We believe that MCU suppliers in mainland China are in the golden window of development. The industry’s “big market + low self-sufficiency rate” provides a broad development space for local enterprises. After years of development, mainland enterprises have the ability to replace “technology” and “product richness”. The superposition of Sino US trade friction and shortage tide brings a golden window for domestic substitution. See the previous report “semiconductor series report: MCU shortage tide, accelerating the domestic substitution process, and local manufacturers welcome development opportunities” for details.
Under the golden window period, we believe that MCU manufacturers with high “product completeness” can quickly run horses and enclosure with the first mover advantage. In this report, we have made an in-depth comparison of the “product completeness” of MCU manufacturers from multiple dimensions: 1) in terms of the number of product numbers and the coverage of medium, high and low-end products, Gigadevice Semiconductor (Beijing) Inc(603986) has obvious advantages and Nations Technologies Inc(300077) catches up quickly. 2) In terms of ecological construction (for MCU customized development), there is little difference among them, Gigadevice Semiconductor (Beijing) Inc(603986) third-party development tools have more choices and slight advantages. 3) In downstream applications, most of them start from consumption. Among them, Gigadevice Semiconductor (Beijing) Inc(603986) has been switched from consumption to industrial consumption, while Gigadevice Semiconductor (Beijing) Inc(603986) , Chipsea Technologies (Shenzhen) Corp.Ltd(688595) , Huada semiconductor and BYD semiconductor have been mass-produced, and Sino Wealth Electronic Ltd(300327) , Nations Technologies Inc(300077) are planned to launch vehicle specification products.
1) 32-bit MCU: there is a gap in the number of high-end layout & item numbers inside and outside Shanghai, Gigadevice Semiconductor (Beijing) Inc(603986) is the leader in the mainland, Nations Technologies Inc(300077) is developing rapidly. We have counted nearly 7000 / 500 + 32-bit products in overseas / China: (1) armcortex core is the mainstream overseas. Overseas, in addition to Renesas, which is mainly self-developed (accounting for 78%), M-series core products account for 81% and self-developed core products account for 16%. In China, there are few self-developed cores, with M-series accounting for more than 90%. A small number of manufacturers have launched products based on risc-v and xtensa cores. (2) In the field of high-end products, there is a gap at home and abroad, Gigadevice Semiconductor (Beijing) Inc(603986) is the leader in the mainland, Nations Technologies Inc(300077) is developing rapidly. ARM core includes different products of medium, high and low end. Using M7 / 33 / 35p / 55 high-end core is one of the intuitive manifestations of the manufacturer’s ability. At present, large overseas factories are basically fully equipped with high, medium and low, and the number of low / medium / high-end item numbers accounts for 38% / 52% / 10% respectively. The layout of mainland manufacturers in the high-end field still has great room for progress, among which Gigadevice Semiconductor (Beijing) Inc(603986) is the most leading. In October 2020, it officially launched high-performance products based on armcortex M33 core. In addition, Nations Technologies Inc(300077) developed high-performance products based on M7, which is expected to be launched in 2022. (3) There is a 10 fold gap in the number of item numbers at home and abroad, and manufacturers in mainland China are developing rapidly. Among overseas manufacturers, there are thousands of material numbers except for 300-500 kinds of microchips and Texas Instruments 32-bit products. In the mainland, the leading manufacturers include Gigadevice Semiconductor (Beijing) Inc(603986) (370 + PCs), Huada semiconductor (100 + PCs) and Nations Technologies Inc(300077) (80 + PCs).
2) 8-bit MCU: among mainland manufacturers, Sino Wealth Electronic Ltd(300327) is the best. The number of 8-bit product item numbers of manufacturers at home and abroad is generally less than 32-bit products. Here, we count more than 1600 products from 5 overseas manufacturers and 122 products from 4 mainland manufacturers: (1) overseas self-developed architecture and mainland 8051 architecture. In terms of 8-bit product kernel, it can be divided into self-developed kernel and kernel based on 8051 open source architecture. Overseas, due to the early development of 8-bit products, most of them use self-developed cores, accounting for 81% of our statistical data. China basically adopts 8051 architecture, and only Chipsea Technologies (Shenzhen) Corp.Ltd(688595) of the manufacturers we count use self-developed cores. (2) In terms of the number of item numbers, there is also a gap at home and abroad, and Sino Wealth Electronic Ltd(300327) has an absolute advantage among mainland manufacturers. The number of material numbers of large overseas manufacturers ranges from 100 to 600, while the number of material numbers of other manufacturers in the mainland is less than 30 except Sino Wealth Electronic Ltd(300327) launched more than 80 products.
3) Ecological Construction: the hardware development tools are relatively perfect, and the supporting software is still lacking. Because engineers need to make customized development on the basis of MCU, a good ecological environment can make the development process more convenient. We compare the 7 mainland manufacturers and 5 manufacturers from overseas (including Taiwan, China) from the following three dimensions: (1) hardware: mainly refers to development boards and other auxiliary hardware, and all enterprises in the mainland have official development boards, which has no obvious difference at home and abroad. (2) Software: at present, most companies in mainland China directly use third-party development tools, including KEIL, IAR, etc., of which Gigadevice Semiconductor (Beijing) Inc(603986) supports more third-party tools. Overseas, the choice is more diverse, and some manufacturers provide self-developed tools. (3) Learning materials: compared with overseas manufacturers, Chinese manufacturers have more advantages in Chinese learning materials. At the same time, we also learn from overseas manufacturers, establish developer communities, launch university plans, etc., and establish local advantages.
4) downstream application layout: the mainland starts from consumer electronics and expands to industry and automobile. Overseas manufacturers basically have a comprehensive layout of consumption, industry and automobile, but their emphasis is different. Among them, microchip (8-bit weight) and Italy France (32-bit weight) focus on consumption and industry, and NXP and Renesas focus on cars. In the mainland, most manufacturers choose to first cut into the consumption field with low performance requirements, and then cut into the industrial level. Among them, Zhaoyi has gradually switched from consumption to both consumption and industry. Due to the higher requirements on product performance, reliability and service life of vehicle specification products, mainland manufacturers are less involved at present, and almost only mass-produced products are available in body modules with low safety relevance, including Gigadevice Semiconductor (Beijing) Inc(603986) , Sino Wealth Electronic Ltd(300327) , Chipsea Technologies (Shenzhen) Corp.Ltd(688595) , while high-end modules such as power domain are hardly involved.
5) team structure: the team background has its own characteristics. From the perspective of team background, each team has its own characteristics: Gigadevice Semiconductor (Beijing) Inc(603986) “Tsinghua + working experience in the United States” has outstanding technical background and management characteristics; Sino Wealth Electronic Ltd(300327) management and technical talents come from Taiwan, China. Nations Technologies Inc(300077) focusing on Chinese talents, the new chairman will lead the transformation of the company after 2018; Chipsea Technologies (Shenzhen) Corp.Ltd(688595) the management is ADC experts, and there are more Chinese talents in the team; Espressif Systems (Shanghai) Co.Ltd(688018) the management comes from Singapore and the technical talents come from all over the world.
6) financial indicators: in 2020, the revenue of mainland leaders will be nearly 1 billion, and there is still 20 times space for benchmarking overseas leaders. From the perspective of revenue volume, the revenue volume of NXP, Renesas and microchip MCU businesses among overseas manufacturers exceeded 20 billion yuan in 2020, while only a few mainland manufacturers reached the level of 1 billion yuan in 2020. We believe that under the catalysis of “trade friction + shortage tide”, several manufacturers are expected to enter the echelon of billions of yuan in 2022.
Investment suggestion: it is suggested to focus on MCU manufacturers with high “product completeness” (including multiple dimensions of item number quantity, medium, high and low-end product coverage, ecological construction perfection and downstream application coverage), or products with special positioning, including:
1) Gigadevice Semiconductor (Beijing) Inc(603986) (32-bit leader in mainland China, with the number of material numbers, coverage of medium, high and low-end products, perfection of ecological construction and downstream application coverage leading in mainland China),
2) Sino Wealth Electronic Ltd(300327) (8-digit leader in mainland China, MCU leader in household appliances),
3) Chipsea Technologies (Shenzhen) Corp.Ltd(688595) (analog + MCU platform company),
4) Nations Technologies Inc(300077) (32-bit general-purpose MCU, which plans to launch high-end products based on M7 kernel),
5) Espressif Systems (Shanghai) Co.Ltd(688018) (iotwifi / Bluetooth MCU),
6) A-share high-quality enterprises such as BYD semi conductor (the largest vehicle specification MCU supplier in mainland China).
Risk tips: the demand is less than expected, the constraints of capacity bottleneck, the technological progress of mainland manufacturers is less than expected, the Sino US trade friction is intensified, the information used in the research report is not updated in time, and the risk of statistical deviation
