Wen Jiaqi, "Core Financial material"
The crisis of global core shortage is getting worse in 2021. According to a recent report released by Deloitte, a professional agency, it is estimated that the chip shortage will continue in 2022, and the chip delivery will be delayed by about 10 to 20 weeks, and the situation will not be alleviated until early 2023.
But which industry has the most serious core shortage? The auto industry bears the brunt. Behind the lack of core, the most urgent need is the specification-level MCU (micro-control unit).
Core financial material noticed that core sea technology (688595.SH), which is listed by Science and Technology Innovation Board, is an analog chip design company, which mainly produces high-precision ADC and high-reliability MCU. On December 26th, the application for issuing 410 million yuan of convertible bonds was examined and approved by the Shanghai Stock Exchange. According to the company announcement, the issuance of convertible bonds is mainly used for automotive MCU chip research and development and industrialization projects, which means that the company began to make efforts to extend MCU chips to the automotive field.
The Road of Entrepreneurship Transformation
With Science and Technology Innovation Board listed as "the first share of the signal chain chip", Xinhai Technology has attracted the attention of many investors since the listing date.
Lu Guojian, founder of Xinhai Technology, once served as deputy chief engineer of basic research and director of digital and analog products at Huawei, the predecessor of Hayes Semiconductor. Lu Guojian has nearly 30 years of working experience in the chip field and is a veritable technical veteran.
Lu Guojian, founder of Xinhai Technology
Lu Guojian started his business from Huawei 19 years ago with the goal of developing a domestic ADC (analog-to-digital conversion chip) to break the foreign technology monopoly. After 3 years of research and development, the first 24-bit high-precision ADC chip of Xinhai Technology is finally available, but few people are interested in the domestic market.
The high investment in R & D soon made it difficult for Lu Guojian's own funds to support the normal operation of the company, and he had been unable to pay his salary for two or three months. In order to survive, Lu Guojian drove his employees more than 5000 kilometers to visit customers and got more orders.
However, at that time, the company had no application market and customers in the industrial field, and the product performance was not satisfactory. Taking into account the development of the company, Lu Guojian decided to settle for second best and develop the weight scale chips that large companies do not do but small companies are difficult to do, and change from industry to consumer applications.
There is no doubt that the decision was wise. The company's demand for scale chips showed explosive growth, and its products once occupied more than 60% of the global market share. It took the lead in realizing domestic substitution in the consumer field of accurate measurement, and accumulated a large number of brand customers.
In the process of expanding to other fields, Lu Guojian found that the domestic demand for MCU chips is particularly large, and ADC+MCU is a trend of global signal chain development, so the company began to develop high reliability MCU technology platform.
With the gradual rise of AIOT Internet of things after 2014, in order to comply with the development trend of the times, the company has created an one-stop solution platform and gradually built a relatively complete full signal chain industry line.
Reviewing the development of Xinhai science and technology, apart from the breakthrough of products from 0 to 1 in technology, it is inseparable from founder Lu Guojian's insight into the trend.
Three product lines of MCU, pressure Touch and SOC
As a chip integrated circuit design company, Xinhai Technology started with ADC, and then gradually covered the product line based on MCU, pressure touch and Soc with the help of the company's R & D technology. Through the product line, it has been applied to many fields such as smart health, smart home, consumer electronics, industry and automobile. The company's main business and important product evolution can be divided into four stages, as shown in the following figure.
In the institutional research at the end of 2021, the secretary of Xinhai Science and Technology said that under the circumstances of high prosperity in the industry and strong market demand, the company's three major product lines are growing rapidly.
In terms of analog signal chain chips, rapid growth has been achieved in the fields of pressure touch, industrial measurement, environmental measurement and lithium management; in terms of MCU chips, 32-bit general MCU has achieved breakthroughs in many fields, such as mobile phones, industrial control, high-end consumption and automobile central control, while the product range has been optimized and the proportion of revenue continues to increase. In terms of health measurement AIOT chips, the rapid development of the Internet of things market in ecosystems such as health measurement and Hongmeng has also increased product demand.
According to the company's financial report, 2021Q3 achieved revenue of 188 million yuan, an increase of 99.50% over the same period last year, net profit of 35.58 million yuan, an increase of 129.21% over the same period last year, deducting non-net profit of 47.52 million yuan, an increase of 297.47% over the same period last year, and gross profit margin rose to 55.59%, achieving five consecutive quarter-on-quarter increases.
In the secondary market, the share price of Xinhai Technology has risen from 65.22 yuan per share at the beginning of 2021 to a maximum of 151.00 yuan. As of December 31, 2021, Xinhai Technology closed at 124.45 yuan, up 92.63% from 64.61 yuan at the end of 2020, outperforming the market.
Key layout in the fields of automobile and industry
With the rise of new energy car-building power and the development of automobile intelligence, the importance of signal chain MCU has become increasingly prominent.
Based on the market demand-oriented development strategy, Xinhai Technology has also joined this hot track. In early 2021, the first car specification-level signal chain MCU was launched and passed the AEC-Q100 certification. It is currently in the market introduction stage and has not yet generated any orders.
However, senior experts in the industry said that the most important thing in the car gauge chip is reliability and safety. Although the products of Xinhai technology have the advantage of high reliability, they still need to be strengthened in terms of functional safety.
In the industrial field, Xinhai Technology said that at present, the company's analog products such as ADC and AFE have been widely used in industrial and measurement fields, and 32-bit MCU products have also been widely used in motor control, power tools and other industrial control fields. The company is speeding up the research and development and promotion of equipment testing and control products in the field of industrial control.
From the perspective of R & D investment, according to the 2021 semi-annual report of Xinhai Science and Technology, the company's R & D investment was 64.0158 million yuan, an increase of about 100.40% over the same period last year, accounting for 23.31% of the operating income. The projects under research include "High efficiency Human-computer interaction Chip", "Development and industrialization of Lithium Battery Management Series Core chips" and "Research and industrialization Project of 32-bit General MCU Chip based on ARM Cortex-M Series", which will be mainly used in industrial and automotive electronics and other fields.
Such a high proportion of R & D investment is enough to show the confidence of Xinhai Technology in the automotive and industrial sectors, but the future development depends on the practical application of the project and the market acceptance of the products.
How to ensure the production capacity in the absence of core?
Since 2021, chips have been out of stock throughout the industry, and it is hard to avoid the impact of core technology. Xinhai Technology has mentioned that due to the continued demand, coupled with the epidemic affecting wafer manufacturing and packaging testing capacity, the company can only meet the order needs of some customers.
In order to strengthen cooperation with enterprises in the upper and lower reaches of the industrial chain, Xinhai Technology invested 50 million yuan to participate in the fixed growth plan of Tonfu and Micro Power in 2020, and obtained priority and stable production capacity supply through the dual cooperation mode of capital plus business.
In terms of supplier cooperation, Xinhai also gives priority to large wafer manufacturers such as Hua Hong Semiconductor (01347.HK). At present, Xinhai Technology has fully introduced the 12-inch wafer process platform to provide more protection for the follow-up production capacity.
Judging from the performance of the secondary market, the share prices of most chip companies in the industry have adjusted sharply, which shows that the market is more optimistic about the production capacity of the industry this year.
According to Dong Mi of Xinhai Technology, the shortage of domestic chip production capacity last year was mainly affected by the epidemic and other factors, and last year's production base was relatively high, and it is expected that the shortage of middle and low-end production capacity will be alleviated this year.
However, the production capacity of middle and high-end chips that do domestic substitution will continue to be tense, because the number of enterprises with domestic alternative technology is limited, the market demand is increasing unabated, the progress of enterprise production expansion is not so fast, and industrial security is an irreversible trend. therefore, mid-and high-end chip production capacity will not be fundamentally alleviated for the time being, and it is expected that there will be a differentiation of production capacity and performance in the industry in the future.