Jiwei network news, recently, Huiding Technology said in an institutional survey that the overall market for smart phones will not grow significantly in the future, and it is normal to maintain the existing scale and even a slight decline. Therefore, in order to continue to grow in the mobile phone market, the company can no longer rely on a single product, we must continue to expand more new product applications in the mobile phone, and build a richer and more diversified product category.
Huiding Technology said that in addition to the field of smart phones, we have other target markets. The next decade of the car is a new growth point, the car is like a "big mobile phone", there are many common needs, we are also thinking about the existing technology upgrade to the field of automotive electronics, seize more opportunities.
In the face of different market needs, we must go hand in hand. For example, in automotive, industrial control, etc., we have accumulated a lot of technology and are developing more innovative product portfolios.
According to Huiding Technology, all IC design companies will present this cyclicality, MediaTek chairman has put forward the "generation of boxing king" theory, many companies rely on a generation of product success, showing that it is a peak, and then it is gone. This is because the technology is mature, but without new technology, there is no way to have new growth. Therefore, to get rid of cyclicality, we must have stronger technical capabilities and broader market coverage in order to build more stable long-term growth.
We have long been aware of cyclicality, the company has also experienced several peaks and troughs, and now the optical fingerprint technology is slowly becoming mature, and there are no more new products with weight, resulting in a decline in the company's performance.
However, through continuous investment in the past few years, our technical capabilities in all aspects have become stronger, and our ability to grasp opportunities in the future has also continued to become stronger, and there are now many new opportunities that are slowly becoming a reality. This is a challenge that almost all CHINESE IC design companies in, including ourselves, will face, and we are the first to respond. Our response is to move forward, to transform the current profit into a driving force for long-term growth in the future, and to continuously expand new businesses, new areas, and new markets. It's going to be a tough process, but I think it's worth it, because when the capabilities and product portfolios are built and the future is captured for new changes and new opportunities, the company will be at a completely different level of capability. Today our efforts are not just about new growth, we're also about growing at different levels and building a stronger technological foundation, which is what we're doing today and why we're confident about the future.
Regarding the field of automotive electronics, Huiting Technology said that the automotive electronics market is a very important strategic market for Huiting, and it has great potential. With the requirements of intelligent, safe and energy-saving vehicles, the number of chips used in each car is growing particularly fast, and it also brings us many new opportunities:
1) The screen of the electric vehicle may change from the previous one to 5, including the rear seat, the central control screen, etc., and the top touch chip is just suitable for this field. The company's 2021 touch chip shipments grew very rapidly, and successfully imported domestic, joint venture brands and new energy brand customers. In particular, the new generation of vehicle-grade touch chips has the characteristics of supporting large size, excellent noise immunity and rapid response, achieving full coverage from 7 to 30+ inch screens, and supporting various aspect ratio screens. Therefore, we will continue to develop more products in the field of in-vehicle touch to support customer needs.
2) In terms of audio, the company has made some breakthroughs in vehicle customers, and the audio algorithm is very competitive, especially in eliminating noise, supporting better speech recognition, and bringing better call quality to voice communications.
3) The car is like a "large mobile phone", the company can develop more and more products, such as Bluetooth chips, NFC have plans to accelerate the launch of vehicle-level products, on-board audio amplifiers are also under development, when these products continue to come out, the company will become a more influential player in the field of automotive electronics. In addition to the continuous development of vehicle-grade products, it will also strengthen the cooperation with Tier 1 machine manufacturers, which is the direction that the company has been striving for, and has made a lot of progress.
Regarding TWS SoC products, Huiting Technology pointed out that the company's TWS SoC products have two unique values: 1. it has an industry-leading low power consumption level; 2. Thanks to the company's audio algorithm, the audio quality of the product is very good.
Competition is mainly about being able to provide new value to customers or save costs for customers. Any product will have competition, we need to constantly improve the technical characteristics of the product, bring new value to customers, while in the existing product performance or function to help customers create new value, reduce costs. From the perspective of chip design companies, it is more necessary to use design capabilities to enhance competitiveness. The process can be used by anyone, the key is whether the design can reflect the differentiated value; secondly, as far as chip design is concerned, the more advanced the process of the product does not mean that the competitiveness of the product is stronger, and there are many factors in the selection of the process node, and the company will make corresponding arrangements according to the actual situation of its own products. Of course, we still have to focus on the mid-to-high-end market, which can better reflect our technical advantages.
In terms of vehicles, Huiting Technology said that the German DCT company acquired by the company has completed all integrations and is very smoothly integrated into the Huiting family. The DCT team has excellent image signal processing (ISP) research and development technology, and has a deep accumulation of technology in the fields of ultra-large-scale system-on-chip (SoCs), FPGAs, embedded software and systems, which has greatly improved the company's digital chip design capabilities and image algorithm processing capabilities. Huiding is a chip solutions company, we not only provide ICs, but also provide customers with very competitive hardware and software integration solutions. In addition to in-vehicle, the DCT team was able to help the company do many different product lines in image processing, algorithms and required products.
Huiding Technology pointed out that the company's first generation of optical sensor products, from the establishment of the project to the commercial mass production of customers, only took 17 months, reflecting the technical ability and fighting spirit of Huiding. We are very bullish on the market opportunity for optical sensors because there are still many customer needs. For example, narrow borders and even a full screen without holes, leaving very little space for light to use; how to achieve good performance in low-light environments; how to make the screen color temperature have better and more sensitive adjustments, so that the eyes feel more comfortable, etc., these are the pain points faced by mobile phone customers. The company's first generation of products has been commercialized, is currently in the second generation of product research and development, the second generation of products whether in the ambient light, color temperature, proximity sensing, will bring better performance advantages.
Regarding the gross profit margin Q1 gross margin fell by nearly 4 points, Huiding Technology said that every industry has a cycle, and there will be price increases or price reductions when the supply and demand imbalance occurs. The company has been in the industry for a long time and has established long-term, trusting cooperative relations with each cooperative manufacturer. At present, there are some price increases in the foundry, on the one hand, the company will fundamentally improve the competitiveness of products by improving its own technical capabilities; on the other hand, the company will rely on strong supply chain cost control capabilities to reduce the adverse impact of product costs. Based on the consideration of long-term strategic cooperation with customers, we did not completely pass on the price increase to customers, but jointly assumed the current market situation.
We have always had relatively high requirements for gross margins, so we want to maintain a gross margin level of about 50%, which is our long-term goal, but sometimes there will be some fluctuations with the changes in the supply chain, which we think is normal.
It is reported that touch is the longest operating product of Huiting Technology, which has been cultivated for more than ten years, and we have also accumulated a very deep technical foundation. We are very optimistic about the development prospects of touch products, we can see more and more applications of screens, mobile phones, tablets, PCs, industrial and automobiles, so we will continue to invest in the field of touch, the goal is to provide customers with a full coverage of competitive products and solutions, and according to customer needs to provide corresponding products, not only to provide IC, but also to provide module products.
Regarding the shipment volume in the second and third quarters, this year's market situation is very complicated, and it is difficult to make accurate judgments. Personally, I think that when the environment is not good, you should see positive information. Although mobile phones will not have the rapid growth of previous years, there are still new opportunities for technology and products in specific market segments. From the perspective of the company, it needs to be prepared in all aspects.
On the whole, I still have a very strong confidence in our annual performance, in response to specific changes, our biggest confidence comes from the fact that there are many new products in the stage of listing and in the stage of cooperation with customers. The essence of growth is still to have new technologies and new products.
It is reported that the shipment of health sensors of Huiding Technology continues to grow, and we are proud to increase by more than 3 times year-on-year in 2021, and have entered the top three health sensors of wrist wearable devices in the world. With the advantages of low power consumption and high integration, integrated heart rate, blood oxygen, ECG and other detection functions, health sensors will continue to grow this year and win more customers. (Proofreader/Li Zhengcao)
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