(Producer/Author: Bank of China Securities, Zhuang Yu, Lu Ran, Wang Haiming)
1 Key Enterprise Analysis
1.1 Company Introduction
Weijiechuangxin (Tianjin) Electronic Technology Co., Ltd. was established in June 2010. It focuses on the research and development, design and sales of RF front-end chips. It mainly provides customers with RF power amplifier (PA) module products, RF switch chips, Wi-Fi RF front-end modules and receiver modules. It is widely used in various mobile terminals with wireless communication functions such as smartphones, tablets, wireless routers, smart wearable devices.
In 2012, Weijiechuangxin's first chip began to be put into mass production; in 2015, the shipment volume reached 500 trillion, the sales exceeded 400 million yuan, and it was listed on the New Third Board, and obtained private placement financing from Zhongqing Zhenghe Technology Venture Capital and Huaxin Venture; in 2019, it received private placement financing from MediaTek Technology Co., Ltd. (MTK); in 2020, Hubble Investment, Tianjin Yuwei, OPPO Mobile, Weiwo Mobile , Xiaomi Fund, etc. successively became shareholders of Weijiechuangxin; on April 12, 2022, Weijiechuangxin was officially listed on the Shanghai Stock Exchange Science and Technology Innovation Board. In terms of
products, with the acceleration of 5G commercialization, the company will realize the innovative iteration of 5G module faster, continuously enhance product performance, deepen product layout in the direction of high performance and high integration, and meet the broader market and customer needs. In the field of RF switches, the company plans to continuously strengthen the research and development design of RF switches and customer market expansion, enrich the RF switch product line models, strengthen the penetration rate of terminal customers, and provide customers with more complete RF front-end overall solutions. In other RF front-end products, the company will develop and design core technologies based on RF front-end, and expand the product line width by adding Wi-Fi RF front-end modules, L-PAMiD, various receiver modules and base station RF front-end products. In terms of application fields, in addition to the continuous penetration and development in mobile communication terminals, the Internet of Things and other fields, the company will further consider laying out radio frequency products in the fields of medical care, automotive electronics and other fields. In terms of industrial chain, the company plans to further ensure the company's product reliability and delivery capabilities through the construction of integrated circuit production and testing projects, and broaden the industrial chain.
1.2 Organization and equity structure
Company’s board of directors includes four major committees: the Strategic Committee, the Nomination Committee, the Remuneration and Assessment Committee, and the Risk and Audit Committee; the Manager has seven major departments, namely the Production and Operation Department, Marketing Department, Sales Department, Finance Department, Comprehensive Management Department, R&D Department and Information Technology Department. In terms of the equity structure of
, the company's joint actual controllers are Rong Xiuli and Sun Yijun, holding 24.19% and 14.10% of the shares respectively, reaching a total of 38.29%. The two's experience in communication equipment business and sales has laid a good foundation for the company's technology, sales and management. In addition, Weijie Chuangxin has 100% control over four subsidiaries: Shanghai Weijie, Beijing Weijie, Hong Kong Weijie and Weijie Jingcha, providing convenience for the development of business nationwide. (Report source: Future Think Tank)
1.3 Main business and products
The company's main business is the research and development, design and sales of RF front-end chips. The main products are RF power amplifier modules. In addition, it also includes some RF switch chips, Wi-Fi RF front-end modules and receiver module products.
company's products are widely used in mobile terminals such as smartphones, tablets, smart wearable devices, and communication devices such as wireless broadband routers. Downstream customers mainly include mainstream mobile phone brand manufacturers such as Xiaomi , OPPO, and vivo, as well as industry-renowned mobile terminal device ODM manufacturers such as Huaqin Communication , Longqi Technology, and Wingtech Technology . The company has established a long-term and stable service and cooperative relationship with the above-mentioned customers. The depth and breadth of brand customers are an important competitive advantage and barrier for the company.
Since its establishment, the company has been committed to providing customers with RF front-end products with high reliability, excellent performance, low power consumption and cost-effectiveness. The main business, main products and main business models have not undergone major changes.With the development of communication technology and the changes in downstream customer needs, the company has developed and launched new products on the one hand, and on the other hand, it has continuously updated and iterated existing products, and has continuously transitioned and upgraded from 2G to 5G.
As integrated circuit design company , the company focuses on all processes of chip design. At the same time, it fully considers all aspects of product production during the design process, designs and hands over to suppliers for manufacturing, packaging and testing high-quality solutions that match the product design, and the suppliers will assist the company in presenting the best products.
1.4 Main business model
1.4.1 R&D model
Weijiechuangxin R&D personnel include relevant personnel of the R&D department and the testing department, quality department, engineering department, and new product introduction department under the production and operation department; among them, the R&D department and the new product introduction department are mainly engaged in the pre-research of cutting-edge technologies in the industry, the design and development of new products, and the verification of radio frequency system in the new product development stage, the testing department is mainly engaged in the formulation of solutions for the under-research product testing. The Quality Department is mainly responsible for the formulation and specific implementation of product quality control plans and policies for the under-research. The Engineering Department is mainly responsible for the formulation and specific implementation of the under-research project.
Company R&D is roughly divided into four stages: project establishment, product design, product trial production evaluation and input mass production. First, the marketing department and the sales department collect market information and downstream customer demand expectations, form a market demand report, and after approval, the project is established and the new product is developed; then professionals will develop, test, package and review within the four design periods of plan, details, initial sample, and complete project samples; after the review is passed, the trial production plan is confirmed, and the product defects found during the small batch trial production, application development and initial customer trial evaluation process and the customer's further needs are modified in combination with the specific situation; after the mass production review meeting is approved, the product enters the mass production stage. In order to strengthen the management of its own R&D project, improve the efficiency of R&D project conversion, and standardize the expenditure and accounting of R&D expenses, and combine the company's own situation, the company has established and improved the R&D internal control system for R&D and effectively implemented it.
1.4.2 Procurement and production model
company adopts the Fabless model. It does not engage in production work itself, and focuses on R&D and design. It mainly completes manufacturing, packaging and testing work by professional wafer foundry, packaging and testing enterprises, and the testing work of some products is completed by Weijie Precision Test.
1.4.3 Sales model
According to the practices of the integrated circuit industry and the characteristics of the company, the company adopts the sales model of "distribution as the main and direct sales as the auxiliary". The relationship between the company and the dealer is a buyout sales relationship, and order sales are based on the sales framework agreement. In addition, for some end customers, the company adopts the direct sales model.
Company has formed its current business model in light of factors such as national industrial policies, upstream and downstream development status, market supply and demand conditions, its own main business and development stage.
1.5 Company business situation
The main players in the global RF front-end market are mainly American and Japanese manufacturers. According to statistics from Yole Development, in 2019, the world's top five RF front-end device providers accounted for 79% of the global RF front-end market share. Among them, Murata, Skyworks, Broadcom, Qorvo and Qualcomm account for 23%, 18%, 14%, 13% and 11% of the market share respectively. Compared with the leading American and Japanese manufacturers in the aforementioned RF front-end field, domestic companies participating in the RF front-end market still have certain gaps in capital strength, product performance and product line width, technology and intellectual property accumulation, number and system of R&D personnel, and cutting-edge technology definition capabilities.
With the rapid development of my country's integrated circuit industry in recent years, startups have been continuously entering the RF front-end field, and the number of domestic companies participating in the competition in the RF front-end field is increasing. In addition to Weijiechuangxin, the major domestic companies in the RF front-end market include Zhuoshengwei, Unigroup Zhanrui, Angruiwei, Huizhiwei, Feixiang Technology, Haoda Electronics, Deqing Huaying, etc.
Weijiechuangxin is one of the earliest integrated circuit design companies in China engaged in the research, development, design and sales of RF front-end discrete devices and modules. It has firmly followed the leading manufacturers at the beginning and gradually narrowed the gap in the development process. In the subdivided fields of discrete devices and module products of RF power amplifiers, the company keeps up with the latest developments in communication technology and has already possessed strong technical strength and competitive advantages. As of the listing date, the company's 4G RF power amplifier module has shipped more than 1.2 billion units, and the 5G RF power amplifier module has shipped more than 100 million units.
's company's operating income mainly comes from the sales of RF power amplifier module products, and also supplies integrated circuit products such as RF switch chips, Wi-Fi RF front-end modules and receiver modules. There are two modes of sales: direct sales and distribution. The company's operating income in 2020, 2019 and 2018 was RMB 181,044.7 million, RMB 581.4227 million and RMB 284.0163 million, respectively. Among them, the operating income of the distribution model was RMB 142,4127,400, RMB 553,962,900, and RMB 283,435,400, respectively, accounting for 78.66%, 95.28% and 99.80% of the current operating income.
According to the latest listing announcement, in 2021, thanks to the enhanced product competitiveness and the growth of downstream market demand, the company's operating income grew rapidly, with a year-on-year increase of 93.80%. (Report source: Future Think Tank)
Due to factors such as the increase in product competitiveness and the increase in 5G product sales, the company's profitability has been further enhanced. Among them, the net profit attributable to the parent company's shareholders in 2021 was a loss due to the recognition of the share payment fee of 607.2518 million yuan, but the scale of the loss has decreased.
Weijiechuangxin's main business is four major categories: RF power amplifier (PA) modules, Wi-Fi RF front-end modules, RF switches and receiver modules. Among them, PA modules account for the highest revenue, reaching more than 95%. Currently, among PA modules, 4G modules have the highest revenue ratio, accounting for about 88.59%, and 5G modules account for 10.54%, far exceeding the 3G category. With the development of technology and the progress of the times, 5G modules will show higher development and revenue potential.
According to the prospectus of Weijiechuangxin, due to the market pricing of similar products, advanced products and technologies, customer bargaining power and past sales prices of leading American and Japanese manufacturers, the combined influence of factors such as the market pricing of similar products, advanced products and technologies, customer bargaining power and past sales prices; the unit cost of product is also affected by factors such as the purchase unit price of raw materials and packaging and testing services, as well as the supply and demand relationship of the industrial chain. PA modules, RF switches and Wi-Fi RF front-end modules have all increased to varying degrees, among which the unit price of Wi-Fi RF front-end modules has the highest increase.
There is no significant difference between the relative proportion of operating costs of each company's products and the relative proportion of their respective operating income. Changes in the company's operating costs are consistent with the direction of changes in operating income and can be matched well.
Weijiechuangxin's comprehensive gross profit has maintained rapid growth, and the company's gross profit is all derived from its main business income. With changes in the company's product structure, supply and demand relationship and market competitiveness, the company's gross profit margin fluctuates to a certain extent.
In 2019, the company was in the first year of mass supply to leading mobile phone manufacturers. Due to factors such as consolidating market position and product iteration and upgrading, the company reduced the price of mature products to a certain extent, resulting in a decline in the company's overall gross profit margin for that year. In 2020, the company's products gradually iterated, and the overall sales unit price increased. However, due to the tight production capacity of the industrial chain, the unit cost of packaging and testing increased, and the overall gross profit margin was relatively stable.
From January to June 2021, due to the large market demand among leading manufacturers, the sales unit price of the company's mature products remained stable; at the same time, due to factors such as 5G and high-integration PA modules and Wi-Fi6 modules, the proportion of sales revenue of high-priced products such as 5G and high-integration PA modules and Wi-Fi6 modules, the company's gross profit margin increased significantly, but it was still lower than that of domestic listed companies in the same industry and leading overseas manufacturers.
Weijiechuangxin's annual sales expenses are growing slowly and the trend is stable, while management expenses and R&D expenses have accelerated in recent years. According to the details of management expenses disclosed in the prospectus, the proportion of one share payment in management expenses increased the most.After excluding the impact of share payment expenses, the company's management expenses in the first half of 2021, 2020, 2019 and 2018 were RMB 23.144 million, RMB 22.7832 million, RMB 43.1508 million and RMB 31.012 million, accounting for 8.15%, 3.92%, 2.38% and 1.82% of operating income, respectively. The company's management expenses increase steadily with the increase in staff size.
Company maintains a large investment in R&D every year. Excluding the impact of share payment expenses, the company's R&D expenses in 2018-2020 were RMB 55.4481 million, RMB 72.7897 million and RMB 153.0430 million, respectively, an increase of 31.28% and 110.25% year-on-year, with huge growth potential and great growth potential in scientific research and innovation. The proportion of R&D expenses to operating income is 19.52%, 12.52% and 8.45% respectively. Due to the rapid growth of operating income, the proportion of sales expenses to operating income has decreased year by year.
The share payment fees recognized by the Company from January to June 2021, 2020, 2019 and 2018 were RMB 268.4178 million, RMB 173.5615 million, RMB 38.0475 million and RMB 10.9452 million, respectively. Large share payment fees as recurring gains and losses have a great impact on the company's net profit.
Company product production process requires procurement of wafers, SMDs, substrates and packaging and testing services. At the same time, during the company's R&D process, the chip flow process needs to purchase NRE MASK services from the wafer manufacturer. The products and services provided by the company's top five suppliers are in line with the company's business model. Since wafer manufacturing and packaging testing belong to the capital and technology-intensive industry , there are relatively limited manufacturers that meet supplier conditions. Therefore, the company's purchase amount from the top five suppliers is large and the concentration is high, which is in line with the characteristics of the industry. (Report source: Future Think Tank)
2 PA is an important device for the RF front-end. LNA/RF switch ensures normal reception of signals
2.1 Introduction to RF front-end
RF front-end refers to the intermediate module located between RF transceiver and the antenna. In this section, the signal is transmitted in RF form. The RF front-end mainly includes four types of devices: filter (Filter), power amplifier (PA), radio frequency switch (Switch/Tuner), low-noise amplifier (LNA), and some RF connection and matching circuits. Its function is to send and receive wireless electromagnetic wave signals. It is a core module necessary for mobile terminal devices to realize wireless communication functions such as cellular network connection, Wi-Fi, Bluetooth , and GPS. The RF front-end and baseband, RF transceiver and antenna jointly realize the two essential functions of wireless communication, namely, converting the binary signal into a high-frequency wireless electromagnetic wave signal and sending it, and receiving the wireless electromagnetic wave signal and converting it into a binary signal.
baseband signal processor can convert required processing signals (such as audio received by the microphone); convert digital signals and analog signals . Then it is modulated through the RF chip and becomes the radio frequency signal . The RF front end filters and amplifies the RF signal. Without the RF front-end chip, mobile terminal devices such as mobile phones will not be able to make calls and connect to the network and wireless communication functions. Therefore, RF front-end plays an indispensable and crucial role in wireless communication.
2.2 Power Amplifier Introduction
RF power amplifier is the core device for transmitting RF front-end signal. It is mainly used for transmitting links. Its function is to amplify the weak RF signal in the RF front-end transmission channel so that the signal is successfully transmitted by the antenna and received by the communication base station, so that the mobile device has higher communication quality and stronger battery life.
In terminal devices such as smartphones, PA chips are usually integrated with other RF front-end chips into module products for application. According to the type and number of integrated chips, PA modules can be divided into low, medium and high integration modules, generally divided into four types: SMSB/SMMB PA, MMMB PA Tx Module, and L-PAMiD/L-PAMiF.
RF power amplifier module (PA module) is Weijiechuangxin's main production product, and its revenue accounts for more than 95% of the company's main business revenue.After the development of communication technology and years of R&D investment and product iteration, the integration of Weijiechuangxin PA modules has been continuously improved, and it has now developed to mainly PA module products with integrated integration in MMMB PA and TxM. In addition, the company has achieved mass production and sales on products such as high-integration L-PAMiF.
working principle, the radio frequency power amplifier (PA) first inputs the received signals of different frequency bands into the corresponding channel into the mode group, and then the driver amplifier (DA) and PA chips use external power supply voltage to amplify the signal power twice, so that the signal power reaches the level required for transmission and feeding, and finally allocates it to the specified frequency band through the radio frequency switch for output. In terminal devices such as smartphones, PA chips are usually integrated with other RF front-end chips and are used as module products. (Report source: Future Think Tank)
2.3 Introduction to low noise amplifier
Low noise amplifier (LNA) is an amplifier with very low noise figure. It exists in many components such as Wi-Fi RF front-end modules, RF receiver modules, etc. It is generally used as a high-frequency or intermediate-frequency preamplifier for various radio receivers , as well as amplifier circuit for high-sensitivity electronic detection equipment. In situations where weak signals need to be amplified, the noise of the signal amplifier itself may cause very serious interference to the signal. Reducing this meaningless noise will facilitate the increase of the signal-to-noise ratio of the output and make the communication smoother and more sensitive.
2.4 Introduction to RF switch
RF switch is an electronic switch used to switch the RF signal path, and the guidance signal is input or output to different modules or antenna ports according to a predetermined path to realize the switching function of the circuit. RF switches are applied in the receiving and transmitting paths of RF signals, which can reduce mutual interference between different signals and improve the sensitivity of signal transmission and reception. The company's RF switches cover products of various modes such as single-pole multi-throw, multi-throw, etc., and are used in various communication equipment; and are all products that are individually packaged with the die of RF switch chips, and are irreplaceable with the die of RF switch chips integrated in PA modules and Wi-Fi RF front-end modules. The basic working principle of the
radio frequency switch is: under the premise that at the same time, only one switch is in the closed state and is connected to the common terminal, and the other switches are in the off state, the radio frequency switch changes the voltage of the input control port to switch the closed or off state.
3 Integrated circuit policy has arrived, and PA modules show their strengths
3.1 Integrated circuit industry overview
3.1.1 Development history and market size
As one of the foundation and core industries of the modern information industry, the integrated circuit industry has become the focus of current international competition and an important symbol of measuring the degree of modernization of a country or region and its comprehensive national strength. Although the integrated circuit industry in mainland my country started late, after nearly 20 years of rapid development, my country's integrated circuit industry has occupied an important position in the global integrated circuit market from nothing to something, from weak to strong. According to data from the American Semiconductor Association (SIA), the market size of China's semiconductor industry in 2020 was US$151.7 billion, accounting for 34.5% of the global share. Although it has decreased from the 34.9% of the world's share in 2019, it is still the world's largest consumer country in semiconductor . In recent years, driven by domestic and foreign market demand, relevant national incentive policies and support, and capital led by the national integrated circuit industry fund, my country's integrated circuit industry has achieved overall prosperity, and its innovation capabilities and product quality have been continuously improved. From 2011 to 2020, my country's integrated circuit industry sales increased from 193.4 billion yuan to 884.8 billion yuan, with an average annual compound growth rate of 18.41%. This is mainly driven by downstream market demand such as the Internet of Things, smart cars, high-tech vehicles, smart terminal manufacturing, and new generation mobile communications.
Although my country's integrated circuit industry is developing rapidly, there is still a high mismatch between the supply of integrated circuits in my country and the huge demand for integrated circuits, and a large number of chips still need to be obtained through import. In 2020, my country's integrated circuit imports amounted to US$350 billion, exports amounted to US$116.6 billion, and the trade deficit to reached US$233.4 billion.(Report source: Future Think Tank)
integrated circuit industry chain can be mainly divided into three major modules upstream, middle and downstream, as well as the supporting industries of the integrated circuit industry. The upstream is the chip design industry, the midstream is the chip manufacturing and packaging testing, and the downstream is the terminal application of the chip. Integrated circuit raw materials and manufacturing equipment are the supporting industries of the entire industry. Among them, the rapid growth of China's integrated circuit industry has driven the growth of the integrated circuit design industry. China's integrated circuit design industry's sales in 2020 reached 377.84 billion yuan, a year-on-year increase of 23.3%, and is still the fastest-growing industry, accounting for 42.7% of the overall industry; the manufacturing sales were 256.01 billion yuan, a year-on-year increase of 19.1%, accounting for 28.9%; the packaging and testing industry's sales were 250.95 billion yuan, a year-on-year increase of 6.8%, accounting for 28.4%.
Integrated circuit design industry is located at the upstream of the integrated circuit industry chain and is a technology-intensive industry. It has extremely high requirements for technological R&D strength, and has the characteristics of high technical threshold and many sub-categories. my country's integrated circuit design industry is developing rapidly, and the industrial structure is gradually transforming from the packaging and testing field with relatively low added value to the design field with higher added value. From 2011 to 2020, the sales of my country's integrated circuit design industry increased from 52.6 billion yuan to 377.8 billion yuan, with an average annual compound growth rate of 24.49%, with a considerable growth rate. At the same time, the proportion of my country's integrated circuit design industry in the total scale of the integrated circuit industry is also increasing.
The development of my country's integrated circuit design industry is inseparable from the emergence of integrated circuit design companies. The number of integrated circuit design companies in my country has increased from 534 in 2011 to 2,218 in 2020, showing a vigorous development trend. With the rapid development of my country's economy and the rise of strategic emerging industries, the integrated circuit industry will gain a broader market and innovation space, and more levels of market demand will emerge. At present, integration and mergers between domestic and foreign countries and the integrated circuit industry are emerging. With the increasing position of China's market and the continuous maturity of its industrial foundation, more overseas companies will choose to enter the Chinese market through mergers and acquisitions. In the future, China's integrated circuit design companies will increase their efforts in integration and restructuring to build large and leading enterprises. (Report source: Future Think Tank)
3.1.2 Industry Opportunities and Challenges
Local Terminal Brands have brought sufficient market development space for RF front-end chips. In 2020, the top five mobile phone manufacturers in the world are Samsung , Apple , Huawei , Xiaomi and vivo. Chinese manufacturers occupy three seats, accounting for 34.6% of the market share. The increase in the market share of domestic terminal brand manufacturers has brought broad development space for my country's integrated circuit industry. However, in the RF front-end market, the market is still firmly controlled by American and Japanese manufacturers, and many international RF front-end giants have made huge profits in the Chinese market. About 1/3 of its operating income comes from the Chinese market. Domestic radio frequency front-end manufacturers still have sufficient room for development and improvement. The increase in the market share of local mobile phone brand manufacturers and the changes in the global trade environment have brought unprecedented rapid development opportunities to , a domestic front-end integrated circuit company.
National policies strongly support it. The integrated circuit industry is one of the basic industries of the information society. The level of industry development is an important manifestation of a country's scientific and technological strength and even comprehensive national strength, and it has important strategic significance for national security. In order to promote the development of the industry, government departments have successively introduced a series of incentive policies. In May 2015, the State Council issued the " Made in China 2025", which listed the integrated circuit industry as a key area for breakthrough development, and clearly proposed to focus on improving the level of integrated circuit design; continue to overcome key core technologies such as core electronic devices , high-end general-purpose chips, basic software, integrated circuit equipment; clarify the core position of the integrated circuit industry in the information industry, and vigorously support the development of the integrated circuit industry from eight aspects: finance and taxation, investment and financing, research and development, import and export, intellectual property rights and market applications.
3.2 Integrated Circuit Policy Review
Integrated Circuit Industry is the core of the information technology industry and a strategic, basic and leading industry that supports economic and social development and ensures national security. By 2015, the sales revenue of the integrated circuit industry exceeded 350 billion yuan; by 2020, the annual average annual growth rate of sales revenue of the integrated circuit industry industry exceeded 20%, and the sustainable development capabilities of enterprises have been greatly enhanced; by 2030, the main links of the integrated circuit industry chain will reach the international advanced level, and a number of enterprises will enter the first echelon of the international community. In 2016, the 13th Five-Year Plan clearly stated that integrated circuits will be regarded as a core technology transcendent project, accelerate the transformation of scientific and technological innovation results into real productivity, and fully release digital dividends to achieve information-driven transformation. In 2017, integrated circuit chip design and services were listed as a key product catalog for strategic emerging industries and belonged to the core electronics industry. In 2019, tax preferential policies will be adopted for integrated circuit design companies and software companies established in accordance with the law and meet the conditions, supporting the development of integrated circuit design and software industry, and vigorously encouraging integrated circuit design. In 2020, as the core of the information industry, the integrated circuit industry and software industry will all introduce policy preferential policies in terms of finance, taxation, investment and financing, research and development, import and export, talents, intellectual property rights, market applications and international cooperation, further optimize the development environment of the integrated circuit industry and software industry, deepen international cooperation in the industry, and improve industrial innovation capabilities and development quality.
3.3 Overview of the development of RF front-end
The RF front-end industry chain from upstream to downstream is: raw materials, RF front-end discrete devices, RF front-end modules, and mobile communication equipment. RF front-end modules are generally outsourced to SiP packaging manufacturers for packaging. The RF front-end is one of the core hardware of wireless communications, mainly composed of four types of devices: filter (Filter), power amplifier (PA), low noise amplifier (LNA), and radio frequency switch (Switch/Tuner).
3.3.1 Global RF front-end market size
According to data, the global RF front-end market size in 2019 was US$16.957 billion, with annual growth rates above 10% from 2011 to 2019. According to forecasts, the global mobile RF front-end market size is expected to reach US$25.4 billion in 2025, of which: the market size of RF power amplifier modules is expected to reach US$8.931 billion, the market size of discrete RF switches and LNA is expected to reach US$1.612 billion, and the market size of SoC chip is expected to reach US$2.395 billion. (Report source: Future Think Tank) The research and development and design of
RF front-end chip requires deep process experience and practical accumulation, and personnel with rich R&D capabilities need to work hard in related fields for many years. The United States, Japan and other countries started early in the field of integrated circuits and accumulated rich people in various aspects such as talents, technology, and capital. With deep technological accumulation, definition of cutting-edge technology, systematic grasp of iteration of communication technology, and close cooperative relationships with leading customers, American and Japanese RF front-end companies have dominated the market, leading the development of the global RF front-end market, and continuing their consistent market dominance, accounting for nearly 80% of the market share. According to data, in 2019, the world's top five RF device providers accounted for 79% of the RF front-end market share, mainly monopolized by the four major American giants Skyworks, Broadcom, Qorvo, Qualcomm and Japanese manufacturer Murata. Due to the great differences in process technologies of different RF front-end devices, overseas leaders have merged and acquired cooperation to form a complete product line key layout. Looking forward to the future development of overseas leaders, Qorvo and Skyworks maintain a "dual oligopoly" pattern in the short term and accumulate strength to develop non-mobile businesses such as automobiles and the Internet of Things in the long run; Broadcom is positioned as a high-end product, and the advantageous product BAW filter is facing competition, and the RF product line is gradually marginalized; Qualcomm's baseband and RF front-end sales are coordinated, focusing on millimeter wave modules and Internet of Things products; Murata's advantageous product SAW filters face the threat of potential entrants, and the share of receiving modules will decline highly.
Compared with foreign manufacturers, according to public information, in addition to the company, Zhuoshengwei, Huizhiwei, Feixiang Technology, Angruiwei and others have launched some 5G RF front-end chip products, but compared with leading American and Japanese manufacturers, they are still in the position of catching up, and their overall RF front-end chip market share is relatively low.
3.3.2 my country's RF front-end market size
There are many domestic RF front-end manufacturers, but they mainly use single discrete devices with low value and low integration modules, with a domestic share of less than 10%. Mainly because my country's integrated circuit industry started late as a whole, and the RF front-end industry has high technology, experience, capital and other barriers, there is still a certain gap between my country's current overall development level of RF front-end and the international advanced level. In the future, four major factors drive the rise of domestic substitution opportunities: first, the independent controllable and cost control needs of terminal manufacturers; second, the wafer production capacity is short of 5G penetration period, and overseas giants will focus on high-end products; again, a intensive financing wave has emerged, and capital advantages are highlighted; finally, the difficulty of 5G modules is reduced, bringing opportunities for overtaking on the curve. Under the trend of modularity, the premise for the rise of domestic leaders is to form a complete product line, and domestic RF front-end enterprises follow the product expansion logic of "single device 5G module 4G receiving module 4G main set module".
With the continuous growth of my country's demand for integrated circuits and the country's increasing attention to the integrated circuit industry, China's RF front-end industry has developed rapidly, and representative RF front-end enterprises are constantly emerging. In the field of RF power amplifiers, in addition to the company, domestic participants include Huizhiwei, Unigroup Zhanrui, Feixiang Technology, Angruiwei, etc. In the fields of RF switches and LNA, Zhuoshengwei has formed the ability to compete with world-class companies by relying on its early entry into brand customers and its own strength advantages, and maintained a leading position in the domestic market. In addition, domestic companies such as Weier Co., Ltd. and Aiwei Electronics are also involved in the fields of radio frequency switches and LNA. In the field of RF filters, domestic companies such as Haoda Electronics and Deqing Huaying have made their mark. Against the backdrop of strong policy support for domestic self-made chips after the Sino-US trade war and the continued growth in domestic mobile phone brand share, domestic supply chain manufacturers are expected to usher in major development opportunities. Domestic manufacturers are expected to rise to the first echelon in the future, expand their market share and have broad room for growth. (Report source: Future Think Tank)
3.3.3 Future market trends of RF front-end
The company's main downstream application field is the smartphone industry, and smartphones use cellular mobile communication technology to achieve network connection. Therefore, the development and trends of the RF front-end industry are in line with changes in communication technology and are closely related to the development of smartphones and other new applications. According to Yole's forecast, the mobile RF front-end market size will be approximately US$18.5 billion in 2020, and the communication base station RF front-end market will be approximately US$2.7 billion in 2020. With the increase in penetration rate of 4G/5G in mobile phones, the size of the mobile phone RF front-end market has continued to grow to US$25.8 billion from 2020 to 2025. The RF front-end market size of communication base stations is mainly related to the operator's capital expenditure. The RF front-end market size of base stations in 2020 is about US$2.7 billion. It is expected that in this round of 5G infrastructure cycle, the RF front-end market of base stations will reach a peak of US$4.2 billion in 2023, and then gradually fall back to US$3.6 billion in 2025. The front end of the RF front end is crucial to the wireless communication performance of the mobile phone. The front end of the RF front end determines important performance indicators such as communication mode, received signal strength, call stability, and transmission power that the mobile terminal can support, which directly affects the terminal user experience. In addition to communication systems, wireless connection systems (WiFi, GPS, Bluetooth, FM, NFC, etc.) in handheld devices also have strong demands for RF front-end chips.
wireless communication technology upgrade has driven the growth of RF front-end demand, and 5G and WiFi6 are the main growth points in recent years. Wireless communication transmission includes many technologies, which can be divided into short-range and long-range wireless communication technologies according to the transmission distance. The short-range wireless communication technologies supported by mobile phones include WiFi, Bluetooth, GPS, NFC/RFID, UWB, Zigbee, etc.; long-range wireless communication technologies include cellular mobile communication technologies such as 2G, 3G, 4G, 5G.The RF front-end value of cellular (2G~5G) and WiFi accounts for a high proportion. From the internal structure, the RF front-end circuit of cellular wireless communication (4G/5G) is much more complex than WiFi. According to Yole's statistics on the RF front-end market space corresponding to cellular, WiFi, and GNSS, the RF front-end market space in cellular mobile communications (2G~5G) accounted for as high as 84% in 2020, and further rose to 85% in 2025; in 2020, the WiFi front-end market space accounted for 14% and decreased to 13% in 2025; while the RF front-end market space in GNSS (Global Navigation Satellite System) accounted for only 1~2%.
5G The rapid growth of smartphone shipments drives the development of the RF front-end market. The accelerated implementation of 5G commercial use has driven the rapid growth of 5G mobile phone shipments. According to Yole Development's statistics and forecast, the global shipment of 5G smartphones will be 214 million units in 2020, and the global shipment of 4G smartphones will be 685 million units by 2025, and the 5G smartphone shipment will be 804 million units. The average annual compound growth rate of 5G smartphones will be as high as 30% from 2020 to 2025. The RF front ends corresponding to different communication standards are independent of each other. The RF front ends and antennas of 5G and WiFi cannot be public and are two independent markets. Secondly, there are also independent RF front-end and antennas between 4G and 5G. 5G mobile phones will be compatible with 4G for a long time in the future. In order to support the newly added 5G frequency band in the 4G frequency band, the number of various RF front-end chips of 5G mobile phones far exceeds that of 4G mobile phones, and the value of PA modules will also be further increased. The rapid growth of 5G smartphone shipments will strongly drive the development of the RF front-end market, so 5G RF front-end and antennas are an independent new market.
Automotive electronics, medical and healthcare and other fields have become emerging markets for the front-end of RF. The implementation of network communication functions of automobiles cannot be separated from the assistance of the RF front-end. According to the forecast of Strategy Analytics, the RF front-end market size of automotive processing and linear advanced driver assistance systems will grow significantly, with an average annual compound growth rate of 17% from 2017 to 2022. In addition, with the advancement of technology, telemedicine has gradually become a reality. The long-distance diagnosis, treatment and consultation of telemedicine need to be achieved through high-speed network connections. The continuous development of telemedicine will effectively promote the development of radio frequency front-end in the field of health care.
(Report source: Future Think Tank)
3.4 PA development overview
In the market segment where the company's main product RF power amplifier is located, according to Yole Development data, Skyworks, Qorvo, and Broadcom accounted for 93% of the global PA market share in 2018; similar to the overall market structure of the RF front-end industry, RF power amplifiers, as the most important RF front-end chip, also show that international leading companies such as Broadcom, Qorvo and Skyworks occupy the vast majority of PA market share. In 2019, the market size of RF power amplifier modules was US$5.376 billion, making it the largest segment of the RF front-end market; from 2019 to 2025, the market size of PA modules is expected to maintain an average annual compound growth rate of 11%, reaching US$8.931 billion in 2025, and it is still the largest segment in the RF front-end market. Although there are many power amplifier companies in my country, most of the products are in mid- and low-end applications, and there are only a few PA manufacturers that have high-end applications. The market concentration of power amplifiers in my country is relatively low. According to Yole Development data, the market share of the TOP3 companies is 13%, and the market share of the TOP20 companies is 25%.
Domestic RF PA has four major markets: mobile phones, base stations, Wi-Fi, and NB-IoT. According to Yole Development statistics, the mobile PA market accounts for about 65%, the Wi-Fi PA market accounts for about 20%, the base station market accounts for about 10%, and the others are 5%.
3.5 LNA development overview
The global revenue of RF low-noise amplifiers in 2018 was US$1.421 billion. The popularity of 4G has increased the number of antennas and RF paths in smartphones, and the demand for the number of RF low-noise amplifiers has increased rapidly. The commercialization of 5G will drive the global RF low-noise amplifier market to usher in a peak in growth in 2020, reaching 7.12%. It is expected that the market size will reach US$1.794 billion by 2023.According to Yole Development, in 2025, the global RF low-noise amplifier market size will reach US$2.32 billion, with an average annual compound growth rate of 17%, of which the discrete RF low-noise amplifier scale will be approximately US$800 million, accounting for 34.4%. The number of RF components in 5G mobile phones will increase significantly, and it is expected that the number of single-player RF low-noise amplifiers for 5G mobile phones will reach 10, nearly twice as many as 4G mobile phones. The market concentration of
RF low-noise amplifiers is much more scattered than that of RF switches. The top five companies in the industry are Broadcom, ONSemiconductor, Infineon, TI, and NXP, and the market CR5 is 52%. Among domestic LNA manufacturers, Zhuoshengwei is mainly the main one, with a market share of 1.3% in 2017. The company, Guomin Feixiang, Ruidike and others mainly provide RF front-end module products, and there are fewer pure RF low-noise amplifier products. Zhuo Shengwei, a domestic RF low-noise amplifier manufacturer, is still developing in this field. In recent years, the proportion of RF low-noise amplifier business revenue has increased. The operating income in the first half of 2019 was 100 million yuan, which has exceeded the annual revenue of RF low-noise amplifiers in 2018, and the business proportion has reached 19.42%.
3.6 Overview of RF switch development
RF switch market size is in continuous growth, among which the growth momentum of antenna tuning switches is very strong. According to Yole Development's forecast, the global RF switch market has experienced continuous rapid growth since 2011. The global market size reached US$1.654 billion in 2018, and the global RF switch market size in 2020 was US$1.431 billion. The market size will reach US$2.306 billion in 2025, with a compound growth rate of 10%. Benefiting from the increase in the number of communication bands brought by the 5G standard, the market size will steadily increase, and as the commercialization of 5G reaches a peak, the growth rate will gradually slow down thereafter. Among them, the market size of discrete RF switches will grow from US$1.1 billion in 2018 to US$2.1 billion in 2025; ordinary switches will grow from US$600 million to US$900 million, with an average annual compound growth rate of 5%; antenna tuning switches will grow from US$500 million to US$1.2 billion, with an average annual compound growth rate of 13%. With the popularity of 5G, the demand for stand-alone RF switches will continue to increase. It is expected that the use of stand-alone RF switches for 5G mobile phones will be 15, twice as many as 4G mobile phones. (Report source: Future Think Tank)
4 Domesticization is gradually rising, and future challenges still exist
4.1 Market competition pattern
RF front-end market is a fully competitive market, and industry competitors range from internationally renowned manufacturers that provide all categories of products such as PA, filters, RF switches, etc. to small and medium-sized enterprises focusing on segmented fields. At present, the global RF front-end market is still dominated by American and Japanese manufacturers, and Skyworks, Qorvo, Broadcom, Qualcomm, and Murata occupy the leading position in the global RF front-end. Among domestic companies, in addition to the companies, they also include Zhuoshengwei, Huizhiwei, Unigroup Zhanrui, Feixiang Technology, Angruiwei and other companies. The basic situation is as follows:
4.2 Weijiechuangxin's industry status and advantages and disadvantages
4.2.1 Industry status
The company has rich experience in RF front-end R&D, and its products keep up with the changes in communication technology. The company is one of the earliest integrated circuit design companies in China to engage in the research and development and design of RF front-end chips, and is deeply engaged in the field of RF power amplifier products. PA is mainly used in the field of wireless communications and needs to continue to innovate with the development of communication technology. In 2019, my country officially launched 5G commercial use. The company launched 5G PA modules in 2019 and mass-produced and sold them in 2020. At present, the company's 5G RF front-end products have been used in mid-to-high-end products of well-known end customers.
is the backbone of China's RF power amplifier industry. CB Insights, a global market research institution, comprehensively evaluated the company's own strength, external attitude, development trends and cooperation performance, released the 2020 list of Chinese chip design companies. The company is one of the integrated circuit design companies with market growth, product representativeness and technology scarcity. The shipment of 4G RF power amplifier ranks first in China and is the backbone of China's RF power amplifier industry.
's products have been certified and used by many well-known mobile phone manufacturers.The company's RF power amplifier module's terminal customers are mainly mobile phone brand manufacturers. The company's products have covered many mainstream mobile phone brands around the world, such as Xiaomi, OPPO, and vivo. Their performance and quality stability and consistency are widely recognized by various customers. The company has become one of the domestic high-quality suppliers in the field of RF front-end power amplifiers in smartphones.
Company shows a high integration trend in the field of 5G RF power amplifiers and has occupied a certain market share.
4.2.2 Technical level characteristics and competitive advantages
Comprehensive and comprehensive RF, analog and digital integrated circuit design capabilities, rich system knowledge of transmitting and receiving links, and rapid testing of system development capabilities. The RF front-end needs to process RF signals that change continuously over time. The internal structure includes RF circuits for signal amplification, analog circuits for power control, and digital interface circuits that meet mobile processing standards. It involves multi-party knowledge of integrated circuit design and is of high complexity. The company's core technical personnel have rich R&D experience in technical fields such as mobile communication power amplifiers, SoC transceivers, communication systems, power management, digital processing chips and testing software development, and can optimize and balance various product indicators, realize rapid product design iteration, and ensure product reliability.
Proficient in the design technology of GaAs PA to achieve cost optimization. GaAs materials have good RF characteristics and high output power capabilities, so they are mainly used in higher frequency wireless communication technologies such as 3/4/5G, Wi-Fi, etc., and are one of the main wafer materials selected by RF front-end manufacturers. Through repeated updates and iterating PA products under different communication technologies, the company has accumulated rich GaAs PA design experience and continuously strengthened its understanding of GaAs wafers. Through years of stable cooperation with Wenmao and Hongjie Technology, the world's leading GaAs wafer foundry, etc., the two parties have carried out technical exchanges from time to time, which not only promotes the company's accumulation of GaAs PA design experience, but also makes common progress in the GaAs PA process, which helps improve product yield and optimize product performance and cost.
has the ability to design high-integration modules earlier and keeps pace with market demand development. The company's RF front-end chip design technology includes design layout technology for different functional chips such as PA in the module, as well as solution design technology to realize the integration of die chips in the module products. The company currently has the design and mass production capabilities of various integrated PA modules such as MMMB PA and TxM; and has achieved large-scale shipment of modules such as high-integration L-PAMiF, and is used in well-known brand customer terminal products such as Xiaomi, OPPO and vivo, and has deepened the design capabilities of high-integration modules.
4.3 The challenges and development trends of future RF technology
5G's popularization and commercialization pose many technical challenges to the RF front-end. In 2019, the world began to enter the 5G era, and the commercial process continued to accelerate. As a new generation of communication technology, 5G cellular mobile communication technology has certain changes compared to 4G in terms of communication frequency, frequency band number, channel bandwidth, and complex technology applications. The specific details are as follows:
5G has certain changes compared to 4G in terms of communication frequency, frequency band number, channel bandwidth and complex technology applications, and puts higher requirements on the design of RF power amplifiers. Therefore, the large-scale popularization and application of 5G communication technology will lead to a significant increase in the design difficulty of RF front-end devices, especially RF power amplifiers, and new design technologies, concepts, and new technologies such as new crystalline manufacturing processes and module packaging processes are required to respond.
RF front-end is a development trend, which will increase the entry threshold for the mid-to-high-end market. The number of RF front-end chips inside 5G mobile terminals has increased rapidly. However, the space left for RF front-end chips inside mobile terminal devices has not increased simultaneously. The miniaturization, thinning and diversified functions of mobile terminals continues to put forward higher requirements on the integration level of RF front-ends.The high integration of RF front-end will further increase its design difficulty. It is necessary to comprehensively consider the characteristics of PA, filter, RF switch, LNA and other devices, as well as the combination methods, interference and coexistence of different types of chips, and the design difficulty is exponentially improved. For example, in a highly integrated RF front-end solution, the RF power amplifier module should not only have traditional signal amplification and transmission functions, but also integrate filters and multiplexers to form PAMiD module products, or further integrate LNAs to form L-PAMiD and L-PAMiF module product forms that have both reception and transmission functions. In the 4G era, only flagship phone manufacturers may adopt highly integrated PAMiD RF front-end solutions. In the 5G era, higher-integration RF front-end solutions such as L-PAMiD and L-PAMiF may become the standard configuration for mid-to-high-end mobile phones, further increasing the entry threshold for the mid-to-high-end market of RF front-end enterprises.
The future RF technology ushers in changes, and the GaAs industry structure may be reshuffled. The first point of debate in the development of PA is process technology. Depending on the semiconductor material used, RF PA can be divided into three major technical routes: CMOS, GaAs (gallium arsenide), and GaN (gallium nitride). China's current mainstream RF technology is the GaAs process. Due to the high cutoff frequency, high gain and relatively low noise of the GaAs process, as one of the most mature compound semiconductor materials, it has become an important cornerstone of RF PA. Its share in the market has increased year by year, and the logic of replacing traditional silicon CMOS processes has been verified by the market. GaAs accounts for a small proportion of the global semiconductor market, and its market share is divided by several RF IDM manufacturers: Skyworks, Qorvo and Broadcom. 76% of the world's GaAs wafer foundry is completed by Wenmao, and the other two are also manufacturers from Taiwan, Hongjie Technology and Huanyu. It can be said that the GaAs device market is monopolized by the US industry, while the GaAs foundry market is contracted by Taiwanese manufacturers. Since the Sino-US trade dispute in 2019, China has driven China to accelerate its de-beautification policy, coupled with the double impact of the new crown pneumonia epidemic in 2020, affecting the revenue of IDM manufacturers and manufacturing OEMs, the related RF front-end components, and the GaAs RF front-end market also shrank in 2020 due to the decline in terminal demand for communication products. However, the power of RF devices produced by the GaAs process is low and cannot meet the requirements of the macro base station for RF devices. GaN can cover both radio frequency and power fields, especially in high power and high frequency fields, and its application effect is particularly excellent; it can be widely used in traditional industries such as communications, computers, consumer electronics, automotive electronics, aerospace, defense and military industry. At present, GaN commercialization is progressing rapidly. With the maturity of GaN material processes and the decline in costs, GaN's penetration rate in the radio frequency market will increase, and may lead the third-generation semiconductor market in the future. The GaAs industry structure is facing pressure to reshuffle.
RF manufacturers have started a wave of factory building and are gradually transforming to the IDM model. Domestic power amplifier manufacturers mainly use the Fabless model. Since the second half of 2019, the global semiconductor industry has entered a prosperous cycle, including GaAs and MEMS foundries, which have shown a supply in short supply, which has led to most domestic RF chip manufacturers operating in the Fabless model falling into the dilemma of shortage of production capacity. When the upstream supply chain is the most in short supply, some manufacturers' orders in foundries have reached more than 6 months, which seriously restricts the development of domestic front-end RF chip manufacturers. At the same time, since most RF chip manufacturers are in the IDM mode, there are very few foundry resources worldwide. Taking the gallium arsenide foundry as an example, all well-known and mature manufacturers in the industry are in Taiwan, China. One big and one small are Wenmao and Hongjieke, followed by Huanyu, Lianying Optoelectronics, Sanan Integration, etc. Therefore, how to obtain stable production capacity has become a problem for domestic RF chip manufacturers. Under this circumstance, domestic RF front-end manufacturers have differentiated, and manufacturers focusing on power amplifiers generally maintain the Fabless mode, but manufacturers focusing on filters have begun to build their own production lines and move towards the IDM mode. The industrial chain is showing a multi-modal integration trend, and de-waferization of design companies and outsourcing of IDM production capacity has become an inevitable trend, and industry integration will continue in the future.
(Report source: Future Think Tank)
5 Profit forecast
Weijiechuangxin’s main business is PA module, Wi-Fi RF front-end module, RF switch, and receiver module. In 21, due to the company's (1) enhanced product competitiveness and growth in downstream market demand, the unit price and sales volume of 4G model PA modules respectively promoted the rapid growth of sales revenue of 4G model PA modules; (2) 5G model PA modules were shipped in large quantities, promoting the rapid increase in sales revenue; (3) In 2021, the revenue contributed by the newly launched Wi-Fi 6 RF front-end modules, RF switches, and receiver modules also increased significantly year-on-year. Overall revenue in 21 years is very optimistic. The growth rate is expected to reach 93.79%. Based on the industry's supply and demand relationship, competitive landscape, company R&D and product layout, preliminary forecasts are made for the revenue and gross profit margin of each business. We predict that the company's total revenue from 2021 to 2023 will be 3.508/4.091/4.910 billion yuan, gross profit margin will be 26.90%/28.65%/28.90%, and net profit will be -0.67/4.91/589 million yuan.
PA module
Company can mainly provide various types of modules of 2G-5G, which can be divided into low integration, medium integration, and high integration according to their integration degree. From 2018 to 2021, the company made significant breakthroughs in major Android mobile phone manufacturers, and the share of leading terminal manufacturers is constantly increasing. 2021H1 PA modules with high integration and medium integration account for 6.73% and 93.27% of sales respectively. At present, high integration modules are still in the rapid growth period, and the proportion of sales amount is expected to further increase, and the future growth space has been opened. Overall, we expect the company's PA model business revenue from 2021 to 2023 to be 3.341/3.896/4.675 billion yuan, an increase of 86.03%/16.60%/20.00% year-on-year, and a gross profit margin of 26.46%/28.26%/28.46%.
Wi-Fi RF front-end module
Company's Wi-Fi RF front-end module business started in 2019, with relatively small sales in the first two years, only 1.1 million yuan and 2.18 million yuan respectively. However, since 2021, the company's wifi6 module was successfully developed and mass-produced, and was shipped in large quantities to the market, which has increased the sales amount, unit price and gross profit margin of Wi-Fi RF front-end modules. It is estimated that the company's Wi-Fi RF front-end module business revenue will be RMB 92/119/154 million yuan from 2021 to 2023, an increase of 4102.29%/30%/30% year-on-year, and the gross profit margin will be RMB 46.22%/47.00%/47.00%.
RF switch
The company's RF switch business is relatively small in terms of shipments, and the overall scale effect has not been formed, resulting in a high cost of the product. In 2019 and 1020, the prices have been adjusted accordingly, resulting in negative gross profit margins. In 2021, the price correction began, and gross profit margin rebounded and profits resumed. It is estimated that the company's RF switch business revenue will be RMB 26/0.27/0.29 million from 2021 to 2023, an increase of 112.34%/5%/5% year-on-year, and the gross profit margin will be 7.67%/8.00%/8.00%.
Receiver module
2021 The company's receiving module was shipped in batches in the first half of 2021, and the product performance was good. It is estimated that the company's receiving module business revenue will be RMB 47/0.49/0.52 million from 2021 to 2023, and the gross profit margin will be RMB 26.46%/26.46%/326.46%.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
Selected report source: [Future Think Tank] Future Think Tank - Official website
