Recently, Huawei Mate 60 series mobile phones have been officially launched through all channels, and the craze of queuing up to pick up the phones at offline stores continues.
Such a hot scene has not happened for probably two or three years. Therefore, Huawei has also raised its mobile phone shipment target for 2023 from 30 million units at the beginning of the year to 40 million units. Some analysts even believe that Huawei’s annual mobile phone shipments can reach 50 million units.
Mate 60 Pro, which was commented by CCTV as a "competitive machine", has also fully demonstrated the role of a hot-selling terminal product in driving the supply chain. According to relevant media reports, Huawei has increased orders for this model to 15 million to 17 million units.
In this regard, analysts have expressed their optimism about Huawei-related industry chains. Guotai Junan Securities pointed out: "The Mate 60 Pro is officially launched and is expected to lead the high growth of Huawei's mobile phone sales in the future. Huawei's related industry chains will directly benefit. It is expected to be the first to get out of the bottom of the industry cycle and achieve performance growth."
So, which companies will benefit from the launch of the Mate 60 series?
According to statistics from the Financial Associated Press, we see that there are at least 46 Chinese companies that are the core suppliers behind the birth of Mate 60 Pro. Among them, most companies come from the mobile phone industry chain.
Mobile phone industry chain suppliers (Source: Financial Associated Press)
For a long time in the past, these mobile phone suppliers have experienced continued sluggish market conditions. Canalys data shows that as of the second quarter of 2023, global smartphone shipments have declined for the fifth consecutive quarter. In the downturn of the industry, companies such as OFILM, AAC Technologies, and Weill are also facing changes in customer structure and the challenge of a long cultivation period for new businesses.
Now that Huawei mobile phones have made a strong recovery, can OFILM sail through the mountains and enter a new upward channel?
"Terminal driven"
As the interim report season comes to an end, we see that the overall performance of the consumer electronics industry is still under pressure. According to Everbright Securities statistics, in Q2 2023, there were 617 companies in the entire industry (A shares), and the net profit attributable to the parent company was 52.85 billion yuan, a year-on-year decrease of 16%.
The sluggish consumption in the smartphone market is undoubtedly the key factor leading to all this. Affected by the economic environment and the lack of eye-catching product innovation in recent years, the smartphone industry has entered a downward cycle.
In such an environment, the industry expects terminal companies, especially leading brands, to come up with explosive products that will stimulate the market.
The explosion of terminals is the key to pushing the industry forward. The technology industry emphasizes technology integration. Terminal companies with strong brand strength are often the "chain masters" in the entire industry chain, driving the performance growth and technology iteration of midstream and upstream suppliers.
In the Chinese smartphone market, "Huami OV + Apple" is the absolute leader. The most direct impact of the outbreak of Huawei's new phones is to boost the overall performance of suppliers.
From OFILM's interim report, we can also see that thanks to the growth in production and sales, OFILM's revenue in the second quarter was 3.619 billion yuan, a month-on-month increase of 34.22% and a year-on-year increase of 13.69%. At the same time, sales scale recovered, and its asset-heavy fixed expenses and R&D expenses were gradually covered. By the second quarter, it achieved a turnaround from losses to profits in a single quarter.
As sales of new phones from leading mobile phone manufacturers are booming, the market has raised its performance expectations for OFILM and other mobile phone suppliers in the second half of the year. After all, Huawei Mate 60 Pro's additional orders of 15 million to 17 million units are expected to bring a considerable increase in performance to core suppliers.
Reflected in the stock market, on September 6, the consumer electronics sector was active, with Huawei's industry chain leading the gains. The consumer electronics concept index has rebounded by more than 10% since its low on August 25. Consumer Electronics ETF and Consumer Electronics 50ETF also rebounded significantly.
At the same time, Huawei's return to the center of the smartphone "stage" does not only mean short-term boost to supplier performance.
The product strength and production and sales volume of terminal enterprises determine their dominance in industrial competition. From the innovation of Huawei’s new phones, we see that Huawei and its related industry chains are gaining the say in technology iteration.
The Mate 60 series has many technical highlights. First, it is based on the Beidou satellite system. Mate60 Pro supports satellite communications. Second, it is equipped with an OLED screen and supports 1-120Hz LTPO adaptive refresh rate. Third, after the launch of Hongmeng 4, the new machine is connected to the AI large model. Fourth, the lens, Mate 60 supports 10-stop variable aperture main camera.
5G, AI, satellite communications, screens and cameras, these technological breakthroughs mark that China’s consumer electronics industry chain is becoming the leader in the distribution of industry value.
For example, consider what OFILM’s former secretary-general said to investors:
· "The self-developed high-pixel super resolution algorithm has been recognized and applied by customers. The super EIS anti-shake algorithm has reached the top level in the industry. MGL high-image quality module, CMP/GMP miniaturized module, floating focus macro module The group and periscope telephoto macro module have been mass-produced. Technologies such as 10x continuous zoom, chip anti-shake, variable aperture and retractable modules have completed technical development, and are actively deploying modules such as interchangeable lenses and polarization filters. assemble new technologies.”
It’s not difficult to see where the Mate 60’s camera breakthrough comes from.
Picture source: Weibo@digital chat station
Compared with Sony's previous optical variable technology, which can only zoom between 85mm and 125mm, OFILM's continuous zoom module is obviously a step further.
In the technological upgrading trends of large image area, ultra-thinness, large aperture, video anti-shake, continuous zoom, etc., OFILM, as a domestic optical lens supplier, has made industry-leading technological breakthroughs, which also proves that the leading players in the smartphone industry have the way to go. Broadening, the value chain of China's consumer electronics industry is being upgraded.
dawn
As Nietzsche said: "Whatever doesn't kill you will eventually make you stronger." After experiencing the dark night, companies will take the initiative to seek change and look forward to the next dawn.
In the past few years, smartphone innovation has slowed down, domestic suppliers have been hit by order cuts, and every link in the industry chain has faced greater price reduction pressure and performance growth difficulties.
Nowadays, the "chain master" has returned to lead the industrial sector's counterattack. From OFILM to the entire industry chain, what we see is that domestic consumer electronics suppliers are focusing on independent research and development and industry-depth expansion, and are turning passive into active, laying the groundwork for starting a new growth cycle. Foreshadowing.
First, OEM innovation capabilities have been continuously enhanced, leading the upgrading of components in the mobile phone industry chain.
In addition to OFILM's new solutions such as the ten-fold continuous optical variable module, periscope telephoto macro module, and floating focus macro module, suppliers in all aspects of the industry chain have made major breakthroughs, especially the low localization rate. FPGA, DSP, simulation, radio frequency, memory chips and other fields.
Behind the iteration of technology in different links is the increasing emphasis on independent research and development by suppliers, which has gradually become an indispensable force in the innovation of the global mobile phone industry. As consumption in the smartphone market recovers, the industry chain will once again enter the upward channel.
Secondly, consumer electronics manufacturers are carrying out multi-level industrial layouts, focusing on automotive electronics, virtual reality and other fields to improve business resilience.
With the development of new energy vehicles, automotive electronics has become one of the largest increases in the consumer electronics industry. On the one hand, new car-making forces that are more Internet-minded regard cars as the next generation of Internet access equipment; on the other hand, various players such as autonomous driving companies, mobility companies, and OEMs are committed to promoting the implementation of autonomous driving.
"Intelligent network connection" is inseparable from the support of electronic devices, and the underlying technology of these electronic devices themselves is not essentially different from that of smartphone-related spare parts. Therefore, starting from 2015, OFILM has built a product matrix based on automotive lenses and cameras, gradually extending to millimeter wave radar, lidar, body domain controllers, electronic exterior mirrors and other fields.
There are always benefits to being a first mover. With years of accumulation, OFILM has now obtained the first-tier supplier qualifications of more than 20 domestic car companies, becoming a Tier1 manufacturer in the intelligent connected car industry. For example, we learned from public information that the intelligent assisted driving systems of five new models, including the new Ideal L8/L7 and the Ideal L9, are equipped with OFILM in-car lenses.
It is not difficult to judge that OFILM at this stage has gone through the initial accumulation process and is waiting for a moment when the industry explodes.
This moment is obviously not far away.
From a policy perspective, in June, the State Council will launch a pilot program for the access and on-road access of intelligent connected vehicles, organize and carry out city-level "vehicle-road-cloud integration" demonstration applications, and support the commercial application of L3 and higher-level intelligent driving functions. ; In July, the Ministry of Industry and Information Technology and the National Standardization Administration Committee issued the "Guidelines for the Construction of the National Internet of Vehicles Industry Standard System (Intelligent Connected Vehicles) (2023 Edition)", which focuses on the general specifications, core technologies and key product applications of intelligent connected vehicles. , building a standard system for intelligent connected cars.
Songguo Finance believes that with the promulgation of relevant policies and the implementation of regulations, OFILM has two areas worth looking forward to, one is CMS (electronic rearview mirror), and the other is DMS (driver monitoring system) + OMS (passenger monitoring system) )One machine.
On the one hand, the new national standard will be officially implemented in July, and the speed of putting electronic rearview mirrors on cars is expected to accelerate. According to the IHS Markit survey report, the output of electronic rearview mirrors is expected to rise rapidly from 2024. The Chinese market is expected to reach 1 million sets in 2026, and the global market will reach 5 million sets in 2031. The market potential will be gradually released.
Picture source: Weibo @欧飞光
OFILM's advantages lie in optics and camera image tuning. Combining OSD and display image enhancement technology, OFILM continues to optimize image quality, effectively solving problems such as color reproduction, LED flicker suppression, dispersion, halos, and light stabs in low-light environments during image tuning.
On the other hand, in the era of human-machine co-driving, DMS and OMS will become the safety standard features of the new generation of smart cars. According to KPMG's forecast, the size of the smart cockpit market in China will reach RMB 212.7 billion in 2026, with a compound growth rate of more than 17% from 2022 to 2026. Compared with the solution of separating DMS and OMS, the all-in-one machine integrates multiple camera functions into a single camera, which has a more prominent cost advantage.
OFILM DMS and OMS all-in-one solution
In addition to automotive electronics, OFILM's optical and optoelectronic business layout in the fields of smart door locks, VR/AR, industry and medical care is not developing very fast, but it will gradually accumulate and there will be a moment when it is accumulated.
Conclusion
In short, the impact of the booming sales of Huawei's new phones does not stop at Huawei itself. Just like a big stone dropped into water, it will always make huge splashes, and the ripples it creates will also be transmitted to farther places.
At the very least, through a supplier map, the outside world can pay attention to more "players behind the scenes." Through the development of these companies, it is not difficult to see that midstream and upstream suppliers in the consumer electronics industry are embarking on a path with wider boundaries, that is, taking the lead in technology iteration through independent research and development, building the core competitiveness of the industry chain, and thus promoting multiple Businesses in the electronics field are advancing hand in hand.
In the future, as terminal products such as smartphones, smart connected cars, and smart wearable devices continue to iterate in technology, the consumer electronics industry still has many stories to tell.
Source: Pinecone Finance