On February 9, Montage Technology Co.Ltd(688008) (688008, SH; yesterday’s closing price was 74.53 yuan) released the performance express of 2021. It is estimated that the operating revenue in 2021 will be about 2.56 billion yuan, a year-on-year increase of 40.49%; It is estimated that the net profit attributable to the owners of the parent company is about 830 million yuan, a year-on-year decrease of 24.88%.
The reporter of the daily economic news noted that the revenue growth of Montage Technology Co.Ltd(688008) in 2021 was mainly due to its Jinchuan server platform product line, but the gross profit margin of this product line was low. At the same time, the gross profit of this product line decreased compared with 2020. The revenue and gross profit margin of interconnect chip product lines, which account for a large proportion of Montage Technology Co.Ltd(688008) revenue, declined in 2021.
“During the reporting period, the company’s main profit source DDR4 memory interface chip entered the late stage of the product life cycle, and the product price decreased compared with the previous year.” Montage Technology Co.Ltd(688008) indicates.
For the next generation product ddr5, Montage Technology Co.Ltd(688008) said that the quantity rhythm on ddr5 related chips needs further observation. Referring to the penetration rhythm of DDR4 memory interface chip, it takes 36 months to complete most of the penetration.
revenue growth and profit decline
According to the announcement, Montage Technology Co.Ltd(688008) is expected to increase its operating revenue in 2021, but the net profit attributable to the parent company has decreased year-on-year.
The operating revenue of Montage Technology Co.Ltd(688008) mainly comes from the interconnection chip product line and Jinchuan server platform product line.
“After early market promotion and customer cultivation, Jinchuan CPU business has made breakthrough progress. Jinchuan server platform product line achieved an operating revenue of 845 million yuan in 2021, an increase of 2750.92% over the previous year, and the gross profit margin was 10.22%.” Montage Technology Co.Ltd(688008) said, “the interconnection chip product line achieved an operating revenue of 1.717 billion yuan in 2021, a decrease of 4.31% compared with the previous year, and the gross profit margin was 66.72%”.
The reporter of the daily economic news noted that compared with 2020, Montage Technology Co.Ltd(688008) ‘s interconnection chip product line, in addition to the decline in revenue in 2021, the gross profit margin of the business also declined. In 2020, the gross profit margin of the business was 73.22%.
The main reason why the revenue and gross profit of the interconnection chip product line decreased is that the sales price of the flagship product “DDR4 memory interface chip” in the product line decreased in 2021.
“At the same time, ddr5 related products were officially mass produced and shipped in the fourth quarter of 2021, resulting in the gross profit margin of interconnect chip product line falling from 73.22% in the previous year to 66.72% in 2021.” Montage Technology Co.Ltd(688008) indicates.
In addition, in 2021, Montage Technology Co.Ltd(688008) ‘s R & D expenses increased, the income from changes in fair value and investment income decreased, and share based payment expenses also had a certain negative impact on the net profit.
new generation products have been mass produced
With DDR4 gradually entering the later stage of the life cycle, Montage Technology Co.Ltd(688008) the new generation product ddr5 achieved mass production in the fourth quarter of last year.
“But since ddr5 is a brand-new product, the rhythm of loading related chips needs to be further observed.” Montage Technology Co.Ltd(688008) according to the previous investor survey, if we refer to the penetration rhythm of DDR4 memory interface chip, the penetration rate of each generation of products can reach about 20% ~ 30% at the end of 12 months, 50% ~ 70% at the end of 24 months, and basically this generation has completed most of the penetration of the market at the end of 36 months.
It is worth noting that the performance of Montage Technology Co.Ltd(688008) increased significantly in the fourth quarter of last year.
According to Montage Technology Co.Ltd(688008) announcement, its operating revenue in the fourth quarter of 2021 was 969 million yuan, an increase of 11.64% month on month and 172.88% year-on-year. Among them, the interconnection chip product line achieved an operating revenue of 601 million yuan in the fourth quarter of 2021, with a month on month increase of 39.97%, a year-on-year increase of 76.55% and a gross profit margin of 69.21%. With the recovery of performance, Montage Technology Co.Ltd(688008) achieved a net profit of 317 million yuan in the fourth quarter of 2021, with a month on month increase of 54.78% and a year-on-year increase of 40.18%.
“With the official mass production and shipment of ddr5 memory interface chips and memory module supporting chips of the company and the continuous development of Jinchuan CPU business, the performance of the company increased significantly in the fourth quarter of 2021.” Montage Technology Co.Ltd(688008) scale.
According to the previous Montage Technology Co.Ltd(688008) announcement, the current competition pattern of ddr5 memory interface chip is similar to that of DDR4 memory interface chip. Only three suppliers in the world can provide the first generation of mass production products, namely Montage Technology Co.Ltd(688008) , Renesas electronics and Rambus.
“The company’s market share in memory interface chips remains stable. On supporting chips, SPD (referring to serial detection hub) and TS (referring to temperature sensor) are currently the two main suppliers of LanChi and Renesas electronics; PMIC (referring to power management chip) has more competitors, and the competition will be more complex in the initial stage.” Montage Technology Co.Ltd(688008) scale.
For the prospect of Montage Technology Co.Ltd(688008) ddr5, Haitong Securities Company Limited(600837) said in its Research Report: “in the context of Intel’s launch of server CPU supporting ddr5 and the launch of ddr5 memory samples by storage giants such as micron, we expect the company’s ddr5 memory interface and supporting module chips to increase both volume and price, which is expected to help further improve the company’s market share and achieve a leap in revenue.”
Western Securities Co.Ltd(002673) also expressed a similar view: “With the arrival of the ddr5 era, the volume and price of memory interface chips are expected to rise. At the same time, the company’s new supporting chips for ddr5 generation memory modules can also be used for PC terminals, opening up a broad market space. It is estimated that the market space of memory interface + supporting chips is expected to exceed US $2 billion. The market share of the company is expected to further improve in ddr5 generation, and the company’s performance is expected to improve rapidly.”
