For the Internet of Vehicles track, it is in a new cycle of 4G stock replacement and 5G incremental upgrade, and the market structure built in the past few years is also facing new variables.
On July 15, Quectel Communications released the 2023 semi-annual performance forecast. It is estimated that the net profit attributable to shareholders of listed companies in the first half of the year will be a loss of about 116 million yuan, and revenue will decrease by about 2.82% year-on-year.
The company stated that due to factors such as the global economic environment and market prosperity, the downstream demand of the Internet of Things industry in which the company is located has not yet fully recovered. Net profit decreased year-on-year.
In 2022, in the Chinese market (excluding imports and exports), there will be 13.3846 million pre-installed passenger cars equipped with Internet of Vehicles (mainly 4G) as standard equipment, a year-on-year increase of only 12.64%. In the first quarter of this year, the year-on-year growth rate of new car delivery with standard Internet of Vehicles dropped to 2.18%.
This means that the vehicle communication market has entered the ceiling of stock growth. In 2022, Quectel's operating income will be 14.23 billion yuan, and the net cash flow from operating activities will only be 502 million yuan. By the end of the first quarter of this year, the company's inventory reached 3.387 billion yuan, the highest in history.
At the same time, 5G increments cannot yet form a scale effect.
According to the monitoring data of Gaogong Intelligent Automobile Research Institute, 417,400 5G vehicles will be delivered (excluding optional equipment) in 2022, and the pre-installation rate will be 2.09%. In the first quarter of this year, 5G vehicles completed about 50% of the delivery volume last year.
However, the growth rate of 5G is fast and the base is small. In addition, the procurement cost of 5G modules is still significantly higher than that of 4G, which leads to continued pressure on large-scale deployment. Gaogong Intelligent Vehicle Research Institute predicts that, optimistically, the 5G deployment rate will exceed 25% in 2025. In comparison, the current 4G deployment rate is close to 70%.
"The switch from 4G to 5G in the front of the car will take a certain amount of time. At this stage, the price of 5G is higher, and the conversion of domestic customers from 4G to 5G will be affected in the short term." This is Quectel's recent investor interaction. public statement.
More importantly, for leading companies, any segment of the automotive industry has an obvious ceiling. The layout of new business and new product lines that will have a positive impact on future performance will also increase the corresponding R&D investment.
In the past few years, on the basis of vehicle-level communication modules, Quectel has also launched a multi-product matrix such as vehicle-mounted smart modules, Wi-Fi&BT modules, GNSS positioning modules, UWB modules, and vehicle-mounted antennas to solve the problem of vehicle-level communication. The technical pain points of factories and Tier1 customers are also to solve their own difficulties.
The data shows that Quectel’s R&D investment in 2022 will reach 1.335 billion yuan, accounting for 9.38% of operating income (the average R&D investment of A-share listed companies during the same period is 2.28%), a year-on-year increase of 30.59%. By the end of last year, there were 4,520 R&D technicians, accounting for 76.18%.
From the perspective of product prices, Quectel will face continuous price reduction pressure for vehicle-mounted 4G/5G modules. At the same time, it will also face the pressure of rising prices of raw materials such as upstream chips.
According to the reply to the IPO review inquiry letter released by Flaircom, the purchase price of vehicle-mounted 4G/LTE modules has dropped from 143.92 yuan in 2020 to 111.36 yuan in 2022. The 5G/NR module will drop from 2,389.38 yuan in 2020 to 811.57 yuan in 2022.
In the automotive industry, Quectel, as the leader in the market share of vehicle-mounted 4G communication modules, is also facing "siege" from more competitors, including both old players and new rivals. At the same time, these companies are simultaneously advancing on the two fronts of 4G and 5G.
Some of the old players have also been in a downward development cycle in recent years. Taking Gosuncn IoT (mainly engaged in Internet of Vehicles terminals and modules) as an example, in 2022, it will achieve an operating income of 649 million yuan and a net profit loss of 118 million yuan.
However, even so, this company is also grabbing customers from Quectel. For example, last year, it added a number of OEM module fixed-point projects such as Hongqi and Changan, and continued to break through new customers and new energy vehicles.
After Fibocom merged with Ruiling Wireless (focusing on overseas markets), the vehicle business will become the company's largest business in 2023. However, Ruiling Wireless is not expected to have much growth in revenue this year, and its main focus will be on 5G orders.
In addition, another subsidiary, Guangtong Yuanchi, focuses on the domestic market. The vehicle-mounted intelligent module business develops faster. The main customers are domestic new energy vehicle brands. According to the designated customers and projects, it is expected to have relatively large growth this year. .
MeiG Smart is a company that has newly entered the automotive communication module market in recent years. At present, the company's 5G smart module products have been mass-produced and applied on BYD's DiLink4.0 and DiLink5.0 platforms. Covering Han, Tang, Tengshi, Seal and other models.
However, in the face of fierce competition in the market, MeiG Smart also fell into the dilemma of increasing revenue but not increasing profits. In the first quarter of this year, the revenue was 443 million yuan, a year-on-year increase of 10.62%; the net profit was 18.13 million yuan, a year-on-year decrease of 26.31%, and the net profit after deducting non-profits was a year-on-year decrease of 36.66%.
As for the reason for the decline in profit, in the record form of investor relations activities, MeiG Intelligent stated that in terms of profit, it was mainly affected by the increase in research and development expenses, which declined.
ZTE is the one with the strongest comprehensive strength among the new entrants.
In June this year, GAC Research Institute announced that the 5G V-Box mass production development platform project will be the first to be equipped with ZTE’s automotive-grade 5G modules (the first automotive-grade 5G R16 ZM9300 module based on a fully self-developed chip platform) , the first equipped model is expected to be mass-produced in 2024.
In addition, ZTE has reached an in-depth strategic cooperation with SAIC Motor and Lianchuang Automotive Electronics, and jointly released the T-BOX product solution based on ZTE's automotive-grade 4G modules.
This means that, based on the full-stack self-developed vehicle-grade communication chip platform, ZTE has stronger market initiative than pure module manufacturers such as Quectel. For example, ZTE's 5G+V2X multi-mode communication baseband chip is the industry's first mass-produced 5G R16 vehicle-grade communication chip.
This will bring about a major change in future incremental competition.
According to Gaogong Intelligent Vehicle Research Institute, 5G has brought a new round of growth opportunities for vehicle modules/T-BOX. But at the same time, the technical and market threshold will also be greatly increased, coupled with the diversification of terminal product forms, the traditional 4G market structure will be completely reconstructed in the 5G era.
For a long time, the "module" track corresponds to low technical threshold and low barriers. The midstream assembly link of the industry is the "feature" of this track. More competitive thresholds lie in the scale effect of product customization design and standardization, as well as upstream Chip purchasing risk avoidance ability.
Behind the change of the track is the upgrading of technology and products.
On the one hand, the convergence trend of communication + computing. For example, the next-generation intelligent communication module has built-in high-power chips and memory, and has powerful processing capabilities and rich interfaces, which can support the communication capabilities of T-BOX, and can also realize functions such as driving records and 360-degree surround views.
On the other hand, with the upgrade from 4G to 5G, it has become an important trend to integrate functions such as V2X and GNSS high-precision positioning on the basis of traditional T-BOX modules.
According to Gaogong Intelligent Vehicle Research Institute, 5G has brought a new round of growth opportunities for T-BOX. But at the same time, the technical threshold and market threshold will also be greatly increased. Coupled with the diversification of T-BOX product forms, the traditional 4G market structure will be reconstructed in the 5G era.
According to public information, the C-V2X carried by most domestic models currently mainly relies on 4G LTE-V2X (R14/R15) technology to achieve basic security functions. Really release.
Among them, high reliability and low latency are one of the most important upgrades of R16, which also means that under certain conditions, NR-V2X can even achieve a latency of less than 3ms. Previously, LTE-V2X could only provide data broadcasting (for example, traffic light timing) for the vehicle from the roadside to be further upgraded to V2V and provide effective perception redundancy for high-end intelligent driving.
In particular, the requirements for cross-domain integration of vehicle-mounted terminals are getting higher and higher, which not only requires high software development capabilities of traditional hardware suppliers, but also requires full-stack and modular R&D capabilities, and also needs to integrate more applications. Function.