(report producer: CITIC Securities )
1 Automotive MCU: Electric intelligent increase consumption, function upgrade increases the average price
MCU ( microcontroller ) is a type of lightweight computing chip, which realizes a basic computer system on a single chip and is widely used in automotive electronic electronic control. MCU (Microcontroller Unit) is a microcontroller, also known as a microcontroller or a single chip computer. It is a chip-level computer formed by appropriately reducing the frequency and specifications of the microprocessor, and integrating memory, flash memory, counter , A/D conversion, serial port , etc. into a single chip. MCU is the control core of many electronic devices. Due to its high performance, low power consumption, programmability, flexibility, it is widely used in consumer electronics, medical electronics, industrial control, automotive electronics and communications fields. All electronic electronic control units (ECUs) are required for all electronic controls in automobiles, and each ECU requires at least one MCU as the core control chip. We believe that automotive MCUs will usher in the opportunity of volume and price upgrading under the trend of intelligent electrification. The following analysis is from the perspectives of quantity and price.
quantity dimension: The usage of bicycle MCUs ranges from dozens to hundreds, and will benefit from intelligence and electrification in the future. According to the data from the Research Department of the Automotive Marketing Expert Committee of the Chinese Marketing Society, the average bicycle of ordinary traditional fuel vehicles is equipped with 70 ECUs; the average bicycle of luxury traditional fuel vehicles is equipped with 150 ECUs. The newly added MCUs are mainly used to improve the ride experience (seat massage, central control entertainment), body stability and safety, etc.; the average bicycle of smart cars is equipped with 300 ECUs, and the newly added MCUs are mainly used for hardware control related to autonomous driving.
The driving factors for the increase in usage of automobile MCUs: intelligence and electrification.
Intelligent: The current automotive industry is still in the stage of rapid improvement of penetration rate of medium and low-level autonomous driving , and the usage of ECU and MCU continues to increase; we expect that after 2025, the industry will enter the development stage of high-level autonomous driving, and the application of centralized architecture and domain controllers will significantly reduce the usage of ECU, but the usage of MCU may be relatively stable. At present, the L2 and below ADAS hardware solutions still adopt a distributed architecture. Even in mid-to-high-level autonomous driving, traditional manufacturers such as BMW and Audi still realize the L3 ADAS function in the distributed processor "stack" way, so autonomous driving applications will increase the number of MCU applications. Centralized architecture will not lead to a significant decrease in the number of MCUs. For example, the number of ECUs in Tesla chassis control system has been simplified from 14 to 3, but each ECU contains 3-4 MCUs. Except for a few basic functions MCUs (such as car doors and windows) are expected to be integrated under a centralized architecture. For the sake of safety redundancy, ECU integration will not bring about a decrease in the number of MCUs related to the car body and chassis, but some MCU functions will be weakened, and only the execution function will be retained, and the operation uniform is the centralized domain controller.
2) Electrification: The demand for electrical control of three-electric systems has increased. The increase in demand for MCUs by electric vehicles is mainly reflected in: i) The battery management system (BMS) needs to control charging and discharging, temperature control, and battery balance. The main control panel requires an MCU, and each slave control panel also requires an MCU, so the number of MCUs will increase significantly. ii) Vehicle controller (VCU). The power system of electric vehicles is more complex than that of fuel vehicles. Energy management must add a vehicle controller, and it must be equipped with 32-bit high-end MCU chips. The number varies according to the manufacturer's plan. iii) Engine controller/transmission controller (stock replacement), the inverter control MCU of electric vehicles will replace the engine controller of fuel vehicles. Since the motor has a high speed, it needs to be decelerated through the reducer. The MCU control chip it is equipped with replaces the transmission controller of fuel vehicles.
price dimension: the proportion of 32-bit high-order MCUs has increased, driving the overall ASP improvement. Automobile MCUs mainly include 8/16/32 bits. 1) 8-bit MCU, mainly used in various subsystems of the vehicle body, including fan control, air conditioning control, wiper , sunroof, window lifting, low-order instrument panel, line box, seat control, gate control module and other low-order control functions. Generally, the price is less than USD.2) 16-position MCU, mainly used in power transmission systems, such as engine control, gear and clutch control and electronic turbine systems; it is also suitable for chassis mechanisms, such as suspension systems, electronic power steering wheels, torque dispersion control and electronic auxiliary, electronic brakes, etc.
is generally priced between 1 and 5 US dollars. 3) 32-bit MCU, mainly including dash control, body control, multimedia information system (TelemaTIcs), engine control, emerging intelligent and real-time safety systems and power systems, such as pre-collision (Pre-crash), adaptive cruise control (ACC), driving assistance systems, electronic stability programs and other safety functions, as well as complex X-by-wire and other transmission functions. The general price is between 5 and 10 US dollars, and some high-end products are above 10 US dollars. With the increasing complexity of automotive electronic control functions and the trend of centralization of electronic and electrical architectures, the proportion of 32-bits in automotive MCUs has increased, driving the overall ASP improvement. (Report source: Future Think Tank)
2 Industry status: Leading by overseas giants, domestic initial penetration
Global MCU market size has grown steadily, and automotive MCU growth is faster than the industry. According to IC insights data, global MCU sales reached US$19.6 billion in 2021, an increase of 23% year-on-year, with CAGR expected to be 6.7% in the next 5 years, and sales in 2026 will reach US$27.2 billion. In 2021, the total MCU shipments were 30.9 billion units, a year-on-year increase of 12%. The CAGR is expected to be 3.0% in the next five years, and will reach 35.8 billion units in 2026. In 2021, the global MCU market ASP reversed the 20-year downward trend, rising 10% to US$0.64, mainly due to tight supply. The increase in demand for advanced MCUs such as 32-bit will provide long-term impetus for ASP growth. ASP is expected to grow at a CAGR of 3.5% to US$0.76 in the next five years.
In the global MCU market, automotive MCU sales were US$7.6 billion, accounting for about 39%, while another 46% came from general-purpose embedded application MCUs (including smartphones, computers and peripherals, industrial and consumer products), and the rest came from the smart card market (bank cards, bus cards, ID cards, etc.) and other uses. Automotive MCU sales are expected to grow at a CAGR of 7.7% over the next five years, slightly faster than the MCU industry growth rate, and sales will grow to US$11 billion by 2026.
China's MCU market is still small, and automotive MCU accounts for a low proportion. According to the Forward Industry Research Institute, China's MCU sales in 2021 (if there is no special explanation in this article, China's MCU sales refer to domestically produced MCU sales) reached US$4.6 billion, an increase of 8.3% year-on-year, accounting for 23.3% globally. The CAGR is expected to be 8.5% in the next five years, and sales in 2026 will reach US$6.9 billion, and the global share will increase to 24.8%. In the Chinese MCU market, automotive MCU sales were US$680 million, accounting for about 15%. Automotive MCU sales are expected to grow at a CAGR of 5.3% over the next five years, with sales growing to $880 million by 2026.
The global MCU market is mainly based on automotive and industrial control applications, and domestic MCUs are concentrated in the consumer electronics market. On the demand side, according to ASPENCORE, in 2019, the downstream consumption of the global MCU market was mainly automotive electronics and industrial control, accounting for 33% and 25% respectively; domestic MCU consumption was mainly consumer electronics (26%), followed by computers (18%) and automotive fields (16%), which is slightly different from the global situation. Among them, consumer electronics include washing machines, air conditioners, microwave ovens, vacuum cleaners, , refrigerators, home audio and video entertainment systems, smart speakers, AR/VR, etc. The industrial field includes industrial sensing, motor control , stepper motors, instruments, etc., and the automotive field includes automotive powertrains and safety control systems.
European and American leaders are far ahead, and domestic manufacturers are catching up from the general market, and the in-vehicle market has begun to penetrate. According to IHS, the global MCU industry in 2020 is CR8=83%, with a high industry concentration. In the field of MCU chip technology, low-end MCU products such as 4-bit, 8-bit, and 16-bit have a high domestic self-sufficiency rate, while the mid-to-high-end MCU market is mainly monopolized by foreign major manufacturers such as Microchip Technology (Microchiph), STMicrochiph (ST), Renesas, NXP (NXP), Infineon (Infineon ).According to CSIA, the top companies in China's MCU market share in 2019 include Renesas Electronics (17.1%), NXP (14.5%), STMicroelectronics (8.5%), Microchip Technology (7.7%) and other companies, with a total share of nearly 50%, while domestic manufacturers have not yet entered the forefront and have a large space for replacement.
3 Industry changes: Supply and demand scarcity continues, domestic substitution promotes
We have sorted out the prices and delivery times of the original and channel ends of MCUs, as well as manufacturing expansion and vehicle demand at both supply and demand. Overall, the global supply of automotive MCUs continues, and domestic manufacturers are expected to take the opportunity to introduce the supply chain of vehicle manufacturers and gradually increase their share. From the perspective of the MCU industry chain, the original factory is located in the middle, and the upstream mainly includes raw material manufacturers, equipment manufacturers, etc. Compared with the IDM model, the Fabless model requires additional support from foundry manufacturers. The downstream is distributed to terminal applications through dealers, including different fields such as automobiles, industrial control, consumption, and communications.
MCU Original end: Since 2021, mainstream overseas MCU manufacturers have raised prices many times. 2021H1 is mainly due to tight supply and demand, and the costs of 2021H2 to 2022Q1 have increased. At the beginning of 2020, the global COVID-19 outbreak, and supply and demand in all fields were severely impacted; after 2020H2, the epidemic panic slowed down, and the demand side was driven by economic recovery, home economy spawned by home office, and new applications such as new energy vehicles, and some terminal manufacturers actively prepared goods, resulting in a surge in orders. However, due to the shortage of 8-inch wafer production capacity and limited logistics and shipment on the supply side, the supply side was limited, and the MCU industry was seriously in short supply, and the rise in the price of original products became the main theme. International MCU giants such as STMicroelectronics, Infineon, Renesas, Microchip, and NXP have issued price increases many times since the beginning of 2021, mainly due to strong demand, the supply chain shortage, and the costs of raw materials, wafers, , packaging and testing, logistics, etc. have continued to rise. Some IDM-type MCU manufacturers also have manufacturing-end expansion investment, and the price increase range basically covers the entire product line. According to industry research, the overall average price of original MCU products is about 10% per quarter.
MCU Original side comparison: The business performance of manufacturers with high automobiles is higher, while the prosperity of manufacturers with high consumption is lower. Renesas Electronics is a world-leading MCU manufacturer, and its products are mainly used in automotive electronics, industrial control, infrastructure, consumption, etc. In 2021, automotive electronics accounted for as much as 46.48% of its revenue; Yingguang Technology is a leading manufacturer of professional microcontroller IC design in Taiwan, China, and its revenue in 2020 is nearly 100% from the consumer electronics market.
From the quarterly revenue data of the two: 1) In 2021H1, the revenue of both companies increased month-on-month, and Yingguang Technology increased significantly, reflecting that consumer supply and demand is more tense: Due to the serious mismatch between MCU upstream supply and downstream demand, the volume and price of original products have increased simultaneously. Renesas Electronics and Yingguang Technology's monthly revenue both showed a month-on-month growth. Renesas Electronics 2021Q1/Q2 revenue +6%/+7% month-on-month, respectively, and Yingguang Technology's revenue in 2021Q1/Q2 +9%/+18% month-on-month, respectively, reflecting the rapid recovery of the downstream and the growth rate of the consumer electronics market is higher than that of the automobile, industrial control and other markets. 2) In 2021H2, Renesas Electronics' revenue continued to increase significantly month-on-month, and Yingguang Technology's revenue showed a month-on-month decline, reflecting that the tight supply and demand of automobiles continued: Renesas Electronics' revenue in 2021Q3/Q4 +19%/+22% month-on-month, respectively, and Yingguang Technology's revenue in 2021Q3/Q4 +7%/-6% month-on-month, indicating that consumer electronics demand in downstream applications is weak, resulting in Yingguang Technology's revenue decline month-on-month; demand in automotive electronics, industrial control and other fields continues to rise, Renesas Electronics' performance has increased rapidly month-on-month.
Channel side: Channel price is an amplifier with actual supply and demand mismatch. The price increase in 2022Q1 indicates that downstream demand increases. The MCU channel price and delivery futures indexes when shipped by dealers to terminal manufacturers are one of the core indicators to track the prosperity of the MCU industry. It is determined by the demand intensity of downstream terminals and the delivery logistics situation, and is also affected by the supply of the upstream MCU original factory.We track the overall trend of MCU channels by using the mainstream MCU products monthly prices of STMicroelectronics (such as STM32F103RCT6, STM32F103RET6, etc.), MY-E-Innovation (such as GD32F103VCT6, GD32F103RBT6, etc.), and track the overall trend of MCU channels in different periods, and vertically analyze the changes in MCU channel prices and delivery periods in different periods:
20H2: Supply in short supply, channel prices +10%~100% month-on-month, and delivery period slightly extended month-on-month. From the perspective of downstream terminal demand, the overall epidemic panic has slowed down, and demand in various markets has turned from decline to increase and has recovered steadily, resulting in an increase in MCU channel prices and an extension of delivery time. Judging from the logistics situation, the improvement of the epidemic has eased transportation pressure, and the ports are gradually opened to open. Judging from the supply of upstream original factories, the time required for resumption of work and production after the epidemic is required, and the global 8-inch wafer (the main foundry production line of MCU) production capacity itself is relatively tight, and expansion requires construction time and limited willingness. The 8-inch wafer ASP has increased quarter by quarter, resulting in an increase in MCU channel prices and extended delivery time. Based on the above influence, the 20H2 channel price of overseas MCU products generally increased by about 50~100% compared with 20H1, while the domestic product price increased by about 10%~40%; the delivery time of NXP and Renesas MCU products remained basically the same, and the delivery time of Microchip and STMicroelectronic MCU products was slightly extended month-on-month.
21H1: The supply and demand gap has increased, channel prices have increased by 300~800% month-on-month, and the delivery time has been severely extended month-on-month. From the perspective of downstream terminal demand, with the normalization of the epidemic, home office has led to the rise of innovative applications such as the home economy and new energy vehicles, demand in various markets has further recovered, and terminal manufacturers have also increased order demand to make up for inventory to meet future demand, and dealers are also interested in stockpiling due to the "bullwhip effect". The overall demand situation is far beyond expectations, resulting in an increase in MCU channel prices and extended delivery time. From the perspective of logistics situation, due to the surge in trade transactions, transportation costs continue to rise month-on-month, and the average freight rate of 21H1 containers is about twice that of 20H2, resulting in an increase in MCU channel prices and an extension of delivery time.
From the perspective of the original upstream factory supply, the production of the STMicroelectronics factory shrank by 50% during the epidemic and there was a worker strike. The Japanese AKM wafer factory caught fire and Renesas NAKA factory was affected by the earthquake. The large-scale power outage of Texas Blizzard affected NXP, Infineon and other manufacturers. The production progress of IDM and foundry factories was severely impacted, and the upstream wafer production capacity became even worse. The 8-inch wafer ASP increased by an increase of month-on-month, resulting in an increase in MCU channel prices and extended delivery time. Based on the above impact, the price of overseas MCU products 21H1 channel has generally increased by about 300% to 800% compared with 20H2, while the price of domestic MCU products has increased by about 300% to 500%; the delivery period of overseas MCU giant products has been severely extended, among which ST. The product shortage of products is in short supply, while the maximum delivery period of microchip products is 55 weeks.
21H2: Demand has differentiated, channel prices are relatively stable, but trade logistics is blocked, and delivery time is further extended month-on-month. From the perspective of downstream terminal demand, the dividends of home economy have narrowed, and the growth rate of consumer electronics markets such as mobile phones and IoT has slowed down, but automotive electronics, industrial control, etc. have maintained a high prosperity, and market demand has differentiated but is still prosperous overall. From the perspective of logistics, shipping prices continue to double month-on-month. Since July 2021, Amazon has sealed stores on a large scale (involving many Chinese sellers), and trade has been severely hindered, and dealers have begun to sell stocks, resulting in a decline in MCU channel prices. Judging from the upstream original factory supply, wafer production capacity remains in short supply, and 8-inch crystal ASP maintains a month-on-month increase trend. Based on the above impact, MCU channel prices maintained an upward trend in 21Q3, but fell rapidly in 21Q4 due to demand differentiation and trade setbacks; the delivery period of overseas MCU giants' products further extended, and NXP products entered a shortage. (Report source: Future Think Tank)
22Q1: Terminal demand is differentiated, channel prices are rising and falling, and delivery time remains high on a month-on-month basis. From the perspective of downstream terminal demand, demand for consumer electronics and other products is relatively weak, and automotive electronics and industrial control medical care maintain prosperity. The overall market growth rate slows down and continues to differentiate, resulting in the increase in prices of MCU channels related to automotive electronics and industrial control medical care and delays delivery. Judging from the logistics situation, the shipping price dropped slightly month-on-month and the logistics pressure was reduced.From the perspective of upstream original factory supply, many manufacturers such as STMicroelectronics and Microchip have continued to increase prices due to rising raw materials and processing costs, reflecting that the production capacity of crystal remains in short supply, resulting in the increase in MCU channel prices and extended delivery time. Based on the above impact, some MCU prices rebounded, but the growth rate was not as high as 21H1; the delivery time remained high on the previous month, NXP and ST products were in short supply, and the maximum delivery time for Microchip and Renesas products reached 52/45 weeks.
channel split: the prices of mid-to-high-end products are more solid, and domestic manufacturers follow the price increase overseas but the range is limited. We classify MCUs according to the kernel specifications (ARM Cortex-M0/M0+ as low-end, M23/M3 as mid-end, and M4/M4F/ARM7 as high-end), and provide manufacturers (overseas/domestic), and further analyze the characteristics of channel price fluctuations:
compared with low/mid/high-end MCU: The prices of mid-to-high-end products are more firm. During the 20H2-21H2 period, the MCU market was severely in short supply, and the prices of various products continued to increase, and then fell again due to demand fluctuations and logistics. Compared with 20H1, the price increase of low-end products is generally between 100% and 500%, while the price increase of mid-to-high-end products is generally between 300% and 1000%, reflecting that mid-to-high-end products are more in short supply than low-end products; compared with price fluctuations, the prices of low-end products changed from rising to falling at the beginning of 21Q2, while the prices of mid-to-high-end products began to fall at the end of 21Q3, reflecting that the prices of mid-to-high-end products are more firm.
vs. overseas/domestic MCU: Product prices change at the same trend, but domestic price increases are relatively lagging and limited in amplitude. Compared with the trend of overseas/domestic price changes, the prices of domestic products and overseas products fluctuate at the same trend, but the price increase of domestic products lags behind in January-2 months and is lower than that of overseas products. This is mainly because domestic manufacturers generally adopt a strategy of following overseas giants, and the relatively sluggish price increase is conducive to replacing the share of overseas manufacturers. Focusing on high-end products, although the overall MCU price in 21Q4 generally fell, the prices of overseas high-end products remained high, mainly because the high-end market is controlled by a few overseas giants, with high competitive barriers and stronger prices.
Manufacturing end: IDM and foundry MCU production expansion is limited, and supply tension is expected to continue. The specifications of automotive chips are mainly 8-inch wafers, and some manufacturers have begun to migrate to 12-inch platforms. According to MIC, the Taiwan Investment Association of China, the proportion of outsourced IDM manufacturers in automotive chips accounts for about 15%, and outsourced products are mainly MCUs, of which about 70% are manufactured by TSMC Manufacturing. We have sorted out the production expansion plans of TSMC and major MCU manufacturers, among which TSMC responds to the automotive chip supply gap by expanding production and reallocating production capacity, while the production expansion plans of major IDM manufacturers focus on 12-inch and 8-inch expansions.
According to SUMCO's statistics in 2018, the demand for 8-inch wafers accounts for 79% of automotive semiconductor demand, and the demand for 12-inch wafers accounts for only 12%. In terms of corresponding wafer demand, according to SUMCO's estimates, the total demand for automotive semiconductor wafers in 2018 is about 2 million pieces per month, of which 8-inch pieces are about 1.6 million pieces per month. By 2022, the overall demand is expected to grow to about 3.15 million pieces per month, of which 8-inch pieces are at 2.4 million pieces per month. According to SEMI data, the CAGR of the 8-inch wafer production capacity of only about 3% from 2013 to 2019, and in 2019 it was still less than 6 million pieces per month. The 8-inch input-output ratio is less than 12 inches, and the difficulty in purchasing second-hand equipment is the main reason for the insufficient increase in new production capacity.
Vehicle factory demand side: chip shortage will still affect delivery, and some companies have announced production reduction or matching reduction delivery. Recalling history, the epidemic in early 2020 affected the production and sales of the global automobile and electronics industry chain. In 2020H2, automobile demand began to recover rapidly, and the insufficient chip inventory of the whole car manufacturer led to the chip shortage problem of 2021H1, and the chip shortage also led to the relatively weakening of the global and domestic automobile sales in 2021H1; the chip shortage of 2021H2 began to ease slightly, and global and domestic automobile sales improved month by month; since the beginning of 2022, vehicle manufacturers have generally increased orders, while upstream chip production capacity is still relatively tight. We have counted mainstream vehicle manufacturers at home and abroad, among which Volkswagen, Ford, , Toyota, , GM, BMW, etc. all said that there is still a chip shortage, resulting in reduced production or reduced distribution and delivery of automobiles. Volvo means that semiconductor supply and output are gradually improving, but this trend has not yet solved the company's current dilemma.In addition, we have paid attention to the suspension of production of some factories due to the epidemic, the Russian-Ukrainian conflict, and may affect medium-term demand. We must pay attention to subsequent progress. (Report source: Future Think Tank)
4 Investment Analysis
MQIYI Innovation : The company is a leading domestic high-performance general-purpose MCU manufacturer. Its products are suitable for industrial automation, human-machine interface, motor control, security monitoring , smart home appliances and the Internet of Things, and is the first manufacturer in China to launch a general-purpose MCU product series to launch Arm M3, M4 and M23 cores. In 2020, the company achieved MCU revenue of 755 million yuan, a year-on-year increase of 70.14%. The CAGR in the past five years was 39.9%, which is faster than the global market.
In 2022, we will benefit from domestic substitution of MCUs in 2021. We expect the company's shipments to grow from 400 million in 2021 to nearly 800 million in 2022 (benefiting from new customer projects, and production capacity is released one after another). company's car grade MCU is expected to be mass-produced in mid-2022. The company's industrial grade MCU has been adopted in the after-installation market and commercial vehicle modules, and the product quality is good (the company has long-term experience in mass production of MCUs and other automotive grade products, such as NOR Flash storage automotive grade products have been shipped for 6 years). We expect that the company's industrial + automobile related applications account for more than 50% of the MCU business revenue in 2022, and high-end products drive the overall ASP and gross profit margin center to move upward. We expect the company's MCU business revenue to reach about 4 billion yuan in 2022, which is expected to increase by about 50% year-on-year.
Xinhai Technology: The company focuses on the design of Internet of Things MCUs, SoCs and high-performance mixed signal integrated circuits. Its core technologies cover high-precision ADCh, low-power/high-reliability MCUs, mixed signal SoCs and industrial-grade high-reliability ASIC, etc. The products are widely used in smart health, smart homes, smart terminals, smart industrial control and other fields. In 2020, the company achieved general MCU revenue of RMB 104 million, a year-on-year increase of 31.46%. The CAGR in the past four years was 38.7%, which is faster than the global market.
2021, the company's first automotive-grade signal chain MCU passed the AEC-Q100 certification and can be applied to smart cockpits and other fields. It has now introduced new product designs from automotive pre-installation companies. The company plans to raise 420 million yuan through convertible bonds in 2022, of which 294 million yuan will be used for automotive MCU chip research and development and industrialization projects. The company's planned automotive MCU products include the M series and R series, among which the M series products are mainly used for end control such as windows, headlights, wipers, air conditioners, etc. The R series is mainly used in domain control related fields, such as powertrains, automotive chassis, etc. We expect that the MCU business will continue to achieve rapid growth in 2022 with the rapid introduction of customers of the company's general-purpose MCU.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
selected report source: [Future Think Tank]. Future Think Tank - Official Website
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