(Report producer/author: Everbright Securities, Liu Kai, Ishizaki Ryo) 1. Semiconductor is the core main axis of the electronics industry 1.1. Review 2021: Those who win semiconductors will win the world after removing new stocks in 2021, from the perspective of the largest incre

2025/07/0714:54:03 hotcomm 1936

(report producer/author: Everbright Securities, Liu Kai, Ishizaki Ryo)

. Semiconductor is the core main axis of the electronics industry

.1. Review 2021: Those who win semiconductors win the world

Excluded new stocks in 2021, from the perspective of the largest range increase , semiconductors are still the sub-industry with the greatest investment opportunities in the electronics industry in 2021. Among them, the sub-sectors and companies with the largest increase in range include: driver IC (Fuman Microelectronics/Ming Microelectronics/Jingfeng Mingyuan), SoC/MCU ( National Technology /Guoke Micro/Quanzhi Technology/Rui Xinwei/Xinhai Technology/Fuhan Micro/Lexin Technology), semiconductor equipment (Changchuan Technology/Xinyuan Micro/Northern Huachuang), semiconductor materials (Jingrui Electric Materials/Shengong Co., Ltd./Nanda Optoelectronics), power semiconductor ( Silan Micro/Star Semiconductor/Minde Electronics), simulation (Shanghai Beiling/Shenbang Co., Ltd.). In addition, some companies in the LED industry have also experienced good growth, including Ocean King, Infite , Lehman Optoelectronics, etc.

Different fields have different ups and downs. Judging from the rise and fall of sub-industry in 2021, semiconductor equipment, discrete devices, passive components, and other electronic components have seen a record high; panels have seen a record low.

2020 annual review: After excluding new stocks in 2020, military IC and semiconductors in 2020 are the two largest sectors in the electronics industry with the largest increase. Among them, the sub-sectors and companies with the largest increase include: Military Infrared (Gaodehongwai/Richuang Micronano/Dali Technology), Military Passive Components (Hongyuan Electronics/Torch Electronics/Hongda Electronics), Military Semiconductor ( Unisex Guowei / Zhenhua Technology ), Power Semiconductor (Jiejie Microelectronics/Yangjie Technology), Semiconductor Design (Zhuoshengwei/Fumanwei/Jingfeng Mingyuan), Semiconductor Materials (Jacques Technology/Anji Technology/Nanda Optoelectronics/Shanghai Xinyang), Apple Supply Chain ( Luxshare Precision /Gol Co., Ltd.).

2019 annual review: Semiconductors, TWS and 5G base station PCB are the core spindles. (1) Domestic substitution. Coupled with the turning point of the economy, the performance of the semiconductor sector is improving. Hyding Technology , Weier Co., Ltd., Wingtech Technology and other companies have achieved rapid growth in performance. (2) The performance of the PCB sector is improving: 2019 is the first year of China's 5G network construction. Due to the construction of 5G and the expansion of 4G, the high-frequency and high-speed PCB industry has huge demand and high industry barriers. The performance of Shenzhen South Circuit and Shanghai Electric Power Co., Ltd. has entered a period of rapid growth. (3) The sales of AirPods have increased significantly. Apple once again led the industry of consumer electronics to innovate . Luxshare Precision and Goertek's revenue has achieved rapid growth, and the penetration rate of TWS headphones is expected to continue to increase.

Review the Ten Years of Electronics (2009-2020): Mergers and acquisitions and Apple's supply chain are the core driving forces, and China's smartphone and security industries are rising strongly. The electronics industry is a large-scale manufacturing industry, and the ten-year bull stocks are all driven by performance. Behind the high growth in performance is the rise of China's smartphone, security, LED and semiconductor industries led by Apple. Under the wave of continuous increase in smartphone penetration, the rise of China's smartphone, security, LED and semiconductor industries. (1) Mergers and acquisitions achieve sublimation of the pattern. Classic cases such as Wingtech Technology's acquisition of Anshi Semiconductor , Weil Shares acquisition of OV, Xinwei Communication's acquisition of Lairde , etc., all show that the horizontal and vertical acquisition of in the industrial chain will help enterprises achieve customer expansion and technology deepening. (2) Apple's supply chain is the core of the differentiation of consumer electronics companies. The introduction of Apple's supply chain helps enterprises achieve comprehensive technological improvements from equipment, processes and materials.

.2. Growth rate: 2021 The semiconductor industry performed well in the first three quarters

Electronics industry 2021 Review of the first three quarters. In the first three quarters of 2021, the revenue of 434 companies in the industry (A shares) was 239.8 billion yuan, an increase of 24.3% year-on-year; the net profit attributable to shareholders of the industry was 176 billion yuan, an increase of 55.1% year-on-year.

Sub-sector segments of each sub-industry 2021 The top ten rankings of revenue growth rates in the first three quarters are: semiconductor-storage (+116.69%), semiconductor-analog (+91.49%), display device-panel (+76.87%), LED-LED power and equipment (+75.95%), PCB-copper clad plate (+62.45%), Tesla supply chain (+61.44%), semiconductor-equipment (+57.77%), LED-LED chip (+55.21%), consumer electronics-acoustics (+50.40%), component-capacitors (+49.71%).

The top ten sub-industry segments in 2021 The first three quarters of net profit growth are: display device panel (+732.98%), semiconductor-storage (+200.37%), semiconductor-analog (+170.88%), LED-LED chip (+163.84%), PCB-copper clad plate (+137.80%), LED-LED power supply and equipment (+100.07%), semiconductor-sensing (+89.33%), semiconductor packaging and testing (+85.88%), component-capacitor (+79.50%), component-inductor (+74.54%).

Electronics Industry Top 10 companies in the first three quarters of 2021. Industrial FULL (revenue in the first three quarters of 2021 was 305.357 billion yuan, a year-on-year increase of 8.1%, the same below), HNA Technology (1717.67, -27.3%), JD.com A (1632.78, +60.6%), TCL Technology (1210.42, +147.9%), Xiamen Xinda (839.34, +65.6%), Luxshare Precision (810.13, +36.1%), Hikvision (556.29, +32.4%), Goertek Co., Ltd. (527.89, +52.0%), Guanjie Technology (508.36, +968.2%), and Wingtech Technology (386.46, +0.8%).

Electronics Industry Top 10 companies in the first three quarters of revenue growth in the first three quarters. Tailong Co., Ltd. (revenue in the first three quarters of 2021 was 3.977 billion yuan, a year-on-year increase of 1563.3%, the same below), Guanjie Technology (508.36, +968.2%), Guoke Micro (18.76, +398.7%), Fuhan Micro (12.80, +235.5%), Mingwei Electronics (10.71, +233.5%), Shengong Co., Ltd. (3.49, +208.9%), Beijing Junzheng (37.93, +208.8%), Hongchang Electronics (33.08, +185.5%), Binbin Co., Ltd. (157.12, +182.4%), Xinyuan Micro (5.47, +158.2%).

Electronics Industry Top 10 companies in the first three quarters of 2021. BOE A (net profit attributable to shareholders in the first three quarters of 2021 was RMB 20.015 billion, a year-on-year increase of 708.4%, the same below), Industrial FULL (110.07, +25.0%), Hikvision (109.66, +29.9%), TCL Technology (91.02, +349.4%), Luxshare Precision (46.90, +0.2%), Weil Shares (35.18, +103.8%), Rainbow Shares (34.69, turn losses into profits), Goer Shares (33.33, +65.3%), Lens Technology (32.97, -3.9%), Transsion Holdings (28.82, +47.5%).

Electronics Industry 2021 The top 10 companies in the year-on-year growth rate of net profit in the first three quarters (excluding negative values). Guokewei (net profit attributable to shareholders in the first three quarters of 2021 was RMB 181 million, a year-on-year increase of 11918.1%, the same below), Lehman Optoelectronics (0.45, +7137.2%), Beijing Junzheng (6.35, +2733.5%), Tailong Co., Ltd. (1.10, +2240.5%), Xiaocheng Technology (0.86, +1902.4%), Jinlong Mechanical and Electrical (2.07, +1852.4%), Jingfeng Mingyuan (5.73, +1818.7%), Shilan Micro (7.28, +1543.4%), Taijing Technology (1.71, +1443.2%), Huilun Crystal (1.38, +1225.2%).

Key companies in the semiconductor field in 2021 had an overall revenue of 291.7 billion yuan, a year-on-year increase of 30.8%; the overall net profit attributable to shareholders was 37.4 billion yuan, a year-on-year increase of 71.3%.

.3, 22 years of focusing on semiconductors, consumer electronics assembly and OEM, military electronics

, rising sun, core and soul-shaping: domestic substitution and intelligent innovation in the G2 era. In the game of the G2 of China and the United States, looking forward to the future, we believe that the wave of domestic substitution and innovation will be the core axis of the future technology industry. (1) Domestic substitution: With the United States' continued suppression of Chinese companies such as Huawei , ZTE, and SMIC, Chinese technology companies led by Huawei are gradually promoting domestic substitution in terms of parts supply chains, semiconductor supply chains, operating systems, etc. (2) Intelligent innovation: The future 5G era is the era of intelligence of all things. 5G+AICDE (AI, IoT, Cloud, Data, Edge) will stimulate a massive application space for the industrial Internet, and the trends of VRAR and smart cars are gradually emerging.

(report producer/author: Everbright Securities, Liu Kai, Ishizaki Ryo)

. Semiconductor is the core main axis of the electronics industry

.1. Review 2021: Those who win semiconductors win the world

.2. Growth rate: 2021 The semiconductor industry performed well in the first three quarters

.3, 22 years of focusing on semiconductors, consumer electronics assembly and OEM, military electronics

Semiconductor: The wave of domestic production has lasted for a long time, and we will continue to pay attention to the high-prosperity segmentation track. (1) Equipment and Materials: Against the backdrop of sanctions by Huawei and SMIC, the localization of semiconductor equipment and materials has become an urgent need. With huge market demand, national policy support and large R&D investment, the market share of domestic equipment and material companies will continue to increase, and the wave of domestic substitution will last forever. (2) AIoT: Against the backdrop of Hongmeng acceleration, the demand for IoT terminals continues to rise, and the number of connected terminals continues to rise. As the brain of IoT terminals, it has benefited significantly.(3) IGBT: Benefiting from the significant promotion of clean energy, the sales volume of new energy vehicles and photovoltaic power generation power continue to increase. IGBT, as the core chip in the above two fields, has long-term growth potential. In the short term, IGBT has only slightly increased prices in some fields in 2021, and the safety margin of the price end is relatively high in 222. (4) RF: In the future, 5G upgrades, module integration, and domestic substitution will drive the rapid growth of China's domestic RF front-end companies. (5) Optics: Optics is an important direction for mobile phone terminals, with continuous innovation, dual main cameras/triple main cameras will become the mainstream in the future, the number of pixels of a single CIS is still increasing, and the value of optical stand-alone machines is expected to continue to grow. (6) Military semiconductors benefit from the 14th Five-Year Plan will continue to be in a high prosperity.

Consumer Electronics: VR/AR and smart cars are the most important innovation directions in the future, and finished product assembly is the core spindle of the growth of the consumer electronics leader in the future N years. (1) Looking at the long-term view of new energy vehicles and VRAR, the grand space for new energy vehicles and VRAR: VR is expected to become a hot spot for consumer electronics after smartphones. The VR industry is growing rapidly, and the AR industry space is grand; the huge space for automotive electronics is still in the early stages of penetration, and the smart car supply chain business will become an important driving force for future growth of consumer electronics supply chain companies. (2) The trend of the leader in smart phone components to extend to downstream OEM is obvious. The finished product assembly business of products such as AirPods, Apple Watch, iPhone, Android TWS and IoT will drive the rapid growth of revenue and profits of consumer electronics leaders.

. Semiconductor: Grasp the large cycle of domestic production

.1, wafer manufacturing echelon differentiation trend is becoming more and more obvious

As semiconductor manufacturing processes develop in a more advanced and refined direction, the two main leading factors of huge capital expenditure and high-end technology blockade (such as EUV lithography machines) have led to the increasing obvious boundaries of different nodes and the boundaries of manufacturers. Among them, the only three companies are TSMC, , Samsung, and , Intel, and . In terms of mature processes, it has been divided into four major manufacturers: UMC, GlobalFoundries, SMIC and Huahong Group. Due to the core limitation of high-end process equipment-EUV lithography machines, SMIC, the leading manufacturer of wafer manufacturing in China, can only stop at 7nm.

According to the statistics and predictions of IC Insights, the market share of various semiconductor processes is developing in a relatively more balanced direction. In 2019, the market share of advanced processes below 10nm was only 4.4%, while by 2024, its share will grow to 30%. During this period, the market share of the 10nm -20nm process will drop from 38.8% to 26.2%; the market share of the 20nm-40nm process will drop from 13.4% to 6.7%; however, according to this statistics and forecast, the proportion of mature processes above 40nm has not changed significantly in recent years. Overall, by 2024, the above processes below 10nm, 10nm -40nm, and above 40nm each account for about one-third of the market.

Advanced Process From the current situation, 10nm is only a transitional process, 7nm is relatively mature and has a large mass production scale. Relatively speaking, 5nm is not a long time to achieve mass production, and it is in the climbing stage, while 3nm and 2nm have not yet achieved mass production. These two processes are the most cutting-edge process technology .

mature process is mainly used to manufacture small and medium-capacity memory chips, analog chips, MCU, power management (PMIC), analog-digital mixing, sensors, radio frequency chips, etc. At the application level, the rapid growth of demand for cloud computing and 5G RF devices has provided strong impetus for mature processes.

From the demand side, the market application prospects of specialized processes are broad and have the foundation to absorb more companies to improve and strengthen in their respective special fields. At present, the three major chips, MCU, analog circuit and discrete devices, account for nearly 50% of the overall market sales share, and their development is more stable, providing a foundation for the application of characteristic processes. What is more worth noting is that compared with advanced processes, the penetration rate of characteristic processes in the wafer foundry business model is relatively low. In terms of traditional logic devices, except for Intel, major manufacturers basically adopt the division of labor cooperation model of "design-agent-packaging and testing", while in the fields of analog devices, MCUs, and discrete devices, they are still mainly produced by IDM.This gives more room for the expansion of mature process technology OEM business.

In addition, the volatility of the profitability of suppliers of special processes is relatively small. On the one hand, the stability on the demand side makes the manufacturers more predictable in business management. On the other hand, due to the relatively high maturity of the process, the manufacturer of special processes is relatively small in terms of equipment expenditure and R&D investment scale, which gives them advantages in cost control.

.2. Semiconductor equipment and materials: The golden wave of domestic substitution has started

On May 15, 2019, the US Department of Commerce included Huawei in the list of entities under export control, and the US technology ratio was limited to 25%. Then, on May 15, 2020, the 25% limit ratio was adjusted to all technologies containing US should be licensed in the US. On October 4, 2020, SMIC issued an announcement that the US BIS has restricted some of the US equipment, accessories and raw materials exported to SMIC in accordance with the US export control regulations. Then, on December 4, 2020, the US Department of Commerce included SMIC and some of its subsidiaries and shareholders on the "entity list" on the grounds of protecting US national security and diplomatic interests. With Huawei and SMIC being sanctioned, the localization of equipment and materials has become an urgent need, officially ushering in this round of golden wave of domestic substitution.

In 2019, China accounted for only 2% of the wafer manufacturing equipment field, and 16% of the semiconductor materials field. Wafer manufacturing equipment is basically monopolized by the United States, Europe and Japan, and the problem of equipment "bottleneck" is particularly obvious. With the continuous increase in national support, manufacturing companies and domestic equipment and material companies have a strong willingness to cooperate, the progress of domestic production has accelerated significantly, and the market share has continued to increase, which is expected to become a must-choose high-quality track in the next 10 years. The rate of domestic substitution for semiconductor equipment and materials is expected to be higher than that of the latter companies.

.2.1. The share of equipment and materials market in mainland China continues to increase

According to the International Semiconductor Industry Association (SEMI), global original equipment manufacturers' semiconductor manufacturing equipment sales will exceed US$100 billion in 2022, setting a record high. Sales in 2021 are expected to be US$95.3 billion, while in 2020 it will be US$71.19 billion. The continuous investment of equipment manufacturers has driven the expansion of the front-end and back-end semiconductor equipment fields.

According to SEMI data, the sales of semiconductor equipment in mainland China in 2020 was US$18.72 billion, an increase of 39.2% year-on-year, accounting for 26.3% of the global semiconductor equipment market, becoming the world's largest semiconductor equipment market for the first time. In 2022, mainland China's semiconductor equipment sales are expected to reach US$30 billion, a year-on-year increase of 12%, and its market share is expected to increase to 30%, showing an upward trend year by year.

According to SEMI data, global semiconductor material sales in 2020 reached US$55.3 billion, a year-on-year increase of 4.6%, of which wafer material sales were US$34.9 billion, accounting for 63%, and packaging material sales were US$20.4 billion, accounting for 37%. With the promotion of advanced node ICs, 3D memory architectures, heterogeneous integrated manufacturing, etc., global semiconductor materials are expected to maintain a steady growth of 5%, and are expected to reach US$61.15 billion by 2022, of which wafer materials are expected to be US$38.7 billion and packaging materials are expected to be US$22.45 billion.

According to SEMI data, semiconductor material sales in mainland China reached US$9.76 billion in 2020, an increase of 12.3% year-on-year, accounting for 17.7% of the global semiconductor material market, making it the second largest semiconductor material market after Taiwan, which accounted for 22.4% globally. It is expected that the sales of semiconductor materials in mainland China will reach US$11.92 billion in 2022, maintaining a rapid growth of nearly 10%, and the proportion of global market share is expected to increase to 19.5%.

.2.2. Leaders in various sub-sectors of semiconductor equipment and materials benefit from the acceleration of domestic production

According to SIA data statistics, global semiconductor equipment can be roughly divided into 11 categories and more than 50 models.The front-end equipment mainly includes eight categories: lithography machine, , etching machine, thin film deposition machine, ion implantation machine, CMP equipment, cleaning machine, front-end detection equipment and oxidation and annealing equipment. The rear-end equipment is mainly divided into testing equipment and packaging equipment. The lithography machine, thin film deposition equipment, etching and cleaning equipment, front-end detection equipment and back-end detection equipment have a global market share of about 19%, 19%, 25%, 9% and 9% respectively in 2019. At present, nearly 85% of the market share in the front-end equipment field is mainly monopolized by American, European and Japanese companies.

According to SIA data statistics, semiconductor materials are divided into two categories: wafer materials and packaging materials. Among them, wafer materials can be divided into silicon wafer , electronic special gas, photoresist and supporting reagents, photomask plates, wet electronic chemicals, CMP abrasive pads and grinding liquid, sputtering target , etc., silicon wafers account for the largest proportion of 36%, and packaging materials can be divided into organic substrates, lead frames, bonding wires, packaging resins, ceramic materials, chip bonding materials, etc., and organic substrates account for the largest proportion of 48%.

Currently, it vigorously improves the competitiveness of semiconductor equipment and material suppliers in mainland China, and has significant spillover benefits in ensuring the security of China's semiconductor industry chain, which will help greatly reduce the risks brought by export controls such as the United States. Therefore, despite the huge barriers to entry, the Chinese government will continue to focus on supporting the local semiconductor equipment and materials industry. Even with the expectation of easing Sino-US relations and loosening of equipment, the general trend of domestic production remains unchanged.

As semiconductor equipment manufacturers gradually log in to Science and Technology Innovation Board may be supported by big funds, many local companies' products can now be used in the 28nm production line. Some products such as China Micro Corporation's CCP etching machine has even entered TSMC's most advanced 5nm logic chip production line. In the field of semiconductor materials, domestic substitution has been achieved in the low-end fields, while high-end fields such as 12-inch light-doped silicon wafers or ArF photoresist are also accelerating breakthroughs. Equipment and material manufacturers continue to obtain the opportunity for verification and import given by local wafer fabs, the progress of domestic production has accelerated significantly, and the market share has continued to increase. (Report source: Future Think Tank)

.2.3. Future performance driving force of semiconductor equipment and materials industry

Domestic substitution is accelerating : Solve the "bottleneck" problem, increase the market share of local equipment and material manufacturers in the supply chain, and reduce sanctions risks. The Biden administration has continued and expanded the semiconductor policy since the Sino-US trade friction: subsidize chip manufacturing internally, and win over TSMC and Samsung to build factories in the United States, while continuing to stumbling out the export of technology and equipment from key companies to China. Although China-US relations have been easing recently and equipment loosening expectations, the domesticization rate of key semiconductor equipment in mainland China is generally lower than 10%. The equipment gap is large, but most of it depends on imports. The problem of "bottleneck" is still very serious, and domesticization is still a relatively certain investment theme in the next ten years.

Fabs are constantly expanding: semiconductor equipment and materials are most closely connected with fabs. In the investment and construction of a new fab, equipment investment generally accounts for 70-80%, and the consumable properties of materials can replace new and old production lines. Fabs are constantly expanding with the urgent need for domestic substitution. The operating income and market share of semiconductor equipment and material manufacturers are expected to usher in a significant increase.

technology is constantly iterating: chip process technology and equipment materials always follow the development law of "one generation of processes and one generation of equipment, with one generation of materials". New process technology has spawned the demand for new process equipment and process materials, and thus promoted the update and iteration of the entire industry.

.3. Design: Domestic substitution drives a lot of flowers to bloom, AIOT. Military semiconductor demand continues to be in high prosperity, optical innovation continues to be continuous

The global semiconductor industry is divided into IDM model and foundry model. The OEM model of design-manufacturing-packaging and testing has separated light assets and heavy assets in the semiconductor industry. Design companies focus on the product definition of light assets, and OEM and packaging and testing plants focus on the production and manufacturing of heavy assets. The foundry model is developing rapidly in logic chips, while the IDM model is still mainly used in the fields of storage, analog RF and power.Mainly because of the standardization of logic chip production process, the driver performance of Moore's Law is improved and the cost of is reduced. The memory chip is similar to commodity , with a relatively simple design and obvious advantages in manufacturing scale. The design of high-end products of simulated RF and power semiconductors needs to be closely integrated with the manufacturing process.

design products with many types. Electronic products are mainly composed of four parts: sensors, memory, processors, and communication components, which correspond to the perception, storage, calculation and transmission of data. In addition, analog chips and power semiconductors are also needed.

OEM model has enabled the design of mainland China to flourish and domestic substitution is in full swing. For example, Huawei HiSilicon in the comprehensive development; Weil Co., Ltd. (Ouwei) in the field of CIS design; Zhuoshengwei and Weijiechuang core in the field of RF chip design; Zhanrui and Aojie in the field of baseband chip ; Zhaoxin and Loongson in the field of computer CPU; Lanqi Technology in the field of memory interface chip; Special ICs and FPGA in the field of Unigroup Guowei, etc.; Gigayi innovation in the field of memory chip design, Beijing Junzheng (ISSI); Shengbang Co., Ltd. in the field of analog chip design; Star Semiconductor and Xinjie Energy in the field of power chip design; Huiding Technology in the field of fingerprint chip ; Quanzhi Technology in the field of consumer electronics SOC, Rockchip micro; Nasda in the field of printer chips; MCU Zhongying Electronics in the field;

major companies: Market demand and competitive landscape are the key. Weil Co., Ltd., Zhuoshengwei, Tianyi Innovation , Lanqi Technology and Huiding Technology are world-class competitiveness. In 2019, Weil's sales in the CIS field were third in the world (second only to , Sony, , Samsung), Zhuoshengwei's sales in the RF switch field were top three in the world, Lanqi Technology's sales in the memory interface field were first in the world, Zhaoyi's sales in the NOR field were third in the world (second only to Wanghong Huabang Electric), and Huiding's sales in the under-screen fingerprint field were first in the world. The growth momentum of these five companies mainly comes from the changes in market share brought about by the growth of industry market demand (camera, 5G RF, server, TWS, under-screen fingerprint) and the competitive landscape.

Small companies: Domestic substitution is the key in the big market. Shengbang and Star Semiconductor belong to the analog (power) industry. This industry requires long-term R&D experience to accumulate, with a leading market share of more than 25%, and domestic manufacturers have extremely low market share. Shengbang and Star Semiconductor are replacing domestically in the low-end product market, and their revenue and profits are growing rapidly against the trend. In the short term, we will complete the product line through continuous research and development + mergers and acquisitions, and penetrate from the low-end to the mid-end. Due to the small market share, rapid growth in 3-5 years is expected.

.4, AIOT The high prosperity, with Hongmeng accelerating the "core" of China's "core" blooming

AIoT, that is, artificial intelligence Internet of Things, broadly refers to the integration of artificial intelligence technology (AI, Artificial Intelligence) and Internet of Things technology (IoT, Internet of Things) and its application in practice. Combining the two, a massive amount of data is generated and collected through the Internet of Things to store it in the device terminal, edge or cloud, and then intelligently analyze the data through machine learning and other technologies to realize the dataization of everything and the intelligent connection between everything. The two work together to promote experience optimization and industrial upgrading.

In recent years, artificial intelligence has fully entered the era of machine learning. The massive data resources brought about by the implementation and large-scale deployment of the Internet of Things application level have also promoted the iterative update of core algorithms and deepened the technical penetration in the IoT field. This has led to the expansion of the market size of the entire AIoT industry.

According to IDC data, the global IoT market size in 2019 was US$686 billion, and it can reach US$1 trillion in 2022, and the CAGR from 2018 to 2023 was 12.20%; correspondingly, the data scale of Internet of Things transmission in 2019 has reached 14ZB, and big data technology will drive the rapid expansion of the transmission scale and reach about 80ZB in 2025. In the next few years, 5G technology will continue to empower the AIoT market. The global AIoT market size was approximately US$226.4 billion in 2019 and exceeded US$482 billion in 2022 with a CAGR of 28.65%.

According to IDC's forecast, the centralized growth of "new infrastructure" and intelligent interconnected applications on the policy side, coupled with 5G empowerment, will jointly promote the Chinese market to grow at a growth rate of up to 32.52% from 2019 to 2022, reaching a scale of US$128 billion in 2022, becoming the world's most promising AIoT market.

Compared with IoT, the AIoT industry chain emphasizes the application of artificial intelligence technology, so there are more expansions in chips, platforms, solutions and other directions. The AIoT industry industry chain can be divided into four levels: sensing layer, transmission layer, platform layer, application and service layer. Based on this, the value distribution of the AIoT industry chain is roughly as follows: hardware/smart terminals (chips, sensors, modules, and smart terminals) account for about 25%, communication services account for about 10%, platform services account for about 10%, and the most downstream software development/system integration/value-added services/application services account for about 55%. Among them, although the value of the platform, application and service layer accounts for a higher proportion, AIoT chips are the cornerstone of the entire industrial chain and the starting point for market extension.

According to Huawei's Global Industry Outlook (GIV) forecast, by 2025: In the field of individuals and families, the number of personal smart terminals will reach 40 billion, of which 8 billion smartphones will reach 3 billion tablets and PC computers will reach 8 billion, and the number of various wearable devices will reach 8 billion. On average, each person will have 5 smart terminals, and 20% of people will have more than 10 smart terminals; nearly 20 billion real-time online smart home devices will become a natural extension of personal and family perception. The penetration rate of smart assistants reaches 90%, and 12% of households will become users of smart service robots.

In the field of Internet of Vehicles, 5G connected vehicles will reach 200 million, 100% of new cars will be connected to the Internet, and the market space for Internet of Vehicles will reach 145 billion US dollars. The connection between people, vehicles and transportation infrastructure will be achieved, and the improvement of connection capability will enable the vehicle-connected application to upgrade from in-vehicle entertainment to driverless driving, fleet orchestration and management, and transportation intelligent services. While the potential of the Internet of Vehicles market is released, transportation costs will also drop significantly. In terms of

device access, the number of connected devices worldwide will reach 100 billion, of which 55% will be used in the commercial Internet of Things field. Nearly 6.5 billion people in the world will live under mobile communication network services, 77% of the population will be connected to the Internet, and the Gigabit mobile network will cover 70% of the population. In terms of households, global household broadband access will reach 75% during the same period, of which the gigabit broadband penetration rate will reach 30%.

Domestic AIoT development has begun a new process. In 2019, Huawei's consumer business proposed the "1+8+N" full-scene intelligent ecological strategy; on May 18, 2021, Huawei officially announced that it would comprehensively upgrade the "HarmonyOSConnect" two major brands, "HUAWEIHiLink" and "PoweredbyHarmonyOS", aiming to solve the interconnection and interaction problems between various smart terminals and promote the further implementation of the full-scene intelligent strategy and ecological construction, and jointly build the Hongmeng ecosystem; on June 2, 2021, Huawei HarmonyOS2 was officially released.

HarmonyOS2 Unlike the smart device operating system that was separated in the past, multiple devices will be integrated into a "super terminal" to control all devices through the unified data control center entrance of the hyper terminal. Hongmeng OS has ushered in the next decade of the operating system era of intelligent connection between all things, further accelerating the evolution of the AIoT industry chain. It is estimated that the number of devices equipped with the Hongmeng operating system will reach 300 million by the end of 2021, of which Huawei has more than 200 million devices, and the number of various terminal devices for third-party partners will exceed 100 million.

.4.1. Huawei HiSilicon is blocked, and local high-end chips are expected to rise

Huawei series incident review:

On May 15, 2019, Trump signed an executive order requiring the United States to enter a state of emergency. In this state of emergency, American companies are not allowed to use telecommunications equipment produced by companies that pose risks to national security. The U.S. Department of Commerce has included Huawei on the entity list on the grounds of national security. On September 15, 2020, the Huawei ban officially came into effect, and Huawei was unable to obtain chips from third parties.

Huawei achieved revenue of 891.4 billion yuan in 2020, a year-on-year growth of only 3.80%, a significant decline.HiSilicon, a chip design company under Huawei, had revenue of nearly US$2.7 billion in 2020, ranking among the top ten semiconductor manufacturers in the world; however, due to the official effect of the ban, HiSilicon fell out of the top 15 at the end of 2020.

As the largest IC design company in China, HiSilicon is officially affected by the US ban and can no longer produce chips through foundries such as TSMC and SMIC. Therefore, from the supply side, its market share of more than RMB 70 billion in 2020 will leave huge room for imagination for other outstanding high-end IC design manufacturers in the future.

.4.2. Processor chips continue to occupy the main line of the semiconductor market

processor is the semiconductor product with the highest market share and the product with the highest gross profit margin. It currently accounts for about US$100 billion in the global market. Generally speaking, semiconductor products include processor chips, memory, logic devices, analog devices, and other specialized devices, of which processor chips account for about 32%.

In the processor chip, general-purpose microprocessors account for 15%/32%=46.9%, which includes the central processors of computing devices such as computers and servers; application processors (special) account for 11%/32%=34.4%, which mainly includes SoC chips integrated in mobile phones, multimedia processors in consumer electronic products, etc.; in addition, there are microcontrollers that account for 5%/32%=15.6% and embedded microprocessors that account for 1%/32%=3.1% (generic). Among general-purpose processors, PCs account for about 62% and servers account for about 34%.

.5, RF: 5G upgrade, module integration, and domestic substitution trends are gradually rising

.5.1, 5G upgrade: Communication system intergenerational switching brings growth opportunities, and 5G demand drives RF front-end devices to increase both the volume and price of

5G. The complex performance requirements of the era promote the increase in the value of devices. In the 4G LTE era, the growth of the RF front-end market mainly comes from the development of carrier aggregation CA and MIMO technologies. With the opening of the 5G era, base stations and user-side devices are thinner and smaller, which puts higher requirements on the size, performance and integration of RF devices, and increases the value of each device:

Overall structure: 5G RF front-end structure is more complex, with higher up/downlink losses, and higher requirements on the losses of each device level, so that the power consumption of the entire machine will not increase significantly. Bandwidth: 5G bandwidth has been increased from 40M-60M in the 4G era to above 100M, which greatly increases the design difficulty of PA and filters and puts higher requirements on the process.

transmit power: 5G higher transmit power requirements bring higher design standards for PA and filters, the working frequency is constantly increasing, and the working low level is constantly decreasing. High frequency: High frequency band signals put demands on new PA materials (GaN), while the transducer constraints of SAW filters make 5G high frequency bands often only use filters with more complex technical structures for communication filtering. The number of

5G frequency bands has increased significantly, and the number of RF front-end devices has doubled. With the introduction of 5G standards, various commercial frequency bands are emerging one after another. Taking common 5G models as an example, the commonly used Sub-6 (N77-N79), mmWave (N257-N261), HB, MB (LTE B1~B34), and dozens of frequency bands such as WCDMA/GSM and WIFI, BT, FM need to be supported. The increase in the number of frequency bands corresponds to the increase in the number of devices, especially the number of switches and filters closely related to the number of channels will increase rapidly.

antenna roots increase, the number of switches increases, and the tuner requirements are higher. In terms of antennas, due to the 4*4 MIMO requirements of domestic operators, the number of antennas required has doubled from 4 to 8, and the corresponding number of switches can reach 10-20. On the other hand, the increase in reception frequency has led to higher operating voltage requirements for tuners, and the demand for higher performance High-V tuner market (voltages from 45-60-80V) is increasing. The increase in the

frequency band leads to a high growth in the number of corresponding filters. Since 5G introduced NSA, it requires 4G and 5G to work simultaneously, the number of corresponding filters in the duplexers of 4G and 5G modules has been greatly increased, and the number can be increased from 20 in the 4G era to more than 50.On the other hand, the demand for high-performance filters in commercial ultra-high frequency bands such as 5G NR N78 and 79 is more rigid, and the full-band integration of the re-cultivation band also makes the filter insertion loss, roll-off and other indicators have higher requirements. Under the combined action of these factors, the usage of filters and unit price in the RF front-end have increased.

From a device perspective, 5G has increased the volume and price of various RF devices, and the value of a single machine has increased at least twice as much as the 4G flagship model. In terms of PA, higher bandwidth and power characteristics have increased the unit price from US$4.8 for 4G models to US$8.3 for 5G; among filter devices, the emergence of more frequency bands has greatly increased the number of filters, and in the 4G era, many new duplex requirements have been added outside the crowded heavy-cultivation frequency band, driving the overall filter value to US$15.3, an increase of 135% year-on-year.

Overall, with the growth of the number of 5G driver devices, the degree of module integration is getting higher and higher, and the value of the stand-alone RF front-end will exceed the US$30 mark, which will at least double compared to the 4G LTE era, opening up the industry's growth space and providing more opportunities for domestic manufacturers to develop rapidly.

.5.2. Module integration: Continuous exploration of miniaturization of RF devices and module integration

RF front-End Module (RF Front-End Module) integrates two or more discrete devices such as RF switches, low-noise amplifiers, filters, duplexers, power amplifiers, PAs, etc. into one module, thereby improving integration and performance and miniaturizing the size. The diversity module only needs to consider the reception link, which is relatively few integrated RF devices and has a low integration degree. The main cluster module needs to integrate the transmission link Tx and the receiver Rx device, with a relatively high integration degree.

Depending on the integration method, the main antenna RF links include: FEMiD (integrated RF switch, filter and duplexer), PAMiD (integrated multi-mode multi-band PA and FEMiD), LPAMiD (LNA, integrated multi-mode multi-band PA and FEMiD), etc.; the diversity antenna RF links include: ASM (integrated antenna and switch), DiFEM (integrated RF switch and filter), LFEM (integrated RF switch, low-noise amplifier and filter), etc. The more integrated components, the higher the upper limit of module implementation functions and miniaturization, but the complexity and difficulty of corresponding process design are greatly improved.

RF front-end integration is getting higher and higher, and modularization is an inevitable trend. The volume of consumer terminal products is limited. With the increase of RF devices, integration can better reduce costs, improve performance, and reduce debugging processes. In the 4G LTE era, RF devices with initially low (about 1GHz), medium (~1-2GHz) and high frequency (~2-3GHz) frequencies were packaged in three separate modules, and the low-band modules were then expanded to 600MHz, with the mid-frequency and high-frequency modules combined into one, and more and more devices were integrated in the modules. As 5G refers to more Sub-6 and millimeter wave bands, the ultra-high frequency (~3-6GHz) module will support the existing LTE band and the NR band of 5G, and even in the millimeter wave band, it is necessary to integrate the antenna and the corresponding diversity reception module into one module.

.6, Optical CIS: The volume and price are rising, and innovations are constantly increasing.

CIS is the full name of CMOSImageSensor. It is an image sensor that adopts the CMOS process. Due to its simple structure and low cost, the manufacturing process is the same as the large-scale integrated circuit production process. It is widely used in application fields such as smartphones, feature phones, tablets, laptops, automotive electronics, mobile payments, medical images, etc. It is the core sensor component for mobile Internet and Internet of Things applications. At present, the world's major CMOS image sensor suppliers include Sony, Samsung, Howie Technology, etc.

mobile phone camera structure is divided into CIS imaging components, optical lenses, voice coil motors, infrared filters and module packaging parts. In 2019, the proportion of value was 52%, 19%, 6%, 3%, and 20%, respectively. Among them, CIS has the highest proportion of value and is the core component in the camera.The downstream of

CIS manufacturers include terminal manufacturers and module manufacturers, terminal manufacturers include Apple, Huawei, Samsung, Sony, Nikon, etc., and camera module manufacturers include Sunny, Qiu Ti, Xinli, OFILM, etc.; the upstream of CIS manufacturers include EDA and IP providers, manufacturers, packaging and testing manufacturers. EDA and IP providers include cadence, ARM, etc., manufacturers include TSMC, SMIC and IDM manufacturers, and packaging and testing manufacturers include Sun and Moonlight, Antune, Changdian Technology and other manufacturers.

quantity: The trend of multi-camera on smartphones continues to

dual-camera and multi-camera solutions have gradually become the mainstream of the industry. In 2011, with the introduction of dual-camera solutions to the market, the combination of multiple cameras on smartphones has become the mainstream development trend in the industry. Many smartphone manufacturers have improved the overall photography effect by combining increasing the pixel level of cameras and increasing the number of cameras. Currently, the flagship models of brands such as Samsung are equipped with four rear cameras, and the number of cameras used in the future is expected to further increase.

Smartphone multi-camera penetration rate continues to increase. According to Frost&Sullivan statistics, the penetration rate of rear dual-camera and multi-camera (three-camera and above) of smartphones worldwide shows a continuous upward trend. Rear dual-camera smartphones have peaked in 2018 since their scale in early 2015, accounting for 40.0%. Since then, multi-camera smartphones with rear triple cameras and above have gradually become the mainstream of the market. It is expected that by 2024, the total penetration rate of rear dual cameras and multi-camera smartphones will reach 98.0%. At the same time, the average number of cameras equipped with a single smartphone is also increasing year by year, from 2.0 in 2015 to 3.4 in 2019, with an average annual compound growth rate of 14.3%. It is expected to rise to 4.9 in 2024 at an average annual growth rate of 7.3%. The increase in the number of smartphone cameras has directly driven the rise in demand for the CMOS image sensor market. After the smartphone market entered the stock era, the multi-camera trend has injected strong development momentum into the CMOS image sensor market, making it expected to achieve a growth rate significantly higher than the mobile phone market.

price: pixels continue to improve, functional innovation continues

Under multi-camera schemes, high, medium and low-performance camera combination configurations are usually adopted to achieve the superposition and complementarity of different shooting functions. Generally, mainstream multi-camera smartphones often adopt a configuration of 1-3 cameras in front and 2-5 cameras in rear.

CIS is gradually developing towards high pixel direction. In 2015 and before, cameras with 2 million pixels and below occupied the vast majority of the market share and assumed the function of the main camera. Since 2016, the market focus has gradually shifted to 5-megapixel to 13-megapixel cameras (including 5-megapixel and 13-megapixel, the same below), and cameras above 13-megapixel (excluding 13-megapixel, the same below) are also showing rapid growth. According to Frost&Sullivan statistics, the market share of shipments of 2 million and below pixel cameras, 5 million to 13 million pixel cameras, and 0.0% of the 13 million pixel cameras in 2012 was 66.7%, 33.3% and 0.0% respectively; in 2019, the above-mentioned market shares were 28.4%, 49.7% and 21.9%, respectively, and the overall pixel level increased significantly compared with 2012. According to Frost&Sullivan's forecast, it is expected that by 2024, the market share of high-pixel cameras will further increase, and the above-mentioned market shares will reach 26.0%, 41.7% and 32.3% respectively. In the future, mobile phone camera pixels are expected to continue to improve and drive the technology and performance upgrade of CMOS image sensors, thus posing new challenges to design manufacturers. In terms of

imaging effect, in addition to the need for high pixels, CIS large size, high frame rate and high imaging effects (such as high signal-to-noise ratio, low illuminance and dynamic environment perception, etc.) are also very important factors. The total number of pixels determines the resolution of CIS and is an important indicator of the performance of CMOS image sensors. The size of CIS determines the photosensitive area and amount of photosensitive accepted by CIS, and is a key indicator of CIS imaging. High frame rate determines the dynamic output capability of CIS, and high imaging effects comprehensively determine the imaging quality.The resolution of

CIS is equal to the effective area of CIS divided by the area of a single pixel point, from 2M, 5M, 8M to 12M, 13M, 16M, 20M, 24M to 32M, 48M, 64M, 108M. In terms of high imaging effects, many market participants have achieved technological breakthroughs in global shutters, low illumination perception, high dynamic perception, etc., and have extensive applications in security, automotive electronics, medical imaging and other fields. The CIS stacking method of front-illuminated FSI to back-illuminated BSI and then stacked StackedBSI is an important technological change to achieve low illumination perception and high imaging effects.

has been converted from front illumination (FSI) to back illumination (BSI). In FSI, when light enters the pixel unit, passes through the lens and filter, it first passes through the metal wiring layer and is finally received by the photodiode. The metal wiring will block and reflect some of the light, which will greatly affect the imaging quality. Sony first adopted a back-illuminated structure, placing the photodiode in front of the metal circuit, allowing the pixel to obtain more photosensitive amount, greatly improving the signal-to-noise ratio, and can also use more complex and larger-scale circuits to improve the sensor reading speed.

has been converted from non-stacked to stacked (StackedBSI). There are two major problems with the difficulty of increasing the photosensitive area of the non-stacked type and difficult to optimize the processing circuit. Sony has successively launched dual-stack (CIS+ISP) and three-stack (CIS+ISP+DRAM) design solutions, which not only increase the area of the CIS photosensitive area to create more pixel units, but also improve image signal processing capabilities.

CIS manufacturing process has achieved continuous breakthroughs in CIS imaging quality from front illumination to back illumination, from non-stacked to stacked, and gradually narrowed the gap with CCD imaging quality. CIS has been widely used with its advantage of smaller and lower cost compared to CCD. As the pixels of mobile CIS gradually increase, the size gradually increases, and the frame rate and imaging effect gradually increase, the unit price of mobile CIS continues to increase. According to Yole's forecast, the average unit price of CIS in 2017 will be about US$2.21 per pill, and the average unit price of CIS in 2019 will be US$3.06 per pill, with an average growth rate of about 18%. It is expected that the average unit price of CIS will reach US$3.83 per pill by 2025.

.7. Power: IGBT has a high value, and domestic substitution continues to be carried out

Power semiconductors can be divided into power discrete devices (modules) + power ICs, which are similar to: semiconductor = discrete devices + integrated circuit ICs. The power IC is equivalent to SOC, and the power module is equivalent to SIP. Power ICs belong to the category of analog ICs, and have many application scenarios, including downstream fields such as automobiles, industry, and consumer electronics.

The main function of power semiconductor is power switch and power conversion. 1) The principle of power switch is to control large currents with a small current. The PMIC and DriverIC are power ICs, while the switches of large currents are power discrete devices or modules such as MOSFETs and IGBTs. 2) Power conversion refers to the mutual conversion of alternating current and direct current during charging and power consumption. In low-power devices, such as boosters, buckers, and voltage regulators in smartphones, can be integrated into PMICs or made into separate power ICs; while in high-power devices, such as rectifiers, inverters in electric vehicles, etc. are generally power modules composed of power discrete devices.

According to Omdia's calculations, the global power semiconductor market size has exceeded US$45 billion in 2019, and it is expected to exceed US$50 billion by 2024. The power semiconductor scale here includes power IC products. In 2019, the automotive application market accounted for 35.4% in the global power semiconductor market, the industrial application market accounted for 26.8%, and the consumer electronic application market accounted for 13.2%.

.7.1. IGBT is an important branch of power semiconductors, with a high value share

Power semiconductors mainly include diodes, thyristors, BJTs, MOSFETs, IGBTs and modules. According to Yole data, the global power discrete devices and module market size in 2017 was about US$15 billion, of which diodes accounted for about 21%, MOSFETs accounted for about 41%, and IGBTs and modules accounted for about 30%.

IGBT is the abbreviation of InsulatedGateBipolarTransistor, that is, an insulated gate bipolar transistor. IGBT is one of the most important power semiconductors, and power semiconductors refer to semiconductor devices that process circuit power.Unlike information semiconductors such as CPUs that process circuit information and perform calculations, power semiconductors are mainly used to change circuit power and realize the power conversion function, mainly including power switches and power conversion, among which power switches are used to realize the conduction and shutdown of the circuit, while power conversion refers to the conversion of DC (DC) and AC (AC), including AC-AC (transformer, such as transformer of transmission grid), AC-DC (rectifier, such as household appliances rectify the municipal AC to DC), DC-AC (inverter, such as new energy vehicles convert battery DC to AC needed for motor drive), DC-DC (voltage regulator, commonly used in instruments and meters).

From the device structure, IGBT is a composite power semiconductor device composed of BJT and MOSFET. It has the advantages of high switching speed, high input impedance, small control power, simple driving circuit, and small switching loss. It also has the advantages of low conduction voltage, large on-state current and small losses of BJT. It is incomparable to other power devices in terms of high voltage, large current, high speed, etc., so it is a relatively ideal switching device in the field of power electronics and is the main direction of future application development.

IGBT Product technology is constantly iterating. From the 1980s to the early 2020s, IGBT chips underwent 6 generations of upgrades, from plane throughput (PT) to trench electric field-cutting type (FS-Trench), chip area, process line width, on-state saturation voltage drop, shutdown time, power loss and other indicators have undergone continuous optimization, and the off-state voltage has also been increased from 600V to above 6500V.

1) First generation: PT-IGBT, the product uses "irradiation" method. Due to the "negative temperature coefficient" caused by the crystal structure in the body, the voltage drop of the primary IGBT cells in the state is inconsistent, which is not conducive to parallel operation. The current of the first generation IGBT is only 25A, and the capacity is small, and it is held back and has a low speed.

2) Second generation: The improved PT-IGBT adopts "electric field termination technology" and adds a "buffer layer", which achieves thinner wafer thickness at the same breakdown voltage, thereby reducing the IGBT on-resistance and reducing the loss during the IGBT operation. This technology has obvious effect on IGBTs with high voltage resistance.

3) The third generation: Trench-IGBT, the biggest improvement is to use a Trench structure to change the channel from the surface to the vertical plane, so the PIN effect in the base region is enhanced, and the carrier concentration near the gate increases, thereby improving the conductivity modulation effect and reducing the on-resistance; at the same time, since the channel is not on the surface, the increase in the gate density is not limited, which enhances the current conduction ability during operation.

4) Fourth generation: NPT-IGBT, no longer adopts epitaxial technology, but uses ion implantation technology to generate P+ collector (transparent collector technology). It can accurately control the junction depth and control the emission efficiency as low as possible, increase the carrier decimation speed to reduce the shutdown loss, maintain the original carrier life of the base area without affecting the steady-state power consumption, and also has the characteristics of a positive temperature coefficient.

5) Fifth generation: FS-IGBT is a combination of the fourth generation of products "transparent collector zone technology" and "electric field termination technology". Due to the use of advanced sheet technology and the electric field termination layer is formed on the sheet, the total thickness of the chip is greatly reduced, so that the conduction voltage drop and dynamic losses are greatly reduced, thereby further reducing the loss during IGBT operation.

6) The sixth generation: FS-Trench-IGBT is an improvement of the trench gate structure based on the fifth generation, further increasing the current conduction capability of the chip, and greatly optimizing the carrier concentration and distribution in the chip. Reduces the overall loss of the chip.

IGBT is widely used in industrial control and motor energy saving, new energy and variable frequency white goods. As a core device in the field of industrial control and automation, IGBT modules are widely used in many fields such as motor energy conservation, rail transit, smart grid, aerospace, household appliances, automotive electronics, new energy power generation, new energy vehicles, etc. With the development of new energy vehicles and the popularization of variable frequency white goods, the market popularity of IGBT continues to heat up. It not only improves the automation level and control accuracy of equipment in industrial applications, but also greatly improves the application efficiency of electricity.(Report source: Future Think Tank)

.7.2. The market size of IGBT is gradually growing

IGBT is a power semiconductor discrete device born in the 1980s. Although it entered industrial applications late, the market size has grown rapidly. Since 2015, the global IGBT market size has been growing steadily. In 2019, the global IGBT market size was approximately US$6.27 billion, with an average annual compound growth rate of 10.39%, which is greater than the compound growth rate of about 5% in the power semiconductor industry.

With the introduction of a series of national policies and measures such as new energy, energy conservation and environmental protection, as an important power device for new energy vehicles and industrial machines, the domestic IGBT market has ushered in a window of rapid development, and the scale of my country's IGBT market has grown rapidly. During the 12th Five-Year Plan period to the 13th Five-Year Plan period, my country accelerated the localization of IGBT, and the demand for IGBT increased significantly. my country's IGBT market size expanded rapidly from 5.05 billion in 2010 to 16.19 billion yuan in 2018, with an average annual compound growth rate of 15.68%.

.7.3. The competition landscape of IGBT is relatively scattered. Domestic Stadium has entered the top ten in the world.

. The domestic and foreign IGBT market is still mainly occupied by foreign companies. Although the demand for IGBT market in my country is growing rapidly, due to the lack of relevant domestic talents and weak process foundation, domestic enterprises have started industrialization late. IGBT modules still rely almost all on imports to this day, and the market is mainly occupied by European, Japanese and American companies. At the same time, domestic companies have developed slowly because their chip supply mainly originated from abroad and are highly restrictive.

Star Semiconductor ranked 8th in the global market share of IGBT modules in 2019, ranking 1st among Chinese companies, and is a leading company in the domestic IGBT industry. In the IGBT industry, Star Semiconductor accounts for about 2.5% of the global market share, which is still a certain gap compared to the 35.6% market share of Infineon, which ranks first. Except for Star Semiconductor, all other companies are foreign companies, and the localization rate of the IGBT industry is still relatively low.

.7.4. New energy vehicles and photovoltaic wind power drive IGBT enters the rapid growth channel

. Traditional industrial control and power supply industry support IGBT market is developing steadily

) Inverter industry

IGBT module not only plays the role of traditional transistors in inverters, but also contains the role of the rectifier part. The sine wave signal generated by the controller is isolated by the optical core and enters the IGBT. The IGBT then converts the rectified DC power of 380V (220V) into AC power output again according to the signal changes.

In recent years, the market size of my country's inverter industry has generally shown an upward trend. According to data compiled by the Forward Industry Research Institute, in recent years, my country's independent R&D capabilities in the inverter market have improved, especially the number of patent applications for high-voltage inverters in 2017 has stabilized at more than 160. At the same time, under the driving force of the real economy, frequency converters will maintain stable growth in industrial fields such as metallurgy, coal, petrochemicals, etc. In the context of the increase in urbanization rate, the demand for frequency converters in public utilities such as municipal and rail transit will continue to grow, thereby promoting the expansion of market size. In the next few years, the market for high-voltage inverters with high-efficiency and energy-saving functions will continue to grow by policies. According to the Forward Industry Research Institute's forecast, by 2023, the market for high-voltage inverters will reach about 17.5 billion yuan.

) Inverter welding machine industry

inverter arc welding power supply, also known as arc welding inverter, is a new type of welding power supply. This power supply generally converts the three-phase power frequency (50 Hz) AC network voltage first rectified and filtered by the input rectifier to become DC, and then passes the alternating switching of high-power switching electronic components (IGBTs) to reversely turn into an intermediate frequency AC voltage of several thousand Hz to tens of thousands of Hz. At the same time, it is reduced to a voltage suitable for welding through the transformer, and then rectifies and filters the reactively to output a fairly stable DC welding current. According to data from the National Bureau of Statistics, my country's production of electric welding machines in 2019 was 9.5 million units, an increase of 970,000 units compared with 2018. The continued heating of the welding machine market will also ensure that the demand for IGBTs will gradually increase.

The increase in new energy vehicles will accelerate IGBT and enter the rapid growth period

New energy vehicles, electric vehicles, and smart cars will become the industry development trend. Against the backdrop of vigorous promotion of new energy in the world, new energy vehicles and electric vehicles continue to grow rapidly. According to Marklines' forecast, global new energy vehicle sales will reach 13.7 million units in 2025, with an average annual compound growth rate of 34.7% from 2019 to 2025. According to Bloomberg New Energy Finance data, global electric vehicles (including pure electric only) sales reached 2.21 million units in 2019, and the decline in battery costs and stricter environmental protection policies will drive high growth in the electric vehicle market. It is expected that sales will reach 28 million and 56 million units in 2030 and 2040 respectively (it is expected to account for 57% of all new car sales).

my country strongly supports the development of new energy vehicles. Since 2001, my country has begun to develop new energy vehicles and has launched a series of supporting policies for national and local governments to support the development of new energy vehicles. After more than 10 years of research and development, my country's new energy vehicles have achieved a leap in industrialization and scale development. In 2011, my country's new energy vehicle production was only 8,000 vehicles, and in 2019 it had reached 1.21 million vehicles, accounting for 2.7% of the national automobile production. In February 2020, 11 ministries and commissions including my country jointly issued the "Innovation and Development Strategy for Intelligent Vehicles", which sets "By 2025, the technological innovation, industrial ecology, infrastructure, regulations, product supervision and network security system of China's standard intelligent vehicles will be basically formed" and "Outlook for 2035 to 2050, China's standard intelligent vehicle system will be fully completed and more perfected" as its strategic vision. The policy content will fully cover the main aspects and core contradictions of the development of smart vehicles, and is expected to form a significant boost to the ecological construction and development of China's smart vehicle industry. At the same time, governments are promoting the development of new energy vehicles and smart vehicles. The UK government announced in February 2020 that it would ban the sale of all cars equipped with petrol and diesel engines, including hybrids and plug-in hybrids, by 2035, further establishing the global trend of electrification of automobiles by five years ahead of the previous plan.

Global new energy vehicles have a low penetration rate and still have a large room for development. In 2020, China's automobile production and sales were 25.225 million and 25.311 million respectively, with China's new energy vehicles accounting for 5.4% and 5.4% respectively. The penetration rate of new energy vehicles in the United States is less than 3%, and the penetration rate of new energy vehicles in Europe is less than 12%. There is still huge market space for new energy vehicles.

New energy vehicle production and sales volume has grown rapidly. According to data released by the China Association of Automobile Manufacturers, in 2020, the production and sales of new energy vehicles reached 1.366 million and 1.367 million respectively, an increase of 7.5% and 10.9% year-on-year, respectively, and production and sales volume hit a record high. According to statistics from WardsAuto.com in the United States, global automobile sales exceeded 90 million in 2017. As the replacement rate of new energy vehicles gradually increases, it will continue to drive the demand in the IGBT module market.

In the transition from traditional cars to new energy vehicles, the power semiconductor increment is the most obvious. As the core of automotive electronics, power semiconductors are the second largest core component in electric vehicles that cost only after batteries. They play an important role in the pressure sensors in the automotive engine, steering, speed change, braking in the driving system, and operation control of instruments such as lights and instrument panels. According to StrategyAnalytics statistics, in 2019, the power semiconductor usage of traditional internal combustion vehicles was US$71, accounting for 21%. Among pure electric vehicles, the power semiconductor usage was US$387, accounting for 55%. Compared with traditional internal combustion vehicles, the value of bicycles has increased by 5.5 times. Other semiconductor devices, such as ICs and sensors, have increased the value of bicycles by 1.0 times and 1.1 times respectively, with no significant increments.

.7.5. Photovoltaic wind power opens up new growth space for IGBT

New energy power generation mainly includes photovoltaic and wind power. Compared with traditional coal-fired power generation, reverse transformation, rectification, convergence and other links are added, involving more power conversion and stable power demands. Therefore, new energy power generation requires a large amount of power semiconductors.

In photovoltaic power generation, power semiconductors are mainly used in the inverter link. Inverters are divided into centralized inverters, string inverters and distributed inverters. According to CIPA calculations, the weighted average cost of the above three types of inverters in 2019 is about 0.2 yuan/W, and is expected to drop to 0.15 yuan/W in 2025.

As the domestic epidemic is well controlled, the installed capacity continues to recover in the second half of the year. The number of new photovoltaic installations in October reached a new high of 4.17GW in the past five years, and the number of new photovoltaic installations in January-10 reached 21.88GW. According to TrendForce's forecast, photovoltaic inverter shipments will reach 327GW in 2025. The proportion of power semiconductors in the cost of photovoltaic inverters is about 9%, and the market space for photovoltaic inverter power semiconductors is expected to be approximately 4.4 billion yuan in 2025.

Wind Power: According to GWEC's forecast, the installed capacity of wind power will increase rapidly in 2020, and the global installed capacity of new wind turbines will remain stable from 2020 to 2024, and the cumulative number of five years is expected to reach 350GW. With the rapid increase in wind power, new increments are expected to be brought to power semiconductors and IGBTs.

. Consumer Electronics: Finished product assembly is the core spindle of consumer electronics' future growth in N years

3.1. The downstream OEM trend is more obvious

Smartphone components leading companies extending to downstream OEM. (1) Luxshare precision business extends from components such as smartphone acoustics, motors, optics, antennas, wireless charging receivers, lighting interfaces, etc. to assembly of AirPods, Apple Watch, and iPhones; (2) Goertek extends from components such as smartphone acoustics to assembly of AirPods; (3) BYD Electronics' assembly businesses are expected to contribute huge growth in the future, and the assembly businesses are expected to benefit from the "demetalization" trend in the 5G and wireless charging eras; (4) After the acquisition of Salcomp, Lingyi Intelligent Manufacturing will enter the charger assembly business from the functional parts and structural parts business of smartphones.

3.2. VR/AR: The VR market is developing steadily, and Apple may launch AR glasses

As the industry continues to make efforts in the AR field, some researchers have withdrawn AR from the conceptual framework of VR. The two are very similar in key devices and terminal forms, but have differences in key technologies and application fields. VR brings an immersive experience through isolated audio and video content, and requires high display quality. AR emphasizes the "seamless" integration of virtual information and the real environment, and requires high perceptual interaction. In terms of application, VR focuses on mass markets such as games, video, live broadcast and social networking, while AR focuses on vertical applications such as industry and military.

VR Key technologies are becoming more and more mature, and AR technology needs to be broken through. At present, the key VR technologies such as near-eye display, rendering processing, etc. have already had a clear development route. The maturity of core technologies will greatly improve the gaming experience, and the development of sensing technology and interactive sensing experience has also made VR application scenarios gradually enriched. AR technology has developed well in the interaction and transmission levels, but it is more complex than VR in terms of SLAM algorithms (positioning tracking and mapping) and its related peripherals and optical displays (optical waveguides), and still requires a certain amount of development time. Overall, the VR market currently has relatively mature products and technologies, and the market is developing steadily, while the AR market still needs to be cultivated and promoted by technology and mature products.

Shipment volume in 2020 has been affected to a certain extent, and the long-term market size has exceeded US$100 billion. In the first half of 2020, the overall shipment of VR/AR products was affected to a certain extent and rebounded in the second half of 2020. It is expected that by 2024, the overall VR/AR product shipments are expected to reach 77.7 million units. The growth in AR product shipments benefited from the rapid expansion of B-side customers to 41.1 million units, and the total market size will exceed US$100 billion. Industrial chain analysis: The C-end market is mainly hardware manufacturing, and Internet giants develop ecosystems; the B-end market has deep application scenarios and many subdivided fields. The VR/AR industry value chain starts from hardware manufacturing and assembly, integrating operating systems and development tools, applications, content, sales and distribution industry chains.

1. The C-end market of the VR/AR industry has great development potential, and the Internet and hardware manufacturers cover the upstream and downstream based on hardware and application scenarios, squeezing small and medium-sized enterprises.Internet and hardware manufacturers represented by Google, Microsoft, Facebook, and Sony attract third-party content providers to provide content and resources to them based on their existing ecological environment and distribution platforms, thereby integrating the industrial chain. At present, the VR market is basically dominated by games and commercial applications in the consumer field, and the space of other companies will be further eaten by Internet giants in the future.

2. The B-end market requires customized and professional solutions, and the application scenarios are scattered. The needs of corporate customers often need to be achieved through customized integrated software and hardware solutions, and need to be manually intensive training to complete subdivided applications with a high degree of professionalism. This gives other companies the space to develop in-depth in segmented fields, rely on long-term cooperation to establish professional advantages, and combine software and hardware to form development barriers.

Golle is a leading solution provider and hardware manufacturer in the global VR/AR industry. Goertek began to enter the VR field in 2012 and has rich experience and can provide precision optical solutions including optical design, molds, and component development, as well as one-stop services for the design, research and development and manufacturing of VR, AR and other products.

3.3. Wearable devices such as smart watches are growing rapidly.

Smart wearable devices are hardware terminals that combine multimedia, sensing, wireless communication, cloud services and other technologies with daily wear to realize user interaction, entertainment, health and other functions. Depending on the wearable parts, they can be divided into smart watches, smart bracelets and smart acoustic devices. Smart watches are the most mature wearable devices currently developing, and smart bracelets also have a larger user group.

Smart Watch: The rapid development of smart watches is related to the launch of the Apple Watch series products. The Apple Watch is a wearable product launched by Apple in 2014 and is also the product with the largest sales share in the smartwatch market. As Apple watches continue to add health functions, cellular data, GPS tracking and other functions, the Apple Watch series gradually breaks away from its strong binding with mobile phones and becomes an independent consumer electronic product. According to IDC data, shipments from 2017 to 2019 reached about 16 million/22 million/30 million units respectively.

Samsung, Huawei and Fitbit are the main brands of Android smart watches. In 2019, the shipments of Huawei GT series in the domestic market grew rapidly with the increase of child users, with a year-on-year growth rate of 63.4%. The market share of smart watches in the Android camp surpassed Apple watches for the first time in 2019, accounting for 54%.

According to Trendforce, with the launch of the latest generation of Apple watches and the price reduction of old products, more watch brands in the Android camp will join the market and drive the overall market development. Affected by the epidemic, the growth rate of smart watch shipments in 2020 is expected to slow down, with Android watch shipments of about 46.5 million units, and the overall shipment of the industry reaches 80.5 million units; the overall shipment of smart watches in 2022 will exceed 100 million units.

Smart Bracelet: It is a low-priced alternative to smart watches. It generally needs to be bound to the mobile phone to use it, track health and location information through sensors, and use the mobile phone or its own screen for data collection and analysis. The price of smart bracelets is usually only 1/5 of that of smart watches, so they can be accepted by more consumers. Currently, the main manufacturers in the smart bracelet market include Huawei, Xiaomi, Fitbit, etc. Among them, Xiaomi quickly expanded its market share in 2019 with its low-priced Xiaomi bracelet series (200 yuan), and shipped more than 20 million units.

smart bracelet manufacturers have fierce price competition, and the shipment share of Fitbit and other manufacturers has gradually been eroded by Huawei, Xiaomi and others. Due to the relatively few functions that can be realized, the growth of shipments in the smart bracelet market has stagnated since 2019. We expect the shipments of smart bracelets to reach 69.7 million units in 2023, with a compound growth rate of only 1.8% from 2020 to 2024.

According to IDC, the market size of smart watches/bracelets reached 150 billion yuan in 2020.Among them, the value of smart watches is slightly higher than that of TWS headphones, and there is a lot of room for growth in the future shipments. According to the average Apple watch price of 2,000 yuan and Android watches of 1,200 yuan, the market size of smart watches in 2020 will be 123 billion yuan, and it is expected to reach more than 170 billion yuan in 2023, with a compound growth rate of more than 10%; the smart bracelet market has little room for price reduction, and there are many participating manufacturers, and the shipment volume is expected to remain unchanged, and the overall market size is expected to be around 20-30 billion yuan.

3.4. Smartphone: The turning point of the 5G switch drive industry, optics, radio frequency, functional parts, wireless charging

Optics, radio frequency, functional parts, and wireless charging are the four major innovation directions of smartphones in the future. We have compiled and analyzed the BOMs of iPhones in previous dynasties. From iPhone 3Gs to the present, the value of stand-alone optical, RF front-end and functional parts has continued to increase. Looking ahead, (1) Optical innovation is expected to continue, and camera multi-camera and "front structure light + rear ToF" will become the general trend; (2) Due to the significant increase in frequency bands, the single-machine value of the RF front-end has increased significantly; (3) The heat dissipation and electromagnetic shielding also drive the increase in the demand for functional parts; (4) The penetration rate of wireless charging is expected to extend from mid-to-high-end mobile phones to mid-to-low-end mobile phones, and the receiving end modules to the transmitting end modules.

. Investment analysis

G2 In the context of the great power game between China and the United States, looking forward to the future, we believe that the wave of domestic substitution and innovation will still be the core axis of the future electronics industry. The upstream view is domestic substitution, the midstream view is functional innovation and OEM extension, and the downstream view is demand innovation. Focus on large space and high growth rate sub-sectors in 2021: driven by the national will, the trend of domestic substitution is expected to continue; the penetration rate of wearable devices such as VRAR, smart cars, and smart watches is expected to become a new hot spot for consumer electronics after smartphones.

, key companies analyze

5.1, Lanqi Technology: Server chip platform-type companies are gradually rising

Jinji platform CPUs are starting to rise quickly. In April 2021, Lanqi's third-generation Jinji CPU was mass-produced and launched. Jinji products received active responses from many domestic server manufacturers. For example, H3D, Lenovo, Baode, Great Wall, etc. have launched server products that support Jinji CPUs. The Jinji platform has been applied to government affairs, transportation, finance and other fields. According to the company's announcement, the company's related transaction volume of Jinji server platform and Intel in 2021 was increased from no more than 100 million yuan, 500 million yuan and 1.5 billion yuan to 1.584 billion yuan. In addition, the company expects the transaction volume to be 2.5 billion yuan in 2022, indicating the company's confidence in the future development of this business. The curtain of

DDR5 has been opened, Lanqi Technology DDR5 has been officially shipped, the server and PCNB market has been fully opened, and the memory interface and supporting chips have been fully increased. Memory technology has now evolved to the DDR5 generation, and Intel officially guides to release the next-generation server CPU in 2022. Memory module manufacturers will enter the mass production climb, stocking and procurement stages 1-2 quarters ahead of the CPU platform. Therefore, as an industry-leading memory interface chipset supplier and an active contributor to JEDEC memory standards, Lanqi Technology's DDR5-related chips began to increase in scale in October 2021 and officially entered the DDR5 stage.

5.2. Zhuoshengwei: 5G penetration, module trends and domestic substitution drive China. The rise of the leader in RF front-end platform

5G promotes the rapid development of the RF front-end market, with the trend of moduleization and the process of domesticization accelerating. The overall size is $17 billion in 2019, and Yole expects to reach $25 billion in 2025. At present, most of the front-end markets are monopolized by the five major RF leaders, Sijiaxun, Kovo, Broadcom, Murata and RF360, and the self-sufficiency rate of domestic devices is less than 5%. 5G high-frequency and multi-band demand drives the number and unit price of RF front-end devices to rise rapidly, while the constraints of PCB wiring area make modular products replace discrete device solutions and become an important trend in front-end design. The company's operating income in the first three quarters of 2021 was 3.484 billion yuan, a year-on-year increase of 76.61%; it achieved a net profit attributable to shareholders of RMB 1.527 billion, a year-on-year increase of 112.84%; it achieved a net profit attributable to shareholders of RMB 1.507 billion yuan, a year-on-year increase of 115.42%.

5G generation, modularization and domestic production will drive the rapid development of Chinese radio frequency manufacturers.Looking at the development history of major RF giants, every time the communication system switches intergenerational, the merger and acquisition integration process of leading manufacturers is accelerated, and leading manufacturers are bound to end customers are expected to usher in rapid development. In the 5G era, the modularization process of domestic RF manufacturers has been accelerated by downstream demand, and the value of stand-alone machines has increased several times; while end customers consider supply chain security issues, the demand for domestic replacement is urgent, and technological change + domestic replacement has opened a fast lane of leapfrog development for domestic RF manufacturers.

5.3. Weier Co., Ltd.: CIS has returned, and has recreated glory in multiple fields to increase volume and create brilliant

Weier Co., Ltd.: the world's leading CIS manufacturer. Weil Co., Ltd. was established in 2007 and listed on the Shanghai Stock Exchange Main Board in 2017. The company was engaged in semiconductor design and distribution business in the early stages, and completed the acquisition of the OV Group in 2019, entering the CIS track. Howie is the world's leading CIS provider, with revenue of approximately RMB 9.8 billion in 2019 and net profit of approximately RMB 1.1 billion, with a global market share of approximately 8%. The company's operating income in the first three quarters of 2021 was 18.314 billion yuan, a year-on-year increase of 31.11%; the net profit attributable to shareholders was 3.518 billion yuan, a year-on-year increase of 103.78%; and the net profit attributable to shareholders was 3.068 billion yuan, a year-on-year increase of 93.41%.

Mobile CIS industry structure reshaping: Howie broke through 48 million pixels (48M) technology in 2019, announcing the return of the king. The full name of CIS is CMOS Image Sensor. It is an image sensor using CMOS technology. It is mainly used in cameras and has an imaging function, similar to the human retina. Before 2011, Howie was the leader in the CIS industry, but in 2011, Howie was replaced by Sony and lost Apple orders due to insufficient process and production capacity. Later, because its R&D lags behind Sony and Samsung, its market share has dropped to the third in the industry year by year. In 2019, Howe released OV48B products, breaking through the 48M technology node and announcing the return of the king. Howie 48M has been ranked first in the world. With the rise of domestic mobile phone manufacturers, Howie is expected to usher in rapid development.

5.4. Goertek: TWS business has a short-term fluctuation that will not change the long-term positive trend, ARVR+IoT opens the growth space of smart hardware business

Smart acoustic whole machine business has a short-term fluctuation that will not change the long-term positive trend. In the first half of 2021, due to the slowdown in the pick-up speed of AirPods by North American customers, Goertek's production speed also slowed down and the changes in transportation methods have led to a certain increase in inventory. Recently, the demand for AirPods has also tended to recover. At present, the supply share of Goertek AirPods 2 generation and AirPods Pro is constantly increasing, with shares of about 35%~40% and 45%~50% in 2020 and expected in 2021. Against the backdrop of the increase in AirPods share, Android TWS and HomePod mini are also the core driving forces for the revenue growth of smart acoustic whole machine business. Looking ahead, considering the cost reduction brought about by the increase in Vietnam's production share and the possibility of self-supply of SiP and other components, we believe that the profitability of Goertek AirPods OEM is still expected to increase. The company's operating income in the first three quarters of 2021 was 52.789 billion yuan, a year-on-year increase of 52.00%; net profit attributable to shareholders was 3.333 billion yuan, a year-on-year increase of 65.28%; net profit attributable to shareholders was 3.019 billion yuan, a year-on-year increase of 52.19%.

In the long run, ARVR and IoT will open up space for smart hardware business growth. In the long run, ARVR and IoT will open up space for smart hardware business growth. (1) As the world's first-generation VR equipment leader, Goertek is the core supplier of Oculus and SONY VR equipment. We expect Goertek's Oculus VR equipment shipments to maintain rapid growth and high profitability; in addition, the launch of SONY next-generation VR equipment from 2021 to 2022 will be expected to further enhance Goertek's overall VR equipment shipments. (2) In addition, considering that smart watches/bracelets of H customers, Fitbit, Xiaomi and other manufacturers are also expected to drive Goertek's smart hardware business to grow rapidly. We expect the company's smart wearable business to achieve revenue of 122/14.5 billion yuan from 2021 to 2022.

5.5. Luxshare Precision: the leader in electronic assembly and OEM, and its future growth is unlimited.

AirPods Business: Short-term fluctuations will not change in the long-term positive trend. Considering the reduction in cost after the increase in Vietnam's production line share and the self-supply of SiP modules, Luxshare AirPods assembly and OEM's revenue and profits are still expected to remain stable in 2021.The company's operating income in the first three quarters of 2021 was 81.013 billion yuan, a year-on-year increase of 36.09%; it achieved a net profit attributable to shareholders of RMB 4.69 billion, a year-on-year increase of 0.21%; it achieved a net profit attributable to shareholders of RMB 3.994 billion yuan, a year-on-year decrease of 5.15%.

Apple Watch business: Entering the whole machine OEM, it is expected to significantly increase revenue and profits in 21-22. As an important supplier of Apple Watch components, Lixun has entered the manufacturing of Apple Watch entire machines in 2020. As a core foundry, Luxun Jiashan Factory has started production since 2020H1 and has started production in 2020Q3. We expect Apple Watch sales to maintain rapid growth of 20+% from 2020 to 2025. Considering the high stand-alone value, it is expected to add tens of billions of new OEM revenue from 2020 to 2025. In addition, due to Luxshare's supply of Apple Watch's wireless charging, watch strap, crown, SiP module and other components, the profit rate is expected to achieve a further leap compared to AirPods. (Report source: Future Think Tank)

(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 This gives more room for the expansion of mature process technology OEM business.