Xiaomi, OPPO, and vivo are behind the crazy rolling images: lens profits have plummeted by 5%, and the supply chain competition is fierce
In the just-ended year of 2023, with the Snapdragon 8 Gen3 released by Qualcomm at the end of the year and the latest generation SoC Dimensity 9300 launched by MediaTek, the smartphone market has once again set off a wave of competition.
vivo has launched the X100 Pro, which is known as the "full flagship", with a 1-inch sensor on its main camera, and is supported by the APO telephoto technology of the optical giant Zeiss. In addition, the phone is also equipped with a 6nm self-developed image chip, which supports telephoto sunset, telephoto macro and telephoto night scene shooting. Not to be outdone, Oppo has launched the Find X7 Ultra, which is equipped with dual periscope telephoto and a 1-inch sensor, supports Xpan wide-format mode, and features Hasselblad Master Shadows. Xiaomi phones have worked closely with legendary imaging manufacturer Leica to bring two Leica color and AI imaging technologies, from the flagship Ultra series to the foldable screen MIX Fold, with the camera function as its main selling point.
Image source: vivo official website
As can be seen from the press conference and the details page of the official website, imaging has become the core focus of the smartphone field in 2023-2024, and its position is irreplaceable compared with large models, computing power and games. The combination of a large bottom sensor and a telephoto lens is gradually becoming the standard equipment of flagship mobile phones. Behind this trend, it is not only due to the needs of consumers and the development of the market, but also inseparable from the increasingly fierce competition between the industrial chain.
Domestic CMOS upper-level flagship mobile phone
The imaging components of smartphones mainly include image sensors, lenses, modules, and drive motors. In the cost composition, the image sensor accounts for about 50% of the total cost, while the lens accounts for about 20%.
For a long time, the image sensor market has shown a relatively concentrated trend. According to a research report by Counterpoint Research, Sony and Samsung together accounted for more than 80% of the smartphone CMOS image sensor market throughout 2022. AFTER SONY AND SAMSUNG, OMNIVISION TECHNOLOGY FROM CHINA HAS A MARKET SHARE OF ABOUT 7%.
In the second half of 2023, with the advancement of the trend of autonomy, more and more domestic flagship smartphones have begun to adopt OmniVision's CMOS sensors. For example, the Xiaomi 14 series debuted with the "Light and Shadow Hunter 900" sensor, which has a CMOS size of 1/1.31 inch and up to 50 million pixels. The Redmi K70 Pro is equipped with the "Light and Shadow Hunter 800" image main camera sensor for the first time, with a size of 1/1.55 inches and also 50 million pixels. It is reported that the Light and Shadow Hunter series sensors are customized products by OmniVision Technology according to Xiaomi's requirements, of which the Light and Shadow Hunter 900 is based on the public version of OV50H.
In addition, the iQOO 12 series is also equipped with OmniVision's OV50H sensor, while the Honor Magic 6 uses OmniVision's OV50K sensor. It is reported that the Huawei P70 series will also use the OV50H sensor. With the continuous improvement of the performance of domestic CMOS, they are gradually getting rid of the label that has long been regarded as a low-end product.
It is worth mentioning that the continuous progress of OmniVision Technology in the field of smartphone imaging is largely due to the improvement of its business in the automotive field. According to research firm Yole, Level 4 and Level 5 autonomous vehicles need to have at least eight to 11 cameras. As a leading brand in the field of automotive CIS, OmniVision Technology has a market share of about 26% in 2022. This cross-domain scale effect advantage has strongly promoted the technological development of OmniVision Technology in the field of smart phones.
However, it should be pointed out that the smartphone market is still in a low period at the moment. According to IDC data, global smartphone shipments in 2023 will decline by 3.2% year-on-year to 1.17 billion units, a new low in nearly 10 years.
Counterpoint expects global smartphone CIS shipments to decline 10% year-over-year in 2023 due to a combination of factors such as weak demand, inventory adjustments, and a decrease in the number of cameras per smartphone.
Multi-camera and telephoto lenses have rapidly become popular, and periscopes have become the new mainstream
If in the field of sensors, the rise of Haowei has brought us a glimmer of hope, then in terms of lens technology, after getting rid of the shackles of semiconductor technology, the potential shown by domestic brands is immeasurable.
In recent years, an important trend in the smartphone industry has been the competition for the number of cameras. From the initial single camera to today's 3-4 camera, the camera function on smartphones is becoming more and more important.
According to Counterpoint, the average number of cameras per smartphone in 2015 was 2, but in 2020 it has increased to 3.7. It is expected that by 2023, more than 90% of mobile phones will be equipped with multiple rear cameras. The teardown report also shows that the iPhone 4's optical components cost just $14, while the iPhone 12 Pro Max costs a whopping $96.
At present, the technology that is attracting attention in the field of lenses is undoubtedly the periscope telephoto lens. It uses reflections to shoot at long distances in a compact body, giving users an unprecedented experience.
Technically, the main challenge for periscope telephoto is the loss of light during reflection. In general, the more reflections there are, the greater the light loss. At present, there are two main technical solutions for periscope cameras: single prism and double prism. The bi-prism scheme can achieve a longer focal length, but its overall mechanical structure is highly complex, which also leads to a significant increase in the complexity of the module and testing.
In terms of cost, the periscope camera module is limited by the scale effect, and the cost is still high. Samsung's Galaxy S20 Ultra, for example, costs $107.5 for a camera module with a periscope telephoto lens, which is almost double the $56.5 cost of the Galaxy S10 with a regular telephoto lens.
Xiaomi 14 Pro image module, taken by Titanium Media App
At the industry level, smartphones are the largest segment of optical lenses, accounting for 58.3% of the market share, followed by the security and camera markets, with 11.3% and 11.1% of the market share, respectively. In this field, Sunny Optical Technology, Qiu Titanium Technology, OFILM and other enterprises have a representative position.
On January 30, 2024, Sunny Optical Technology (02382. HK) issued a profit warning announcement, expecting its net profit in 2023 to be between 1.084 billion yuan and 1.204 billion yuan, compared with 2.408 billion yuan in the same period in 2022, a decrease of about 50% to 55%. Similarly, Q Technology (01478. HK) has also issued a profit warning announcement, expecting its net profit in 2023 to decrease by 35% to 45% year-on-year.
The board of directors of Sunny Optical Technology pointed out that the expected decrease is mainly due to the impact of multiple factors such as the slow recovery of China's economy and global economic uncertainty in 2023, resulting in the continued weakness of the global smartphone market demand and the increasingly fierce competition in the industry. At the same time, the trend of downgrading the configuration of smartphone cameras continues to put pressure on the average selling price and gross profit margin of the company's mobile phone lenses and mobile phone camera modules.
From a production point of view, in 2023, Sunny Optical Technology's mobile phone lens shipments will reach 1.171 billion pieces, a slight decrease of 1.8% year-on-year, while the shipment of mobile phone camera modules will be 567 million pieces, a year-on-year increase of 9.8%. Although shipments remained generally stable, intensified competition in the industry was the main reason for the significant decline in product margins.
At present, it seems that with the fading of the gaming mobile phone boom and the immaturity of the new wave of artificial intelligence technology, there is still a lot of room for development in the field of imaging for smartphones. From the perspective of photography, images have always evolved with the improvement of aesthetic concepts. On the basis that consumers have become accustomed to clear photos, their pursuit of color, composition and aesthetics is also increasing, which puts higher demands on smartphone manufacturers.
From a technical point of view, the large models of the future will have a positive impact on the imagery. For example, OPPO's smart erase function based on large models was widely praised during the recent Spring Festival. With the continuous emergence of new applications in the future, the space for innovation in imaging of smartphones will be broader.
In addition, MWC, the largest annual event for the communications industry, will be held in Barcelona on February 26. Every year, it attracts technology giants and innovative companies from all over the world to participate in the exhibition, showcasing the cutting-edge technology of smartphones in different dimensions such as communication, imaging and design.
At that time, Titanium Media will also send a reporting team to the scene in person, and send back the on-site report in various forms such as text, pictures and videos as soon as possible, revealing which technologies will become a new vane in the future development of the mobile phone industry, so stay tuned!