Wenmao's momentum for stockpiling may not be strong in the second half of 2018, but high inventory is not a bad thing. According to Wenmao's official statement, there are two main reasons for the increase in customer inventory: the yield rate increases and the loss becomes lower.

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Wenmao announced its operating conditions for the third quarter of 2018, and its revenue may drop by 10% in the quarter due to adjustments in customer inventory.

Wenmao's stock pulling momentum may not be strong in the second half of 2018, but high inventory is not a bad thing

According to Wenmao's official statement, there are two main reasons for the increase in customer inventory:

• yield increases and the loss becomes lower, and the number of VCSELs that can be produced per VCSEL wafer increases;
• customers avoid re-enacting the dilemma of supply shortage like in 2017 and preparing inventory early, which makes the third quarter of 2018 enter the inventory adjustment state in advance.

In this way, although high inventory will affect the momentum of stock pulling up in the second half of 2018, with the increase in customer products in the third and fourth quarters of 2018 and the accelerated inventory sales, Wenmao's revenue prospects remain optimistic in the fourth quarter of 2018 and even in the first quarter of 2019.

In addition, the increase in yield yield makes each wafer produce more VCSEL chip. Although will increase inventory in the short term, it is actually a good thing for Wenmao itself or customers. is beneficial to improve gross profit margin performance, and customers are pulling goods in advance, which actually means they are optimistic about the outlook for shipments in the second half of 2018.

In other words, although the momentum of pulling goods in the second half of 2018 may be poor, this is only due to the advance pulling goods. With the increase in customer products, Wenmao's situation will improve from the second half of 2018 to the beginning of 2019.

The 3D sensing in the second half of 2018 to the first half of 2019 will only increase the quantity

From Wenmao’s statement about the increase in inventory due to advance pulling goods, it can also be judged that the 2018 iPhone will not have much change in the 3D sensing function. From Apple's perspective, it makes sense to continue the design in 2017: given the problem of improving yields in 2017, 3D sensing design will definitely not be significantly adjusted in 2018 in order to supply as scheduled.

For Apple, it is urgent to promote 3D sensing to each product line; in other words, 3D sensing from the second half of 2018 to the first half of 2019 should be purely an increase in quantity. From this point of view, Wenmao's growth during this period is limited to the increase in quantity, and a substantial leap in process or technology must be waited until after the second half of 2019.

Text丨Tuoqi Industrial Research Institute Huang Jingzhe

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