Author | Zhong Lin
Source | Semiconductor Industry Insights
Why is the much-anticipated leading IPO of RF chips only waiting for a break?
The long-awaited first domestic PA stock was finally listed on the Science and Technology Innovation Board, and the first day of listing was broken.
To be honest, this exceeded my expectations, the market value fell below 20 billion, and the previous prediction was that the market value was at least more than 30 billion.
As a practitioner of domestic RF chips, it is psychologically difficult to accept. After calming down, I began to think, only the listing of Jie Chuangxin, what does it mean to domestic RADIO frequency?
Capital calm
Capital is fickle, and yesterday it still showed you a bright smile, but today it greets you with a bloody mouth that devours you. In the face of Weijie Chuangxin, the capital is too calm.
I am a domestic RF chip entrepreneur, in the product line, Weijie Chuangxin and our company have a competitive conflict, but this does not affect my recognition and support of Weijie Chuangxin, there is no country where there is a home, there is no domestic RF chip is really powerful, where there is the vigorous development of China's wireless communications and benefit the people's livelihood.
In the field of domestic RF chips, Weijie Chuangxin is a good company, which is a company that has been unanimously recognized by the field of RF chips. The domestic RF chip industry needs such a benchmark, which is also the goal and hope of other domestic RF chip entrepreneurs.
Looking back at the entrepreneurial history of Weijie Chuangxin, it is not the earliest RF chip startup in China, nor is it the most halo entrepreneurial team in China, back to ten years ago, no one would have thought that it would become the leader of China's RF PA.
This is a low-key and pragmatic RF chip company, from the initial research and development of 2G PA to the current 5G PA, Weijie Chuangxin has always been a down-to-earth technology, and very strategic.
In June 2010, Weijie Chuangxin was established in Tianjin, and at the same time, Wuxi Zhongpu Micro, Onry Micro (formerly known as Han tianxia PA Division), and Rui Di Ke (RDA), which was established in 2004, was the domestic RF PA boss at that time.
Therefore, the domestic 2G PA first has Rui Di Ke, and then there is Han Tianxia; 3G PA, Zhongpu Micro accidentally surpassed Rui Di Ke to do the first domestic. Whether it is 2G PA or 3G PA, Weijie Chuangxin can not find its own position.
In 2014, Weijie Chuangxin finally found its own sense of existence in 3G PA and became an excellent domestic PA, and it was also in this year that 4G mobile phones began to rise, and the 4G PA market prospects were huge. Companies running for 4G PA also include Huizhiwei, Feijun Technology, etc., and 4G PA has opened a wave of domestic RF chip entrepreneurship.
At that time, the 2G PA and 3G PA market was still very large, the threshold for product development was relatively low, and a few experienced R&D designers could be made, which attracted many startups to join. Today, some companies that do 2G PA and 3G PA have disappeared or changed tracks.
Chip entrepreneurship, win in strategy. Weijie Chuangxin decided to give up 2G PA and 3G PA and go all out to do 4G PA. This kind of decision requires courage and confidence, and success is a blockbuster, and defeat is irrevocable.
Weijie Chuangxin succeeded and achieved the first domestic 4G PA. Huizhiwei, which has been positioning 4G PA since the beginning, was established in 2012, and focus and innovation are the brand of Huizhiwei. Both companies are handing over their fate to 4G PA, desperately betting, throwing off opponents, and not coveting the immediate interests.
The comparison between the primary market and the secondary market of capital makes people feel too dazzling. Perhaps it is the previous stock price of Zhuoshengwei that brought illusory illusions to primary market investment, and a large amount of hot money poured in, giving birth to many low-end duplicate RF chip companies. Companies that did not tie the line with RF chips before have also joined in doing RF chips, taking advantage of hot spots and financing more.
The calmness of capital may also be a good thing. Let the disorderly domestic chip entrepreneurship return to rationality, and let the disorderly market competition return to normal.
Competition has intensified
I support Weijie Chuangxin, not out of interest, not out of feelings. As the jewel in the crown of analog chips, RF front-end chips are highly difficult in technology and have a long research and development time, especially RF PA technology, which has been monopolized by foreign countries for a long time.
China's RF front-end chip is in the research and development of talents is almost blank, capital is not optimistic about the difficult dilemma step by step, becoming the best model of domestic chips.
Through market research, the RF PA procurement data of the top ten domestic mobile phone customers was collected, which is not necessarily accurate, but has reference significance.
In 2021, the top ten domestic mobile phone clients PAs procurement amount of nearly 20 billion yuan, of which Weijie Chuangxin is about 3 billion yuan, the market share is 15%, and the market share of foreign manufacturers is about 70%.
Huizhiwei, Onruiwei, Zhuoshengwei, Ruishi Chuangxin and Feijun Technology together account for 15% of the market. The domestic PA market share is 30%, and the localization rate in the chip industry is very high.
The first five in the figure below are domestic brand mobile phone companies, and the next five are domestic ODM mobile phone companies.
Among domestic brand mobile phone companies, the highest RF PA domestic production rate reached 73%, and the lowest was 25%. The localization rate of RF PA of domestic ODM mobile phone companies is more than 80% on average.
The reason for this phenomenon is that brand mobile phone companies mainly do high-end mobile phones, mainly using Sub-3GHz PAMiD and UHB L-PAMiF; ODM mobile phone companies basically use Phase2 PA, Sub-3GHz Phase5N discrete scheme and UHB L-PAMiF.
For ODM mobile phone companies, it is possible to achieve 100% localization of RF PA, but because the Qualcomm platform bundles its own UHB L-PAMiF, it can be said that the RF PA domestic production rate of ODM mobile phone companies has no space.
Remarks: Proportion of RF PA localization in 2021
In 2022, the market share of domestic PA has the opportunity to achieve 50%. Dating back to March 2020, oppo K7x equipped with Huizhiwei 5G PA module the first batch of mobile terminals mass production, for the first time using the domestic 5G RF front-end integrated transceiver module L-PAMiF, covering the 5G UHB new frequency band n77/78/79 frequency band, and then Weijie Chuangxin to keep up.
By 2021, Weijie Chuangxin and Huizhiwei will also launch the n77/78 1T2R L-PAMiF transceiver module chip applied to the 5G UHB single-frequency solution, which is a universal RF module for 5G mobile phones, with a wide range of applications, covering high-end and low-end 5G mobile phones. It will start to be promoted in the second half of 2021 and will start in 2022.
It can be seen that the domestic RF PA competition has intensified, and there will be two scenarios in market competition: domestic substitution and substitution of domestic production.
In the brand mobile phone client, RF PA is a domestic alternative, first replace the L-PAMiF transceiver module chip of foreign manufacturers, in the next two years, domestic Sub-3GHz PAMiD will be launched, and will begin a new round of domestic substitution.
In the ODM mobile phone client, RF PA is an alternative to domestic production, replacing the domestic 4G LTE Phase2 PA and Sub-3GHz Phase5N discrete scheme. Later, as more companies launch L-PAMiF, it will be domestic L-PAMiF to replace domestic L-PAMiF.
In the next two years, whether it is between domestic and foreign RF manufacturers, or between domestic and domestic RF manufacturers, it is a competition between you and me.
With the growth of performance, Weijie Chuangxin will achieve profitability in 2022. Occupying the head customer, compared with domestic manufacturers, the product market price is the highest, the cost of the supply chain is the lowest, if the only shortcut core can not be profitable, other domestic RF companies are more difficult to talk about profitability.
The pattern is initially determined
The ideal is very full, the reality is very bone. Last year, the market value of Zhuosheng Micro was as high as more than 150 billion, and now it is less than 70 billion, such a big gap, too hurt the shareholders.
No matter how capital plays, we must keep our original intention, do a good job of chips, do a good job of chips, and dare to compare with foreign chip manufacturers. Chip is inseparable from capital, but also can not only follow the capital, to follow the market, follow the customer, follow the technology. Say a word over and over again, do valuable chips, do valuable companies.
In fact, with the listing of Weijie Chuangxin, the pattern of domestic RF PA is initially determined, and PAMiD and L-PAMiF determine the pattern of domestic RF PA.
The domestic PA manufacturers that have mass-produced L-PAMiF include Weijie Chuangxin, Huizhiwei, Onry Micro and Zhuoshengwei.
Weijie Chuangxin showed in the prospectus that RF power amplifier module products have been applied to smart phone brand companies such as Xiaomi, OPPO, vivo and leading ODM manufacturers such as Huaqin Communications, Longqi Technology and Wingtech Technology.
In addition to being used in Samsung mobile phones, Huizhiwei's L-PAMiF is also applied to OPPO, and in the recently listed mobile phone vivo Y10, Huizhiwei was first applied to vivo smartphones. The three major ODM mobile phone manufacturers also use Huizhi micro RF front-end modules.
Joyson's L-PAMiF has also entered the brand's mobile phone customers and will become its main source of performance in the future.
As mentioned in the previous article, THE MODULARIZATION OF THE RF front-end is the future development direction of the RF front-end, and PAMiD is a technological peak for the domestic RF front-end to be strong, PAMiD determines the future of the RF front-end, and also determines the future of domestic mobile phone PA companies.
PAMiD will become a watershed for domestic RF companies, some companies will stop here, and some companies will cross this technological peak to become stronger. PAMiD became the last chance for domestic RF PA companies.
However, the design of Sub-3GHz PAMiD module products faces three major challenges: the design of full-module sub-circuits and strong system design capabilities, as well as mass production capabilities and miniaturized filter resources. Without a certain amount of technology accumulation, without a certain scale of research and development, without a certain degree of customer resources and recognition, it is difficult to successfully develop PAMiD and introduce customers.
As mentioned earlier, the customers who will use PAMiD are brand mobile phone customers, and they are competing with foreign manufacturers, and the first thing to fight is not price, but performance.
The mid-to-high-end models of brand mobile phones have a certain premium, paying more attention to product performance, unless the supply chain security is threatened, and generally will not use worse performance products. Therefore, the low-price strategy does not work here, and only by making the product as good as foreign manufacturers will there be opportunities.
Once the brand mobile phone customer has imported the domestic PAMiD, especially with three domestic suppliers to choose, it is difficult to replace the domestic product later, and the product verification and replacement risk is what the brand mobile phone customer is unwilling to face. If it were not for the domestic replacement opportunities in the past two years, domestic RF chips would not have been so fast.
The reality is so cruel, the next thing is to see who first launched sub-3GHz PAMiD, the first three are effective.
Write at the end
At the time of writing this article, the mood is still very heavy, not for today's stock market, not for the future of domestic RF chips, the future of domestic RF chips is bright, and domestic RF chips have risen. Only for the cruelty of chip entrepreneurship, many entrepreneurs will face the dismal in the near future.
For Weijie Chuangxin, for China's RF chip industry, I am full of confidence, confidence is more precious than gold.