Recently, the two largest companies in China's MEMS sensor industry have successively released their 2022 financial reports, which has aroused widespread concern in the industry.
The two companies have occupied the TOP 2 positions in China's MEMS industry for a long time, and are the first and second largest MEMS sensor companies in China. At the same time, the two companies are also "fruit chain" companies. In recent years, it has also been deeply troubled by Apple's supply chain.
From the peak market value of over 200 billion to today’s market value of 20 billion, the net profit in the first quarter plummeted by 88% year-on-year. Facing the decline, the two MEMS companies bet on a new track, which may be a new round of development of domestic MEMS wave.
From 200 billion to 20 billion, net profit plummeted by 88%. What happened to these two MEMS giants?
For many years, according to the list of "Top 10 MEMS Enterprises in China" released annually by China Semiconductor Industry Association, the largest semiconductor industry organization in China, Goertek and AAC have been ranked top 2 for a long time .
From the perspective of business revenue, the revenue performance of the MEMS business of the two companies far exceeds that of the third domestic MEMS company. Therefore, for many years, the top two domestic MEMS are basically ranked by Goertek and AAC Technologies, and only the ranking after the third place changes with the market.
How strong is the MEMS business revenue of GoerTek and AAC Technologies? According to a data released by CCID Consulting, among the top 10 local MEMS sensor companies in China in 2020, Goertek’s MEMS output value is 3.19 billion yuan, and AAC’s MEMS output value is 1.08 billion yuan. The output value of the two companies’ MEMS is far greater than that of other companies Domestic MEMS enterprises.
▲Source: CCID Consulting
On the night of April 17, Goertek disclosed its 2022 annual report, showing that during the reporting period, the company achieved operating income of 104.894 billion yuan , a year-on-year increase of 34.10%; realized net profit attributable to shareholders of listed companies of 1.749 billion yuan, a year-on-year decrease of 59.08% .
Not only that, but the 2023 first quarter report disclosed on the same day showed that the company achieved operating income of 24.122 billion yuan in the first quarter , a year-on-year increase of 19.94%; the net profit attributable to shareholders of listed companies was 106 million yuan, a year-on-year decrease of 88.22%.
Although Goertek's revenue in 2022 exceeded 100 billion yuan, achieving double-digit growth year-on-year, the sharp drop in net profit still caused Goertek's stock to fall by the limit the next day.
▲Source: Oriental Fortune
Another MEMS giant, AAC Technologies, previously released a 2022 financial report that also showed poor performance.
During the reporting period, AAC Technologies achieved revenue of RMB 20.63 billion, a year-on-year increase of 16.7%; net profit of RMB 821 million, a year-on-year decrease of 37.6%; gross profit margin of 18.3%, a year-on-year decrease of 6.4 percentage points.
▲Source: AAC Technology Annual Report
Why are the two MEMS giants so bleak in 2022? Success is also apples, failure is also apples!
2017 was the peak of AAC Technologies. Its value in the Hong Kong stock market was once as high as 200 billion Hong Kong dollars, but only 5 years later, the market value of AAC Technologies is now only about 20 billion Hong Kong dollars, which has dropped by almost 90%, and has disappeared from the capital market .
And what about Goertek, another MEMS giant? According to the market value data of China’s major sensor companies compiled by Dynamic Sensing on September 23, 2022, the market value of GoerTek was hovering around 100 billion at that time, mainly due to the impact of the economic situation. The market fell, but it still firmly occupied China’s sensor industry. The market capitalization TOP2 position.
And just over a month later, the market value of Goertek shares evaporated by 25 billion+ billion, directly falling to 70 billion and falling out of the 100 billion market value. As of today (April 21), the market value is only about 65 billion, which is far from See Boost Outlook.
Why these two companies are falling
▲Source: Sensor Expert Network, market value in 2022 as of September 23, 2022
At the beginning of November 2022, there was an incident that rushed to the hot search, that is , Goertek was "cut down" by Apple. An intelligent acoustic complete machine product".
According to Ming-Chi Kuo, an analyst who has been following the Apple industry chain for a long time, he pointed out in a document that the major overseas customer is Apple, and the smart acoustic complete machine product that has suspended production is the second generation of AirPods Pro.
This incident directly caused the stock of Goertek to eat multiple limit-downs in a row, directly evaporating 25 billion+ billion in market value. Judging from the financial report released recently, the turmoil directly led to a sharp decline in net profit in Q4 of 2022 and Q1 of 2023, with an 88% year-on-year decline in net profit.
▲Source: Goertek 2022 Annual Report
The same is true for AAC Technology, which stated in its annual report that the vast majority of the Group's revenue comes from the smartphone market in the consumer electronics market . Due to the expected slowdown in the global economy and the weakening of consumer sentiment and demand, there is uncertainty in the smartphone market . Among them, the major customer in the smartphone market is obviously Apple.
According to 36 Krypton, as an important supplier of Apple's acoustic components, the acoustic component business of AAC Technologies accounted for almost 50% of the company's total revenue before 2017. After 2018, under the influence of another fruit chain company, Luxshare Precision, the growth rate of AAC’s acoustic business revenue fell directly from the previous 20% to a negative growth range. High all the way down.
▲The stock price trend of AAC Technology; data source: wind, organized by 36 Krypton
According to the data of Yole, a well-known semiconductor consulting organization, the largest company in the global MEMS acoustic sensor market is Goertek (independent of Goertek), while AAC Technologies ranks third, mainly due to Apple - its iPhones, AirPods and other consumer electronics products have a huge demand for devices such as MEMS microphones.
▲ Goertek's global MEMS acoustic sensor market share in 2020 (from Goertek's prospectus)
It can be seen that, relying on the charm and massive demand of Apple products, Goertek and AAC have gradually come to the fore in the global MEMS acoustic sensor field, but also because of Apple, the two companies have fallen into a growth crisis.
Apple is known for its excellent supply chain control. In order to prevent a certain supplier from becoming dominant in a segmented field and gaining a greater voice, Apple has been continuously cultivating new suppliers, and using new suppliers to check and balance old ones . Suppliers, thus continuously weakening the supplier's right to speak in the industrial chain.
In addition, in addition to facing Apple's strength in the supply chain, fruit chain companies such as GoerTek and AAC Technologies also have to bear inventory and asset risks for Apple.
Apple itself does not stockpile goods, but has a large demand for parts and components. In order to realize the rapid supply of products, this requires fruit chain suppliers to maintain a relatively high inventory to meet the demand for increased supply of Apple at any time. In this way, Apple The pressure of hoarding goods itself is given to the supply chain, and a large amount of inventory also causes the occupation of assets.
According to 36 Krypton’s data, the inventory turnover days of AAC Technologies reached 131 days, while that of Goertek was 57 days, and Apple’s own inventory cycle was only about 9 days.
▲Inventory turnover days of major mobile phone manufacturers and industrial chains, data source: wind, sorted by 36 krypton
A new wave of MEMS development, China's MEMS giants have bet on this track
It can be seen from the above content that the two largest MEMS sensor companies in China have risen by relying on Apple's entry into the consumer electronics market.
In the past 10 years, with the explosion of consumer electronics such as smartphones and smart wearable products, the demand for consumer electronics MEMS sensors has grown tremendously, driving the development of MEMS sensors.
With the development of consumer electronics in trouble, where is the new wave of MEMS development?
In its 2022 annual report, AAC Technologies disclosed:
In 2022, the Group will actively create a second growth curve to activate new growth drivers. While maintaining its position in the smartphone market, it actively seized new market opportunities and explored strategic emerging markets. It achieved milestone development in the field of vehicle acoustics, and the overall vehicle acoustics solution has begun mass production and delivery. In addition, the Group has also successfully developed a complete set of new vehicle-mounted MEMS microphone modules, which are expected to be mass-produced in 2023. Other products such as optics and motors are also actively expanding to AR/VR, automotive and other fields.
In addition, Goertek also pointed out in its annual report: "During the reporting period, the company actively explored business opportunities related to automotive electronics, and made certain business progress in the subdivisions of sensors and optical modules. "
With the advent of new energy vehicles, the traditional automobile industry is facing a huge change, from mechanization to electronics, from petroleum drive to electric drive. Known as the "new four modernizations" (electrification, networking, intelligence, and future sharing), the proportion of automotive electronic components in the cost of a complete vehicle continues to increase.
Wang Chuanfu, chairman of BYD, said, "We judge that the automobile industry will fully enter the era of intelligence in 2035."
According to Yole's MEMS industry report, by 2027, the CAGR of the automotive electronics MEMS market will be around 10%, and the growth rate will exceed that of the consumer electronics market, making it one of the fastest growing MEMS markets.
▲Source: Yole
China's largest sensor company and image sensor leader Vail has also strengthened its investment in automotive image sensors. It disclosed in its 2022 annual report that the image sensors in the automotive market have grown strongly by 56%:
In 2022, the revenue of the public image sensor business from the automotive market will increase from 2.321 billion yuan in 2021 to 3.633 billion yuan, an increase of 56.55%; while the revenue from smartphones will drop from 9.708 billion yuan in 2021 to 5.397 billion yuan. 44.40% reduction
▲Source: Weir Shares Annual Report
The world's first truly large-scale commercialized MEMS sensor is the accelerometer, which was invented by the American ADI company (Adeno) in 1991 and used in automotive airbags, thus starting the rapid development of MEMS sensors for 30 years , Now back to the original point, the transformation of automotive electronics will also drive the rise of a new round of MEMS applications.
Previously, AAC Technologies acquired part of the shares of Ibeo, the German solid-state lidar leader, at a price of 59,992,000 euros (equivalent to RMB 473,821,000) in 2021, and deployed vehicle-mounted lidar.
Not long ago, Goertek launched a new generation of vehicle-mounted AR-HUD (vehicle head-up display device) based on Texas Instruments MEMS DMD chip technology, and entered the automotive smart cockpit business, attracting market attention.
▲Source: Goertek official website
According to previous interviews with experts in the sensing industry by China Electronics News:
Yang Yongjun, Chairman of Mattel Electronic Technology Co., Ltd.: "MEMS has great potential in lidar sensors and inertial navigation sensors. Vehicle inertial navigation is the home field of MEMS; MEMS lidar has the advantages of low cost and miniaturization, and can solve reliability problems. One of the most promising lidar solutions for mass-produced vehicles."
Zhao Zhenyue, an analyst at CCID Consulting's Internet of Things Industry Research Center: "Bicycle intelligence and vehicle-road collaboration are developing simultaneously for domestic autonomous driving, so MEMS sensors will also be used at the road end. With the increase in investment in new infrastructure The demand for MEMS on the road side will also grow rapidly."
epilogue
With the weakening of the consumer electronics market, as the largest market for MEMS sensors and image sensors, the performance of domestic sensor companies such as Goertek, AAC, and Weil shares has declined, and these sensor head companies have chosen to develop Automotive Electronics Circuit.
At present, the traditional automobile industry is facing a great change, from mechanization to electronics, from petroleum drive to electric drive. Known as the "new four modernizations" (electrification, networking, intelligence, and future sharing), the proportion of automotive electronic components in the cost of a complete vehicle continues to increase. The transformation of automotive electronics will also drive the rise of a new round of MEMS applications. Judging from the revenue of leading sensor companies such as Weil, this trend has already emerged.
In this great change, domestic new energy vehicle brands have emerged a number of up-and-coming domestic auto brands, and even BYD has become the king of new energy vehicles.
Faced with the rise of domestic new energy vehicles and the huge sensor demand for automotive electronics, are domestic sensor manufacturers capable of undertaking it? Can domestic sensor manufacturers seize this opportunity?