When the smartphone market is sluggish: what are the odds of the industry chain manufacturers laying out "new business"?

Since the beginning of this year, the sluggish market performance of the entire consumer electronics industry has become an indisputable fact.

Combined with the industry chain news, the recent Apple has successively cut the output orders of iPhone SE and AirPods, and the major domestic Android mobile phone brands have cut about 170 million orders this year, accounting for about 20% of the original shipment plan in 2022.

Following the news of cutting orders in the mobile phone and TWS headset industry chain, a new wave of cutting orders has also spread to the PC industry. Jibang Consulting revised down its original shipment forecast of 238 million units of laptops to 225 million units, an annual decrease of 8%, and estimated that the shipment of laptops (including Chromebooks) in the second quarter of 2022 was about 55.1 million units, a quarter-on-quarter decrease of 0.7%.

At the moment when the performance of the consumer electronics industry market is weak, how to ensure the stability of the operation of industrial chain manufacturers? Further, how to develop and stand on the second growth curve has also become a new issue facing consumer electronics companies.

The "Second Spring" of Consumer Electronics Manufacturers

Multiple challenges such as lack of cores and the continuous superposition of the Russian-Ukrainian war and the counterattack of the epidemic have led to a decline in downstream demand, especially in the fields of smart phones, TWS headphones, laptops, and televisions. How to develop and stand on the second growth curve has become a new issue facing consumer electronics companies.

"In the chaotic mountains and gravel of time, the scenery on both sides of the river is not important, what matters is whether the stream will flow to the wilderness or the desert." In fact, some enterprises in the industrial chain have already begun the epitaxial layout of the second or even third business. In recent years, consumer electronics companies have expanded to new business areas such as smart wearables, smart homes, VR, new energy vehicles, digital energy, photovoltaics, etc., which confirms from the side that the frequent actions of enterprises to make new growth poles, and in the environment of consumer electronics, the trend of manufacturers expanding into new business areas is likely to intensify.

The first to bear the brunt is a large number of fruit chain manufacturers who make a lot of money from apples.

Following the announcement of entering the field of new energy vehicles and photovoltaics, in April this year, lens technology, the leader of glass cover panels, issued an announcement that it intends to add 3.9 billion yuan to the construction project of smart wearable and touch function panels, and indicates that the smart wearable business will become an important business growth point for the company in the future. At present, in the field of smart wear, its smart watch and smart bracelet market is growing steadily.

The 2020 fixed fundraising plan of crystal optoelectronics, the leader of the filter, also shows that in addition to the smart phone business, the company's products are also gradually penetrating into smart watches, wearable devices, automotive electronics, biometrics and other fields.

While the meta-universe concept continues to be hot, Goertek is also targeting the VR/AR track. In fact, as early as 2012, Goertek began to lay out VR, and in 2016, it entered the AR field, and so far in the past ten years, it has completed the research and development and mass production of a variety of products with customers such as Meta, Sony, and Lenovo. In addition, in the "4+4+N" development strategy, Goertek also pointed out that it is actively expanding some new business directions, including automotive electronics, haptics and so on.

While deeply binding with Apple, Luxshare Precision continues to carry out epitaxial expansion to achieve horizontal expansion of the business. In the past few years, Luxshare Precision has gradually entered the consumer electronics industry chain, communication field, automotive electronics field, wearable field, acoustic field, camera module and other fields from the connector business. In February this year, it announced that it planned to raise no more than 13.5 billion yuan, of which 3.5 billion yuan was used for the construction of smart wearable device production lines, 1.5 billion yuan was invested in the construction of new energy vehicle high-voltage connection system product production lines, and 500 million yuan was invested in the construction of intelligent vehicle connection system product production lines, all of which reflected its expansion pace in smart wearables, new energy vehicles and other fields.

In addition, AAC Technology has extended to the field of lens modules/3D glass, and has expanded its business in non-smartphone terminals, such as tablets, notebook computers and other acoustic components, and pointed out that the proportion of the above business in 2022 will increase from less than 1% in 2021 to more than 5%. At the same time, it has also invested in the field of lidar and strategic cooperation to expand its business into the VR/AR field.

Not only fruit chain manufacturers, but also the pace of expansion of enterprises in the field of consumer electronics in the above new areas is also accelerating.

After experiencing the pain of "off-chain", while consolidating the core optical business, OFILM also actively lays out optical optoelectronic businesses such as smart cars, VR/AR, industrial, medical, and action cameras, and strives to increase the proportion of revenue in the above businesses and create a new growth momentum for the company.

Following the acquisition of Nexperia and the targeting of the automotive semiconductor track, Wingtech Technology has recently won another 5 billion yuan smart home project, which has officially begun mass production and achieved normal shipments. It can be seen that Wingtech Technology is trying to expand from the traditional mobile phone ODM business to tablets, laptops, IoT, servers, automotive electronics and other fields.

RF front-end chip manufacturers said that they will further expand the application field of Bluetooth low energy microcontroller products such as smart wearables and smart homes, and further promote the marketization process of products in the field of Internet of Things.

The dividends of the development of the new track continue to be released

It is true that consumer electronics manufacturers have strong industrial advantages in expanding into other fields, but the continuous layout of the above-mentioned manufacturers for new businesses, in addition to showing the determination of manufacturers to develop the second growth curve, also reflects the development dividends of new tracks in related industries from the side.

IDC's latest statistics show that in 2021, the global shipment of wearable devices (smart watches, smart wristbands, wireless headphones, etc.) has reached 534 million units, an increase of 20% over 445 million units in 2020, of which smart watches account for 23.97%, and it is expected that the global shipment of smart wearable devices will reach 632 million units in 2024.

At the same time, AR/VR headsets will reach double-digit growth by 2026 in 2022, when global shipments of VR/AR headsets will exceed 50 million units, with a compound annual growth rate (CAGR) of 35.1%.

The market space of the new energy automobile industry is even more unstoppable, clean Technica data, global new energy vehicles (passenger cars) sales reached nearly 6.5 million in 2021, a sharp increase of 108% compared with 2020. It is predicted that global new energy vehicle sales are expected to reach 10 million units in 2022, and the market share is expected to exceed double digits for the first time.

Turning their attention to terminal brand manufacturers, Huawei and Xiaomi began to lay out the smart wearable field at almost the same time, but Xiaomi is a low-end to high-end development, and Huawei is an all-round coordinated development.

Let's start with Xiaomi, whose first smart wearable product, the Xiaomi bracelet, captured the first consumers at a price of 79 yuan, and since then the product has been updated all the way to the 6th generation. In addition to making efforts to smart watches and TWS headset products in the field of smart wear, Xiaomi has also built an AIOT ecological chain with mobile phones as the core, and has successively expanded to smart homes, travel, daily necessities and other fields.

Looking at Huawei, the 2021 annual report shows that the revenue of Huawei's two main businesses, carrier business and consumer business, has declined, but the sales revenue of the enterprise business has reached 102.4 billion yuan, especially the revenue of emerging businesses has increased by more than 30% year-on-year. In terms of subdivision products, although the revenue of its three business areas of mobile phones, tablets and PCs has declined, at the same time, several types of businesses such as wearable devices and large screens have experienced very obvious growth, with a growth rate of more than 30%. In addition, new businesses such as HUAWEI CLOUD, smart photovoltaics, coal, digital energy, and automotive terminals are also expected to become important growth points for Huawei.

In addition, oppo, vivo and other domestic head mobile phone manufacturers in addition to the Expansion of IoT scenarios, but also in the car-machine mutual integration and other automotive business efforts. Among them, OPPO officially launched the OPPO Zhixing solution in 2021, and there are currently more than 70 partners in the program. Vivo disclosed a patent related to autonomous driving in April this year.

For consumer electronics manufacturers expanding into new business areas, although the development of the "second growth curve" has the opportunity to bring new growth points to performance, at the moment when the industry is cold, as a smart phone manufacturer still shoulders a heavy responsibility, while ensuring the stability of its own operation, how to promote the transaction vitality of the smart phone market is also particularly important.

(Proofreading/Xiao wei)