On October 23, the antenna RF sector ushered in a relatively strong market performance, as we judged some time ago, in the 5.5G era, antenna and RF industry chain is a direction worth paying attention to.
First, why focus on 5.5G at the current point in time?
On October 10, the 2023 Global Mobile Broadband Forum led by Huawei opened in Dubai, at which Ken Hu, Huawei's rotating chairman, said that Huawei is working hard to bring 5G-Advanced technology to reality and will release the industry's first 5G-A full range of product solutions. According to the planning of the International Standards Organization 3GPP, the first version of the 5.5G standard R18 will be frozen in the first half of 2024, and the industry chain is about to usher in a critical period of development and maturity.
Second, what are the key changes that 5.5G will bring?
Recently, Huawei completed a comprehensive 5G-A technology performance test. The test results show that Huawei has made major performance breakthroughs in a number of 5G-A uplink and downlink ultra-broadband technologies, and for the first time applied end-to-end cross-layer collaboration technology to 5G-A broadband real-time interaction, achieving key progress in capacity and latency.
As the second stage of 5G standard development, 5.5G will achieve more than 10 times the performance of key communication networks, achieving peak rates of 10 gigabit downlink (10Gbps), gigabit uplink (1Gbps), millisecond-level latency, and centimeter-level positioning accuracy. The upgrade and innovation of these technical indicators aims to promote the development of new fields such as RedCap IoT, passive IoT, and communication perception convergence, and 5.5G technology is expected to be widely used in scenarios such as metaverse XR, automated factories, and intelligent driving.
Third, 5.5G catalytic base station RF new requirements
Radio frequency is the abbreviation of high-frequency alternating current electromagnetic waves with frequencies between 300kHz~300GHz that can be radiated into space. RF is mainly used to realize the two essential functions of wireless communication - transmit and receive.
From a structural point of view, RF can be split into antennas, RF transceiver chips, baseband, and RF front end. The RF front end can be further split into an antenna tuner (Tuner), antenna switch (Switch), filter (Filter), power amplifier (PA), and low noise amplifier (LNA).
1. Antenna: 5.5G antenna density multiple increase
In the 5G era, the number of antenna channels used by macro base stations is 64 single-sided, and each base station usually needs to set up three-sided antennas to achieve 360-degree coverage. Compared with 5G base stations, the number of ultra-large-scale antennas in 5.5G base stations has increased to more than 192 channels, an exponential increase.
2. The amount of ceramic dielectric filter + permeability is double-liter
5G base station single-sided antennas require 64 filters, a single macro base station three-sided antenna requires 192 filters, and the number of 5.5G channels is more than 3 times that of 5G, so the demand for filters has also grown exponentially.
5.5G has higher antenna integration requirements than 5G base stations, and more components need to be integrated in a smaller size. Compared with traditional metal cavity filters, in terms of volume and weight, ceramic dielectric filter products are smaller in size and lighter in weight under the same frequency requirements, which has become one of the mainstream technical solutions for 5G base station filters, and the penetration rate is expected to be further improved.
Fourth, 5.5G core incremental links:
The first echelon: antenna (for base station RF), filter, high-frequency high-speed PCB board, telecom optical module.
The second echelon: base station RF PA module (including LNA, RF switch, RF chip, base station duplexer, etc.) ), switches, connectors (including optical connectors and electrical connectors).
The overall personal ranking of RF components such as 5G filters, first of all, the conclusion: Dafu Technology = Wuhan Fangu> Chunxing Seiko > Canqin Technology
1) Canqin Technology:
The core supplier of domestic 5G RF filters, endorsed by Huawei Hubble (shareholding ratio of 3.44%).
The company began to start the research and development of dielectric waveguide filters in 2012, and successfully realized the mass production of dielectric waveguide filters for 5G base stations in 2018, and has become an important RF device supplier in the upstream of the global communication industry chain, and has established good business cooperation with communication equipment manufacturers such as Huawei, CommScope, Qualcomm, China Xinke, Nokia, etc., and has become a high-quality supplier of leading enterprises at home and abroad.
The company's latest ceramic dielectric filter can be widely used in various application scenarios in the sub-6GHz frequency band, including 4G, 5G, 5.5G and other FDD architecture communication networks, further broadening the company's market share of filters for base stations; The company's HTCC related product line is gradually enriched, and a variety of ceramic substrates, tube shells and other products in semiconductors, new energy, wireless communications and other fields of customers began to send samples, and made phased progress.
Disadvantages, compared with FY2020, 21E/22E/23H1, including turnover and profit, declined rapidly for unknown reasons, and gross profit decreased significantly.
Suspected of being preconceived, it followed up by mainstream filter manufacturers in the market, and fell into the downside in the subsequent market competition.
22E, gross margin of 24%, down about 10% from 34% in 21E, far from about 40% in 20E and about 60% in 19E.
It is expected that when the 5.5G construction begins, the filter field is expected to usher in a rise in volume and price, and the gross profit is expected to rise to more than 30%.
2) Dafu Technology:
Huawei's core antenna supplier, the company has the ability to provide customers with "metal cavity + metal resonant rod", "metal cavity + dielectric resonant rod", "dielectric waveguide" and other 5G filter products, most of the 5G filter products have begun to supply, high-end dielectric filter is in the climbing stage.
Filter products accounted for nearly 70% of revenue. It is expected that after the stability of the annual revenue of RF products will be 2 billion, the gross margin will be 22%~25%, and the gross profit will be 4.4~500 million.
As one of Huawei's core suppliers, the volume and price of RF products continue to rise, suspected of seizing the market share of Canqin Technology.
It is expected that if the construction of 5.5G meets expectations, the service will usher in a double increase. The overall RF business is expected to increase to 30~4 billion revenue, the gross profit margin will rise to 25%~30%, and the overall gross profit will contribute 7.5~1.2 billion. (Core Benefits)
3) Wuhan Fangu:
One of the core suppliers of RF devices for base stations, engaged in the research and development of RF devices and RF subsystems. Filter products accounted for nearly 20% of revenue, and duplexers accounted for more than 70% of revenue.
Duplexer products continue to increase, gross profit remains stable, filter product revenue and gross profit have shrunk in 23 years, one of the leading domestic duplexer enterprises.
It is expected that after the start of 5.5G construction and upgrading, the two core services are expected to achieve a rise in volume and price, and the overall service volume will increase by 50%.
4) Chunxing Seiko:
In 16 years, it began to reserve 5G technology, conduct research and development of 5G filters and other devices, and enter Huawei's supply chain, and carry out business transformation in the vicinity of 20 years.
The RF related business continued to increase, the filter was mainly metal filter, the technical content was slightly lower, the overall RF business including filters accounted for 34% of the revenue in 22 years, the overall revenue was about 900 million, and the gross margin reached 25%.
It is expected that the current development model will continue in the future, and the dual resonance of precision devices + 5G RF devices.
5) Sobede (market capitalization 4.2 billion)
Huawei antenna supplier, supplying Huawei macro base stations (antenna oscillator OEM. ), and as the core supplier of Huawei Mate series mobile phone antennas.
China's leading 5G wireless communication terminal antenna R & D manufacturer. The antenna business accounted for about 70%, which is relatively high.
The revenue of antenna business was 1.012 billion in 22E, with a gross profit of 26%, and 690 million in 23H1, with an overall gross margin of 27%.
Gross profit and revenue accounted for a high proportion, considering Huawei's leading position in antennas, the company, as Huawei's antenna oscillator foundry, 5.5G core revenue, is expected to achieve double growth in related businesses.
6) Tongyu Communication (market capitalization 6.6 billion)
The company is a company that has been focusing on the research and development, production and sales of base station antennas, microwave antennas and radio frequency devices in mobile communication systems.
The company is a supplier of radio frequency devices and antennas to Huawei. The main areas of cooperation are in the fields of microblog antenna, base station antenna, timing positioning antenna and other fields (very similar to Shuobed).
The company's Sun company is committed to the research and development of various optical modules, 400G small-scale mass production, 800G under research.
22E, base station antenna revenue 7.37, gross margin 21.34%; Microwave antenna 210 million, gross profit 31.24%; RF device revenue of 201 million, billion gross profit 8.69%; The optical module is 191 million, and the gross profit margin is 26.72%.
23H1, base station antenna 293 million, gross margin 24.34%; RF devices 104 million, gross margin -8.66%; Microwave antenna 084 million, gross margin 31.65%; The optical module is 24 million, and the gross profit margin is 11.35%.
The overall business gross profit is similar to that of Shuobed, which is also bound to Huawei, one of the core beneficiaries of 5.5G.
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