and capital increase prices." On the basis of referring to the company's previous valuation level, the final price is determined through negotiation and negotiation, and the pricing process and basis are fair. Diao Wei explained that the company's cooperation with OPPO was earlier than OPPO Guangdong's shareholding. Before and after OPPO's shareholding, the product structure of the final sales to OPPO did not change significantly.
In this regard, the sponsor CITIC Construction Investment said that Xiaomi and OPPO are important brand manufacturers in the domestic mobile phone market, and are also the core end customers of Products in the field of Diao Micro Consumer Electronics, and Diao Micro hopes to deepen cooperative relations with Xiaomi and OPPO to form stable and lasting business exchanges. Xiaomi and OPPO have relatively complete internal control systems and governance systems, and the possibility of profit transmission through related party transactions is small.
Diao Wei said that according to IDC statistics, Xiaomi and OPPO are the top five mobile phone brands in the world in terms of shipments, and the company's products have achieved a large number of shipments of Xiaomi and OPPO, which will help the company to continue to extend to other mobile phone brand customers and cover a wider range of customer groups while penetrating and expanding to different models of existing mobile phone brand customers. Among the mobile phone brand terminal customers, in addition to OPPO and Xiaomi, the company has also expanded the mobile phone terminal brands such as VIVO, of which the VIVO brand has begun to purchase high-performance analog switch products in the signal chain analog chip and load switch products in the power management analog chip.
In this regard, a sponsor representative in Shenzhen told the first financial reporter that the key to the situation of both shareholders and customers is to look at the information disclosed by the regulator, which is more common in the proposed listed companies in the industrial chain, and it is estimated that it will not become an obstacle to listing.
Rely on Korean fabs
For domestic integrated circuit design enterprises, there are large customer guarantees at the sales end, but the procurement is still highly dependent on fab manufacturers, most of which are still from overseas, which has also become a potential risk.
DiaoWei said that during the reporting period, the global wafer and packaging and testing capacity generally entered a relatively tight cycle, if the price of wafers and packaging and testing rose sharply, or due to the shortage of wafer supply, insufficient packaging and testing capacity and other reasons to affect production, it will adversely affect the company's profitability and the stability of product supply.
Diaowei also said that the company belongs to the typical Fabless model integrated circuit design enterprises, and the suppliers are mainly wafer foundries and packaging and testing foundries. The high concentration of upstream suppliers is one of the characteristics of the integrated circuit design industry. During the reporting period, the company maintained a stable procurement cooperation relationship with major suppliers.
From 2018 to the first half of 2021, the total purchase amount of Diaowei from the top five suppliers was 68.739 million yuan, 93.0246 million yuan, 130.0033 million yuan and 108.3978 million yuan, accounting for 81.98%, 86.01%, 89.71% and 88.94% of the total procurement in the same period, respectively, and the overall procurement concentration was at a high level.
The company mainly purchases wafers from DB HiTek Co., Ltd., and Ship Chip Manufacturing (Suzhou) Co., Ltd., DB HiTek Co., Ltd. is one of the world's top ten wafer manufacturing companies, and Ship Chip Manufacturing (Suzhou) Co., Ltd. is a well-known wafer manufacturing enterprise in China. The company mainly contributes to Tongfu Microelectric (002156. SZ), Changdian Technology (600584. SH) procurement of packaging and testing services, the above enterprises are well-known domestic listed companies, OEM quality can be guaranteed.
Among them, EASTERN HiTek Co., Ltd., from South Korea, is a world-renowned wafer manufacturing company, listed in South Korea (stock code: 000990.KS). In the first half of 2021, Diaowei's procurement of Eastern Hi-Tech was 44.6884 million yuan, accounting for 36.67% of the procurement, making it the largest supplier of Diaowei.
172 million yuan to buy a house before listing
Regarding the 172 million yuan of office buildings purchased before the listing, the regulatory authorities also asked DioWei to provide an explanation; and Dio Micro plans to use the raised funds for 1.5 billion yuan.
In 2020, DiaoWei purchased office space in Shanghai's Minhang District, and in 2020 and the first half of 2021, it paid a total of 172 million yuan for the purchase price.
Theo micro explanation; The office building purchased this time will be used for the upgrading and industrialization of analog chip products, and the construction of Shanghai R&D and design center", the purpose of which is to implement the company's technology and market accumulation in the integrated circuit design industry, through the purchase of venues and decoration, the introduction of advanced R & D and operation of the required equipment, the expansion of the personnel team, so as to further accelerate the company's development, enrich product range and improve profitability, to meet the growing market demand for analog integrated circuit products.
After deducting the issuance fee, the raised funds will be invested in a number of projects such as analog chip product upgrading and industrialization projects, with a total amount of 1.5 billion yuan to be used.
At present, Diowei's international competitors mainly include Texas Instruments, ON Semiconductor, The American Core Source, Dal Technology and other companies; domestic competitors mainly include Shengbang Shares, Sripu, Aiwei Electronics, Silicon Lijie, Jingfeng Mingyuan, Lixin Micro, Xinpeng Micro, Xidi Micro and other companies.
Regarding the competition with domestic companies, Diao Wei said: Although the company has less differences with domestic competitors in terms of market position and market share, the latter has strengthened its R&D investment by virtue of the brand effect of listed companies and the implementation of investment projects raised by raising funds, so that there is a certain gap between the company and the number of R&D personnel and the amount of R&D investment.