The profits of mobile phone manufacturers are squeezed, and the reshuffle of upstream suppliers will be worse?

Jiwei network news, in the face of the continuous shrouding of the epidemic, the sharp decline in shipments, and the continuous decline in unit prices, mobile phone manufacturers have increased a lot of "pressure" and "troubles".

According to data from the China Academy of Information and Communications Technology, in January 2022, the domestic market mobile phone shipments were about 33.022 million units, down 17.7% year-on-year, of which 5G mobile phone shipments were about 26.324 million units, down 3.5% year-on-year; in February 2022, the domestic market mobile phone shipments were 14.864 million units, down 31.7% year-on-year, of which 5G mobile phone shipments were about 11.374 million units, down 24.5% year-on-year.

Affected by the decline in mobile phone shipments, mobile phone upstream suppliers bore the brunt of the impact and became the object of the impact. According to an industry insider who has long been concerned about mobile phone screens, the current entire mobile phone market is sluggish, and due to factors such as slowing downstream demand and fierce competition, the unit price of all products of mobile phone screens has fallen sharply.

The above-mentioned person further said quite helplessly that for mobile phone upstream manufacturers, the first consideration is not profit, but whether the production line has received orders to produce.

In fact, in addition to the mobile phone screen, the mobile phone camera is also facing an unfavorable situation. According to the disclosed information, the leading manufacturer of mobile phone core device lenses, Daliguang, had revenue of NT$6.345 billion (about 1.428 billion yuan) in the first two months of 2022, down 19% from the same period last year. Quite consistent with the Da li light curve, the shipments of mobile phone lenses and mobile phone camera modules in the first two months of this year also declined significantly year-on-year.

It can be seen that in such a big environment, coupled with the continuous rebound of the epidemic, enterprises in the upstream supply chain of mobile phones have difficulty in profitability and intensified competition.

"In 2022, the growth of the market share of mobile terminals has become the guarantee of the market share, and the terminal squeezes the cost of the supply chain, causing the supply chain to suffer." A person who is deeply involved in the mobile phone industry said bluntly that for mobile phone upstream suppliers, in order to maintain basic operation, many mobile phone suppliers will painfully take orders, in the process of attack and defense, it will also lead to terminals to feel that the supplier support is not enough, suppliers will also have bitter water to say, I have lost money to produce goods, this gap will lead to terminal replacement of suppliers, and thus lead to a certain degree of reshuffling in the mobile phone supply chain.

Upstream manufacturers' profits are thinner

The fierce competitive environment in the mobile phone market has successfully spread to the upstream market.

From the perspective of the entire mobile phone, the core devices of the mobile phone are mainly divided into screens, batteries, processors, memory, cameras, precision structural parts, connectors and other products. A person who is deeply involved in the mobile phone industry revealed that some mobile phone devices have "violently" fallen in price.

Taking the mobile phone camera market as an example, the average sales unit price of the camera module of Qiu Ti Technology in 2021 fell from about 38.72 yuan in the previous year, down about 9.1% year-on-year to about 35.21 yuan. In addition, in the field of lenses, the loss of The New Juke in 2021 is even more expanding.

As a leading enterprise of mobile phone lenses, the gross profit margin of Daliguang products, which is known as the king of stocks, fell below 60%. According to the disclosed news, the gross profit margin of Daliguang in 2021 is about 59.95%, down 7.04 percentage points year-on-year, hitting a new 6-year low.

From the perspective of product structure, in 2021, the proportion of mobile phone lens shipments of 20 million pixels and above in Daliguang has declined significantly. In this regard, Daliguang said that it is mainly due to the lack of chips and the weak demand for high-end models.

And just as expected, Sunny Optics is also mired in the quagmire of price reduction of optical products. In the 2021 annual report, Sunny Optics bluntly said that due to the impact of the reduction of smart phone cameras, the average sales unit price of the company's mobile phone lenses and mobile phone camera modules has decreased compared with the previous year.

It is worth mentioning that due to the weak sales of Android high-end, the number of high-end mobile phone lenses, modules and unit prices are not ideal, in this context, in order to achieve the target and product turnover rate set at the beginning of the year, mobile phone first-line suppliers began to compete for orders from the next level supplier.

With the rush of many suppliers, the unit price of mobile phone lenses, modules, motors, chips and other products continues to decline, especially the lens market is the most serious. A few days ago, a person who is deeply involved in the mobile phone lens market said quite helplessly that at present, there are several companies on the mobile phone lens side competing downward for low-end mobile phone lens orders, and the fierce market competition has made the unit price of mobile phone lenses decline all the way.

"On this year's ODM project, there are several projects that have been 'eaten' by first-line mobile phone lens manufacturers, and they are won at a 'low price'," the above-mentioned person continued to add.

In fact, this phenomenon is not limited to mobile phone lens manufacturers, but also exists in the mobile phone camera module market. According to Jiwei Network, at present, in the ODM project, a number of first-line mobile phone camera modules are also participating in the bidding ranks.

It can be seen that in such a fierce market competition environment, for some mobile phone camera suppliers, how to get orders has become the primary issue they consider, and once the first-line mobile phone camera suppliers penetrate the market to the next level supplier, then on the one hand, it is difficult to maintain a high level of gross profit margin of their own products, on the other hand, it will further squeeze the market share of second-line mobile phone camera suppliers.

The big chess game behind the supply chain shuffle

The squeeze of downstream profits has made upstream suppliers further compress costs, which in turn has exacerbated the reshuffle of the upstream supply chain of mobile phones.

According to a person who is deeply involved in the mobile phone industry chain, in the mobile phone camera market, the current mobile phone camera module market pattern has hardly changed, in the mobile phone lens market, since last year, there has been an obvious shuffling phenomenon, and in the mobile phone camera motor market, the market pattern change is not obvious, but the upstream integration phenomenon is quite obvious.

For the motor market, some insiders bluntly said that this year's Q1 entire mobile phone market is quite negative, high, medium and low end have been affected to varying degrees, and the technical direction of the motor has also changed, from the perspective of the strategic layout of the motor supply chain, module factories, lens factories are strengthening or adding their own motor factories.

According to the micro network, as of now, China Blue has a layout in the lens market, while Sunny Optics and AAC have a layout in the motor market. The above-mentioned people believe that the next motor market advantage will be biased towards the "motor + module", "motor + lens" factory has more advantages, do a single product alone, the price will be greatly squeezed, the market competitiveness is weak.

"From the perspective of the strategic layout of the motor product line, at present, the domestic motor mainly lays out the OIS and IOT markets, and for the OIS field, in fact, after Huawei was sanctioned, TDK's motors were affected to a certain extent." Another person bluntly said that at present, domestic motor factories are ushering in opportunities, but they need to break through technical bottlenecks and patents.

The above-mentioned person further revealed that this year's internationally renowned mobile phone manufacturers are expected to carry domestic shrapnel OIS motors. It can be seen that in terms of the motor market alone, the integration of upstream manufacturers is quite obvious, and with the rapid rise of domestic motor manufacturers, follow-up Chinese manufacturers are expected to continue to eat OIS motor orders from Japan and South Korea.

However, it should be noted that the motor order is now reflected in the terminal manufacturers. According to an industry insider, in the past 5 years, mobile phone manufacturers have not designated motor suppliers, but now mobile phone manufacturers have begun to require and designate motor suppliers. In other words, if you want to get a mobile phone motor order, it is not a matter for the module factory to decide, and the final right to speak is still in the hands of the mobile phone terminal.

It is worth mentioning that last year, under the continuous upgrading of the price war, the market pattern of mobile phone lenses has changed significantly. According to the feedback from the mobile phone supply chain, AAC's mobile phone lenses have developed rapidly, and the market share has increased significantly. Jiwei Network found from AAC Technology's 2021 annual report that in 2021, AAC Technology's optical business achieved revenue of 2.39 billion yuan, an increase of 46.2% year-on-year.

Overall, from the current situation, the continuous decline in the profits of upstream suppliers has significantly aggravated the reshuffle of the entire mobile phone upstream suppliers, and the horizontal multi-field layout has become one of the important means for manufacturers in competition. (Proofreading/Sara)