Zhang Fan fell from the king of domestic chips to the altar and is taking Huiding Technology (603160. SH) to nurture new transformations.
In 2022, Zhang Fan, chairman and CEO of Huiting Technology, ranked 900th in the "2022 Hurun Global Rich List" with a wealth of 24.5 billion.
It is worth mentioning that in the same list, Zhang Fan's wealth in 2021 is shown to be 35.5 billion, in 2020 it is shown to be 59 billion, and the wealth of 2 years shrinks by 34.5 billion yuan.
From IC card chips to touch chips to fingerprint chips, Zhang Fan relies on research and development innovation, converts tracks, and stands on the top of the global industry.
However, the shrinking of the mobile phone market and the intensification of industry competition, the market value of Huiting Technology fell rapidly, from 177.7 billion yuan to 25.3 billion yuan, a total evaporation of 152.4 billion yuan.
At present, Zhang Fan is taking Huiding Technology to get rid of a single mobile phone business and carry out diversified layout.
Chaodian Think Tank tried to contact Huiting Technology many times, but did not get a reply.
Twice entrepreneurship reigned supreme
Zhang Fan's success is rising in the midst of constant change.
Zhang Fan, born in 1965, was admitted to Chengdu Institute of Telecommunications Engineering (later renamed University of Electronic Science and Technology of China) in 1982, majoring in radar confrontation and having a bachelor's degree.
After graduating from university, Zhang Fan chose to stay in Chengdu and entered the Tenth Research Institute of the Ministry of Electronics Industry (now under the umbrella of China Electronics) to participate in the development of the Beidou navigation system. It was a stable and enviable job at the time.
However, Zhang Fan's entrepreneurial enthusiasm was stimulated by the spring breeze of reform and opening up. In 1993, Zhang Fan, whose heart was touched, no longer hesitated, resigned and went to the sea to join the southward gold panning camp.
In Shenzhen, Zhang Fan initially entered the Japanese Hokuriku Electric Co., Ltd. to engage in sales work, and his down-to-earth work attitude and outstanding performance won the appreciation of his boss.
According to public information, Zhang Fan's suggestions for product improvement were not accepted, and thus caused contradictions. In desperation, Zhang Fan decided to resign and start a business. In 1997, Zhang Fan founded Shenzhen Chengdian New Electronic Technology Co., Ltd., mainly engaged in fixed telephone business.
The initial business was that the former boss invested millions of yuan to help him solve his financial difficulties. With the support of funds, Zhang Fan promoted the technological progress of the fixed-line business and won half of the domestic market.
In 2002, Zhang Fan founded his second company, which was later listed on the A-share market.
At this time, landlines began to decline, and smartphones rose. Zhang Fan led the transformation of Huiding Technology to the mobile phone and tablet touch chip industry, and launched the first 10-point touch chip in 2009 to serve Apple's iPhone.
The real success of this industrial transformation is 2010. According to legend, Zhang Fan's American partner returned to Shenzhen, and on a minibus in Hong Kong to Shenzhen, he met a long-sought MediaTek Android engineer. At this time, MediaTek is being suppressed by Qualcomm in the United States and seeking to transform to An Android solution.
It was this chance encounter that led to the cooperation between Huiding Technology and MediaTek, which invested $4 million in Huiting Technology strategically.
In 2010, MediaTek chip Android solutions shipped a large number of shipments, Huiding Technology mobile phones and tablet capacitive touch chip solutions are therefore hot sales, the market broke out, Huiting Technology relied on capacitive touch chips to earn the first bucket of gold.
After three years of explosive growth, the popularity of domestic smart phones has been basically completed, the price war of manufacturers, and the operating performance of Huiting Technology have been under pressure.
In September 2013, Apple released the first mobile phone with fingerprint recognition function - iPhone 5s, Zhang Fan was keenly aware that the field of fingerprint touch chips will be promising.
In May 2014, Huiding Technology officially entered the fingerprint recognition industry and immediately launched a fingerprint touch product prototype. Therefore, Huiding Technology is the first company in the world to launch a "fingerprint recognition chip for frontal application in Android mobile phones", which was first applied to the Meizu MX 4 Pro released in September 2014.
Huiding Technology has produced new products in the fingerprint recognition industry. In 2015, the company released a fingerprint recognition chip that supports glass covers and commercial mass production, in 2016, released Live Finger Detection, a living fingerprint detection technology for mobile terminals, and launched an off-screen optical fingerprint in 2018.
In the field of fingerprint chips, Zhang Fan has achieved great success. In 2019, the shipment of Huiding Technology's OLED optical under-screen fingerprint solution was 110 million pieces, accounting for 75% of the global market share of optical under-screen fingerprints and 57% of the global overall under-screen fingerprint market share. The global market shares of Aegis and Siliwei, which ranked second and third in the industry, were 12% and 7% respectively.
Zhang Fan has achieved the ultimate in the field of fingerprint chips, so he is called the king of domestic chips by the market. And this, Zhang Fan used for 18 years.
Huiding Technology has become the world's leading enterprise of fingerprint recognition chips, and its products are not only sold to Domestic Huawei, Xiaomi, OPPO, Vivo, Lenovo, but also to Google, HP, Samsung and other foreign companies.
The next storm
How fast it develops, how big it falls. In just one year, the market value of Huiting Technology has evaporated by 152.4 billion yuan.
In February 2021, the stock price of Huiding Technology reached a maximum of 388 yuan per share, the highest peak since its listing in 2016, and the company's market value reached 177.7 billion yuan.
Huiding Technology is also the first chip stock in the A-share market with a market value of more than 100 billion.
However, as of May 30, the latest market value of Huiding Technology was 25.33 billion yuan, the highest 55.6 yuan / share, down nearly 7 times. At the same time, Zhang Fan's wealth has also shrunk from 59 billion yuan to 24.5 billion yuan.
According to the 2021 annual report, the revenue of Huiding Technology was 5.71 billion yuan, down 14.6% year-on-year, and the net profit was 860 million yuan, down 48.2% year-on-year.
In 2022, its performance continued to decline, with revenue of 870 million yuan in the first quarter, down 38.4% year-on-year, and net profit fell by 132.3% year-on-year, with a loss of 50.512 million yuan, which is also the first loss since the listing of Huiding.
For the performance of performance, Zhang Fan is frank, the company is indeed too dependent on a single mobile phone market and individual products, optical and capacitive fingerprints have a considerable market share, especially optical fingerprints used to have a relatively high unit price and gross profit margin, but when the unit price decline caused by technological maturity and market competition, it has an impact on revenue and profits. In addition, the increase in the company's new product investment also significantly affected the performance.
In the investment of new products, Huiding can be said to spare no effort. In the case of declining revenue, in the first quarter of 2022, the R&D expense ratio of Huiting Technology has reached 39.3%.
Zhang Fan said that for growth companies, R&D investment is the most important nutrition for growth, and there will be no innovative products without R&D investment. He firmly believes in the basic law of "burying one's head in the cause and the effect will naturally become", and believes that continuous investment and effort will produce positive results.
Aware of the operational challenges brought by large items, Zhang Fan is promoting industrial transformation and transformation. As early as 2018, Zhang Fan promoted The transformation of Huiding Technology to the field of Internet of Things, mainly through mergers and acquisitions.
This year, the company acquired CommSolid, germany' leading semiconductor cellular IP provider, to enter the NB-IoT (cellular-based narrowband Internet of Things) field. In 2020, it completed the merger and acquisition of NXP VAS business, helping Huiding Technology to expand the development opportunities of these technologies in automotive and other fields.
Huiding Technology also acquired the German company Dream Chip Technologies GmbH (hereinafter referred to as DCT), which has the world's top digital circuit design capabilities and will help the company develop the automotive market.
Through the above two acquisitions, huiting technology business has also extended from the terminal field such as smart phones to the internet of things and automotive electronics. However, judging from the financial report of Huiding Technology in 2021, the role of these two acquisitions is not very large at present.
In addition to mergers and acquisitions, Huiting Technology also tried to improve the company's operations by tapping talents, and in March 2022, according to the announcement of Huiding Technology, the board of directors agreed to appoint Ms. Hu Yuhua as the president of the company, who is fully responsible for the overall operation management of the company and reports directly to Mr. Zhang Fan, chairman and CEO of the company. Previously, Huiting Technology has introduced former TI executive Xie Bing to join the board of directors as a non-independent director of the company.
In addition, Huiding Technology itself is also carrying out diversified research and development: in-ear detection + touch two-in-one solution, blood oxygen sensor, Bluetooth LE chip, active noise reduction frequency codec chip, security chip, etc.
Obviously, the new business cannot become the overall business support of Huiting Technology at present, and it cannot make up for the loss caused by the decline in the profitability of fingerprint recognition chips.
So, for the next transformation, how Zhang Fan will respond, this will be the answer for the future.
(Zhang Fan's views in this article mainly refer to Hubei Yangtze River Business Daily, Operator Finance Network, Current Affairs New Theory and other media)