We have deeply sorted out the industrial chain ecology, difficulties and development opportunities of China's home appliance industry, the current development status of small and medium-sized enterprises, and the subdivided cases of specialized and new enterprises.

We deeply sort out the industrial chain ecology, pains and difficulties and development opportunities of China's home appliance industry, the current development status of small and medium-sized enterprises, and the sub-cases of specialized and new enterprises. China's home appliance industry continues to break through barriers and is currently growing into an industry with global competitiveness. Our study of the context and details of China's home appliance industry from following and running side by side to leading is of great reference significance for China to fully break through the industrial bottleneck of high-end manufacturing.

Summary

Home appliance industry chain is highly comprehensive and involves many upstream industries. 1) Home appliance manufacturers are involved in many industries such as electronics, machinery, and electric new. In the IOT era, products are intelligent, and software development and system integration have become important parts of the upstream. 2) Upstream core technologies have a great impact on the development of the industry. Accessories and raw materials used in home appliances rely on upstream technologies and processes, such as the development of chips, artificial intelligence, and new materials. 3) There are many sub-track tracks in the home appliance industry, including white electricity, new displays (including black electricity, projectors, interactive tablets, VR, etc.), large kitchen appliances, small household appliances (kitchen appliances, cleaning appliances, personal care appliances, etc.), civil electricians and lighting, etc. The industry characteristics, industrial chain division of labor system and value distribution of different sub-tracks are different.

The transcendence of the home appliance industry in

: from scale advantage to technological advantage. 1) China's home appliance manufacturing industry has gone from the OEM manufacturing of technical imitation to leading the global market, from opening up the huge domestic market to introduce global home appliance giants to learn advanced technology to form large-scale manufacturing advantages, and then breaking through technical barriers to achieving domestic substitution. Home appliance companies have strengthened the integration of the industrial chain and have realized the domestic substitution of air conditioner compressor , motor, frequency converter, and MCU. China's color TV once faced a difficult situation with the panel and faced difficulties. Some cleaning appliance companies in China have strong vacuum cleaner motor manufacturing capabilities. 2) At present, China's home appliance industry has grown into an industry with global competitiveness, with a complete industrial chain and low dependence on foreign countries. Only a few components such as chips and LCD panels in the industrial chain need to be imported, becoming a classic case of upgrading China's manufacturing industry.

China's home appliance specialization and innovative products of small and medium-sized enterprises lead the global market. 1) The breakthrough in core technologies drives product upgrades. Chinese home appliance companies have been leading the world in innovative products such as sweepers, floor washing machines, , and smart micro-investment. 2) We have sorted out 21 national and provincial "specialized, specialized and new" home appliance companies, not many, because most of the industrial bottlenecks have been broken. The products produced by "specialized, specialized and innovative" home appliance companies focus on upstream core accessories and some emerging products that have not yet been popularized. 3) From a development perspective, there are currently problems such as insufficient development of AI, excessive motor noise, and low battery energy density in the upstream of home appliances. If the above technology is overcome, breakthrough products such as home service robot , low-noise range hood, low-noise vacuum cleaner , wireless steam floor scrubber and other breakthrough products can be produced.

risk

market demand risk; technological innovation slows down risk

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Introduction: China's home appliance industry continues to make breakthroughs and achieve global competitiveness

China is one of the world's largest home appliance markets and is also a global home appliance production base. According to data from the Ministry of Industry and Information Technology, in 2021, the operating income of large-scale enterprises in the home appliance industry was 1.7 trillion yuan (including non-home appliance business of enterprises) and total profit was 121.9 billion yuan; according to data from Aowei Cloud Network, the retail scale of China's home appliance market in 2021 was 760.3 billion yuan; China is also the world's largest home appliance exporter, and General Administration of Customs statistics China's home appliance exports (including color TVs, DVDs and some white appliances products) in 2021 were US$98.7 billion.

China's home appliance industry has formed many enterprises with advantages in many fields in the continuous development. For example, the leading large-scale home appliances companies are gradually integrating the industrial chain and becoming a global comprehensive enterprise. The refrigerator and refrigeration capacity of Chinese home appliance companies accounts for more than 70% of the world's global production capacity, and the washing machine capacity accounts for more than 50% of the world's global production capacity, forming a global competitiveness.With technological breakthroughs and the continuous development of upstream technologies, China has formed cleaning electrical appliance companies with technological advantages and emerging categories with distinctive characteristics such as smart lighting, intelligent interactive tablets, intelligent micro-investment, etc. Many related companies have been included in the provincial and national "specialized, specialized and innovative" enterprises, marking that they have technological advantages in their fields, or contribute to conquering key technologies, and have industry leadership.

In the initial stage of China's home appliance industry more than 40 years ago, it mainly relied on imitation and introduction of technology, and relied heavily on the import of key components and raw materials. China's home appliance industry is an early industry in China that has achieved high independence and led global manufacturing. The history of China's home appliance development is a history of continuously achieving technological transcendence and breaking foreign technological advantages. Therefore, studying and sorting out the context and details of China's home appliance industry from following and running to leading is of great reference significance for China to fully break through various industrial bottlenecks of high-end manufacturing.

air conditioning industry chain: Industrial integration consolidates key technologies

The continuous breakthrough and integration of the air conditioning industry chain is a microcosm of the continuous breakthroughs and development innovation of Chinese home appliance enterprises. In the process of the industry turning from weak to strong, the home appliance industry has been continuously integrating into the upstream industrial chain to overcome bottlenecks.

►Breakthrough of air conditioning compressors: 1) In 1967, Toshiba Group launched the first air conditioning rotor compressor. Before 1995, air conditioners were a luxury product in China. The supporting compressor was restricted by the large one-time investment and high technical threshold, and they were highly dependent on imports. 2) After 1995, the air conditioning industry in our country developed rapidly, and some foreign compressor manufacturers with technical and financial strength came to China to invest and build factories. For example, in 1995, Japan Toshiba and Guangdong Wanjiale Group jointly established Toshiba wanjiale, and in 1996, Dajin and Qing'an Group jointly established Xi'an Dajin Qing'an compressor. 3) Now China has become the world's largest rotor compressor production base. Industry online data, China's rotor compressor production in 2021 reached 238 million units, an increase of 13.2% year-on-year, accounting for 93.2% of the total global output. 4) Midea Group prepared the compressor project in 1988, produced the first rotary compressor in 1992, and acquired Toshiba Vangkale Holdings to establish Meizhi Compressor (GMCC) in 1999, and acquired Thailand Hitachi Compressor Factory in 2020.

Chart: In the compressor production pattern in 2021, the total output of Gree (Lingda) and Midea (Meida) compressors account for 61% of the total

Source: Industry Online, CICC Research Department

► Breakthrough Road for Air Conditioning Motors: 1) Industry Online Data, China's air conditioning motor sales in 2021 reached 392 million units (domestic sales accounted for about 80%), an increase of 10.0% year-on-year, and the sales CAGR from 2017 to 2021 was 7.2%. Air conditioning motors have been replaced locally, and China's production capacity accounts for more than 90% of the global production capacity. 2) In 2021, the sales volume of air conditioning motors will be 87.2%, and the sales volume of CR3 will be 68.7%. Some companies have the advantage of self-supply supporting facilities.

Chart: China's air conditioner motor sales CR3, CR5

Source: Industry Online, CICC Research Department

► Breakthrough in frequency conversion control technology: In the 1980s, air conditioner frequency conversion technology began to be used in Japan. In 1997, mainland China produced the first domestic frequency conversion air conditioner. In the 2000s, many domestic air conditioners began to pay attention to the research and development of frequency conversion technology, and air conditioners officially entered the frequency conversion era. Frequency conversion control technology requires coordinated control of multiple accessories such as controllers, electronic components, temperature devices, chips, etc. In the early stage, overseas semiconductor control manufacturers were mainly used at the technical level. At present, Chinese companies have strengthened their independent supply capabilities for frequency conversion air conditioning industry chain, but the chips used for frequency conversion control are still mainly supplied by overseas manufacturers.

► MCU domesticization rate increases: 1) According to Industry Online, in 2021, the demand for three major white electric MCUs in my country is about 700 million, and the proportion of MCUs in China has increased from 8% in 2020 to 17%, but domestic products are mainly low-end series. The share of the three major white electric MCU brands in 2021 is a large proportion of foreign products, with domestic brands accounting for 17%. 2) China Home Appliance Enterprise has established relevant subsidiaries and developed its own chips, involving home appliances, industry, medical and other fields. The self-supply volume is still insufficient.

► IPM is still breaking through inadequacy: 1) According to Industry Online, in 2021, my country's three major white electricity IPMs demand is about 270 million, of which China-made IPM accounts for about 10%. The leading IPM manufacturers are mainly European, American and Japanese companies, and domestic companies started late. At present, the subsidiaries of home appliance companies have achieved batch promotion and application of IPM and other products on variable frequency air conditioners, and can be widely used in fields such as home appliances, smart equipment, and new energy.

Chart: China's three major white electricity MCUs and IPM demand

Source: Industry Online, CICC Research Department

Chart: my country's white electricity MCU market brand pattern

Source: Industry Online, CICC Research Department

attaches importance to R&D investment, and home appliances break through some key technical barriers

Home appliance companies invest a lot of R&D expenditure and talent resources, break through technical barriers, and realize domestic substitution. Air conditioning valve parts are one of the typical cases. Take electronic expansion valve as an example. As a key component of frequency converter air conditioners, the most important early market was in Japan. Before 2006, the electronic expansion valve market was mainly controlled by Japanese companies. Since domestic inverter air conditioners were still in the R&D and small batch promotion stages at that time, domestic manufacturers had great disadvantages in technology, scale and cost compared to leading Japanese companies with nearly 20 years of production history and experience at that time. After years of R&D investment, domestic manufacturers have successfully overcome patent technical barriers, ranked among the world's forefront and able to mass produce.

industrial chain panoramic map: strong comprehensive application, great influence of upstream core technologies

home appliance industry has strong comprehensive application, closely related to multiple industries, and the industry is distributed in a grid-like manner. It is the culmination of various industries. From the perspective of related industries: 1) Nonferrous and chemical industries provide important raw materials: such as copper materials, copper tubes, plastics, refrigerants, etc.; 2) Electronics, machinery, computers, etc. provide various types of chips, components, and algorithms: such as MCUs, IPMs, optical processing chips in chips; valve parts, air conditioning compressors in machines, etc.; computer intelligent perception algorithms, AI algorithms, etc. The upstream industries related to home appliances are of great importance, such as electronics, machinery, and chemical products in the home appliance industry chain have a large number and a large proportion.

Chart: The home appliance industry is related to multiple industries, and is the leader of various industries

Source: CICC Research Department

Taking four types of home appliance products: air conditioners, color TVs, new displays (projectors, laser TV , etc.), and sweepers as examples, it can be seen that the product accessories in the home appliance industry are different, but they are closely related to various industries. First of all, home appliances mostly use upstream metal materials, plastics and other raw materials, and their gross profit margin is affected to varying degrees by fluctuations in raw material prices. In addition, various products rely on various types of chips, and some chips are the "difficulties" in the industrial chain. Among them, the domestic production rate of IPM and sweeper CPU in the air conditioning industry is relatively low, and the domestic production rate of projector optical processing chips is low. In addition to using the above-mentioned raw materials and corresponding chips, products such as sweepers also involve AI algorithms, voice control, lithium batteries, etc.

Chart: Four types of home appliances: air conditioners, color TVs, new displays, sweepers

Source: Prospectus of listed companies, company announcement, CICC Research Department

China's home appliance industry chain is complete, with low dependence on foreign countries, only a few such as chips, and upstream raw materials for LCD panels need to be imported. From the perspective of upstream and downstream, home appliance manufacturers are located in the middle of the industrial chain, with the upstream being manufacturers and manufacturers of home appliance raw materials and parts, and the downstream being sales channels and end consumers.

domestic production rate is to portray China's control over the industrial chain. However, due to the large number of home appliance industries, there are many calculation methods in actual quantitative calculations. We choose different methods of calculations based on the characteristics of the industry and products. 1) For example, for the color TV industry chain, foreign-funded enterprises in China have a great influence on the upstream raw materials of panels, which can be considered non-domestic; 2) For air conditioning compressors and motors, China's own production is already fully sufficient for domestic use, but China's air conditioning industry is developing globally, and the domesticization rate is defined in this field as the proportion of China's compressors in global output.3) In addition, bulk raw materials are an important cost of home appliances, but they have nothing to do with technical barriers. For example, copper, aluminum, plastics, etc., the impact of imported raw materials is not considered in the domestic production rate. We will mention the dependence on bulk raw materials in the corresponding part for reference.

► The upstream industrial chain of home appliances involves many industries, mainly including upstream manufacturing industries such as electronics, machinery, power equipment, new energy, production equipment, as well as raw materials such as chemicals, steel, and non-ferrous metals, . With the general intelligence of products in the IOT era, software development and system integration have also become an important part of the upstream industrial chain. Therefore, the home appliance industry has the characteristics of strong comprehensiveness, but upstream core technologies have a great impact on the development of home appliances. The accessories and raw materials used in home appliances will rely on upstream technology and process levels, such as the development of chips, the development of artificial intelligence algorithms, and the development of new materials.

► The downstream sales channels of home appliances can be divided into online channels and offline channels according to their digital attributes. Online channels mainly include e-commerce platforms and live broadcast platforms, and offline channels mainly include professional distributors, KA stores, brand stores, etc. According to whether it passes through the dealer, it can be divided into distribution channels and direct sales channels. With the development of e-commerce, digitalization drives the flattening of channels, and the sales methods of home appliance companies are also changing, and online direct sales have become an increasingly important sales method.

Chart: Panoramic map of the home appliance industry chain

Source: Annual reports of each company, Wind, CICC Research Department

The industry characteristics, industrial chain division of labor system and value distribution of different sub-segment tracks are different. We have conducted a detailed description of the most representative products in each sub-segment track.

air conditioning industry chain

air conditioning industry is more sensitive to the price of imported raw materials, and the self-sufficiency rate of upstream materials is relatively low. 's upstream industrial chain includes raw materials and parts manufacturing. Among them, air conditioning raw materials mainly include metal materials and ABS plastic [1]. According to China Business Industry Research in 2021, the cost of raw materials and parts account for about 74% of the total cost of air conditioning (26% of compressors, 24% of copper related materials, 9% of steel, 4% of aluminum, and 11% of ABS plastic). In terms of raw materials, copper, steel, aluminum, etc. all rely on a large amount of imported raw materials. According to research on National Bureau of Statistics and Huajing Industry, the self-sufficiency rate of copper materials in 2021 is about 20%, and the self-sufficiency rate of steel materials is about 73% based on cost, the self-sufficiency rate of aluminum is about 35%, and the self-sufficiency rate of ABS particles is about 66%.

core components of air conditioners include compressors, condensers, , evaporators, electronic expansion valves and motors, etc. The core is the compressor, which has basically been domestically produced in China. According to Industry Online, taking the widely used rotor compressor as an example, China's production in 2021 accounts for about 93% of the world, and the production in Southeast Asia, Japan and South Korea, India, Brazil and and other regions account for a slight proportion. The compressor is a driven fluid machine that promotes low-pressure gas into high-pressure gas, providing power to the entire system and accounting for about 26% of the production cost of air conditioners. The

compressor industry is relatively sufficiently competitive. Although the entry threshold is high, there are still problems of structural overcapacity and fierce competition among mid- and low-end compressor products. Efficiency, frequency conversion, and miniaturization will still be the focus of the overall machine factory's implementation of competitive differentiation.

Because China's air conditioning compressors are basically self-sufficient, the core components have little impact on the problems of the boredom and the global development of enterprises, we use the global market share to measure the domestic production rate of my country's air conditioning. According to China Refrigeration Network, China was the world's largest air conditioner production base in 2020, with production accounting for more than 80% of the global total output. The leading domestic appliance companies in China have a high degree of integration in the industrial chain, and their core accessories compressors, motors, etc. are produced by themselves, and non-core accessories are purchased externally. According to Industry Online, China's rotor compressor production accounts for about 93% of global output in 2021.

Chart: Panoramic map of the air conditioner industry chain

Source: China Customs, Xinhua News Agency, New Materials Online, Toubao Technology, Zhigao Holdings 2018 Annual Report, CICC Research Department

Note: According to Industry Online, China is the main producer of motors, heat exchanger and other components and exports in large quantities. Based on this, it is judged that the domesticization rate of this part is 100%.

color TV industry chain

Currently, Chinese enterprises have the world's leading panel production capacity, but the domestic production rate of core accessories or advanced technology types upstream of the panel is not high. such as glass substrate is one of the most core components in the production of LCD panels. Some mainland Chinese companies have the capacity to display glass substrates, but at present, my country still lacks international advanced production lines such as the 10/10.5 generation line. We estimate that the upstream core materials of color TVs account for about 65% of the total cost. Due to the high proportion of foreign capital such as key upstream originals, the overall localization rate of color TVs is about 50% when the production and assembly process is basically domesticized.

LCD panel industry is a typical heavy asset industry with high technical barriers and high capital investment. Judging from the historical development pattern of LCD panels, since the 1980s, LCD panels have been controlled by Japanese and Korean companies; in 2010, China achieved a countercyclical investment in panels, and the global LCD panel industry was accelerating its transfer to China. In 2020, more than 50% of the global production area of ​​LCD panels was in mainland China. The technical barriers of

glass substrates are mainly reflected in the following aspects: 1) Process barriers, that is, the requirements for the flatness and impurity content of the glass surface have reached the electronic level, so the general float process cannot meet; 2) Formulation barriers are also core barriers, that is, the correct glass liquid formula is required during the production process to make the glass stable forming and meet the optical and chemical characteristics requirements of the glass; 3) Equipment barriers and production equipment are basically independently developed by existing manufacturers, and it is difficult for new entrants to buy related equipment on the market. Currently, the suppliers of glass substrates are mainly Corning, Japan's Asahi Glass and electrical Glass. Local companies are promoting the localization of substrate glass. For other basic materials, except for the backlight source, the remaining raw materials are still mainly controlled by European, American and Japanese companies. For example, the suppliers of LCD materials are mainly German Merck (Merck , TFT liquid crystal market share exceeds 50%) and Japanese TechSo (Chisso); the suppliers of polarizer are mainly Nitto Dento, Sumitomo Chemistry, Sanli Chemical, LG and other companies. In terms of

chip, the main control SOC (System on a Chip) chip brings together CPU, GPU, RAM[2], ADC/DAC[3], Modem[4], high-speed DSP[5] and other components, and baseband processor , which is a key component of smart TV. The industry leader MediaTek acquired Cayman Morningstar in 2012, and currently has a global market share of SOC chips of color TVs of about 65% (Introduction to MediaTek's official website [6]); other suppliers mainly include Jingchen Co., Ltd., Huawei HiSilicon, Hisense Group , etc.

Chart: Panoramic map of color TV industry chain

Source: China Business Industry Research Institute, WitsView, Pixelworks, TI, CICC Research Department

New display (projector + laser TV) Industrial chain

projector is mainly composed of optical machine, main control system, curtain (optional), and other components. Its core is optical machine, accounting for more than half of the cost of the whole machine. The composition of optical machines (upstream of the industrial chain) includes optical combined system (light modulation), lighting display system and imaging system. Due to the professionalism and complexity of optical design, most intelligent projection equipment industry companies currently do not have the self-developed capabilities of optical machines, which makes it impossible to connect well with the overall machine design, resulting in the inability to fully achieve the ideal state in terms of product performance, cost, etc. The optical modulation part of optical machine largely determines important display parameters in addition to brightness. The core paths are divided into three types: LCD[7], DLP[8] and LCOS[9], and DLP technology is currently the mainstream in the household consumer market.

According to the Xmi Technology 021 annual report, currently mainstream consumer projection equipment is mainly DLP technology, and the core patents are all mastered by Texas Instruments (TI) Company in the United States. Considering that the chip part also needs to be purchased to a certain extent, we have comprehensively calculated that the domestic production rate of laser projection is about 50%.

► LCD LCD projection technology started in the 1990s. This technology uses the changes in the arrangement of liquid crystal molecules under the action of electric fields to affect the transmittance of liquid crystal cells or the reflectance of , thereby forming various images, but the color displayed on a single-piece LCD is weak.Currently, LCD display technology is mainly based on Japanese companies such as Epson , Sony , and Nikkei.

►DLP digital optical processing technology, the advantages of DLP are high light energy utilization, high contrast, high pixel filling rate, etc., which reduces the volume of the projection equipment. Currently, Texas Instruments enjoys exclusive patent for DLP technology.

► LCOS silicon-based liquid crystal technology replaces traditional LCD glass substrates with silicon wafers, and uses reflective projection to improve the utilization efficiency of light. The advantages of LCOS are high chip integration, high resolution and contrast, and high light efficiency. It is more suitable for large-size and high-brightness display products. Currently, this technology is mainly controlled by Japanese companies such as Sony and JVC. The midstream of the

industry chain includes optical machine, system platform and processing chips. Optical machines are divided into laser optical engines and LED projection optical engines.

Chart: Panoramic Map of the New Display Industry Chain

Note: Cost split is estimated based on the 2021 data. Source: Early Bird Information, Company Announcement, CICC Research Department

Sweeping Robot Industry Chain

Sweeping Robot is composed of hardware and software, with a high domesticization rate. According to data from the Forward Industry Research Institute and GfK, China's sweeper market accounts for about 32% of the world in 2021, the Chinese market is dominated by local brands, while the overseas market accounts for a large proportion of foreign brands. hardware is mainly raw material and component manufacturing enterprises upstream of the industrial chain. Raw materials mainly include metals, plastic particles, packaging materials, etc., and core components include chips, sensors, batteries, motors, intelligent controllers, optoelectronic components, etc. The most core of these is chips, mainly including main control chip , MCU chip, Wi-Fi chip, power management chip , etc. According to Liding Industry Research, as of 2020, Japan and South Korea had a high market share in the battery cell field, exceeding 50%, and battery cells accounted for 80% of the battery cost, which made the domestic production rate of the sweeper battery part we calculated was about 60%.

midstream of the industrial chain mainly consists of whole machine design, manufacturing, and software-layer algorithms. The software layer mainly includes motion control module code, sensor code and artificial intelligence module code, which determine the navigation, obstacle avoidance capabilities and intelligent functions of the sweeping robot (such as voice or video interaction). The whole machine manufacturing includes code implementation, chip recording, laser module processing, whole machine assembly and testing, etc.

Chinese sweeper products lead overseas brands in technological innovation. After has gone through the ultrasonic radar positioning and random collision cleaning period, Chinese manufacturers have adopted lidar (LDS) navigation technology, and the algorithm adopts global planning function, which greatly improves the user experience, and the sweeping robot has entered the explosion period. Up to now, Chinese sweeper brands have basically completed the iteration of lidar navigation technology, while most overseas brands are still in the iteration process. After the emergence of the first generation of self-cleaning sweepers, domestic brands have evolved to the current "self-collecting + self-cleaning" full-function base station, while overseas brands have not yet begun to iterate towards self-cleaning after launching self-collecting products. From this we can see that China's sweeper industry has reached the world's leading level in terms of technology and functionality.

Chart: Panoramic map of the sweeping robot industry chain

Source: Company announcement, Foresight Industry Research Institute, sweeping robot network, Tmall flagship store, CICC Research Department

LED lighting industry chain

LED lighting products are mainly electronic components, driving power supplies, plastic parts, hardware, etc. The core of electronic components is LED chip. is currently leading the world in the production of domestic LED chips, and the midstream LED packaging industry has also developed, and LED lighting can be fully domestically produced.

The downstream of the lighting electrical appliance industry is facing dealers and terminal applications at all levels. According to the different terminal application fields, it can be divided into different market segments such as commercial lighting applications, office lighting applications, home lighting applications, landscape lighting applications, industrial and mining lighting applications.

Chart: LED lighting industry chain panoramic map

Source: CSA, company announcement, CICC Research Department

Note: The output value scale of the above figure comes from CSA data.

pain points and opportunities coexist: upstream and downstream linkage, some links have high external dependence

industrial chain pain difficulties: some upstream electronic components and raw materials are still limited

With policy support, active investment of enterprises, and continuous realization of engineer dividends, Chinese companies' global competitive advantages are no longer limited to cost advantages, and have been transformed into comprehensive industrial chain advantages. We have seen that some areas that were "bottlenecked" in the past have now basically completed domestic substitution and exported to foreign countries. For example, in 2021, China's global production of rotor compressors (used for air conditioners) and piston compressors (used for refrigerators) accounted for 93% and 84% of the global production area of ​​LCD panels in 2020, respectively. However, in the high-precision electronic components upstream of the various sub-sectors of home appliances, they still face the problem of import dependence. mainly consists of chips, MCUs, lasers, and IPMs. Although the upstream core raw materials and accessories required for the production of panels are generally locally supported, foreign-invested enterprises account for a high proportion.

Chart: High-precision electronic components are low domestic production rate

Source: Company Announcement, Industry Online, Laser Focus World, Xinsijie Industrial Research Center, IHS, Omdia, Luotu Technology, IDCh, TrendForce, Global Info Research, CICC Research Department

Note: 1) The bubble size in the figure represents the market size that we estimate by third-party institutions or our estimated. Among them, semiconductor laser quotes the expected value of Laser Focus World 2021 and the prospectus of Changguang Huaxin; DMD+DLP quotes Texas Instruments' revenue scale and gross profit in 2021; LCOS quotes the 2022 forecast value of Xinsijie Industrial Research Center; TFT-LCD scale quotes IHS data; LCD polarizers quotes Omdia; other scales are estimated values, and some references to industry online data. 2) The domestic production rate of TFT-LCD panels means that the global production area of ​​LCD panels in 2020 is more than 50% in China. 3) In mainland China, as such industries go global, the domestic production rate of piston compressors and rotor compressors is measured by the proportion of China's output in the world. 4) The domestic production rate of LCD glass substrates, polarizers for LCDs, and color TV SOC chips is calculated by the share of mainland Chinese companies in the global market. There is a big gap between

white electric MCU and high-end layout and material number number with overseas companies. 1) Microcontrol unit (MCU) is the basic control chip in electronic systems, integrating CPU, RAM, ROM [10], timing counter and multiple I/O interfaces [11] on one chip to form a chip-level processor. 2) With the development of intelligent and variable frequency in the white goods market, the types and volume of MCU demand have increased. According to industry online data, in 2020, the domestic sales demand for air conditioners, refrigerators and washing machines was 486 million pieces, of which 32-bit products gradually became the mainstream (accounting for 48.5%), with 16-bit and 8-bit accounting for 19.9% ​​and 31.6% respectively.

► 32-bit MCU: 1) In terms of high-end layout, among the ARM Cortex M core, M7/M33/M35P/M55 is a mid-to-high-end core. Overseas major manufacturers have basically made comprehensive layouts around high, medium and low-end cores; while domestic manufacturers have insufficient layout in the high-end field and have launched some products. 2) In terms of the number of 32-bit general MCU material numbers, there is a big gap at home and abroad. As of the end of 2021, there are hundreds of models for domestic leading manufacturers; and currently, leading overseas manufacturers such as NXP, Renesas, STMicroelectronics , etc. have thousands of material numbers.

Chart: MCU usage for white electricity subdivided products in 2020

Source: Industry Online, CICC Research Department

Chart: Changes in the proportion of major household appliances MCU imports and domestic production

Source: Industry Online, CICC Research Department Note: The 2021 data is the estimated value of the industry online.

white electricity field, the domestic production rate of IPM in 2021 is about 11.6% (Industry Online) . 1) Intelligent power module (IPM) consists of high-speed, low-power IGBT chips and preferred gate-level drivers and protection circuits. It can realize control voltage undervoltage protection, overheating protection, overcurrent protection and short-circuit protection. It is one of the important components of inverter controllers. 2) The improvement of home appliance energy efficiency standards and the change in white electricity frequency bring considerable power chip increments.Industry Online estimates that in 2021, IPM demand for household air conditioners, commercial air conditioners, and washing machines will reach 250 million, more than 2 million, and 33 million respectively, and the demand for refrigerator IGBT chips will reach 120 million. 3) Industry online data, the domestic production rate of IPM of major household appliances increased from 2.2% in 2017 to around 11.6% in 2021. The leading IPM manufacturers are mainly European, American and Japanese companies such as ON Semiconductor, Infineon , STMicroelectronics, Rom, Mitsubishi Electric , Fuji Electric, etc. Domestic companies started late.

Chart: my country's three major white electric MCUs and IPM demand (domestic sales + export sales)

Source: Industry Online, CICC Research Department

Chart: Changes in the proportion of IPM imports and domestic production of major household appliances

Source: Industry Online, CICC Research Department Note: The 2021 data is the estimated value of the industry online.

new display field, laser light sources are mainly Japan, Japan and Asia. They have not yet been replaced by domestic products and cannot be mass-produced. 1) The lasers have a combination scheme according to the number of lasers, such as 28, 14, 8, etc. The 28 lasers use a combination of 14 red, 7 green, 7 blue, which is a three-color laser scheme. Japan-Jia Asia is the main supplier of Blu-ray LD [12] and Green Light LD, while Red Light LD is provided by companies such as Mitsubishi in Japan. Domestic brands have not yet achieved large-scale mass production. 2) The manufacturing of green light and red light LD is difficult, mainly due to the high difficulty of frequency doubling technology and the high cost of converting crystals, so the price of green light LD is the highest, followed by red light LD. 3) Blue light laser is prepared by cyanide gas-phase epitaxial method. At present, the growth technology of GaN epitaxial materials is difficult, and only Riya and Osram can achieve industrialization in the world. 4) Domestic enterprises have made breakthroughs in the industrialization of Hongguang LD. But overall, the domestic research and development and production of three-primary LD devices still have a gap with international peers in terms of power, efficiency and reliability. The economic indicators of blue-green LD technology cannot meet the application needs of laser TVs. Red LD is close to the level of practicality, and it still takes time to completely replace domestically.

Chart: Tricolor laser diode product parameter statistics

Source: China Laser TV Industry White Paper, CICC Research Department

new display optical processing chips, controlled by Texas Instruments under the DLP path, domestic companies have not yet mass-produced under the LCOS path. 1) The composition of the projector optical machine includes light source, light modulation, optical path structure, lens, etc. Among them, the light modulation part largely determines important display parameters besides brightness. The core paths are divided into three types: LCD, DLP and LCOS. DLP technology is currently the mainstream of the household consumer market. 2) DLP digital optical processing technology uses DMD digital microreflector as the light valve imaging device. Each DMD is formed by millions of micromirrors, and each micromirrors corresponds to an image pixel. The advantages of DLP are high light energy utilization, high contrast, high pixel filling rate, etc., which reduces the volume of the projection equipment. Under the DLP path, the specifications of the core DMD chip mainly affect the brightness and clarity of the projection display. Texas Instruments currently enjoys exclusive patents and has not yet achieved domestic substitution. 3) LCOS silicon-based liquid crystal technology replaces traditional LCD glass substrates with silicon wafers, and uses reflective projection to improve the utilization efficiency of light. The advantages of LCOS are high chip integration, resolution, contrast and light efficiency, and are more suitable for large-size and high-brightness display products. Currently, chip suppliers are mainly Sony and JVC in Japan, as well as Jingdian in the United States. Some domestic companies have launched LCOS light valve chips, but they cannot be mass-produced and replaced in the short term.

Chart: China's smart projection market display structure type proportion

Source: Luotu Technology official account, CICC Research Department

Chart: Comparison of LCOS and DLP technology

Source: Company announcement, CICC Research Department

Color TV field, mainland China's panel production capacity has overtaken Japan and South Korea, but the core materials and accessories of the upstream panel and color TV have a "bottleneck" problem.

► Panel: Mainland panel industry learned from South Korea’s countercyclical investment strategy that year, mainland panel manufacturers actively put into production and invested in high-generation lines. In 2016, China’s panel production capacity surpassed Japan for the first time, and further surpassed South Korea and Taiwan in 2018. In 2020, more than 50% of the global production area of ​​LCD panels is in mainland China.

Chart: Changes in global LCD capacity distribution

Source: iHS, CICC Research Department

►Polarizer: polarizer accounts for about 15% of the cost of LCD panels, and is one of the most difficult areas for domestic production of LCD panel technology in my country. According to Omdia data, the global polarizer market size in 2021 is about 10 billion US dollars, and the top three production capacity are Sumitomo, LG Chem and Nippon. The market share of Chinese mainland companies has increased rapidly in 2020, but among the upstream materials of polarizers, the technical threshold of PVA and TAC (accounting for about 75% of the cost of polarizers) is high and is still controlled by Japanese companies.

Chart: 2021H1 Global LCD TV Panel Market Share (by Area)

Source: Sigmaintell, CICC Research Department

Chart: 2021 Global LCD Polarizer Market Share

Source: Omdia, CICC Research Department

► Glass Substrate: Glass Substrate is one of the most core components in the production of LCD panels. The main suppliers include American company Corning, Japanese company AGC Asahi Glass Glass and electrical glass. According to the relevant business revenue of major listed companies in the glass substrate field in 2021, the global display glass substrate market has less than 20% of the share of mainland Chinese companies, and is still mainly concentrated in the hands of US and Japanese companies.

► Color TV main control SOC chip: Chinese Taiwanese company MediaTek acquired Cayman Morningstar in 2012 and currently has a global market share of SOC chips of color TVs of about 65% (Introduction to MediaTek's official website [13]). In recent years, mainland Chinese companies have made layout and investment in main control SOC chips.

► Smart TV and smart micro-cast operating systems rely on the Android kernel. 1) Currently, mainstream smart TV systems include Android system, Tizen system (developed by Intel and Samsung based on Linux), WebOS system (acquired by LG from HP), etc. Among them, Android systems are the most mainstream, and all manufacturers have launched smart TVs based on Android systems. Since Google Services withdraws from the Chinese market and many domestic apps have not entered the Google Play Mall, most domestic manufacturers have changed and customized their own systems based on the free and open source Android system. 2) Similar to TV manufacturers, smart micro-investment manufacturers have also launched their own systems based on the Android kernel.

Industry chain opportunities: Standard improvement and new technologies drive the transformation and development of the industry

Under the environmental protection requirements, the air conditioning and refrigerator refrigerant industries have room for upgrading. refrigerant is a substance that continuously circulates in the refrigeration system and changes its own state to achieve refrigeration, and has undergone four generations of technological evolution. After sorting out and analyzing professional information such as "2020 China Refrigerant Product Market Analysis", we can know: 1) The first generation of refrigerants are CFC (HCBC), and the representative products are R11, R12, etc. Because they contain chlorine, they have greatly damaged the ozone layer and have been eliminated at the global level. 2) HCFC (hydrofluorochlorocarbon) is the second generation refrigerant, and its representative product R22 is widely used in air conditioning, refrigeration, foaming and other industries. HCFC contains hydrogen, so it causes less damage to the ozone layer. European and American countries have been eliminated and are widely used in China; according to the Montreal Agreement signed in 1987, developed countries will be eliminated by 2030, and developing countries will be completely banned by 2040. 3) The third generation of refrigerant is HFC (hydrofluorocarbon), which has excellent energy efficiency and does not damage the ozone layer. Therefore, it has been widely used in air conditioning, refrigeration, foaming and other fields once it was launched, but it still has a high greenhouse effect. The third-generation refrigerant is widely used abroad and is in the early stage of elimination; considering that the refrigerator and air conditioner renewal cycle is 8-10 years, it will take time to completely eliminate it. 4) As the fourth generation refrigerant, hydrofluoroolefins (HFOs) are chemical synthetic fluids, with high production costs and have not yet been applied on a large scale. There are many companies in the fourth generation refrigerant market layout. The HFO-1234yf refrigerant jointly developed by Honeywell and DuPont in the United States has been vigorously promoted in Europe and the United States, and Chemours and Arkema are also actively making arrangements.

Cleaning appliances and range hood industry chain is mainly in China, but around user experience, the space for industrial upgrading is still there. 1) Clean electrical batteries, currently the industry mainly uses cylindrical batteries and are large in size.If a soft-pack battery with small size and high energy density is used in sweepers or handheld vacuum cleaners, it can reduce the product volume and weight and provide longer battery life, which is the direction of industry development. 2) Clean the motor of electrical appliances, range hoods and integrated stoves, and the lifting direction can achieve higher speeds, while achieving less noise in combination with the air duct design.

Artificial intelligence, as an emerging industry, global AI technology needs to be made breakthroughs. Driven by technologies such as artificial intelligence and big data, the smart home market is in a period of development. 1) Smart home is a home ecosystem based on residential use and based on IoT technology, composed of hardware (smart home appliances, smart hardware, security control equipment, etc.), software systems, and cloud computing platforms. 2) The market expects the AIoT smart home ecosystem, but in addition to hardware obstacles (low penetration rate of smart hardware and difficulty of interconnection, etc.), one of the most core obstacles is that artificial intelligence technology is not yet mature. At present, most of them can only achieve mechanical judgments and cannot achieve housekeeper judgments and services, which are inconsistent with actual family needs, resulting in poor user experience. 3) Artificial intelligence chips, American companies have obvious first-mover advantages. Among the 2018 global AI chip companies announced by Compass Intelligence, the top 8 are American companies, and the highest ranking of domestic manufacturers is Huawei HiSilicon (No. 12). Domestic artificial intelligence started late and developed into a national strategy in 2016. According to iMedia Consulting data, the market size of China's artificial intelligence chips reached 18.4 billion yuan in 2020, and is expected to exceed 100 billion yuan in 2023.

Chart: Global AI chip companies ranking in 2018

Source: Compass Intelligence, CICC Research Department

Chart: my country's artificial intelligence chip market size from 2018 to 2023

Source: iMedia Consulting, CICC Research Department

Development status: Upstream pain and difficulties still need to be overcome, it is difficult for small and medium-sized enterprises to innovate

China's home appliance brand is leading the global competitiveness, and the pain and difficulties of the industrial chain are concentrated in the upstream. China has advantages in home appliance industry clusters and labor costs, and is currently the world's largest home appliance producer and exporter. Downstream brand manufacturers pursue scale and efficiency. The market share of large enterprises represented by Midea, Gree and Haier is gradually concentrating. The larger scale also supports their continuous innovation. At the same time, they are gradually completing the transformation from export ODM/OEM to OBM. Although emerging brands founded by small and medium-sized enterprises also have certain breakthrough innovation capabilities, such as Stone Technology's leading breakthrough in path planning algorithms, in most cases, it still provides incremental innovation based on the current situation of the industry, such as the improvement of projectors in automatic trapezoidal correction, autofocus, etc. Overall, most home appliance manufacturers are positioned in downstream assembly, and a few fields have the ability to supply key components themselves, and most of them are still purchasing from upstream raw materials and parts manufacturers according to the division of labor in the industrial chain. China has made breakthroughs in the LED and panel industry chains, becoming an industry with global advantages, but it still relies on foreign manufacturers in the supply of MCU, IPM, DMD chips, laser light sources and upstream panel raw materials. Therefore, we mainly focus on the pain and difficulties of the above-stream industrial chain and potential upgrade directions, and discuss the industry characteristics and the current development status of small and medium-sized enterprises.

white electricity sector

is aimed at the upstream of the white electricity industry chain. The current pain and difficulties are concentrated on the independent supply of MCU and IPM chips. The direction of industrial upgrading lies in the application of environmentally friendly refrigerants. However, the sub-sectors of these three links are limited by the industry development stage or have high requirements for capital and technology. They are currently more suitable for large enterprises to innovate. Among the downstream brand manufacturers, because the development of white goods is relatively mature and the efficiency and scale of the entire industrial chain of the enterprise is high, the listed companies are mainly large enterprises and small and medium-sized enterprises. Innovations are mainly concentrated in areas such as noise improvement, intelligent interconnection, healthy locking, environmental protection and low consumption.

►MCU: MCU is a technology and capital-intensive industry, with high requirements for personnel R&D capabilities and equipment investment. In 2021, the average CAPEX of domestic MCU companies accounted for about 43% of the profit. Currently, overseas giants have leading technology and low domestic production rate of MCUs. According to Omdia data, the CR5 of the domestic MCU market in 2020 is about 70%. Domestic manufacturers have made breakthroughs in general 32-bit MCUs.The industry's average R&D expense rate in 2021 is 15.8%, which requires more innovation factors. However, small and medium-sized enterprises are limited by their financial strength and upstream and downstream voice, making independent innovation more difficult.

►IPM: IPM is a technology- and capital-intensive industry, with high requirements for large-scale equipment, production lines and R&D efficiency. In 2021, domestic companies account for about 125% of profit, with an average R&D expense ratio of 6.1%, and the industry is relatively concentrated. Omdia data shows that the global IPM market CR5 in 2020 is about 73%. The leading international manufacturers are Infineon, Mitsubishi, Fuji Electric, ON Semi, etc. Some domestic manufacturers are relatively leading, but the industrial technology iteration is faster, the industry concentration is high, and small and medium-sized manufacturers have fewer innovation opportunities.

► Refrigerant: is different from the first two types of parts. The refrigerant industry is developing relatively maturely. At present, the second-generation fluorine refrigerant R22 is widely used in China, with a high domestic production rate. At the same time, the R&D expense rate of domestic related companies is also low. The average value in 2021 is 2.5%, and there are fewer dimensions of innovation. In recent years, the concept of environmental protection and low consumption has gradually attracted the attention of consumers and manufacturers, but the refrigerant industry mainly focuses on the purchase of large amounts of resources and equipment investment, and the industry concentration is relatively high. According to China Business Industry Research Institute, the third-generation refrigerant product R134a product CR4 is more than 70%, which is more suitable for larger enterprises to innovate, and small and medium-sized enterprises have less room for innovation.

Chart: White Electricity sector pain and difficulty links

Notes: 1) Select listed companies in the MCU link: Zhaoyi Innovation, Zhongying Electronics, Xinhai Technology, Fudan Microelectronics, National Technology, and Lexin Technology; 2) Select listed companies in the IGBT concept related to the IPM link; 3) Select listed companies in the refrigerant link; 4) Select Midea Group, Gree Electric Appliances, Haier Smart Home, and Hisense Home Appliances; 5) R&D expense ratio: Use the above-mentioned companies in 2021 data to calculate the average value; 6) Domestic production rate: Use the data of the above-mentioned companies in 2021 to calculate the average value; 6) Domestic production rate: The domestic production rate of the MCU and IPM links is only for the white electricity field; 7) The industrial concentration is taken from the 2021 data, for the entire MCU/IPM/refrigerant sector, not just the white electricity field. Source: Wind, Omdia, Yole, AVC, Industry Online, China Business Industry Research Institute, CICC Research Department

Upstream White Electricity Difficult links. Small and medium-sized enterprises have high patents per capita but weak profitability. We select listed companies engaged in related businesses in A-shares for analysis, and use 1 billion yuan of annual income and 2,000 parent company employees as the basis for division to summarize the current development status of small and medium-sized enterprises. It can be found that in the MCU, IPM and refrigerant fields, small and medium-sized enterprises have small revenue scale and high per capita patent number (except refrigerant). The per capita patent number of small and medium-sized enterprises in the MCU field reaches 0.73, but their profitability is weaker than that of large enterprises, and small and medium-sized enterprises in refrigerant have not even achieved profitability. The reason is, on the one hand, the number of small and medium-sized enterprises is small and easy to be affected by separate samples. On the other hand, the SMEs have high R&D investment in personnel and equipment in the early stage, and downstream customer certification takes a certain amount of time. The increase in revenue and profits does not match the investment in R&D expenses in the same period, and their performance is not as good as that of large enterprises in mass production and efficiency improvement, which leads to the ROE and ROA of small and medium-sized enterprises being slightly lower than that of large enterprises.

Chart: Current development status of small and medium-sized manufacturers in each link of the white goods sector

Note: 1) The choice of listed companies in the three links of MCU, IPM, and refrigerant is the same as above, and the data for 2021 is taken; 2) The operating income in 2021 is less than 1 billion yuan and the number of employees of the parent company is less than 2,000, and the R&D expense rate of refrigerant small and medium-sized enterprises (Guoxin Culture) is relatively abnormal in 2021, so it is replaced by the average R&D expense rate in the past three years. Source: Wind, Company Announcement, CICC Research Department

Color TV and New Display Section

For the upstream of the color TV and New Display Industry Chain, the current pain and difficulties are concentrated on the preparation of new display laser light sources, optical processing chips, and the upstream raw material polarizer link of color TV panels. These three types of links are currently more suitable for large enterprises to innovate. Among the downstream brand manufacturers, some leading manufacturers develop laser display technology, while the rest are small in size and are mainly non-listed companies. Their innovations are mainly concentrated in intelligent improvement, brightness and resolution improvement, self-developed operating systems and other fields, with less investment in research and development of upstream core components.

►Laser light source: Semiconductor laser industry is capital and technology-intensive, with high requirements for patented technology, capital investment, technical equipment, etc., which is difficult for small and medium-sized enterprises to bear. The 2021 annual report shows that the average CAPEX proportion of A-share laser listed companies accounts for more than 90% of the profits. According to Laser Focus World data, the global semiconductor laser market size in 2020 was US$6.7 billion, with a CAGR of 10% from 2015 to 2020. The industry has matured and is mainly controlled by Japanese manufacturers. Japan's Japanese-Asia is the main supplier of blue and green lasers, and red lasers are mainly provided by Japan's Mitsubishi. We believe that the laser industry is currently low inclusive for small enterprises in innovation, and large enterprises have more potential in breakthrough innovation. Referring to the development experience of the LED industry, the overall industry is greatly affected by policy support, and the intensity of industrial policies on the innovation support of small and medium-sized enterprises has a great impact on their development in the laser industry.

►Optical processing chip: DMD chip, as the core component of the optical machine in the projection display product, determines the brightness and resolution of the projection product under DLP technology, and the cost accounts for about 28% of the total machine. The related technology is developed by Texas Instruments, and currently there are few domestic companies in research and development. Optical processing chips are technology- and capital-intensive industries with high R&D barriers. At the same time, as a precision equipment, DMD chips have technical equipment capabilities and production yields determine whether they are energy-producing and subsequent cost-reduction. Texas Instruments has developed in this field relatively maturely. In 1987, the company developed the first digital microscope device (DMD), and in 1996, data optical processing (DLP) technology was officially commercialized to the projection display market. Due to large capital investment and technical reserves, it is difficult for small and medium-sized enterprises to achieve disruptive innovation.

►Polarizer: has high requirements for equipment and labor investment, the industry is developing more maturely, and there is less room for innovation, which is suitable for large enterprises to innovate. In the early days, Japanese and Korean manufacturers had a relatively complete patent chain in the display field and formed a large industrial cluster. Therefore, polarizer technology has long been occupied by Japanese and Korean manufacturers. According to Wits View data, LG Chem, Nitto Dento and Sumitomo Chemical are expected to account for more than 60% of the global polarizer share in 2020. However, in recent years, domestic companies have shown that they have continuously increased their R&D and investment, their production share has increased rapidly, and the problem of domestic production has gradually improved.

Chart: Characteristics of each link of the color TV and the new display sector

Note: 1) The listed companies selected for laser light source are: Ruike Laser, Fujing Technology, Jeput, Changguang Huaxin; 2) The listed companies selected for polarizers are: Guanshi Technology, Sanlispot; 3) The listed companies selected for new downstream brands are Jimi Technology, Guangfeng Technology, Hisense Video, and Vision Co., Ltd.; 4) The listed companies selected for color TV are Skyworth Electrical Appliances, TCL Electronics, Hisense Video, Shenkangka A, Sichuan Changhong; 5) R&D expense ratio: The average value is calculated using the above-mentioned companies' 2021 data, among which there are no companies engaged in related businesses in the field of new display optical processing chips, so they are calculated based on the 2021 data of Texas Instruments; 6) The industrial concentration data is aimed at the entire segmentation link, rather than just the new display or color TV field.

Source: Wind, Luotu Technology official account, "2021 China Laser Industry Development Report" (China Laser Magazine, Wuhan Literature and Information Center of Chinese Academy of Sciences, China Optical Society, 2021), AVC, Wits View, CICC Research Department

Color TV and emerging display sectors have high per capita patent number and profitability. Currently, there are few targets involved in laser light sources, optical processing chips and polarizer preparation among A-share listed companies, among which optical processing chips are particularly obvious. We believe that the reason may be that Texas Instruments has a significant leading technology and volume advantages on DMD chips, the global industrial chain has clear division of labor, and high requirements for capital investment and R&D strength. In the absence of policy innovation and industrial chain advantages, domestic companies lack R&D motivation and low R&D input-output ratio, so there is little layout. In the field of laser light source, small and medium-sized enterprises have high R&D efficiency and significantly lead large enterprises with profitability (ROE 16%), with slightly higher patents per capita (0.24), but due to the few targets involved, they may be greatly affected by individual differences.The industry in the polarizer field is relatively mature, and small and medium-sized manufacturers have low risk resistance and profitability. Therefore, listed companies are mainly large enterprises and have gradually achieved domestic substitution in recent years. However, the innovation vitality is currently lacking, and the R&D expense rate (3.6%) and the per capita patent number are both low (0.03).

Chart: Current development status of small and medium-sized manufacturers in each link of color TV and new display

Note: 1) The choice of listed companies in laser light source and polarizer link is the same as above; 2) In 2021, the operating income is less than 1 billion yuan and the number of parent company employees is less than 2,000. Source: Wind, Company Announcement, CICC Research Department

Home Appliance Specialized and New Enterprises: Segmentation and Breakthrough Cases

Home Appliance Specialized and New Enterprises Collected and New Enterprises

Home Appliance Companies and Subsidiaries, and among the companies that have invested, there are many companies involved in new display and "industry cross-border". Among them, there are 8 national-level "specialized and innovative" enterprises, consisting of 3 new display and consumer electronics, 2 industry cross-border, 1 civil electrician and lighting, 1 cleaning appliance, and 1 massage home appliance related company. In addition to the national "specialized, specialized, specialized, and new" small giants", we have also sorted out a list of provincial "specialized, specialized, specialized, and new" enterprises related to 13 listed home appliance companies, with a total of 21 provincial and national "specialized, specialized, specialized, and specialized, and cross-border industries accounting for 33.3% and 19.0% respectively.

Chart: National and provincial "specialized, specialized, specialized, and new" related home appliance companies

Source: Wind, company announcement, company official website, CICC Research Department

Overall, companies listed on the list of specialized, specialized, specialized, and new "little giants" are mostly concentrated in the upstream of the industrial chain's electronic components, mechanical components and other fields. For home appliances, there are three categories of related "specialized, specialized, and new" enterprises: 1) In addition to upstream and motor links, there are also downstream brands; 2) Home appliance companies are rated as "specialized, specialized, specialized, and new" because of their advantages in the field of specialized equipment by "industry cross-border"; 3) Traditional home appliance giants are rated as provincial "specialized, specialized, specialized, and new" because of their manufacturing advantages or their subsidiary companies. Overall, we believe that the downstream links of the domestic home appliance industry, whether it is product disruptive innovation or experience upgrade, are already leading to a certain degree than the overseas market. Therefore, domestic brands are more likely to move towards the global market, but some upstream core components links are lagging behind some international manufacturers due to the constraints of the industrial chain. Therefore, their business "strength chain" and "supplementary chain" attributes are stronger, and they are more in line with the characteristics of specialized and new enterprises.

Policy recommendations: Encourage the conquering of upstream technologies, guide and improve talent incentives

Encourage home appliance companies to tackle upstream core technologies and ensure supply chain security. 1) Encourage the conquering of core technologies. Currently, some upstream core components of refrigerants and air conditioners rely on external procurement; glass substrates in color TVs rely on Japan and the United States; the domestic production rate of white goods, new display and cleaning robot chips is insufficient. 2) Encourage enterprises to hedge their raw materials. household appliances use large quantities of copper, aluminum and other commodities. Due to the impact of global hot events, it is recommended to encourage enterprises to pay attention to hedging raw materials, improve futures markets, spot delivery and other systems, and provide support for enterprises to lock in costs. At the same time, increasing my country's pricing rights over copper, aluminum, stainless steel, etc. will also help production enterprises maintain reasonable gross profit margins. 3) Ensure the smooth and smooth supply chain. provides convenient conditions to enterprises to ensure smooth production, sales and transportation.

provides greater discounts to enterprises with higher standards. For example, in the field of air conditioning, energy consumption standards are upgrading toward the trend of frequency conversion. It is recommended to provide greater discounts to enterprises and products that are in line with green and high-energy efficiency to promote the transformation of enterprises to low-carbon, environmentally friendly and high-tech. At the same time, it is recognized as a "specialized and innovative" enterprise and product, and it is recommended to provide tax or financing preferential treatment.

attaches importance to the cultivation of talents in colleges and universities, and at the same time improves the level of vocational education. involves "bottleneck" technical fields, and needs to be systematically cultivated from the fields of basic science, experimental research, etc. There are some shortcomings in the fields of upstream core components and raw materials of home appliances, and relevant high-tech talents are urgently needed.It is recommended to support college majors, talent introduction, research funds, etc. to create a systematic and higher-level talent system; increase discounts in terms of household registration policies and rental and purchase of houses. Since home appliance companies are involved in assembly and production, vocational and technical education also needs strong support.

encourages the demand for "domestic products" and introduces policies related to home appliances related consumption stimulus and upgrades in a timely manner. Home appliance brands in have gradually become popular, but residents still have a lot of room for improvement in home appliance products at higher levels in some areas. It is recommended to introduce policies such as home appliances going to the countryside, energy conservation and emission reduction green subsidies, etc., to stimulate demand while guiding enterprises to transform to higher standards and greener environmental protection.

encourages outstanding home appliance companies to "go global" and reasonably develop diversified markets. improves its product level through mergers and acquisitions or setting up R&D bases around the world. High-quality cases show that reasonable mergers and acquisitions and diversification will help Chinese home appliance companies explore overseas markets. Chinese home appliance companies are in an advantageous position, and are better than foreign investors in terms of cost performance, and are gradually leading in terms of performance. It is recommended to encourage and guide the diversified path of mergers and acquisitions, which will help market expansion and sales improvement.

Conclusion: From scale advantages to technological advantages

We have comprehensively sorted out the industrial chain ecology, pains and difficulties and development opportunities of China's home appliance industry, the current development status of small and medium-sized enterprises, and the subdivided cases of specialized and new enterprises, and relatively comprehensively portrayed the comprehensive industrial upgrading of China's home appliance manufacturing industry, constantly breaking through technical bottlenecks, from weak to strong, from technical imitation OEM manufacturing to comprehensively leading the global market and brand overseas.

opens the huge domestic consumer market to form a scale advantage. In the initial stage, China used the large scale of the domestic consumer market to attract global home appliance giants into the Chinese market, and learned from the advanced technology, advanced management experience and advanced brand operation models of global home appliance companies. Domestic home appliance companies have initially formed a large-scale cost competitive advantage, and have become the product image of China's home appliances in the first place.

continues to invest in R&D and innovation, and scale advantages are transformed into technological advantages. With the gradual consolidation of the scale advantages of domestic home appliances and the initial capital accumulation, domestic home appliance companies have continuously invested a lot of R&D expenditures and talent resources, breaking through technical barriers and realizing domestic substitution, and transforming the initial scale advantages into technology-led advantages. The continuous breakthrough and integration of the air-conditioning industry chain is a microcosm of the continuous breakthroughs and development innovation of Chinese home appliance companies. The leading air conditioner has continuously strengthened the integration of the industrial chain and overcome difficulties, and has achieved domestic substitution of air conditioner compressors, motors, variable frequency controllers, and MCUs. Compressor and motor technology are not only used in the production of home appliances, but have also developed across the border to the current growing new energy vehicle parts field. The continuous progress and update and iteration of R&D technology and manufacturing processes are the foundation for the sustainable development of China's home appliance industry.

core technology breaks through and upgrades its product form and enters the global high-end market. China's home appliance industry has achieved full competition and has made continuous breakthroughs in core technologies, such as air conditioning products using aviation turbine convex technology, and cooking robots using micro-perforation technology launched by submarine missiles. In addition to the brand and capacity acquisitions carried out by Chinese companies overseas, the continuous breakthroughs and iteration of core technologies also provide the most critical guarantee for the high-end upgrade of domestic home appliances and entering the global market.

The innovative products of China's home appliance specialization and special enterprises lead the global market. The overall growth rate of traditional home appliance industry has slowed down, and it has entered the stock market from the incremental market. However, the specialized and innovative small and medium-sized enterprises in China's home appliance industry use core technologies to achieve breakthroughs to continuously launch innovative home appliance products around the needs of consumers, leading the global consumer market and helping to increase product penetration.

China's home appliance industry has achieved full competition, and technology has been continuously iteratively and progressed closely around consumer needs, and ultimately forming competitiveness globally.

risk warning

market demand risk. The profits of home appliances and related companies depend more on the overall market demand, including domestic and external demand.If the macro economy fluctuates greatly, it may lead to insufficient social demand. If geopolitical conflicts intensify, it will also disturb overseas demand, which will in turn affect corporate exports, which may have a negative impact on income.

Technological innovation slows down the risk. new technology requires a large proportion of R&D expenditure in the early stage, and there is certain uncertainty in technological breakthroughs and application effects. Early R&D expenditure may have a certain drag on the company's profits; the speed of technological innovation may also slow down due to the increase in technical difficulty, which slows down the speed of product iteration, which in turn affects the company's profitability.

[1] ABS plastic is a terpolymer of three monomers: acrylonitrile (A), butadiene (B), and styrene (S). It is widely used in home appliances and other fields.

[2] RAM (Random-Access Memory) is the running memory, referred to as run memory, which is a component used to temporarily store data

[3] ADC is the abbreviation of Analog-to-Digital Converter, referring to analog/digital converter; DAC is the abbreviation of Digital-to-Analog Converter, referring to digital/analog converter

[4] Modulator (modulator) and Demodulator (demodulator), which is called modem

[5] DSP (Digital Signal Processor), or digital signal processor, is a programmable chip specifically used for digital signal processing

[6] https://i.mediatek.com/digital-tv

[7] LCD (Liquid Crystal Display), which is constructed to place liquid crystals in two pieces of parallel glass, with many vertical and horizontal tiny wires

[8] DLP (Digital Light Processing), digital light processing. This technology first passes the image signal digitally and then projects

[9] LCOS (Liquid Crystal on Silicon), a new type of reflective Micro LCD projection technology

[10] ROM (Read-Only Memory), read-only memory

[11] The l/O interface is responsible for information exchange between the host and the controlled object. The host exchanges data with external devices through the I/O interface

[12] LD refers to laser diode

[13] https://i.mediatek.com/digital-tv

Article source

This article is excerpted from: "Specialized and Special New | Home Appliances: Continuous Breakthroughs, Classic Industrial Upgrade"

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