Huawei phones are empty again!
This time it is the Huawei PURA 70 series, which is another masterpiece after the strong return of the Mate60 series in the second half of 2023, but it is more expected to be released in the second quarter of Huawei's folding screen mobile phone.
On April 23, Huawei officially announced the latest patent for folding screen mobile phones, which is a new "three-fold screen mobile phone" that is being secretly developed, and the structure is completely different from the current folding screen folding method with the screen folded in half.
Earlier, Huawei set a shipment target of 7 million to 10 million units in 2024, which is nearly three times higher than the 2.6 million units in 2023.
Now that the Mate 60 and Pura 70 series have been a success, Huawei's flagship phones have regained their share of the high-end market.
So why do we need to increase R&D in folding screen phones?
Because the global smartphone market as a whole is still shrinking, this is also a reality that all mobile phone manufacturers must face.
Since 2017, when global smartphone shipments reached a high point, due to the decline in economic factors and mobile phone innovation factors, the time for global mobile phone users to replace new mobile phones has been getting longer, and old mobile phones can be used immediately.
In 2023, 1.163 billion smartphones were sold globally, a decrease of 3.35%, while 272 million domestic smartphones were sold, a decrease of 4.76%, which is more than the global level.
It can be said that the current mobile phone market not only did not continue to rise, but the continuous decline in sales also made the competition of major manufacturers more intense, and the sales of Apple mobile phones also declined.
In this current situation of the smartphone market, folding screen mobile phones are an unexpected dark horse, and sales are growing against the trend.
In 2023, the domestic sales of folding mobile phones will be 6.1 million units, an increase of 69.44% over 2022, which can be said to be unique compared to the downward trend of the smartphone market.
In the global market, sales in 2023 will also reach 18 million units, an increase of 26.76% over 2022, although it is not as fast as the domestic market, but it is also a very good result.
So, what is the biggest highlight of folding phones compared to straight phones?
As long as you have seen a folding phone, I believe that you must be impressed by the fact that this kind of mobile phone can be folded in half, which is the biggest attraction of the folding phone: the hinge.
At present, U-shaped hinges and teardrop-shaped hinges are the most used, and domestic manufacturers such as Huawei mainly use teardrop-shaped hinges, and Samsung mainly uses U-shaped hinges.
On the whole, the waterdrop hinge has a lower cost, a stronger structure, and is easier to manufacture, making it the most mainstream hinge structure, and the price of folding mobile phones such as Huawei is more competitive.
So, how big is the market space for folding hinges?
First of all, compared with the maturity of the straight smartphone market, folding mobile phones are still a new thing, and they have just entered the stage of rapid sales growth.
According to the forecast of consumer electronics institutions, the global sales of folding mobile phones will reach 100 million units by 2027, accounting for 39% of the high-end mobile phone market.
Compared with the sales volume of 18 million units in 2023, the market increment space is as high as more than 5 times, and it is an emerging blue ocean market with very large market space and growth rate.
Secondly, the hinge is a new part that only came after the advent of folding phones, and it is also one of the main incremental costs of folding phones, and the proportion of value in mobile phones has increased significantly.
We compare Samsung's folding machine Galaxy Fold and Galaxy S9+, the cost of mechanical structural parts including hinges increased by 193.33%, which is the component with the largest increase in the total cost of mobile phones.
More importantly, folding mobile phones are a new variety that appeared after domestic mobile phone manufacturers stabilized the market, and almost all mobile phone manufacturers in the world are on the same starting line, and foreign manufacturers do not have many first-mover advantages.
Therefore, for domestic manufacturers, this is a good opportunity to expand their market share in high-end mobile phones, and Huawei and other domestic manufacturers have not wasted this good opportunity and have become mainstream brands in the market.
According to agency data, in 2023, Huawei will occupy 37.4% of the market share in the domestic folding mobile phone market, continuing to rank first, while OPPO, Honor, Samsung, vivo and Xiaomi are closely behind, and domestic manufacturers occupy 89% of the market share, with obvious advantages.
There are more than 64% of the existing high-end mobile phone users in China, who take folding mobile phones as the first choice for buying new mobile phones, and there is no doubt about the incremental space of folding mobile phones.
So, what are the excellent hinge parts manufacturers in China?
The hinge machining accuracy needs to reach the level of 0.01mm, and the machining technology is very important.
Judging from the current processing methods, the MIM (metal injection molding) process has become the mainstream processing process of hinges due to the overall advantages of easy design, easier mass production and lower cost.
With the continuous growth of folding mobile phone sales, the industrial chain status of domestic MIM processing enterprises Jingyan Technology, Dongmu Co., Ltd., and Tonglian Precision is also rising.
Yi'an Technology is a liquid metal supplier upstream of the hinge, but it accounts for less than 10% of the total revenue, and the growth of the segmented business has little impact on the performance.
Jingyan Technology, the company's main business is MIM parts and component products, and the revenue of MIM business will reach 1.451 billion in 2023, and the domestic market share will continue to maintain the first place.
After a large loss in net profit in 2022, the company ushered in a reversal in 2023, with a year-on-year increase of 171% in attributable net profit, mainly due to the increase in stocking by downstream customers in the third quarter of 2023, with a single-quarter net profit of up to 153 million, a significant increase of 21.83 times from the previous quarter.
The company has long-term business cooperation with major mobile phone manufacturers, especially in the hinge of folding screen mobile phones, the company's MIM products have been successfully used in Huawei, Samsung, Xiaomi, OPPO, vivo and other well-known folding mobile phone brands.
As a supplier of MIM parts for Huawei's mobile phone hinges, the company is deeply involved in the development and mass production of Huawei's new generation of folding screen mobile phone hinges, and the new machine is expected to be sold in the second quarter of this year.
The company was also selected by Xiaomi as the number one supplier of hinges for next-generation folding screen mobile phones. In the global market, the company also supplies hinged MIM parts for folding screen mobile phones for Samsung.
These partnerships demonstrate the company's expertise and market position in the field of MIM technology, and as a result, it is expected that the 2024 performance will hopefully usher in new growth after the recovery with the mass production and launch of folding phones of downstream partners.
Dongmu Co., Ltd., MIM business revenue is also in the first echelon in China, closely following the footsteps of Jingyan Technology in China, and downstream customers include well-known brands such as Apple and Huawei, and there are also prospects for growth in performance in 2024.
However, the company's MIM business will account for just over 20% of the total revenue in 2023, which will not have such a big impact on the overall performance compared to the proportion of Jingyan Technology.
On the whole, the folding screen mobile phone industry chain is a deterministic high-growth track, and the market space for these core businesses of hinges is expected to continue to expand.
The above analysis does not constitute specific investment advice. The stock market is risky, and investors need to be cautious.
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Source: Flying Whale Investment Research