In the past decade, the consumer electronics industry has given birth to a lot of big bull stocks in A-shares. For example, Luxshare Precision, Goertek, Sunwoda, OFILM and so on. Behind the emergence of many bull stocks is the improvement of the prosperity of the entire industry.
Now, since the second half of last year, the consumer electronics theme has continued to be optimistic about institutions, and as of March, 8 ETFs have taken turns to enter the market.
The performance of the consumer electronics sector peaked at the end of last year and then went all the way down.
The same is reflected in the performance of funds that track consumer electronics indexes, such as the Huaxia National Securities Consumer Electronics Theme ETF issued in August last year, where the net value of the fund peaked at the end of the year and then fell all the way.
The size of the fund has also dropped from more than 400 million when it was listed to 130 million today, and the data intuitively reflects that retail investors do not buy it.
Why do institutions continue to be optimistic, while retail investors are running away? When will the consumer electronics sector usher in spring?
Before we get into this, let's figure out what consumer electronics are.
01 | Consumption + technology
Consumer electronics, popularly speaking, are the electronic products we use in our daily lives, including mobile phones, tablets, headphones, audio, televisions, computers, etc., and now extend to smart cars, smart homes, etc. These products contain a large number of electronic components.
Consumer electronics, the reason why it is called consumer electronics, is because he has both consumer attributes and technological attributes.
From the perspective of consumption attributes, such as mobile phones, are our daily necessities, generally used for 2 or 3 years to change, if it is fruit powder, it may even be changed every 1 year, chasing the latest model released every year to buy. Some electronic consumer products are closer to the standard of semi-FMCG, such as headphones, data cables, charging treasures, etc.
In terms of scientific and technological attributes, consumer electronics products involve multidisciplinary fields such as optics, acoustics, communications, and materials science. In the era of scientific and technological revolution, technology development is rapid, technology-based product upgrading is also very fast, such as the 4G era has spawned smart phones, the emergence of Apple AirPods has led the replacement of wired headphones to wireless headphones, and now the breakthrough of 5G technology will also bring about the creation and iteration of related electronic products.
The combination of consumer and technological attributes has contributed to the characteristics of consumer electronics:
The price is higher than that of general FMCG (such as clothing, food), and there are many consumers
Compared with refrigerators, TVs and other home appliances, product replacement is faster, mobile phones can be changed once a year, but TVs may not be changed for 5 years.
Therefore, the consumer electronics industry market capacity is larger.
02 | Ultra-long industrial chain
The entire industrial chain of consumer electronics is relatively long, involving dozens of companies or hundreds.
Upstream: mainly for raw materials and core components production, including high-end chip design and manufacturing, high-end connectors;
Midstream: Mainly for motherboard and structural parts manufacturing and module production (including optical camera modules, acoustic modules, battery modules, display modules and other subdivisions);
Downstream: Mainly for mobile phones, headphones, tablets, smart wearables, audio, automotive electronics, security monitoring, wireless charging and other products of the main foundries (such as Luxshare Precision, Goertek shares) and brand holders (such as Apple, Huawei, Millet, etc.).
Taking the mobile phone industry chain as an example, the listed companies involved include various components of mobile phones, from chips to manufacturers of mobile phone shells, and finally factories that do assembly.
Consumer electronics are close to our lives, but companies in the industrial chain are far away from us.
In addition to Foxconn due to various events out of the circle, the entire industry of manufacturing companies are relatively unknown to the public, even if it is out of the circle of Foxconn, it is also said to be a bitter foundry, no technology content, and no bargaining power with brand owners.
But in any case, this industry, with its meager gross profit margin, has bred many bull stocks that many shareholders are talking about. In the final analysis, the large-scale penetration of end products into consumers' lives, the rapid expansion of the overall market scale, and the income of the entire industrial chain. In the past, the main driving growth of the industrial chain was mobile phones, laptops, and tablets.
And now that mobile phones are growing slowly, what else can support the industry?
03 | The dawn of a subdivision track
The consumer electronics industry is cyclical, and this cycle is formed as new technologies drive product innovation iterations.
For example, from 2012 to 2017, smart phones became popular with the development of 4G, and the stock prices of smart phone industry chain companies rose sharply. In 2017, the large-scale popularization of Airpods brought about the outbreak of wearable device sales, and related companies in the industry chain, such as Luxun Precision and Goertek, took the opportunity to open a new round of rise.
In the next round, the market's expectations for new technologies and products are placed on 5G technology, once, when the 5G concept was just popularized, the mobile phone industry believed that 2020 would be a big year for 5G mobile phone replacement, thereby driving the growth of the 5G mobile phone market, and in fact, due to the slow construction of 5G networks and the application scenarios are not extensive enough, the promotion of 5G mobile phones has not exploded.
When mobile phones are struggling to find application scenarios, the metacosm seems to have brought dawn to 5G applications, directly driving the vitality of the VR and AR industry chains.
When we look at the data, we can feel it more intuitively.
For the whole of 2021, the annual shipment volume of China's smartphone market was about 329 million units, up 1.1% year-on-year. However, in the fourth quarter alone, China's smartphone market shipped about 83.4 million units, down 3.5% year-on-year, showing a "high before and low" rhythm.
(Source: IDC China)
By February, the decline in sales was even more pronounced: overall sales in China's smartphone market fell by more than 20% year-on-year and 24% month-on-month in February.
(Source: CINNOResearch)
Notebook shipments were even more dismal, with shipments of 238 million units expected in 2022 at the beginning of the year, down 3.3% year-on-year.
(Source: Jibang Consulting)
In the near future, this expectation has been revised to 225 million units, a year-on-year decline of 8.5%.
In contrast, AR/VR devices are extremely hot. In the past 2021, the annual global SHIPMENT OF AR/VR headsets reached 11.23 million units, an increase of 92.1% year-on-year. In 2022, 15.73 million VR headsets are expected to ship worldwide, an increase of 43.6% year-on-year.
If the metaverse is the ultimate form of the Internet, no matter what kind of world it will eventually form and what kind of morphological changes it will undergo, we need a medium and a bridge to link the world of the metaverse and the real world, then VR/AR is such a basic link device and the entrance to the metaverse.
Facebook is a pioneer on this path. Its explosive VR headset Oculus Quest 2 has now sold more than 10 million units, which has greatly driven the rapid growth of hardware equipment shipments. In order to make the universe, Facebook even changed its own name: Meta.
In 2021, another product that performed well was smart home devices. China's smart home equipment in 2021 market shipments exceeded 220 million units, an increase of 9.2% year-on-year, and it is expected that 22 years will be a relatively rapid growth year, with shipments exceeding 260 million units, an increase of 17.1% year-on-year.
Another area involved in consumer electronics, smart cars, is also worth looking forward to.
Although the current unmanned driving technology seems to be immature enough, there will always be reports on the news that there will be problems with the automatic driving of a certain car, but looking to the future, the trend of automobile intelligence is unstoppable, that in the field of intelligent cars, driverless, intelligent cockpit involved in chips, lasers, radar, cameras, displays and other auto parts are expected to achieve rapid growth of domestic manufacturing companies.
The development of smart cars will open up new demands and bring opportunities to the electronics supply chain, but we still need to wait a little longer.
04 | epilogue
What is growing in the positioning industry is the demand of consumers.
The growth of downstream demand can drive the vigorous development of the upstream industrial chain. Tracking the development of downstream demand in real time and looking for growth points in the fields involved in the upstream and midstream of the industrial chain is the basic logic of our research on the consumer electronics industry.
Mobile phones, tablets, laptops, TVs and other products that have created brilliant achievements for the consumer electronics industry in the past have entered a bottleneck period.
The development of new technologies and the emergence of innovative products in the future are the basis for supporting the growth of consumer electronics. At present, the market is focused on smart homes and VR/AR device tracks, and in the future, smart cars are worth looking forward to.
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