As of the closing price on June 3, 2022, the PE-TTM of the SW Electronics Index was 25.12 times, the ten-year historical quantile was 4.69%, the index risk premium was 1.22%, and the ten-year historical quantile was 98.44%.

(report producer/author: Huachuang Securities, Geng Chen)

The combination of multiple factors has led to the recent decline in the valuation of the A-share electronics sector, and the long-term allocation value is highlighted at the current position. Under the joint impact of internal and external factors such as repeated COVID-19 epidemics, imported external risks, and marginal weakening of economic conditions, the valuation of the A-share electronics sector has continued to decline recently. As of the closing price on June 3, 2022, the PE-TTM of the SW Electronic Index was 25.12 times, the ten-year historical quantile was 4.69%, the index risk premium was 1.22%, and the ten-year historical quantile was 98.44%. The current valuation level of the A-share electronics sector is close to the lowest level in 10 years. Historically, the long-term allocation value at the current position is obvious. The booming development of

5G and the new energy sector injected growth momentum into the development of my country's electronics industry. Strategic sectors such as semiconductors have continued to benefit from the opportunity of domestic substitution. According to Wind's consistent expectations, the top 20 weighted stocks in the electronics (Shenwan) sector are expected to maintain stable growth in 2023-2024. Except for Industrial Fulian and Changdian Technology , other 2023 weighted stocks are expected to grow by more than 25%. The growth rate of the leading electronics sector's business performance is expected to be strong, and the current valuation is close to the historical lowest level. We believe that the strategic value of the electronics sector is highlighted at the current point in time.

2. Semiconductor: The supply and demand relationship in the industry tends to differentiate. Seize the investment opportunities of stocks

(I) A new round of product cycle has begun. Under the differentiation of economic conditions, the preferred stock

semiconductor is the hardware entrance for technology innovation . Driven by the core terminal, it will experience a product cycle every 8-10 years, and sales show cyclical fluctuations, but the overall trend is upward. Since 2002, driven by two major products, PC and smartphones, semiconductor demand has experienced two stages of rapid growth. With the release of demand for 5G, AIoTh and automotive electronics, a new round of innovation cycle is ready to go.

1. A new round of semiconductor growth cycle has begun, with a broad space for emerging applications

2000, the Internet bubble burst. After experiencing a two-year adjustment period, the semiconductor industry has developed rapidly with the rapid growth of computer demand and the expansion of 12-inch wafers. At the end of 2008, the global financial crisis brought the semiconductor market into a short period of adjustment. According to IDCh data, from 2002 to 2008, the global PC shipment volume increased from 136 million units to 295 million units, with a compound growth rate of 13.8%. Thanks to the explosion of the PC market, the global semiconductor market size increased from US$142.2 billion to US$248.6 billion during the same period, with a compound growth rate of 9.8% (SIA data).

Since 2010, the rise of smartphones has begun a new round of technological innovation cycle. According to Gartner data, from 2009 to 2018, global smartphone shipments increased from 172 million units to the peak of 1.555 billion units, with a compound growth rate of 27.7%. The semiconductor market has risen sharply. Driven by the strong smartphone market, the global semiconductor market size increased from US$226.3 billion to US$468.8 billion, with a compound growth rate of 8.4% (SIA data). Starting from the second half of 2018, due to factors such as the slowdown in global macroeconomic growth and the lack of innovation in smartphones, the demand for the global electronics industry has been weak, and the semiconductor industry, as the upstream basic industry of electronics, has entered a downward cycle.

5G mobile phone silicon content has increased significantly compared with 4G mobile phones, and the increase in penetration rate and are expected to drive the increase in semiconductor demand. With the rapid advancement of 5G network construction, the global penetration rate of 5G mobile phones has been continuously increasing. As the world's largest 5G mobile phone consumer market, China was the first to upgrade 4G mobile phones to 5G mobile phones. In 2021, the cumulative shipment of 5G mobile phones in the domestic market was 266 million, accounting for 75.9% of the mobile phone shipments in the same period. The silicon content of 5G mobile phones has increased significantly compared with 4G mobile phones. With the continuous increase in global 5G mobile phone penetration, the demand for semiconductors related to mobile phones is expected to grow in the future.

semiconductor usage in new energy vehicles has increased significantly, and it is expected to drive the continued high growth in the demand for related semiconductors in the future. In 2019, the global penetration rate of new energy vehicles was only 2.4%.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 35% from 2019 to 2025. Compared with traditional fuel vehicles, the usage of electric vehicles semiconductors will be greatly increased. Taking power semiconductors as an example, the power semiconductor usage of traditional fuel vehicles is only US$71, while the average cost of medium-power semiconductors for mild hybrid vehicles (MHEV), hybrid vehicles /plug-in hybrid vehicles (HEV/PHEV), and pure electric vehicles BEV medium-power semiconductors is US$90, US$305 and US$350, which is 27%, 330% and 393% respectively compared with traditional vehicles. The increase in penetration rate of new energy vehicles in the future is expected to drive the rapid growth of semiconductor demand.

The global semiconductor industry has rebounded significantly, and the emerging driving force is full of potential. The wave of 5G replacement is gradually beginning, and the markets in other fields of new infrastructure such as the Internet of Things, new energy vehicles charging piles, artificial intelligence are developing rapidly, while the prosperity of the automobile industry has simultaneously rebounded. According to SIA data, as downstream demand in the semiconductor industry gradually recovers, global semiconductor sales continue to rebound. In 2021, global semiconductor sales reached US$555.9 billion, and increased by 26.2% year-on-year. According to SIA data, based on downstream fields, the proportion of global semiconductor sales in 2021 is computers (31.5%), communications (30.7%), automobiles (12.4%), consumer electronics (12.3%) and industrial control (12.0%). The proportion of emerging consumer electronics represented by automobiles, industry, and AIOT is still low, and the space is worth looking forward to.

2. Cost increases and demand differentiation, product/customer structure continues to be optimized, the value of individual stocks highlights the differentiation of prosperity, and chip companies in different fields have diverged in revenue growth rates. Since the second half of 2021, downstream manufacturers such as smartphones & PC have entered the destocking cycle, and the performance of related consumer chip companies is under short-term pressure, while power semiconductor companies that have benefited deeply from the transformation of automobile electrification have maintained a high performance growth rate through active adjustments in product structure and application fields.

The supply and demand imbalance is superimposed on geopolitical risks, and semiconductor silicon wafers are in short supply and prices are rising. Capital expenditure of global wafer factories continued to grow in 2022. All major upstream wafer factories have proposed expansion plans, but the expansion of silicon wafer factories has a certain degree of delay than wafer factories. Taking Japan's SUMCO as an example, the company's 12-inch expansion plan of 228.7 billion yen (approximately RMB 13.438 billion) will be launched from the second half of 2023 and will be fully put into production in 2025. SUMCO pointed out in the 22Q1 legal seminar: the demand for 12-inch silicon wafers for logic/memory continues to be significantly higher than the supply, and there is a trend of increasing intensity; silicon wafers under 8-inches are still tight and in short supply, and Q2 is expected to continue the tension. At the same time, the silicon wafer inventory of downstream customers will continue to decline, with 12-inch customer inventory approaching the water level at the end of 2018.

semiconductor production capacity supply continues to be tight, and the leading foundry/IDM enjoys high bargaining power. TSMC, the global leader in foundry, informed its customers on May 10 that it will increase the wafer foundry price from January 2023, with an overall average price increase of 6%; while IDM manufacturer STMicroelectronics issued a notice to the distribution channel as early as March, saying that since the increase in raw materials, energy and logistics costs has reached an indigestion, it decided to raise prices for all its product lines during Q2 2022. On the mainland, the profitability of the two OEM players continues to improve. SMIC 22Q1 achieved a gross profit margin of 40.7%, a record high. Huahong Semiconductor achieved a gross profit margin of 26.9% in 22Q1 (excluding the influence of audit rules, the real gross profit margin basically showed an upward trend), effectively transmitting pressure on the cost side. At the same time, when the capacity is basically full, fabs efficiently adjust capacity allocation according to downstream demand, and the strong demand for automobiles/industrial control offsets the weak impact of smartphones to a certain extent.

continues to promote the upgrading of product structure and customer structure, and the advantages of discrete devices and platform layout design companies are fully demonstrated. From the demand side, demand in new energy vehicles, photovoltaics and other fields has maintained a high growth trend, driving the overall demand for power devices to rise.From the supply side, the global wafer foundry production capacity shortage continues, and domestic power IDM manufacturers are still expanding their production capacity. As the industry moves from a comprehensive high prosperity to a structural prosperity, we believe that discrete device manufacturers that seize the opportunity of domestic substitution to achieve product structure and customer structure optimization and upgrading are expected to maintain high performance growth. In recent years, with the rapid development of the domestic chip design industry, a number of leading manufacturers with international competitiveness in sub-sectors have emerged. In the wave of stock out of stock in 2021, industry leading companies have been more restrained in price increase. They are more likely to take advantage of the opportunity of stock out of stock to focus on ensuring strategic new and old customers. Both product and customer expansion have made great breakthroughs. Among them, some manufacturers with platform layout have made great progress in automobile/industry/AIOT and other aspects, and are expected to lead the wave of domestic substitution in the new round of product innovation cycle.

(II) The industry's high prosperity continues + sector valuation is at a low level, and the long-term allocation value highlights the industrial development trend. After experiencing the stage of the industry's overall supply and demand in 2021, the semiconductor industry is gradually moving from a comprehensive high prosperity to a structural high prosperity, and the supply and demand relationships in different fields have differentiated:

2016-2017: Driven by the demand in emerging application fields, semiconductor products such as silicon wafers, memory chips, and CIS have seen price increases, and the global semiconductor industry has entered a period of upward prosperity;

2018-2019 Mid-year: Affected by factors such as the slowdown in the growth rate of macroeconomics and the lack of innovation in smartphones, global electronics industry has weak demand and high product inventory; at the same time, the uncertainty brought about by Sino-US trade frictions has increased, the semiconductor industry, as the upstream basic industry of electronics, has gradually entered a downward cycle;

Mid-2019-Mid-2020: The wave of 5G replacement is gradually starting, and the markets in other fields of new infrastructure such as the Internet of Things, new energy vehicle charging piles, artificial intelligence, etc. have developed rapidly, and the prosperity of the automobile industry has rebounded simultaneously. As the downstream demand of the semiconductor industry gradually recovers, global semiconductor sales continue to rebound;

2020 second half of 2020-to-present: The raging COVID-19 pandemic has impacted chip manufacturing and packaging and testing capacity in the IDM system in Europe and the United States. At the same time, demand for 5G, new energy vehicles and other fields has exploded, and new wafer production capacity cannot be launched in a large number of new wafer production capacity in the short term, and mature process products such as power semiconductors and MCUs continue to be in short supply;

Looking forward to the future: In the short term, demand in the consumer electronics field represented by mobile phones and home appliances is sluggish, demand in new energy vehicles, photovoltaics and other fields remains high in prosperity, and supply and demand relationships are differentiated, but the overall economy remains high.

semiconductor product delivery cycle remains high, the industry is expected to experience cost-driven price increases, and the overall high prosperity is expected to continue. The strong demand in new energy vehicles, photovoltaics and other fields has driven the continued tight supply and demand for mature process products, and the semiconductor product delivery cycle remains high. According to ECIA data, the current semiconductor delivery cycle has exceeded the highest level from 2017 to 2018. At the same time, the costs of upstream raw materials, wafer foundry and other links remained rising, and TSMC, , Samsung Electronics, , etc. have subsequent price increases. We believe that subsequent industries will experience cost-driven price increases, and the overall industry prosperity is expected to remain high.

positive terminal demand and the impact of Sino-US trade frictions, China's semiconductor industry ushered in a new round of development opportunities. The booming development of the terminal application field has driven the continuous increase in demand for upstream semiconductors. With the vigorous development of emerging application fields in China, the proportion of semiconductor sales has continued to grow from 26.4% in 2014Q1 to 33.7% in 2021Q4. Since 2019, the United States has continued to impose sanctions on Huawei and China's semiconductor industry, and the trend of domestic semiconductor substitution has accelerated. With the further support of national policies to my country's semiconductor industry and domestic terminal manufacturers continue to transfer supply chains to the domestic market, the positive terminal demand and the impact of Sino-US trade frictions, my country's semiconductor industry ushered in a new round of development opportunities.

The combination of multiple factors has led to the recent decline in the valuation of the A-share semiconductor sector, and the long-term allocation value is highlighted at the current position.Recently, the valuation of the A-share semiconductor sector has continued to decline. As of the closing price on June 3, 2022, the PE-TTM of the SW Semiconductor Index was 39.46 times, the ten-year historical quantile was 1.37%, the index risk premium was -0.23%, and the ten-year historical quantile was 99.02%. The current valuation level of the A-share semiconductor sector is close to its lowest level in 10 years. According to Wind's consistent expectations, the performance of the top 10 heavyweight stocks in the semiconductor (Shenwan) sector is expected to maintain stable growth in 2023-2024, and domestic substitution is still continuing to advance. We believe that the long-term allocation value of the semiconductor sector is obvious at the current position.

(III) Key companies analyzed

1, Tuojing Technology: The scarcity of semiconductor thin film deposition equipment leaders is prominent, and the orders in hand are abundant to start the accelerated growth period

Company disclosed the 2021 annual report and the first quarter report data of 2022: 1) The company achieved operating income of 758 million yuan in 2021, up 73.99% year-on-year; achieved gross profit margin of 44.01%, up 9.95pct year-on-year; achieved net profit attributable to shareholders of 68.4865 million yuan, up 696.10% year-on-year; achieved net profit attributable to shareholders of -82.0019 million yuan after deducting non-operating items; 2) The company achieved operating income of 1.08 in 2022Q1 1.08 in 2022Q1 RMB 100 million, up 86.21% year-on-year; gross profit margin was 47.44%, up 17.43pct year-on-year; net profit attributable to shareholders was -11.8781 million yuan; net profit attributable to shareholders was -21.6589 million yuan after deducting non-operating items.

Further downstream market demand has driven continued high growth in performance, and the company's profitability has significantly improved. Demand in the downstream market continues to be strong, and the company's PECVD business achieved high growth, with operating income of 675 million yuan in 2021, a year-on-year increase of 61.49%, and gross profit margin reached 42.64%; ALD business is in the stage of market development and has a domestic technology leading technology. In 2021, the operating income of 28.6221 million yuan, a year-on-year increase of 1451%, and gross profit margin reached 44.19%; SACVD business achieved operating income of 41.1589 million yuan in 2021, a year-on-year increase of 375%, and gross profit margin reached 62.99%. The industry continued to be highly prosperous in 2022. The company achieved revenue of 108 million yuan in Q1 2022, up 86.21% year-on-year; gross profit margin of 47.44%, up 17.43pct year-on-year. The main reasons for the high growth of each business are: 1) The increase in bargaining power has led to an increase in the average unit price; 2) The optimization of product structure, the company has begun to enter the advanced process equipment market with higher value; 3) The increase in order volume has promoted the emergence of 's economic benefits in scale . Outlook: In 2022, major domestic wafer fabs will continue to expand production, and the process of domestic equipment will be steadily advancing. As the leader in domestic semiconductor thin film deposition equipment, the company's performance is expected to continue to grow at a high level.

The high prosperity of the industry resonates with the trend of domestic substitution, and the commercial performance of domestic semiconductor equipment manufacturers has entered a period of high volume. The booming development of 5G, new energy automobiles and AIOT fields has opened a new global semiconductor boom cycle. Fabs are actively expanding production, and their investment enthusiasm continues to rise, driving the continuous growth of the semiconductor equipment market. According to IC Insights data, global semiconductor industry capital expenditure rose 36% year-on-year to US$153.6 billion in 2021, a record high, and is expected to continue to grow 24% to US$190.4 billion in 2022. At the same time, in recent years, the tense geopolitical pattern and uncertainty in the new crown epidemic have exacerbated the shortage of semiconductor supply. The domestic supply chain is in a hurry to demand for independent and controllable . Domestic semiconductor equipment manufacturers seize the historical opportunity and actively cooperate with downstream wafer fab verification and introduction, achieve breakthroughs in subdivided fields, and make phased progress. With the new round of production expansion of downstream wafer fabs, domestic equipment manufacturers are expected to increase coverage in mature process production lines and make their mark in advanced processes, continuously improve their voice in the process of domestic substitution, ushering in a stage of rapid performance growth.

2, North Huachuang : Performance maintained high growth, and the semiconductor equipment leader continued to benefit from the domestic production

Company released the 2021 annual report and the first quarter report of 2022: 1) The company achieved operating income of 9.683 billion yuan in 2021, a year-on-year increase of 59.90%; achieved gross profit margin of 39.41%, a year-on-year increase of 2.73pct; achieved net profit attributable to shareholders of 1.077 billion yuan, a year-on-year increase of 100.66%; achieved net profit attributable to shareholders of 807 million yuan after deducting non-operating items, a year-on-year increase of 309.45%; 2) The company achieved operating income of 2.136 billion yuan, a year-on-year increase of 50.04%; achieved gross profit margin of 2022Q1; achieved gross profit margin of 2.136 billion yuan in 2022Q1; achieved gross profit margin of 50.04%; achieved gross profit margin of 807 million yuan after deducting non-operating items of 807 million yuan, a year-on-year increase of 309.45%; 2) The company achieved operating income of 2.136 billion yuan, a year-on-year increase of 50.04%; achieved gross profit margin of 2022Q1; achieved operating income of 2.136 billion yuan, a year-on-year increase of 50.04%; achieved gross profit margin of 2022Q1; achieved operating income of 2.136 billion yuan, a year-on-year increase of 50.04%; achieved gross profit margin of 2022Q1; achieved operating profit margin of 2.136 billion yuan, a year-on-year increase of 50.04%; achieved gross profit margin of 44.64%, up 5.12pct year-on-year; net profit attributable to shareholders was RMB 206 million, up 183.18% year-on-year; net profit attributable to shareholders was RMB 155 million, up 382.23% year-on-year.

Further downstream market demand has driven continued high growth in performance, and the company's profitability has significantly improved.The downstream market demand continues to be strong, and the company's electronic process equipment and electronic components business achieved high growth, with operating income of 9.683 billion yuan in 2021, an increase of 59.90% year-on-year, of which the electronic process equipment business revenue was 7.949 billion yuan, an increase of 63.24% year-on-year; the electronic component business revenue was 1.715 billion yuan, an increase of 47.22% year-on-year. The industry continued to be highly prosperous in 2022. The company achieved revenue of 2.136 billion yuan, up 50.04% year-on-year; gross profit margin of 44.64%, up 5.12pct year-on-year; net profit attributable to shareholders was 206 million yuan, up 183.18% year-on-year. Outlook: In 2022, major domestic wafer fabs will continue to expand production, and the process of domestic equipment will be steadily advancing. As the leader in domestic semiconductor equipment, the company's performance is expected to continue to grow at a high level.

verification + order + production expansion, domestic semiconductor equipment manufacturers are expected to enter the stage of rapid performance growth. In terms of equipment verification, the verification of domestic equipment is currently steadily advancing; in terms of orders, the expansion plan for key customers is steadily advancing, and it is expected to see the implementation of large orders for key customers and the corresponding share increase in the short term; in terms of production expansion, the industry continues to be in a high prosperity, and the production capacity of mature processes is in short supply. At the same time, mainland China accounts for about 35%-40% of the global demand for semiconductor chip . At present, domestic wafer factories are far from meeting the independent and controllable needs. We believe that domestic wafer production expansion is expected to maintain a high growth rate in the next few years. Based on the three aspects of comprehensive verification, orders and production expansion, we believe that domestic semiconductor equipment manufacturers are expected to usher in a stage of rapid growth in performance.

3, China Micro Company : Performance exceeded expectations, etching equipment business continued to be prosperous

The company released the first quarter report of 2022: The company achieved operating income of 949 million yuan in 2022, up 57.31% year-on-year; achieved gross profit margin of 45.47%, up 4.55pct year-on-year; achieved net profit attributable to shareholders of 117 million yuan, up 14.94% year-on-year; achieved net profit attributable to shareholders of 186 million yuan, up 1578.18% year-on-year.

etching equipment business continues to be highly prosperous, driving the company's performance to maintain high growth. The company achieved operating income of 949 million yuan in Q1 2022, up 57.31% year-on-year, of which the revenue of etching equipment was 714 million yuan, up 105.03% year-on-year; the revenue of MOCVD equipment was 042 million yuan, up 68.59% year-on-year. The company's etching equipment business remains highly prosperous, and the orders for MOCVD equipment driven by Mini LED technology are full. Considering the revenue recognition rhythm, we believe that the annual MOCVD equipment revenue will increase quarter by quarter. Due to the increase in the proportion of revenue of etching equipment with high gross profit margin, the company achieved a gross profit margin of 45.47% in Q1 2022, +4.55pct year-on-year; and achieved a net profit attributable to shareholders of RMB 186 million after deducting non-operating items, a year-on-year increase of 1578.18%. Looking ahead to the whole year, the company has strong demand for etching equipment, and the MOCVD equipment business is about to usher in a revenue turning point, and its annual performance maintains high growth.

industry continues to be highly prosperous and accelerated domestic substitution, and the share of domestic semiconductor equipment manufacturers continues to increase. The shortage of mature processes has driven domestic wafer fabs to accelerate production expansion, and the trend of domestic equipment production under the background of Sino-US trade frictions is obvious. According to SEMI data, mainland China's semiconductor equipment sales increased by 58% year-on-year to US$29.6 billion in 2021, once again becoming the world's largest equipment spending region. Domestic semiconductor equipment manufacturers represented by China Micro Company have increased their efforts in product development, downstream wafer fabs actively cooperate with equipment verification and introduction, and the domestic production of semiconductor equipment has accelerated. With the continuous expansion of downstream customers and the research and development and verification of advanced process equipment, the share of domestic semiconductor equipment manufacturers is expected to continue to increase.

4, Changchuan Technology : Strong R&D strategy and high-quality mergers and acquisitions jointly drive high performance growth, and growth further highlights

The company released its 2021 annual report and the first quarter report of 2022: 1) The company achieved operating income of 1.511 billion yuan in 2021, a year-on-year increase of 88.00%; achieved gross profit margin of 51.83%, a year-on-year increase of 1.72pct; achieved net profit attributable to shareholders of 218 million yuan, a year-on-year increase of 157.17%; achieved net profit attributable to shareholders of 193 million yuan after deducting non-operating items, a year-on-year increase of 339.61%; 2) The company achieved operating income of 538 million yuan in 2022Q1, a year-on-year increase of 82.37%; achieved gross profit margin of 218 million yuan; achieved gross profit margin of 193 million yuan after deducting non-operating items, a year-on-year increase of 339.61%; 2) The company achieved operating income of 538 million yuan, a year-on-year increase of 82.37%; achieved gross profit margin of 2022Q1; achieved gross profit margin of 538 million yuan in 2022Q1; achieved operating income of 52.37%; achieved gross profit margin of 2022; achieved operating income of 538 million yuan, a year-on-year increase of 82.37%; achieved gross profit margin of 2022Q1; achieved operating income of 538 million yuan, a year-on-year increase of 82.37%; achieved gross profit margin of 2022; achieved gross profit margin of 538 million yuan in 2022Q1; achieved operating income of 52.37%; achieved 53.09%, -0.88pct year-on-year; net profit attributable to shareholders was 7109.89 trillion yuan, up 60.10% year-on-year; net profit attributable to shareholders was 62.2915 million yuan, up 46.69% year-on-year.

off-season is not slow, and performance is expected to continue to grow high.The company achieved operating income of 1.511 billion yuan in 2021, an increase of 88.00% year-on-year. Among them, the sorting machine business achieved revenue of 936 million yuan, an increase of 67.59% year-on-year, and the gross profit margin was 42.65% (+0.22pct year-on-year), and the test machine business achieved revenue of 489 million yuan, an increase of 174.33% year-on-year, and the gross profit margin was 67.67% (-2.23pct year-on-year). R&D investment continues to increase. In 2021, the company's R&D investment was 353 million yuan, accounting for 23.36% of the operating income. In 2022Q1, the company achieved operating income of 538 million yuan, up 82.37% year-on-year, and + 21.49% month-on-month, and the off-season was not slow. The revenue in the single quarter hit a historical high, further confirming the company's continued high R&D investment in process technology iteration and continuous upgrading of product structure. With the company's SoC tester, probe station and other new products increased, the annual performance is expected to maintain a high growth rate. At the same time, the company's endogenous extension improves the testing field layout, greatly expanding the business boundaries, and the gradual release of synergies between various businesses will help the company's management capabilities and operational efficiency to continuously improve.

industry continues to be prosperous and accelerated domestic substitution, and the localization rate of semiconductor testing equipment continues to increase. The booming development of 5G, new energy vehicles and AIOT fields has opened a new global semiconductor boom cycle, downstream wafer fabs/packaging and testing plants are actively expanding production, and semiconductor equipment manufacturers have benefited deeply. Testing equipment is widely used in all aspects of semiconductor production, which is of decisive significance to the final yield of the chip and indirectly affects the overall production cost. As the complexity of chip design gradually increases, the difficulty of testing continues to increase, and the value of related equipment continues to increase. We predict that the market size of my country's semiconductor test equipment in 2021 will be approximately 15 billion yuan. At the same time, based on the China International Bidding Network data and calculated, the domestic production rate is less than 20%. Against the backdrop of Sino-US trade frictions, the domestic supply chain has an urgent need for independent and controllable demand, and the domestic semiconductor test equipment industry has ushered in an important window period, and leading equipment manufacturers are expected to continue to benefit. (Report source: Future Think Tank)

5, Fudan Microelectronics/Shanghai Fudan: Performance continues to grow at a high level, and the company's growth attributes are highlighted under the increase in high reliability business volume

The company released the first quarter report of 2022: The company achieved operating income of 776 million yuan, up 54.54% year-on-year and 4.07% month-on-month; achieved gross profit margin of 63.59%, up 12.45pct year-on-year and 2.83pct month-on-month; achieved net profit attributable to shareholders of 233 million yuan, up 169.62% year-on-year and 84.51% month-on-month; achieved net profit attributable to shareholders of 226 million yuan, up 217.81% year-on-year and 108.92% month-on-month.

's performance continues to grow at a high level, and the rapid increase in high-reliability business has driven the company's profitability to significantly improve. The company achieved operating income of 776 million yuan in Q1 2022, up 54.54% year-on-year and 4.07% month-on-month. By business, the company's security and identification chip business revenue in 21Q4/22Q1 was RMB 258/215 million, respectively, up 16.8% month-on-month; the non-volatile memory business revenue was RMB 168/246 million, up 46.4% month-on-month; the smart meter chip business revenue was RMB 106/102 million, up 3.6% month-on-month; the FPGA and other chip business revenue was RMB 123/171 million, up 38.8% month-on-month; the integrated circuit test business revenue was RMB 65/43 million, up 33.5% month-on-month. We believe that high reliability business volume is the main factor leading to the company's high month-on-month growth in profits in Q1 2022, and the company's performance is expected to maintain high growth in the future.

6, GYIC Innovation : Product structure continues to be optimized, with rapid growth in performance in 22Q1

The company released its 2021 annual report and the first quarter report of 2022: 1) The company achieved operating income of 8.51 billion yuan in 2021, a year-on-year increase of 89.25%; achieved gross profit margin of 46.54%, a year-on-year increase of 9.16pct; achieved net profit attributable to shareholders of 2.337 billion yuan, a year-on-year increase of 165.33%; achieved net profit attributable to shareholders of 2.224 billion yuan, a year-on-year increase of 300.48%; 2) The company achieved operating income of 2.23 billion yuan, a year-on-year increase of 39.02%; achieved gross profit margin of 2022Q1 2022Q1 2023; achieved gross profit margin of 2.23 billion yuan, a year-on-year increase of 39.02%; achieved gross profit margin of 2.23 billion yuan in 2022Q1 2022; achieved operating income of 2.23 billion yuan, a year-on-year increase of 39.02%; achieved gross profit margin of 2.23 billion yuan in 2022Q1 2022; achieved gross profit margin of 2.23 billion yuan, a year-on-year increase of 39.02%; achieved gross profit margin of 2.23 billion yuan in 2022Q1 2022; achieved operating income of 2.23 billion yuan, a year-on-year increase of 39.02%; achieved gross profit margin of 2.23 billion yuan in 2022Q1 2023; achieved operating income of 2.23 billion yuan, a year-on-year increase of 39.0 49.48%, up 13.73pct year-on-year; net profit attributable to shareholders was RMB 686 million, up 127.65% year-on-year; net profit attributable to shareholders was RMB 655 million, up 136.51% year-on-year.

NOR Flash The tight supply and demand state is expected to continue, and the company will continue to increase its market share steadily. In 2021, the company's storage products achieved operating income of 5.451 billion yuan, a year-on-year increase of 66.0%, mainly contributed by NOR Flash business.A diverse product portfolio such as high performance, large capacity, low power consumption, and small size are constantly innovating, and performing well in the fields of TWS headphones, PCs, electricity meters, security monitoring , automotive electronics, etc., and its market share has further increased. As traditional flash memory manufacturers gradually withdraw, Taiwanese manufacturers have limited new production capacity in the short term, and the overall supply and demand of the NOR market are still tight. The company adopts the Fabless operation model and has high flexibility in capacity expansion. With the acceleration of 12-inch expansion of domestic wafer fabs, the company's NOR Flash is expected to obtain more capacity support. At the same time, the comprehensive layout of automotive specification products, iterative processes (process nodes switch from 65nm to 55nm), and optimize product structure will help the company move forward steadily in NOR Flash business.

7, Yangjie Technology : Performance exceeded expectations, product structure upgrade opened up growth space

The company released the first quarter report of 2022: The company achieved operating income of 1.418 billion yuan in Q1, a year-on-year increase of 50.46%; achieved gross profit margin of 36.73%, a year-on-year increase of 3.21pct; achieved net profit attributable to shareholders of 276 million yuan, a year-on-year increase of 77.82%; achieved net profit attributable to shareholders of 274 million yuan after deducting non-operating items, a year-on-year increase of 79.59%.

The industry's prosperity has differentiated, and the company's product structure has been upgraded to achieve high performance growth. In the context of differentiation of industry prosperity, the company maintained relatively stable profitability through product structure adjustment: ① The company continued to promote international strategic layout. Under the background of normalization of the epidemic abroad, the sales revenue of MCC brands doubled year-on-year in the first quarter; ② Actively deployed and promoted new products, and the sales revenue of new products such as IGBTh, SiC, MOSFET increased by more than 100% year-on-year, and the proportion of revenue from growth businesses continued to increase; ③ Seize the opportunity of domestic substitution to expand downstream application areas, and revenue in new energy fields such as photovoltaics and automobiles continued to increase. The company's strategic adjustments have been smooth in recent years. With the gradual start of new production capacity, we believe that the company's performance is expected to maintain high growth.

8. Xinjie Energy: Performance exceeded expectations, and the product structure adjustment effect was significant.

The company released the first quarter report of 2022: The company achieved operating income of 421 million yuan in Q1, a year-on-year increase of 30.79%; achieved gross profit margin of 39.72%, a year-on-year increase of 6.32pct; achieved net profit attributable to shareholders of RMB 112 million (19 million yuan of share payment allocation expenses have been deducted), a year-on-year increase of 50.11%; achieved net profit attributable to shareholders of RMB 110 million (19 million yuan of share payment allocation expenses have been deducted), a year-on-year increase of 48.29%.

The industry's prosperity is differentiated, and the company's product structure and customer structure adjust the company's product structure and customer structure maintain high performance growth. The company actively optimizes and upgrades its customer structure and product structure. The proportion of medium and high voltage MOS and IGBT revenue continues to increase. New energy markets such as automotive electronics and photovoltaic energy storage are constantly developing. The company's operating income in 2022Q1 increased by 30.79% year-on-year and 5.45% month-on-month, fully demonstrating the sustainability of the industry's prosperity; at the same time, the gross profit margin increased by 6.32pct year-on-year and -0.02pct month-on-month, indicating that the company's product structure and customer structure adjustment remain relatively stable. Historically, the first quarter was the company's traditional off-season, and the company's profits still achieved positive month-on-month growth in 2022Q1, fully indicating that the company's own strategic adjustments have brought about rapid growth in performance under the differentiation of industry prosperity.

9. Wingtech Technology: The semiconductor business continues to grow at a high level, and the ODM platform layout is about to usher in a harvest period.

The company released its 2021 annual report and the first quarter report of 2022: 1) The company achieved operating income of 52.729 billion yuan in 2021, an increase of 1.98% year-on-year; achieved gross profit margin of 16.17%, an increase of 0.97pct year-on-year; achieved net profit attributable to shareholders of 2.612 billion yuan, an increase of 8.12% year-on-year; achieved net profit attributable to shareholders of 2.201 billion yuan, an increase of 4.17% year-on-year. 2) The company achieved operating income of 14.803 billion yuan in Q1 2022, up 23.44% year-on-year; achieved gross profit margin of 17.75%, up 2.19pct year-on-year; achieved net profit attributable to shareholders of RMB 503 million, up 22.87% year-on-year; achieved net profit attributable to shareholders of RMB 633 million, up 5.51% year-on-year.

's operating performance meets expectations, and the company's various businesses maintain a growth trend. In terms of product integration business, in 2022Q1, the external operating income was 10.334 billion yuan, up 20.03% year-on-year, and the gross profit margin level continued to recover. However, affected by the continued R&D investment of new products and new customers, the net loss in the first quarter was 40 million yuan. As new projects gradually entered mass production, the profit elasticity of the product integration business in the future is expected to be released.In terms of semiconductor business, in 2022Q1, it achieved external operating income of 3.697 billion yuan, a year-on-year increase of 9.62%, gross profit margin of 42.94%, and net profit of 854 million yuan, a year-on-year increase of 41.18%. Outlook: In 2022, demand in the automotive, industrial and other fields will continue to be strong, and the semiconductor business is expected to maintain a month-on-month growth trend. Product integration business and semiconductor business continue to improve, while the optical module business continues to reduce losses. We believe that the company's annual performance is expected to achieve high growth.

3. Consumer Electronics: The upward trend of VR/AR and automotive electronics is clear, pay attention to the high-quality targets of sub-track tracks

(I) VR/AR+ automotive electronics relay TWS has become the main driving force for consumer electronics

The main logic of the consumer electronics industry continues to iterate, and VR/AR+ automotive electronics has become the main logic of the industry's upward growth. Looking back at the development logic of the consumer electronics industry since 2010, it has mainly gone through three stages: 1) From 2010 to 2018, the consumer electronics industry mainly fluctuated around the smartphone innovation cycle; 2) With the penetration rate of the smartphone industry peaked in 2018, TWS relay smartphones became the new main driving force of the consumer electronics industry in 2019; 3) Since 2021, with the rapid growth of VR and electric vehicle shipments, VR/AR and automotive electronics have become the main driving force of the current consumer electronics industry.

(II) The VR/AR market has entered a period of rapid development. We are optimistic about the industrial chain-related targets

1. The VR industry has passed the trough period, and has entered the rising stage after years of development.

Virtual reality technology Virtual Reality (VR) is a three-dimensional digital model composed of computer graphics and compiled into a computer to generate a comprehensive perceptible artificial environment that mainly focuses on visual perception, also includes hearing and touch, emphasizing the interaction between users and the virtual world, and can provide users with a closed and immersive virtual world experience. Augmented Reality (AR) is a technology that increases the user's perception of the real world through the information provided by the computer system, and superimposes computer-generated virtual objects, scenes or system prompt information into the real scene, thereby achieving "enhancement" of reality. AR technology has been developed based on VR technology. The near-eye display system of AR and VR devices uses optical components to image pixels on the display and project them to the human eye. However, AR glasses need to integrate virtual information with real scenes through layering to achieve augmented reality effects.

VR/AR hardware industry has experienced years of development, and the hardware maturity has ushered in a significant improvement under continuous iteration. In the VR industry, Oculus launched the Oculus Rift VR prototype in 2012 and brought the industry into the public's vision. In 2014, Facebook spent a huge amount of money to acquire Oculus to push the industry to its first climax, and then a large number of companies in the industry released their own products. However, in 2017, due to the imperfection of hardware equipment and content, it was difficult to form a virtuous cycle in which terminals promote content development and content feeds back to terminal demand, and the industry experienced a significant decline. VR entered a recovery period in 2020. The emergence of high-quality hardware such as Valve Index VR, Oculus Quest, and HTC Vive has also boosted the rise of the industry, and terminal shipments have continued to rise. In the AR industry, in April 2012, Google released Google Glass, which brought AR into the public's vision. Later, Microsoft released HoloLens in 2015, which further increased the industry's attention, and a large number of startups and capital began to enter. Starting from 2018, due to the fact that the technical route of the AR industry has not yet been clarified, C-end products are expensive and the user experience is generally sluggish, industry companies have shifted their development focus to B-end applications. Starting at the end of 2020, mobile phone giants such as OPPO and Xiaomi released their own consumer-oriented AR products, but they have not been sold publicly.

VR industry has entered an upward stage, and the C-end applications of the AR industry are still not yet mature. With the continuous iteration of hardware, the current VR industry hardware can basically meet the needs of users. A virtuous cycle of mutual promotion of "hardware + content" has been initially established, and the industry has entered an upward stage; since the current technology still needs to be broken through, mass production and price have not yet met the requirements for large-scale applications on the C-end. The current downstream of the industry is mainly B-end, and it still takes time to increase the volume on the C-end.

2. The maturity of "soft and hard" has been improved, VR/AR has risen again

hardware maturity has been improved, and the user experience has been greatly improved.In 2015, VR/AR products once became a hot spot in the consumer electronics industry. However, due to the relatively weak hardware maturity at that time, and due to the limited hardware conditions such as communication speed and computing power, the scene screen resolution of VR products is low, the grainy feeling is serious, and the rendering effect is poor. Users will feel dizzy when using it for a long time. In 2017, the market fell into silence due to the terminal shipment volume being lower than expected. As the hardware such as processors and screens continues to be upgraded and iterated, the dizziness that affects the user experience is expected to be greatly improved: (1) The popular product Quest2 uses the XR2 chip specially designed for VR/AR. The Quest Snapdragon XR2 platform is the world's only 5G+XR chip platform. It uses TSMC's 7-nanometer manufacturing process. It also supports up to seven cameras, which can create more possibilities for XR; (2) The graininess brought by the screen effect greatly affects the VR experience. Quest2 uses Fast-LCD technology, and the refresh rate is increased to 90~120Hz, and the screen effect is greatly reduced. The technical route of

VR optical solution is clear, and it is currently in the transition period from Fresnel lens to pancake folding optical path. VR optics used a single lens solution in the early days, but the lens itself was relatively heavier; Fresnel lenses are the current mainstream solution, which is thinner and lighter than traditional lenses, and have certain improvements in weight, but the thickness of the whole machine does not change much; in December 2019, Huawei launched the VR Glass, using a pancake folding optical path solution, with a thickness of only 26.6mm. Compared with the 105mm thickness of Xiaomi VR all-in-one machine using Fresnel lenses, the thickness has been greatly improved in terms of thickness, but due to the ghosting problem and high cost, it has not been widely adopted in the future. In April 2012, Meta announced a VR headset codenamed Project Cambria at the 22Q1 performance briefing. It is expected to adopt the pancake solution. Considering that Meta is the current leader in the VR industry, the subsequent penetration rate of pancake folding optical paths may usher in a significant increase.

6DOF replaces 3DOF with a clear trend. 3DOF (three degrees of freedom) refers to the fact that only the head of the player wearing a head can perform three-dimensional movements up and down, left and right, front and back. 6DOF refers to the addition of 3DOF to the player's body's three-dimensional movement, which can move around in the VR space. According to the VR head display hardware statistics on the steam website, most of the headsets with higher usage rates have been updated to the 6DOF type. The development of 3DOF to 6DOF has greatly improved the user experience. 6DOF can allow users to move freely in VR space, feel the height of visual objects more immersively, making the scene more realistic. The trend of 6DOF replacing 3DOF is relatively clear.

VR The terminal maturity has improved and the development trend is clear, and the product form has shown a convergence trend. With the continuous development of the VR industry and the continuous iteration of products, the current configurations of VR terminals, including processor chips, display screens, optical solutions, positioning modes, etc., are showing a trend of homogeneity, and the iteration direction of each core device and parameter is relatively clear, and the product trend is expected to continue. We believe that the convergence of product forms is a reflection of the improvement of product maturity, which shows that the industry has formed a certain consensus on the current optimal form of products. In addition, the convergence of product forms is also conducive to the improvement of supply chain maturity. Popular applications drive the leap in VR penetration, and new applications continue to be launched and gradually matured on the content side. In terms of VR content, the 3A-level VR game "Half-Life: Alyx" was released on March 24, 2020. In April, steam statistics accounted for the proportion of active VR users, surpassing the previous historical high to reach 1.91%, which shows the powerful driving effect of high-quality content on hardware penetration. In the future, more high-quality applications continue to be launched. According to the Quest platform data, in 2021, four games including "Resident Evil 4" were newly launched on the Quest platform and achieved sales revenue of more than 10 million US dollars, and the content side is gradually becoming mature.

3. Terminal shipments are growing rapidly. Industrial chain companies are expected to fully benefit

hardware experience and content jointly determine terminal shipments, and leading companies have a complete layout and competitive advantage. From the perspective of market share, Oculus has occupied most of the market share with its own popular product Oculus Quest 2, its rich Quest platform content and excellent PC streaming.According to counterpoint data, the Oculus market share in the global VR/AR market in 21Q1 shipments can reach 75%; according to IDC data, the Oculus market share in 2021 reached 78%. We believe that the main factor that determines the shipment of VR/AR industry manufacturers is still the user experience of the product and the degree of perfection of content. The leading manufacturers in the industry have strong competitive advantages.

virtual reality industry chain includes four major links: hardware, software, content production and distribution, application and service. The hardware link includes three parts: core devices, terminal devices and supporting peripherals. In terms of core devices, it includes chips (CPU, GPU, mobile SOC, etc.), sensors (image, sound, motion capture sensors, etc.), display screens (LCD, OLED, AMOLED and display screens and their driving modules), optical devices (optical lenses, diffraction optical components, image modules, three-dimensional modeling mode groups, etc.), communication modules (radio frequency chips, WIFI chips, Bluetooth chips, NFC chips, etc.). In terms of terminal devices, it includes PC devices (host + output headset), mobile devices (connected to the mobile phone via USB) and all-in-one (VR headset with independent processor). In terms of supporting peripherals, it includes handles, cameras, perception devices (rings, touch panels, touch/force feedback devices, etc.).

VR/AR The industrial chain has clear division of labor, and core components have strong competitive barriers. Early VR/AR devices had poor experience when wearing them due to insufficient chip computing power to insufficient smoothness, insufficient screen clarity, and bulky hardware. In recent years, with the continuous upgrading of hardware, product design has become more lightweight, and VR/AR equipment has developed towards lightness and comfort. While the experience is improved, the price has gradually dropped. In addition, the supply chain is constantly improving, and a number of high-quality manufacturers in the fields of high-quality optical and complete machine assembly have emerged in China.

(III) Short-term disturbances will not change the general trend of the development of new energy vehicles. Electrochemical and intelligent drive the outbreak of automotive electronics

1. The general trend of electrification and intelligence, and the outbreak of automotive electronics

electrification accelerates penetration, and the space for intelligence is broad. Recalling the history of mobile phone development, since the release of the first iPhone in 2007, the penetration rate of smart phones has increased rapidly. In the ten years from 2006 to 2016, the penetration rate of smart phones has increased from 7.9% to 74.7%; in terms of product form, the intelligence level of mobile phone products has been continuously improved, and the functions and interaction methods have changed significantly. The automotive industry is currently undergoing electrification and intelligence changes. The global penetration rate of new energy vehicles in 2021 is 8.4%, similar to the penetration rate of smart phones in 2006, and is expected to start a golden decade; in terms of product forms, it has also gradually developed from the mechanical era and the electronic era to the intelligent era. Companies represented by Tesla are actively making arrangements in intelligent fields such as autonomous driving and on-board display. With the increase in the degree of intelligence, the intelligent penetration rate increases, double-click on the development of intelligent automobiles with broad space.

Short-term disturbances will not change the development trend of new energy vehicles. According to data from the China Passenger Car Association, the sales of domestic new energy vehicles from January to March 2022 were 1.07 million, an increase of 145% year-on-year, showing a strong development trend. In April, the supply chain was severely affected by the epidemic. Many car companies such as Tesla, Volkswagen, and NIO stopped production. In April, domestic new energy vehicles sold 282,000, a month-on-month decrease of 63.4%. As the impact of the epidemic gradually subsides, various manufacturers are gradually resuming production, and are expected to return to high growth in the future.

Under the trend of electrification and intelligence, the value of automotive electronics has increased significantly. Electrification brings disruptive changes in the automotive power system, and automotive electronics plays a core role in powertrain and battery management system control. Intelligence brings a revolution in automobile travel and vehicle upgrades. High-performance sensors and high-performance computing are widely used to gradually enter the era of autonomous driving from humans. The BOM cost related to automotive electronics will be increased from US$3,130/car in 2019 to US$7,030/car in 2025, an increase of 124.6% year-on-year, of which electrification will increase the cost of US$2,235/car BOM, and intelligence will increase the cost of US$1,665/car BOM. The market space of domestic automotive electronics in 2021 is US$110.4 billion, and the market space in 2025 is US$141.2 billion; Statista predicts that global automotive electronics in 2021 is US$235.1 billion, and the market space in 2025 is US$318.6 billion, and the market space in 2028 will reach US$400 billion.(Report source: Future Think Tank)

2. Autonomous driving is constantly advancing, and car-mounted lenses open up new huge space

Unmanned driving technology is gradually evolving, and advanced autonomous driving becomes possible in the future. According to the SAE grading standards for autonomous vehicles released in 2014, autonomous driving technology is divided into 5 levels: driving support (Level 1), partial automation (Level 2), conditional automation (Level 3), high automation (Level 4), and full automation (Level 5). Among these five levels, there has been a fundamental change from L2 to L3. People still observe the driving environment at L2 and below. There is a driver in the driver's seat and it is necessary to take over directly in an emergency. The driving environment at L3 and above is observed by machines. Human drivers do not need to sit in the driver's seat and hold the steering wheel. They only need to leave a monitoring computer inside or outside the vehicle. In an emergency, cognitive discrimination intervention is carried out through computer operations. At present, the development of autonomous driving is at such a critical turning point. As long as this turning point is overcome, the autonomous driving market is expected to usher in a new round of recovery.

ADAS penetration rate increases rapidly. In the technical system of autonomous driving, ADAS technology is one of the key technologies for vehicles to realize road conditions perception, path planning and automatic control. ADAS can be divided into three major systems: an environment perception system responsible for environmental identification, a central decision-making system responsible for computing and analysis, and an underlying control system responsible for executing control. The sensors responsible for sensing mainly include cameras, millimeter-wave radars, ultrasonic radars, night vision devices, etc.; the analysis is mainly chips and algorithms. The algorithm is a breakthrough for ADAS to advance to unmanned driving, and the core is vision-based computer graphics recognition technology; the execution is mainly carried out by hardware that performs functions such as braking and steering.

bicycle lenses have increased significantly, and the market space has grown rapidly. As ADAS penetration increases, the number of bicycle cameras also increases. According to Yole data, the average number of cameras per car in the world will increase from 1.7 in 2018 to 3 in 2023. On the other hand, since on-board cameras generally need to meet the characteristics of wide angle, high relative illumination, high light through light, fog transmission, continuous and stable focus and thermal compensation, and at the same time, they have functions such as dust-proof, earthquake-proof and night vision, making the product production difficult and the price has also increased. Among them, the front-view lens in ADAS has extremely high requirements for high temperature resistance because it is near the engine. Only pure glass lenses can meet the requirements, and the unit price is doubled compared with traditional car lenses. Driven by the above factors, the global automotive lens market size has increased rapidly, exceeding 40 billion in 2020.

3. New energy vehicles lead the wave of electrification and intelligence, and on-board PCB ushered in the golden age.

New energy vehicles explored new market demand and catalyzed the first incremental sector of the upstream PCB sector. From the last 5 to 8 years of 2021, a large number of in-use vehicles with national IV standards and below will gradually face elimination and replacement, bringing greater development space to the new energy vehicle market. The growth rate of electric vehicle production and sales is expected to remain above 40% in the next five years. As a high-linkage, the upstream PCB sector has been affected by downstream demand, and has formed a new increase. Currently, the automotive PCB market size is about $7 billion, with an estimated CAGR from 2020 to 2025, accounting for 10-15% of the total PCB sector demand, making it the fourth largest PCB market, second only to consumer products.

equipment upgraded automotive electronic content increases, and electrification and intelligence are the largest increments. The cost of automotive electronics accounts for the total cost of automobiles is increasing year by year, and is expected to increase from US$2,597 in 2020 to US$3,064 in 2024. Electromotion and intelligence are the largest sources of automotive electronic growth, with the compound growth rates between 2018 and 2024 being 16% and 16% respectively.

After the wave of electrification and intelligence, the volume and price of automotive PCBs have increased. Volume increase: Electrolysis drives the increase in demand for PCBs mainly based on power systems, and intelligence drives the increase in demand for smart cockpits, autonomous driving, and body control PCBs. The use of PCBs for traditional bicycles is usually between 0.5 and 1 square meter, and the use of PCBs for new energy vehicles is usually above 3 square meters.Price increase: Electrical and intelligent requirements for various electronic components of new energy vehicles have been increased, and corresponding requirements for PCBs have been increased. For example, the smart cockpit PCB forms a multi-layer board of traditional cars, a small amount of HDI to a multi-layer board of new energy vehicles, and medium and high-end HDI, with an increase in unit price.

Automobile PCB market dominated by overseas manufacturers, and domestic manufacturers are expected to rise head-on. The automotive PCB market structure is relatively scattered. The top five manufacturers in 2020 are CMK, Qisheng NOK, Schinda TTM, Mingxing, and Jingpeng. The top ten automotive PCB manufacturers in 2020 had a total revenue of US$3.74 billion, with CR10 of approximately 58%. There are 6 overseas manufacturers in the top ten manufacturers, 3 manufacturers in Taiwan and Hong Kong, and only 1 manufacturer in mainland China. In the rapidly developing automotive PCB market, domestic manufacturers are expected to catch up: (1) Local manufacturers have cost and management advantages, and the PCB industry moves eastward in a general trend; (2) In the past, the automobile industry tier1 was mainly dominated by overseas companies and the supply chain is relatively closed, and the supply chain of new energy vehicles is relatively open, and domestic manufacturers are expected to rise with the domestic tier1.

4, Automotive Electronics Industry Chain Category

Automotive Electronics is the general term for automotive electronic control systems and on-board electronic appliance systems. The automotive electronic control system includes engine electronic systems, chassis electronic systems, driving assistance systems and body electronic systems, and the on-board electronic appliance systems include safety and comfort systems and infotainment and networking systems. The sub-tracks include on-board PCB, on-board lens, on-board CIS, electric drive, power assembly, automotive connector, inverter (IGBT/film capacitor), on-board storage, precision structural parts, etc.

(IV) Key companies analyze

1, Goertek: VR and game console business is growing rapidly, the meta-universe hardware giant set sail

VR/AR market accelerates to increase volume, and the company's precise positioning is expected to enter the harvest period. After experiencing an industry low period in 18 years, the VR/AR industry has entered an upward stage. Among them, the VR industry's "hardware + content" two-way promotion of a virtuous cycle has been basically established, and hot products have driven the rapid increase in terminal demand. According to IDC data, the global shipment of VR/AR headsets in 2021 was 11.2 million units, a year-on-year increase of 92.1%; it is expected that global VR/AR shipments will exceed 50 million units in 2026, with a CAGR of 35% during the period. The company is forward-looking in VR/AR business, leading the technology industry from optical components to complete machine solutions, and deeply bound to the leading global VR/AR industry customers, which is expected to fully benefit from the upward trend of the industry.

wearable business has a promising future growth space, and the company has been deeply involved in the TWS headphones and watch business track. The company laid out its TWS headphone business in H2 in 2018 and gradually released its TWS headphone production capacity in 2019. During this period, the TWS business ushered in rapid growth. According to Canalys data, with the launch of AirPods 3 in October 21, AirPods headphones shipments in 21Q4 increased by 20% year-on-year, returning to double-digit growth; the market expects Apple to launch AirPods Pro 2 at the fall 22nd launch conference. This product is not only designed in novel ways, but also supports Apple Lossless (ALAC) format and charging case that can make sound for users to find and other functions. As the core supplier of TWS headsets for customer A, the company is expected to benefit the TWS business. The smart watch industry has grown steadily. According to the number of big data of Rising Sun, the global smart watch shipments in 211 were 210 million units, an increase of 8% year-on-year; it is expected that shipments in 2022 can reach 270 million units, an increase of 29% year-on-year. The company's smart watch business covers domestic Android major customers and is expected to benefit from the upward trend of the smart watch industry.

2. Dongshan Precision: Automotive Electronics & VR/AR business has opened the company's second growth curve

three-dimensional layout of the automotive electronics business. The company's second growth track is clear, and it is expected to create another Dongshan Precision in the future. The automotive electronics business has become an important part of the company and the core of future strategy. From the perspective of soft boards: the trend of soft boards in electric vehicles to replace traditional wire harnesses is clear, the bicycle ASP has been significantly improved, and Mflex has carried out in-depth cooperation with T customers and other new energy customers in the fields of BMS soft boards, energy storage, etc. While the company's in-vehicle PCB business is developing rapidly, it has gradually transformed and upgraded its original sheet metal structural parts/LED/display touch and other businesses in light of rapid development of the company, enriching the company's automotive electronics product categories and opening up space for long-term growth.The group has established a coordination group for automotive electronics business, and major business units are expected to exert synergistic effects. We predict that automotive electronics business will achieve more than double growth this year, and it is expected to maintain a 50%+ compound growth rate through endogenous layout + external acquisitions and other methods. In the medium and long term, the automotive electronics business is expected to create another Dongshan Precision.

soft board business shows a trend of both volume and price increase among major customers, and VR/AR reshapes the ceiling of soft board business. As the core supplier of soft boards for A customer, Mflex’s total ASP and share of supply materials have steadily increased. Currently, nearly 50% of the soft board business of A Customer is in Japanese and Korean companies. With the release of the second phase of Yancheng production capacity, the company's share in major customers is expected to continue to increase. Secondly, the company actively deploys VR/AR-related tracks. The company successfully introduced F customers and became the core supplier of OculusQuest2 soft/hard boards. Industrial chain research shows that ASP has exceeded US$30, and the VR/AR market sentiment has been high in 21 years. Quest2 has become the most popular VR device in the industry. In addition, the market expects that A customer will release its first MR headset in 22 years, and the value of stand-alone soft boards is expected to be significantly higher than other products in the same market. The company is expected to benefit fully as the core supplier of A customer.

3. Transsion Holdings: the leader in mobile phones in emerging markets, "product strategy + channel first-mover advantage" builds core barriers

The leader in mobile phone industry in emerging markets, and creates an ecosystem of "mobile phones + Internet + home appliances, digital accessories". Transsion Holdings is the fourth-ranked brand mobile phone manufacturer in the world's mobile phone shipments and the first-ranked mobile phone shipments in Africa. With the three major mobile phone brands, "itel, TECNO and Infinix", covering customers at different levels of consumption, it has occupied a significant market share in the African market and is expected to continue to benefit from the mobile phone change cycle in Africa and the release of demand in emerging markets such as India. At the same time, based on the localization strategy, the company actively explores the demand characteristics of local consumers and builds a business ecosystem of "mobile phone + mobile Internet + home appliances, digital accessories" around the mobile phone business, opening up another growth space for the company.

Mobile business operation trend is upward + Internet business is growing rapidly, and it is recommended continuously. The company has deeply deployed in emerging markets such as Africa and Southeast Asia. With the positive feedback of "channel first-mover advantage and multi-brand cost-effective strategy", the company's industry share in Africa has repeatedly hit new highs, and it is expected to deeply benefit from the industrial dividends of the increase in smartphone penetration rate in Africa in the future. At the same time, the strategy of deepening the channel has enabled the company's share in Southeast Asia to rise steadily. In recent years, the share of Southeast Asian countries such as Pakistan, Bangladesh, and Thailand has continued to grow. At the same time, benefiting from the demographic dividend and perfect channel layout in Africa, the company can calmly deploy emerging businesses such as home appliances and the Internet. The Internet business has continued to double in the past two years. The joining of a former Baidu executive Xiang Hailong team provides a more diversified idea for the company's exploration of the Internet business model in Africa, which is expected to drive the Internet business to achieve rapid growth.

4. Hengmingda: The turning point has reached, and the production capacity of die-cutting strong people has accelerated to enter a new round of growth

Apple's basic market is stable, and the market volume and price of precision functional parts in the 5G era has increased. Since the release of the first 5G model iPhone12 series in 2020Q4, iPhone shipments have grown rapidly for four consecutive quarters. According to IDC data, iPhone shipments in 2021Q3 were 50.4 million, up 20.8% year-on-year. According to canalys data, Apple's market share was 22% in 2021Q4, the second highest position since 2014, second only to 23.4% in 2020Q4, showing strong demand. The market volume of precision functional parts in the 5G era: 1. The recovery of the terminal market will inevitably drive the increase in upstream component shipments; 2. The introduction of new functions and new technologies, the usage of precision functional parts has increased. Taking OLED screens as an example, the usage of die-cut parts is about 3 times that of LCD screens. Increase in value: 1. Improve the process requirements of precision functional parts; 2. Add functional applications to superimpose precision functional parts, and superimpose shielding, heat dissipation, waterproofing and other functions on the basis of their original fixed functions. Hengmingda has been deeply engaged in the field of precision functional parts for many years, and has the best customers/leading R&D accumulation, and is expected to deeply share industry dividends.

is supported by major customers and focuses on the die-cutting industry, supplementing the metal parts processing capacity further opens up the company's growth space.The die-cutting industry has high barriers and high average profit center. Thanks to its high-quality internal management and product delivery capabilities, the company has been highly recognized by major customers. Since 2018, the company has been supported by major customers, vigorously developed its die-cutting business, actively adjusted its capacity structure, cooperated with major customers to complete the research and development of a number of new medium-precision functional parts, continuously introduced high-value material numbers, and steadily increased the business share of major customers. In 2020, the company's acquisition of Huayangtong business supplemented the metal parts processing and assembly capabilities, which was conducive to forming a synergistic effect with die-cutting and further opened up the company's growth space.

5, Hesheng Co., Ltd.: CTP penetration accelerates the increase in the volume and price of battery boxes, vertical integrated layout builds competitive barriers

focuses on aluminum profile processing, and the new energy business has opened the second growth curve. Since its establishment in 2005, the company has focused on the precision processing of aluminum profiles. The products are widely used in consumer electronics, durable consumer goods and automotive parts. In 2015, the company strategically planned the new energy vehicle battery box business, and after five years of investment, it continued to lose money. In 2020, with the explosion of new energy vehicles turning losses into profits, the new energy vehicle business accounted for more than half in 2021. New energy vehicles accelerated penetration under the background of global carbon neutrality, and the battery box business is expected to drive the company into a new round of growth period.

First-principle drives CTP battery penetration accelerates and battery box competition barriers are enhanced. The range and kilometer-to-kilometer cost are the core variables of electric vehicles penetration. Battery factories and vehicle manufacturers have always been committed to reducing kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to-kilometer-to Currently, lithium battery materials are at high prices, lithium iron phosphate batteries are revived under cost pressure, material innovation improves energy density ceilings are highlighted, and structural innovation improves space utilization has become an important measure. Traditional battery packs adopt Cell-Module-Pack three-level structure, while CTP (Cell To Package) solution cancels/reduces module structural components, and the space utilization rate of the battery pack can be increased by 15% to 20%, making up for the shortcomings of low energy density of lithium iron phosphate through structural innovation. The CTP solution has brought new requirements to the performance of the battery protection box (better airtightness/heat dissipation/short-circuit prevention, etc.). The value of traditional battery boxes is between 1,500 and 2,000 yuan, and FSW technology solutions are mostly used. The battery protection box of the CTP solution adopts FDS solution with more complex technology, with a value of between 3,000 and 4,000 yuan, and the value of some high-end models has even exceeded 5,000 yuan. In 2021, the proportion of CTP in the company's battery box shipments increased quarter by quarter. At present, the production capacity of competitors in the industry is still mainly traditional pallets/FSW, and its profitability is average. The company has led process changes with early investment and early R&D. The value and profitability of bicycles are significantly better than those of its peers, and the industry's competitive barriers have been further enhanced.

forward-looking card position binds front-line customers to reduce dimensionality with the flexibility of consumer electronics. The company actively cooperates with C customers to invest resources during the industry downturn. It has now become the largest supplier of CATL battery pallets, indirectly supplying new car companies such as Wei Xiaoli. The company has large-tonnage aluminum extrusion molding technology and flexible production lines, and has laid out core technologies such as FDS (bolt self-tightening technology) and FSW (friction stir welding) in advance, and masters the research and development and manufacturing of CTP battery trays. In 2021, the company has obtained targeted projects for multiple auto companies with its scale and technological advantages, and new Internet forces and traditional auto companies are also accelerating their entry. Compared with the traditional automobile supply chain, battery boxes have the characteristics of fast iteration and complex technology. The company uses consumer electronics strategy to flexibly adjust to achieve rapid response and delivery, which has a dimensionality reduction blow to traditional parts companies, and has obvious leading advantages.

6, Yutong Optics: Security inventory reduction performance is under pressure, and the market space for in-vehicle optics and consumer

layout in-vehicle front-mounted lenses, opening up the company's long-term growth space. At present, the products in the automotive electronics track are mainly equipped with lenses, and have been shipped to customers and have been verified by the industry and some auto companies. Since August 21, the company has increased its investment in the ADAS field and established a wholly-owned subsidiary of Vehicle In-house. In May 22, the company announced preliminary communication with Gu Wenbin, a natural person shareholder of Dongguan Jiuzhou Optics Co., Ltd., and others. The company plans to acquire part of the equity of Jiuzhou Optics held by Gu Wenbin and others with its own funds, which shows the company's determination to enter Vehicle In-house.On the one hand, the company is expected to increase cooperation with its original customers, jointly serve car companies, and provide complete car products; on the other hand, the company actively contacts car companies and gradually carry out independent certification work.

AIOT The smart home in the era triggered the $13 billion camera market, and operators became an important driving force. The market space is broad: Strategy Analytics predicts that smart home devices will grow from 663 million units in 2017 at a growth rate of 19.4% to 1.9 billion units in 2023. In the era of AIOT, cameras are widely used in smart cameras, smart doorbells, sweeping robots, smart refrigerators, smart air conditioners, smart TVs, smart homes, etc. At this stage, the IOT market is booming. As an indispensable data acquisition end for AIOT, the fixed-focus lens market has entered an explosive growth period from 20 years, and this trend is expected to remain in the next three years. As the leader in the fixed-focus lens market, the company is expected to share industry dividends.

4. PCB: Pay attention to the segmented economic track number + automobiles, the price of raw materials is down, and the profitability of the restoration of profitability

PCB The overall demand of the industry is sluggish, and the growth of the structure

industry share continues to shift to the mainland, and the output value of the mainland PCB hits a new high. As old manufacturers such as Japanese and Korean companies gradually withdraw from their PCB business or shrink their focus on the high-end carrier board market, the global market share of mainland PCB companies continues to rise. In 2021, the revenue of the A-share PCB sector maintained rapid growth. Due to the influence of raw material prices and the increase in overall crop rate, the overall profitability remained relatively stable. In 2021, the operating income of the PCB sector increased by 23.1% year-on-year, and the net profit attributable to shareholders increased by 23.5% year-on-year; in Q1 2022, due to weak downstream consumer demand, the year-on-year growth rate of operating income fell to +11.2%, and the year-on-year growth rate of net profit attributable to shareholders fell to 6.46%. Judging from the tracking of the industrial chain, the resumption of work after the epidemic is good, and the demand for DUT and downstream automobiles is good. Export companies denominated in US dollars are expected to enjoy the profit boost brought by exchange rate depreciation this year.

(I) Intel server platform upgrade, Digital Communication Board is expected to usher in both volume and price increase

server platform upgrade promotes the iteration of PCB to high multi-layer high-frequency high-speed boards. Intel's new generation server is restricted by chip supply and has not yet entered the stage of increasing volume. With the problem of chip supply gradually solved, it is expected that the upgrade of the new generation server platform in 22 years will drive the industry shipment to a higher level. With the development of hot applications such as virtualization, cloud computing, desktop cloud, big data, in-memory database applications and high-performance computing in the 5G era, the market share of high-end servers such as 4/8 channels has gradually expanded. The server market is gradually entering the track of high-speed, large capacity, cloud computing and high-performance development, so the design requirements for PCB are constantly increasing, such as high-layer count, large size, high aspect ratio, high density, high-speed materials and lead-free welding, etc., are gradually advancing.

high-speed board is a new PCB board with low transmission loss at high frequency. It is mainly used in server backplanes and Memory cards, and has a wider range of applications in high-end servers. Due to the material characteristics of high-speed materials themselves, it is easier to absorb moisture and produce moisture-saving and strata, so there is a high requirement for optimization and adjustment of production technologies such as drilling and pressing during the production process of the enterprise. At the same time, server performance drives the performance demand of high-speed boards to gradually improve. For example, on single-channel and dual-channel servers, PCB boards are generally between 4-8 layers, while high-end server motherboards such as 4-channel and 8-channel require more than 16 layers, and backplane requirements are above 20 layers. The requirements for high-speed board products such as thickness, line width/pad, impedance tolerance and other parameters are gradually strict, and the industry technology and capital investment barriers are gradually improved. Server platform upgrade driver PCB performance improvement. With the upgrade of the server platform, PCle (high-speed serial computer expansion bus standard) has undergone the evolution of 1.0 to 4.0, and its transmission speed has increased from 2.5GT/s to 16GT/s, beginning to welcome the arrival of the PCle 5.0 era. Higher bus standards also have higher performance requirements for CCL and PCB: low dielectric constant, low dispersion factor, low roughness and high number of layers.

(II) The leader in the data center industry chain proves the prosperity of the industry

With the shipment of Intel Sapphire Rapids, data service manufacturers will also purchase service equipment equipped with new processors in order to maintain their competitive advantages, thereby driving the industry into a prosperous cycle.Judging from the situation of Intel's data center business unit, due to the epidemic in the first half of 2020, working from home/learning, etc. stimulated server demand, and Intel's data center business maintained rapid growth. The impact of the epidemic in the second half of 2020 decreased, and the server market entered the stage of destocking. It was not until Q3 2021 that the server market began to recover and revenue resumed high growth.

xinye's monthly revenue continued to increase, demonstrating the high prosperity of the industry. Taiwan Xinhua’s main product is server management chips, which has a high market share in the server field. Its monthly revenue is forward-looking in judging the prosperity of the server industry. In the second half of 2021, with the increase in product prices and strong demand in the data center market, the company's revenue has seen strong growth since August 2021, with a year-on-year increase of 49.53% to 71 million yuan, and continued its high growth trend in the following months, further verifying that the server industry has entered a prosperous cycle. (Report source: Future Think Tank)

(III) Under the wave of electric intelligentization, the growth of automobile PCB is accelerated

Car PCBs have both volume and price, driving rapid growth in the industry. According to Fanyi Circuit data, the value of the PCB of traditional bicycles is about 400 yuan, and the value of the PCB of new energy vehicles can reach more than 2,000 yuan in electrification, intelligence and lightweight. At the same time, driven by policies and costs, the global sales of new energy vehicles reached 6.75 million in 2021, and is expected to increase rapidly to 18 million in 2025. With the increase in volume and price of in-vehicle PCBs, their market size is expected to increase rapidly from US$6.7 billion in 2021 to US$8.8 billion in 2024.

New energy electronic control system has given rise to a significant increase in PCB usage. Compared with traditional fuel vehicles, new energy vehicles have used battery packs and replaced by "engine + transmission" with "motor + motor controller + reducer". The three major control systems in electronic control, BMS, VCU and MCU, have spawned a large number of automotive PCBs. Among them, the VCU is the control center of the power system, and the control circuit needs to use a PCB. The function of the MCU is to control the motor to operate according to the instructions issued by the VCU, so that it outputs the required alternating current according to the instructions of the VCU. BMS controls the battery charging and discharging process to achieve protection and comprehensive management of the battery. BMS has high requirements for PCB boards, which brings the largest PCB increment.

(IV) The turning point of commodity prices has begun to appear, and the cost side is expected to usher in marginal improvement

Since 2021, PCB has been affected by the rise in upstream commodity prices, and the profitability of the industry has been generally affected. From the perspective of cost composition, its direct raw material CCL has increased significantly. To further disassemble, the main raw materials of CCL are electronic copper foil, glass fiber cloth and resin, among which copper foil accounts for 30-50% of CCL's production costs, glass fiber production costs account for 25-40%, and resin costs account for 25-30%, with a high overall raw materials account for a relatively high proportion. Observing the main direct material copper clad link of PCB, the gross profit margin of the industrial chain company began to show a turning point downward from 21Q3, mainly due to the weakening of product prices due to supply and demand.

As a leading enterprise in communication boards and automobile boards, Shanghai Electric Power Co., Ltd., as the company's gross profit margin trend in 21 years, as communication demand falls, upstream raw materials continue to rise in prices, and overall profitability is under pressure in 21 years. In 22Q1, as the demand for downstream automobile and data centers recovers, raw material prices peak and fall, and the company's profitability has shown a turning point signal.

(V) Key companies analyze

1, Shanghai Electric Power Co., Ltd.: Benefiting deeply about the acceleration of global digitalization, Digital Communication + Automobile has started a stronger and more lasting new cycle

Data Center + Automobile resonance is upward, and the prosperity cycle is stronger and more stable. In 21, the company actively adjusted its product structure against the backdrop of declining demand for 5G communications and increased its layout in digital communications and automobile business. The Digital Connect Board benefits from the improvement of digitalization and technology upgrade (400G switches, PCIE5.0, overseas cloud capex, domestic transmission network construction) ushers in an increase in both volume and price. Automotive and intelligent automation have started the growth period of in-vehicle PCB. The Digital Connect and Automotive industries are weaker in cycles, and the technology continues to iterate upwardly, and the climate cycle may last longer. 22Q1 has seen an upward turning point in performance, and it is expected that the epidemic will not change the annual trend. The profit elasticity is huge under the optimization of product structure.

digital board enters a new growth cycle.This round of digital board recovery mainly comes from overseas data center demand. Overseas manufacturers are optimistic about the 22-year capex guidance. In 21Q4, the underlying logic behind it is that the degree of global digitalization has increased under the epidemic. The rise of the metaverse has accelerated the growth of data traffic. Cloud computing manufacturers' revenues continue to grow rapidly, and capital expenditures have returned to the rising cycle. The Intel Eagle Stream platform will be mass-produced in the second half of the year. PCIE 5.0 promotes the upgrade of high-speed boards, and the start of the replacement cycle will further increase server demand. The domestic digital economy development plan for the 14th Five-Year Plan also proposes that gigabit broadband users will grow by 10 times in five years. 10 big data center clusters have been planned, and the demand for construction of data centers and core transmission networks is imminent. Unlike the short-term outbreak of 5G base stations in 2019-20, data center demand fluctuates upward, product upgrade cycles are faster, and the Digital Communication Board is expected to usher in strong growth under the resonance of domestic and foreign demand. The upgrading of product structure and the increase in crop rate are expected to drive profit margins to hit a new high.

2. World Yun Circuit: After more than ten years of sleeping on firewood and tasting gall, the leading automotive PCB company set sail

New energy vehicles are thriving, and electrification and intelligence drive the development of the automotive PCB industry. According to EV-volumes statistics, the global sales of new energy vehicles in 2021 reached 6.5 million, an increase of 108% year-on-year; at the domestic level, according to data from the China Passenger Association, the domestic sales of new energy vehicles in 2021 were 2.991 million, accounting for half of the world's new energy vehicles. Compared with traditional cars, new energy vehicles have driven the increase in the proportion of electronics in automobiles, driving the increase in the volume and price of automobiles. Volume increase: Electrochemical drives the increase in demand for PCBs mainly based on power systems, and intelligence drives the increase in demand for PCBs such as smart cockpits, autonomous driving, and body control. The PCB usage for traditional bicycles is usually 0.5~1 square meter, and the PCB usage for new energy vehicles is usually more than 3 square meters. Price increase: The requirements for electronic components of new energy vehicles have been increased, and the corresponding requirements for PCBs have been increased. For example, the smart cockpit PCB forms a multi-layer board of traditional cars, a small amount of HDI to a multi-layer board of new energy vehicles, and mid-to-high-end HDI, with an increase in unit price. The automotive PCB industry space is expected to enter a period of rapid development.

Company’s precise positioning and car use PCB track, deeply binds top customers, and jointly builds a moat for industry customer barriers. The company has deployed its automotive PCB business in 2010 and established in-depth cooperative relationships with leading customers including Tesla. As a long-term business, the company's first-mover advantage in automotive business is significant: (1) certification barriers, the automotive business certification cycle is long, and it requires dual certification of parts manufacturers and terminals (2) Strong capacity adaptability, strong PCB specialization, different downstream product structures are different. Automotive PCB is mainly 2~6-layer boards. With the increase in penetration rate of new energy vehicles, the proportion of high multi-layer and HDI gradually increases, and the capacity adaptability requirements are high (3) The ability to cooperate with large customers has been continuously broken through, and the company has made breakthroughs in system certification, high-end products, and comprehensive strength. The company's high-frequency and high-speed 3- and 4-stage HDI for automobiles has begun mass production and applied to famous automobile brands in the United States and South Korea. In terms of comprehensive strength, it is based on the The 2020 global automotive PCB supplier ranking released by N.T.Information is ranked 14th in the company, which is 3 more than in 2019 (4) The operating quality is stable, the company's data is stable, and the operating quality is in line with the characteristics of long-term automobiles.