Semiconductors: TSMC’s revenue exceeded expectations and is optimistic about semiconductor structural opportunities. TSMC’s 2021q4 revenue exceeded expectations, and its capital expenditure and gross profit margin guidelines continued to rise. The company believes that the capacity shortage in 2022 will run through the whole year, the growth rate of the global semiconductor industry (except memory) will reach 9%, and the company’s capital expenditure guidelines will reach US $40-44 billion, a year-on-year increase of 33% – 47%. We believe that TSMC’s strong performance and optimistic outlook reflect that the prosperity of semiconductors remains high. After preliminary adjustment, the current valuation of the semiconductor sector has a high cost performance. Another record high capital expenditure of TSMC will boost the demand for semiconductor equipment and materials. We continue to be optimistic about domestic substitution of semiconductors and investment opportunities in high prosperity tracks such as automobile chips.
Automotive electronics: under the return line of Consumer Electronics Show (CES) in 2022, automotive intelligence has become the biggest highlight. Many enterprises have released high-performance chips to support the demand for automatic driving computing power. NVIDIA and Qualcomm released autonomous driving platforms based on Orin and snapdragonride respectively; Mobileye launched eyeqltra system integrated chip, which is expected to achieve vehicle specification level mass production in 2025. Cabin intelligence has become an important trend. Qualcomm released Xiaolong digital chassis to provide an overall solution for intelligent vehicles. We believe that the trend of intelligent vehicle will accelerate penetration. Last December, Mercedes Benz L3 class automatic driving system was approved by the German Federal traffic control bureau, which officially opened the first step of global L3 automatic driving. In 2025, the global L3 penetration rate will reach 12%.
Consumer electronics: Apple’s sales volume peaked in 2021q4. We are optimistic about Apple’s industrial chain. Considering the improvement of the cost performance of iphone13 series and the absence of Huawei’s high-end machines, we are optimistic about the advantages of Apple’s mobile phones in the high-end market. We believe that apple is expected to launch 5giphonese series in 2022h1 to supplement the gap of low-cost 5g mobile phones, which is expected to further stimulate the demand for 5giphones, IPhone shipments are expected to reach 245 million in 2022. We continue to be optimistic about the performance of the core targets of Apple’s industrial chain
Investment suggestion: driven by the strong demand for 5g terminals and automobile electrification, the profit side of the electronics industry is expected to maintain rapid growth. At present, the valuation level of the electronics industry is close to the medium and long-term negative one standard deviation level, and there is still much room for improvement to maintain the “recommended” rating. Semiconductors maintain high prosperity. It is recommended to pay attention to image sensor leader Will Semiconductor Co.Ltd.Shanghai(603501) (603501. SH), vehicle specification semiconductor leading enterprise Wingtech Technology Co.Ltd(600745) (600745. SH), wafer OEM enterprise Semiconductor Manufacturing International Corporation(688981) (0981. HK), etc. For consumer electronics, it is suggested to pay attention to VR leading manufacturer Goertek Inc(002241) (002241. SZ) and precision manufacturing leading Luxshare Precision Industry Co.Ltd(002475) (002475. SZ). The LED industry has entered a new business cycle. It is suggested to pay attention to the LED chip leader Sanan Optoelectronics Co.Ltd(600703) (600703. SH), the downstream display leader Leyard Optoelectronic Co.Ltd(300296) (300296. SZ), and the Chinese led solid crystal machine leader Shenzhen Xinyichang Technology Co.Ltd(688383) (688383. SH).
Risk tip: there is a risk that the demand for new products is less than expected and the technological breakthrough of Chinese manufacturers is less than expected.
