Intensive IPO, Huawei Xiaomi blessing, RF chips usher in a golden age

In the past month, the RF chip market has experienced a small upsurge. Four companies have made the latest progress in IPOs, and many companies have completed financing.

On June 16, CICC announced that it had provided listing guidance for Feixiang Technology and filed with the Shenzhen Securities Regulatory Bureau. Later, according to information from Junhao Capital, Feixiang Technology completed the Pre-IPO financing, and old shareholders such as Junhao Capital invested hundreds of millions of yuan in this round.

On June 21, Weijie Chuangxin’s application for listing on the Science and Technology Innovation Board was accepted on the Shanghai Stock Exchange. CITIC Construction Investment Securities was its sponsor, and it planned to raise 2.487 billion yuan.

On June 30, the Shanghai Stock Exchange accepted Haoda Electronics’ application for listing on the Science and Technology Innovation Board. According to the prospectus, Haoda Electronics plans to raise 960 million yuan to invest in the construction of the R&D center, the expansion of the surface acoustic wave filter and the supplementary working capital.

In addition, also last month, China Merchants Securities disclosed on the official website of the China Securities Regulatory Commission, a summary report on the guidance work of Guobo Electronics’ initial public offering and listing on the Science and Technology Innovation Board. This means that, following the guidance and registration in January, the IPO of Guobo Electronics Science and Technology Innovation Board has gone a step further.

In addition to the above IPO companies, at the beginning of this month, Chaocai Information announced the completion of the A3 round of financing, which is already the third round of financing of Chaocai Information this year. In the past six months, many semiconductor RF companies such as Corebaxter, Onray Micro, Xinpu Technology, Sidian Micro, Dixin Technology, and Hunting Semiconductor have obtained financing.

influx of giants

The predecessor of Feixiang Technology is National Technology Radio Frequency Division, which focuses on RF front-end chips. Its products include power amplifier chips, switch chips, filter chips, and RF front-end modules. In June last year, the company officially released a complete set of 5G RF front-end solutions.

The main business of Haoda Electronics is the research and development, production and sales of surface acoustic wave radio frequency chips. The main products are filters, duplexers and resonators.

Weijie Chuangxin is the backbone of China’s RF power amplifier industry, and its 4G RF power amplifier shipments ranks first in China.

The above companies, through their shareholding structure, can find some familiar figures.

Among the shareholders of Haoda Electronics are Huawei and Xiaomi. In May 2020, Xiaomi Changjiang Industrial Fund invested in Haoda Electronics with a shareholding ratio of 6%. In January of the same year, Huawei Hubble participated in Haoda Electronics’ strategic financing, and the financing scale was not disclosed.

At the same time, Haoda Electronics is also a supplier to Xiaomi and Huawei. According to the prospectus of Haoda Electronics, in 2019, the company’s unit price of Xiaomi sales was 8.81% lower than the average unit price of sales to non-affiliated direct sales customers.

In the financing process of Feixiang Technology, Wingtech and Huatian can be seen. In December last year, Wingtech Technology and Fan Ding Investment and other investment institutions jointly participated in the equity financing of Feixiang Technology. In July this year, Huatian Technology participated in the Pre-IPO round of financing of Feixiang Technology.

Feixiang Technology is a supplier of Wingtech Technology, and Wingtech’s investment in Feixiang Technology has the consideration of upstream and downstream synergy. Huatian invests in Feixiang Technology or is interested in Feixiang Technology’s 5G RF front-end solutions, aiming at the incremental market of RF front-end chips brought by 5G mobile communication technology, making layout in this field in advance, and improving its own technology in mobile communication. aspects of consideration.

Compared with Haoda Electronics and Feixiang Technology, Weijie Chuangxin’s investors are luxurious. From the perspective of equity structure, Gaintech, a subsidiary of MediaTek, holds 29.87% of the company’s shares and is the company’s largest shareholder. In addition, Huawei’s Hubble, OPPO, VIVO, and Xiaomi have also invested in shares, holding 3.57% and 3.39% respectively. , 2.61%, 1.74% of the shares.

In addition, Guobo Electronics is part of the national team and is affiliated to the 55th Research Institute of China Electric Power Division, specializing in the research and development, production and sales of RF microwave modules and subsystems.

In addition to the above-mentioned companies, Onray Micro is also favored by Huawei and Xiaomi. In February last year, Onray Micro obtained a strategic investment from Xiaomi Changjiang Industrial Fund. In November, Huawei Hubble made a strategic investment in Onray Micro.

three-year revenue

From the prospectus, from 2018 to 2020, Weijie Chuangxin achieved revenue of 284 million yuan, 581 million yuan, and 1.801 billion yuan respectively, with a compound annual growth rate of 152.48%. Among them, the revenue growth in 2019 and 2020 was 104.58% and 211.53% respectively, and the revenue scale showed a trend of continuous growth.

During the reporting period, the company’s gross profit margins were 21.89%, 18.04% and 18.12%, with certain fluctuations.

Haoda Electronics achieved revenue of 165 million yuan, 206 million yuan, and 332 million yuan in the three years from 2018 to 2020, with a compound annual growth rate of 41.85%. Among them, the revenue growth in 2019 and 2020 was 24.85% and 61.17% respectively. In these three years, the company’s gross profit margin was 45.89%, 42.79% and 45.94% respectively.

Through the comparison between Weijie Chuangxin and Haoda Electronics, it can be seen that the growth rate of Weijie Chuangxin in the past three years is fast, but the gross profit is relatively low, while the growth rate of Haoda Electronics is not as fast as that of Weijie Chuangxin, but the gross profit is high , which may be due to product differences.

The products of Weijie Chuangxin are mainly PA modules, RF switches and WiFi RF front-end modules. Among them, PA modules are the core products. The average gross profit margin of this product in the past three years is 19.63%. Among them, the gross profit margin of 4G PA modules is declining year by year, and the gross profit margin of 5G PA modules is around 30%, which is the company’s future focus.

Haoda Electronic products mainly include filters, duplexers and resonators, among which filters are the core products, accounting for more than 70% of revenue, providing the company with a broad profit space. The average gross profit margin of filters in the past three years is 48.92%.

As a leader in the domestic RF industry, Zhuoshengwei is a name that cannot be bypassed.

Zhuo Shengwei’s achievements

Since the IPO on June 18, 2019, as of June 18 this year, within two years, since the issue price, Zhuoshengwei’s share price has increased by 50 times (after the resumption of rights). Since the beginning of this year, Zhuoshengwei’s share price has also risen by more than 50%, significantly outperforming the major stock indexes.

In terms of revenue, Zhuoshengwei achieved revenue of 1.183 billion yuan in the first quarter of this year, a year-on-year increase of 162.37%, and realized a net profit of 492 million yuan attributable to shareholders of listed companies, a year-on-year increase of 224.34%.

From an operational point of view, Zhuoshengwei’s gross profit margin is above 50%, of which the gross profit margin of its main product RF switches last year was 51.79%, the gross profit margin of RF low noise amplifiers was 46.6%, and the gross profit margin of receiver modules was 67.44% .

Although the RF industry is booming, there are some issues to watch out for.

Zhuoshengwei stated in its financial report that the chip products provided by domestic local competitors tend to be homogenized, which will lead to a decline in prices and shrinking industry profits.

Weijie Chuangxin’s prospectus also mentioned: “In recent years, domestic enterprises are still fully competing in the low-end and mid-end fields, and in the market environment where price war is the main competitive strategy, if the company cannot further achieve greater growth in the mid-to-high-end market. If there is a breakthrough, there is a risk of intensifying competition among domestic peers, which will lead to a decline in the company’s profitability.”

If you want to get higher profits, it is the only way to face high-end and 5G.

The gross profit margin of Weijie’s 4G PA modules is maintained at about 20%, and due to intensified competition, the gross profit continues to decline, while the gross profit rate of its newly developed 5G PA modules is around 30%. Similarly, the gross profit margin of Zhuoshengwei’s 5G-related “receiving-end modules” reached 67%. 5G is the focus of the competition of major RF manufacturers in the future.

On the other hand, Weijie Chuangxin’s prospectus also mentioned: “The company’s main raw material suppliers Wenmao, GlobalFoundries (GF), TSMC, Murata and Zhuhai Yueya supply wafers, capacitors to the company respectively. Raw materials such as inductors and substrates. During the reporting period, the company’s raw material purchases from the above five suppliers accounted for 85.77%, 79.09% and 89.95% of the company’s total raw material purchases for the current period, respectively, which accounted for a relatively high proportion.”

It can be seen from this description of Weijie Chuangxin that the domestic RF industry still needs to import raw materials and other aspects. Perhaps, relying on major customers and relying on several core suppliers is determined by the characteristics of the entire RF industry, and this is not only the case of Weijie Chuangxin.

The concentration of the top five customers of Zhuoshengwei has always been above 75-80%. The top five customers of Haoda Electronics have accounted for more than 50% of the revenue in recent years, and the dependence of the top five customers has exceeded 50%.

Epilogue

With the application of 5G, radio frequency chips will also usher in a new boom. While 5G brings higher profits to manufacturers, it also has higher requirements for technology, which also means more intense competition. Overall, the domestic RF industry will usher in a golden age in the future. If local companies can seize this opportunity, then the domestic RF industry will also reach a higher level.