In-depth study on electronics industry in 2022

Semiconductor: terminal innovation, chip flowers bloom

1 terminal innovation + domestic substitution, the domestic semiconductor demand is growing steadily

1.1 Terminal innovation: electric vehicle/photovoltaic /5G/ artificial intelligence /VRAR, etc., driving the growth of semiconductor demand

The global semiconductor industry continues to grow and the ceiling continues to move up. Global semiconductor sales: us $142.2 billion in 2002, US $291.6 billion in 2012, US $440.4 billion in 2020, US $553 billion in 2021; Historically, PCS and smartphones have been the two core engines of semiconductor growth; The current terminal innovation is continuous: intelligent electrification of vehicles, photovoltaic wind energy storage, 5G and Internet of Things, AI/ cloud computing, ARVR, etc., promoting the continuous growth of semiconductor demand.

1.2 The trend of industrial migration to China is significant, but the overall trade deficit is still large

China's annual trade deficit in the IC industry remains large: According to Chinese customs statistics, China imported $304 billion of integrated circuits in 2019, down -2.2 percent year-on-year. China's integrated circuit exports amounted to us $101.5 billion, up 20.1% year on year. The overall trade deficit narrowed to $202.5 billion, down 10.94 percent from a year earlier, but still about twice the value of exports. In recent years, although the export amount of Integrated circuits in China increases with the increase of import amount, the overall trade deficit is still very large.

1.3 The localization rate is low, and the core areas are still controlled by others

According to data from IC Insights, the self-sufficiency rate of domestic semiconductors has been steadily improving from 2012 to 2019, reaching about 17% in 2019. Referring to "Made in China 2025", the target is to achieve 50% localization in 2025, which means that China needs assets to produce at least $100 billion of products by itself. But now China can only provide about $20 billion of products, which is more than 5 times the replacement space in 2019. At the same time, China still has a long way to go to achieve its goal of "Made in China 2025".

Power semiconductor: the core semiconductor component of carbon neutralization

2.1 The overall growth of the power semiconductor industry is steady and the periodicity is relatively small

Power semiconductor is the core of electric energy conversion and circuit control in electronic devices, mainly used to change voltage and frequency rate, DC ac conversion and so on in electronic devices. The power half conductor is subdivided into power devices (one of the discrete components) and power ics (one of the integrated circuits). Ideally, perfect converters have no voltage loss when they are turned on and no power loss when they are turned on and off, because the goal of products and technological innovations in the field of power semiconductors is to improve the efficiency of energy conversion.

2.2 There are many power semiconductor products, IGBT is a typical product in the new generation

According to the statistics of Yole et al., about 50% of the global power semiconductors are power ICS, and the rest are power discrete devices. In power discrete device sales in 2017, MOSFET accounted for the highest proportion, accounting for about 31%, followed by diode/rectifier bridge accounted for about 29%, thyristor and BJT and other discrete devices accounted for about 21%, IGBT accounted for 19%, but its compound growth rate is the fastest in all products.

2.3IGBT products update slowly and the price is stable

From the 1980s to now, IGBT chip has undergone 6 generations of upgrades, from plane through type (PT) to groove type electric field-cutoff type (FS-Trench), chip area, process line width, on-state saturation pressure drop, off time, power loss and other indicators have undergone continuous optimization. The off-state voltage also increased from 600V to more than 6500V.

2.4IGBT industry driving factors are clear, the ceiling moving up driving force is strong

IGBT is widely used in industrial control and automation, new energy vehicles, motor energy saving, solar power generation, wind power generation and many other fields. It is used to improve the efficiency of power conversion, transmission and control in various circuits, among which the driving system in new energy vehicles is the most typical application.

2.5 Domestic substitution space is broad, and the growth certainty of leading power companies is strong

There is plenty of room for homegrown alternatives. At present, the domestic IGBT module into the global top 10 only Star half guide, but also only accounts for less than 5% of the global IGBT module market share, due to IGBT downstream application of new energy vehicles, photovoltaic, wind power and other emerging fields, China's voice in the world is higher than the traditional fuel vehicle field and industrial control field in the past, Therefore, more than half of the IGBT incremental demand is in China. In the next few years, the proportion of IGBT market demand in China will increase from no more than 35% in 2019 to 50% or above in 2025, creating good conditions for China's IGBT manufacturers to enhance their share and competitiveness. Domestic IGBT manufacturers market share and business volume promotion potential is very large.

3 analog IC: steady growth, leading share is constantly improving

3.1 Analog IC has excellent business model and high industry barrier

Integrated circuits can be divided into analog integrated circuits and digital integrated circuits by their functions. Analog integrated circuit mainly refers to the integrated circuit used to generate, amplify and process continuous functional analog signals (such as sound, light, temperature, etc.); Digital integrated circuit An integrated circuit that performs arithmetic and logical operations on discrete digital signals, such as binary code represented by two logical levels of 0 and 1.

3.2 Analog IC has excellent business model and high industry barrier

Analog chip technology barrier is high, so the rate of return is high: analog chip industry gross margin of about 50%, greater than the gross margin of most industries. The industry leader Texas Instruments' gross margin has been rising steadily for 15 years, averaging around 60%. Compared with digital chip, analog chip products require low distortion, low power consumption and high reliability. Compared with digital chip aided design software, analog chip design requires designers with rich experience. Therefore, analog chip barriers are higher, the added value of the product is high, the overall gross margin is high.

3.3 The localization rate is extremely low, and the leading market share in China has a huge space for improvement

The competition pattern in China's market is relatively scattered, with the top 5 companies accounting for about 35%, and the other companies accounting for less than 5%. The top five companies in the global market account for about 78% of the total market concentration. By contrast, 65% of the Chinese domestic market is occupied by a large number of smaller companies, so there is no obvious monopoly phenomenon. With a market share of less than 1%, Seropump has great potential for future development.

4 FPGA: high prosperity and high barriers, domestic manufacturers in many fields strive to catch up

4.1FPGA: programmable chip with flexible architecture, parallelism and low time ductility

FPGA chip belongs to logic chip category. Logic chips can be divided into four types of chips according to their functions: general processor chips (including central processing chip CPU, graphics processing chip GPU, digital signal processing chip DSP, etc.), Memory chips, special integrated circuit chips (ASIC) and field programmable logic array chips (FPGA).

4.2 Unique advantages to expand the demand space and increase the domestic and foreign markets simultaneously

China's market is growing faster than the rest of the world, with a compound annual growth rate of 23.1% over the next five years. China's FPGA market grew from about 6.55 billion yuan in 2016 to about 15.03 billion yuan in 2020, with a compound annual growth rate of about 23.1%. With the further acceleration of home-made substitution process, it is estimated that the market size of FPGA in China will reach about 33.22 billion yuan by 2025.

4.3 Downstream application multi-point blossom: growth analysis of FPGA subdivision field

FPGA is widely applied downstream, and 5G+AI+ automotive electronics leads the growth of the industry. Thanks to the advantages of HIGH flexibility and extensibility of FPGA, the downstream application of FPGA is very broad, including network communication, consumer electronics, data center, automotive electronics, artificial intelligence and other fields. At present, with the rapid penetration of 5G communication, the vigorous development of artificial intelligence and the continuous strengthening of the trend of automotive intelligence, it is expected that the demand for FPGA in communication, AI and automotive electronics will continue to increase in the future, and the market size is expected to continue to benefit.

4.4 Application of FPGA chip in network communication and 5G

Network communication field is one of the main application markets of FPGA chips. According to Frost&Sullivan data, the sales of FPGA chips applied in this field in China will reach 6.21 billion yuan in 2020, accounting for 41.3% of China's FPGA chip market share. The compound annual growth rate from 2021 to 2025 will reach 17.5%.

4.5 Application of FPGA chip in industry and data center

The industrial field is one of the main application markets of FPGA chip. FPGA core chip is widely used in the industrial field. It is widely used in video processing, image processing, CNC machine tools and other fields to realize signal control and operation acceleration. With the development of intelligent and automation technology, the industrial field is gradually shifting from human resources as the core elements to automation as the core elements of intelligent unmanned factories.

4.6 Application of FPGA in automotive intelligence and artificial intelligence

FPGA chip can be used to realize the signal bridge of multiple image sensors, 3D annular video fusion, reversing assisted video, driving assisted video and other functions. In the field of assisted driving and automatic driving, FPGA chip can be used to realize machine vision and target detection.

4.7 Competition pattern: foreign absolute monopoly, domestic leading companies catch up

FPGA chip started earlier abroad, deep technology accumulation, highly monopolized market. According to the statistics of Frost&Sullivan, over 80% of the market share of FPGA chips in China was occupied by foreign companies in 2019. The top three suppliers were celins, Intel and lettis, with shipments of 52 million, 36 million and 33 million chips respectively. Accounting for 36.6%, 25.3% and 23.2%, domestic manufacturer Anlu Technology ranked the fourth, accounting for only 6%. In terms of sales volume, the market presents a duopoly form, in 2019, The combined market share of Silas and Intel reached 91.1%, Anlu Technology ranked fourth, accounting for 0.9%, ranking first among domestic manufacturers.

Intelligent car: electric intelligent trend is clear, parts welcome machine

5. Electrification and intelligence drive incremental demand

Electrification of vehicles: that is, electric energy is used as energy supply and motor is used as power engine, which has the characteristics of energy saving and zero emission. At present, common BEV (battery power), HEV (oil-electric hybrid), MHEV (light hybrid), PHEV (plug-in hybrid) and REEV (extended range), etc.

Intelligent vehicle: In February 2020, the National Development and Reform Commission issued the "Intelligent Vehicle Innovation and Development Strategy", which defines the intelligent vehicle as "a new generation of vehicles with automatic driving functions by carrying advanced sensors and other devices, using artificial intelligence and other new technologies, and gradually becoming intelligent mobile space and application terminals. Intelligent vehicles are also called intelligent connected vehicles, autonomous vehicles, etc."

The electrification and intelligentization make the increment demand for high voltage connection, intelligent sensing, body control chip, power device and so on.

6 sensor: Eye of intelligent vehicle, core hardware of perception layer

6.1 Sensor is the eye of intelligent driving

The higher the level of autopilot, the more sensors are required. The tesla Model3 sensor array contains eight cameras and 12 ultrasonic sensors. Three cameras provide the forward view, and the main camera has a range of up to 250 meters.

6.2 Vehicle-mounted camera market has broad space

With the gradual deepening of ADAS and autonomous driving, the market size of on-board camera is expected to maintain high growth in the future. According to ICVTank, the global on-board camera market size is expected to grow from $6.2 billion in 2015 to $27.3 billion in 2025, with a 10-year CAGR of 16.0%. The domestic market is expected to exceed 10 billion yuan in 2022 and reach 23.7 billion yuan in 2025, with a compound annual growth rate of 32.7%, higher than the global growth rate.

6.3 The demand for millimeter wave radar is increasing rapidly

The center frequency of millimeter wave radar has been increased from 24GHz to 77GHz. Compared with 24GHz, 77GHz has the advantages of small size, easy single-chip integration, good performance (higher speed resolution, improved signal-to-noise ratio, higher output power) and less r&d cost and material cost of radar system. Taking ACC scenario as an example, the volume of 77GHz millimeter wave radar is 1/3 of that of 24GHz millimeter wave radar, and the detector accuracy is 3-5 times of that of 24GHz millimeter wave radar. Therefore, 77GHz millimeter wave radar will become an important direction for the future development of the industry.

6.4 Lidar has a broad prospect, and domestic manufacturers are expected to enter the mainstream market

Velodyne is the leader in the lidar market and the pioneer of mechanical lidar. With patent barriers and advanced technology, Velodyne has entered the car front assembly market by launching hybrid and pure solid state lidar through T1 models such as Hyundai Mobius.

7 connector: small parts, large space, domestic suppliers break the situation

7.1 Automotive connectors are the largest segment

According to Bishop & Associates, the global connector market was $62.73 billion in 2020, with a CAGR of 2.7% from 2010 to 2020, and is expected to exceed $90 billion in 2023. In 2019, the automotive sector surpassed communications to become the largest market segment, accounting for 23.7%.

7.2 High voltage Connector: The connector solution

New energy vehicles use large-capacity lithium batteries, and the range of their working voltage jumps up from the traditional 12V to 400~600V, and the number of electric drive units and electrical equipment increases greatly, putting forward higher requirements for the reliability, volume and electrical performance of connectors.

7.3 RF & High-speed Connectors: deep benefits from ADAS and automotive intelligence

Under the trend of automobile intelligence, the penetration rate of ADAS (intelligent driver assistance system) is increasing rapidly, the amount of on-board sensors is increasing, and the data transmission requirements (high speed and high frequency large data volume) are increasing. The usage of on-board RF connectors is also increasing, and the demand for high-speed and high frequency connectors is generated.

7.4 Domestic new energy vehicle connector track has high growth

Driven by the dividend of the high-speed development of new energy vehicles, the domestic new energy automobile connector market in 2021 will increase by about 6.9 billion yuan, optimistic calculation, to 14 billion yuan in 2022, a year-on-year growth of 102.9%, to 35 billion yuan in 2025. Combined with the traditional fuel car connector demand, the total market size will reach 34 billion yuan in 2022 and 50 billion yuan in 2025. The CAGR is 14.7% from 2021 to 2025.

7.5 Competition pattern: High threshold of automobile connector, overseas giants occupy a monopoly position

Industry concentration is high, the top ten manufacturers accounted for more than 60% of the market. Over the past 40 years, the market share of the world's top 10 connector manufacturers increased from 38% in 1980 to 61% in 2020, and remained 60% after 2015, with a stable head concentration pattern. Tyco Electronics, Amphenol and Molex, the top three giants, occupy more than 35% of the market, forming a relatively stable global leading position, leading the industry technology trend, and has a monopoly position in the high-end market.

LED display: Mini LED wind, terminal multi-point flowering

In the era of picture quality remodeling, Mini LED blossomed in many places

8.1 Advanced display technology, picture quality remodeling

Mini LED makes up for the disconnect between LCD and Micro LED technology: 1) Panel factory -- extends the life cycle of LCD panel; 2) Terminal brand -- get rid of the fierce competition of traditional LCD demand, high-end products to enhance added value; 3) Ultra HD display policy promotion, large-scale application of 4K/8K; 4) The technical conditions are mature and can be commercialized.

8.2Mini LED: balanced choice of picture quality and cost

Mini LED is superior to OLED in brightness, contrast, color saturation, reliability, life and other aspects. At the same time, the industrial chain has less capital investment and low cost, which has significant advantages in the field of large size.

8.3 Large size is the main power generating space for Mini LED backlight

Take the 12.9-inch iPad Pro as an example. According to Fomalhaut Techno Solutions, Japan, the internal hardware cost is $510 ($1,099), including the mini LED chip cost $90, nearly 1/5 of the total cost. (2500+ zones, over 10,000 beads)

PCB: material prices look for a small callback, cars, servers together

9 upstream raw material price outlook

PCB manufacturer's operating cost is sensitive to the price of upstream raw materials. At present, 50 to 75 percent of the operating costs of leading companies are made up of raw material costs. Copper clad board is the core raw material of PCB manufacturing. It is a kind of plate material made by dipping electronic glass fiber cloth and other reinforced materials with resin, covering one or both sides with copper foil and hot pressing. It mainly plays the role of electrical connection, insulation and support. According to the prospectus of Shengyi Electronics, the cost of copper clad plate accounts for 43.59% of its raw material cost.

10. The electrification and intelligentization of automobiles increase PCB consumption

New energy power system for the motor, PCB consumption significantly increased. Traditional energy vehicles also refer to traditional fuel vehicles, the power system uses the engine, new energy vehicles use electric machine. Compared with traditional energy vehicles, the electronization degree of new energy vehicles is improved, and the PCB value of single vehicle is improved. PCB increment mainly comes from the three control systems VCU, BMS and MCU. In conventional fuel cars, the average PCB consumption is 1 square meter, and the consumption of high-end models is 2-3 square meters, and the value of single PCB is about 400 yuan. New energy vehicle PCB per unit value of more than 2000 yuan, China's new energy vehicle penetration rate, will bring a lot of incremental space for automotive PCB.

Cloud computing flow is rising, and PCB quantity and price of server are rising together

Each transmission bus standard can always bring Intel and other server CPU income surge, that is, server CPU year. High-speed Computer Data Transfer Bus (PCIe), is a high-speed serial computer extension bus standard proposed by Intel in 2003, designed to replace the older PCI, PCI-X and AGP bus standards. PCIe is high-speed serial point-to-point dual-channel transmission with high bandwidth. Connected devices are allocated exclusive channel bandwidth rather than sharing bus bandwidth, providing end-to-end reliable transmission, hot swap, and quality of service (QOS) functions.

Under the same conditions, each upgrade of the PCIe standard doubles the transmission speed. Having evolved from 1.0 to 4.0, the Sapphire Rapids on the Intel Eagle Stream platform is expected to drive adoption of industry-changing technologies such as PCIe 5.0 and DDR5 memory in Q2 to Q3 2022.