A telephone exchange meeting for investors last weekend attracted the participation of more than 220 institutions. The impact of Luxshare Precision Industry Co.Ltd(002475) controlling shareholder’s 10 billion stake in Chery can be seen. Huawei, Xiaomi, Midea, 360 Security Technology Inc(601360) , Tencent, Baidu, Foxconn, Lingyi Itech (Guangdong) Company(002600) … In recent years, Internet giants and giants in the electronics manufacturing industry have entered the market to build cars. What is the industrial logic?
Insiders interviewed by Shanghai Securities News said that in the era of intelligent networked vehicles, the core of vehicles has shifted from the three major parts of traditional fuel vehicles (engine, transmission and chassis) to three electricity (electric drive, battery and electronic control), giving birth to a huge incremental market, and is expected to catalyze new development modes such as ODM (original design manufacturer, commonly known as “OEM”) manufacturing. The new market and new model will not only bring upgrading opportunities to both China’s automobile and electronic industries, but also support the birth of more world-class companies in the field of complete vehicles and Tier1 (primary supplier of vehicle factory).
When the opportunity comes, of course, we should try to seize it. In response to the question of “how to treat the manufacturing of cars by technology giants”, the relevant person in charge of Luxshare Precision Industry Co.Ltd(002475) said that he would strive for this opportunity.
giants have entered the game to “build cars”
On February 12, Luxshare Precision Industry Co.Ltd(002475) announced that the company signed the strategic cooperation framework agreement with Chery holdings, Chery shares and Chery new energy (collectively referred to as “Chery group”), and plans to jointly establish a joint venture with Chery new energy, specializing in the research, development and manufacturing of new energy vehicles, so as to provide cutting-edge R & D and design for Luxshare Precision Industry Co.Ltd(002475) auto core parts business Mass production platform and sea port. Meanwhile, the controlling shareholder of Luxshare Precision Industry Co.Ltd(002475) Lixun Co., Ltd. plans to purchase 19.88% equity of Chery holdings, 7.87% equity of Chery shares and 6.24% equity of Chery new energy held by Qingdao Wudaokou for RMB 10.054 billion.
This is just another case of manufacturing giants entering the market to “build cars”. In recent years, Huawei, Xiaomi, oppo, 360 Security Technology Inc(601360) , Tencent, Baidu and other technology Internet companies have successively poured into the intelligent Internet connected car track. On the other hand, Foxconn Industrial Internet Co.Ltd(601138) , Lingyi Itech (Guangdong) Company(002600) , Luxshare Precision Industry Co.Ltd(002475) and other electronic manufacturing leaders have also increased their automobile strategy with their accumulation in the field of consumer electronics.
The industrial logic of giants is as powerful as their strength.
“Software defines car” is the idea of a number of technology Internet companies. For example, in addition to the vehicle strategy, Baidu and Xiaomi also widely spread their nets on the whole intelligent Internet connected automobile industry chain and arranged in the fields of vehicle electronics, intelligent cockpit and so on. Huawei’s goal is to provide smart car parts based on the M5, while Huawei’s goal is not to provide smart car parts based on the ICT.
Based on the core field, electronic manufacturing companies can only rely on “hard power”. For example, Luxshare Precision Industry Co.Ltd(002475) chairman Wang Laichun said that Lixun does not build cars, and Lixun aims at Tier1 (the first-class supplier of the car factory). Foxconn Industrial Internet Co.Ltd(601138) previously said that in the automotive field, Foxconn Industrial Internet Co.Ltd(601138) will rely on deep precision manufacturing technology, focus on new energy vehicles and the Internet of vehicles, layout the core parts field and integrate the supply chain. Foxconn Industrial Internet Co.Ltd(601138) has acquired 63% shares of constant drive motor and cooperated with Shandong Chuangxin Metal Technology Co., Ltd. to layout the fields of electric drive and automobile lightweight.
smart networking brings great industrial opportunities
Why can an investor exchange meeting of Luxshare Precision Industry Co.Ltd(002475) attract the participation of more than 200 institutions? There are also well-known institutions such as Boshi fund, Danshui spring, Temasek futon, Wells Fargo fund, Goldman Sachs asset management, Gaoyi assets, huitianfu fund and so on.
Some insiders believe that as a giant of Apple’s industrial chain, Luxshare Precision Industry Co.Ltd(002475) and its major shareholders have made great efforts to advance into new energy vehicles, which is of wind vane significance. This is also the reason why giants have joined the automobile industry chain, especially in Chinese enterprises with relatively backward automobile industry.
This is a big market full of opportunities. Wang Laichun said on the conference call that the market scale of Tier1 is almost 70% of the total output value of all auto enterprises. As we all know, the top four Tier1 manufacturers in the world, Bosch, Japan electric equipment, ZF and Magna, all have a revenue scale of more than US $30 billion. Among the top 100 Tier1 manufacturers in the world, there are only 8 Chinese enterprises.
In the era of intelligent Internet connection, the core of automobile has changed from the three major parts of traditional fuel vehicles (engine, transmission and chassis) to three electricity (electric drive, battery and electronic control), which has brought a huge incremental market to the whole industrial chain. According to the report on the development trend of China’s smart Internet market released by IHS Markit, the penetration rate of new vehicles equipped with Internet of vehicles in the global market will be about 45% in 2020. By 2025, the penetration rate of smart vehicles in the global auto market will increase to 60%, and the proportion in the Chinese market will reach 75%.
The track has several times or even dozens of times of growth space. “Smart connected vehicles will be the largest intelligent terminal after mobile phones and one of the main driving forces for the growth of semiconductors.” Dai Weimin, the founder and chairman of Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) said in an exclusive interview with reporters that in the past, cars may need 500 or 600 chips, while intelligent Internet connected vehicles need at least 2000 chips, which brings four times the driving force to the development of semiconductors.
“Vehicle end, roadside and vehicle road coordination are identified opportunities.” The relevant person in charge of Gosuncn Technology Group Co.Ltd(300098) said in an interview that car enterprises accelerate their embrace of intelligence and actively layout on-board electronics; Vehicle road coordination is the infrastructure for the development of intelligent networked vehicles. With the promotion of the “14th five year plan” of all provinces, vehicle road coordination will accelerate the development of intelligent networked vehicles. From the perspective of investment, lidar, intelligent cockpit, v2x, high-precision map, on-board audio-visual and safety are all good opportunities.
Lidar has become a “tuyere” for car factory investment. Public information shows that Xiaopeng automobile and Shangqi capital (SAIC Equity Fund) invested in Yijing technology of MEMS lidar company, Weilai capital controlled by Li Bin invested in innovusion, a lidar start-up company, and Byd Company Limited(002594) took shares in robosense, a star lidar company.
a double upgrade of electronics and automobile industry
Compared with the feast of the incremental market, the intelligent networked vehicle is a catalyst and a great opportunity for China’s automobile and electronic industry to upgrade the industry.
“Under the new pattern, the market needs ODM to build cars, which is highly similar to Yin Tongyue, founder of Chery.” With regard to “building a car” with Chery, Wang Laichun said on the conference call that Chery’s complete vehicle and the accumulation of Lixun in the electronic field can jointly develop another Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) – building a good car for others, which is in line with the needs of market development and just meets the difficulty of making a breakthrough in the growth of Lixun Tier1.
“This is a new opportunity for the development of China’s automobile industry.” Insiders said that in the field of traditional fuel vehicles, in the face of the accumulation of overseas giants for a century, it is difficult for China’s automobile industry to make a breakthrough in the field of “three major parts”. However, in the era of intelligent Internet connection in which Internet companies and electronic manufacturing companies end up “making cars”, cars are expected to copy the development model of mobile phones, subvert the existing business formats and give birth to professional automobile ODM companies. Luxshare Precision Industry Co.Ltd(002475) the cooperation with Chery may create a new model of ODM in China.
Citic Securities Company Limited(600030) in the latest research report, it is proposed that apple, Huawei, Xiaomi and other mobile phone manufacturers and Internet manufacturers enter the market to build cars. In the initial stage, even if some of them choose to build their own production lines, considering the economy and rationality of capital investment, when the automobile industry chain is further decoupled and the capabilities of relevant suppliers are mature in the later stage, It is expected to copy the division of labor mode of some mobile phone industries (i.e. produced by car factories in-house, and some are produced by similar mobile phone ODM or OEM), so as to reshape the pattern of the industrial chain.
On the other hand, after experiencing the baptism of consumer electronics and the saturation of smart phone market, China’s electronic industry chain has considerable technical reserves and has reached the crossroads of industrial upgrading. It can not only meet the demand of “ODM car making”, but also complete its own industrial upgrading. For example, on the chip side, Will Semiconductor Co.Ltd.Shanghai(603501) CIS products, Puya Semiconductor (Shanghai) Co.Ltd(688766) nor flash, Allwinnertech Technology Co.Ltd(300458) intelligent vehicle chip products have achieved breakthroughs in the vehicle market.
“Under the short board of manufacturing technology, for companies in the electronic industry chain, the best choice may not be to build complete vehicles, but to enter the Tier1 sequence of the automotive industry chain to strengthen their core competitiveness in the field of ‘three electricity’.” For the positioning of the electronic industry chain company in the automotive field, there are suggestions from people in the automotive industry.
“Professional division of labor can be regarded as an industrial development solution.” The above insiders added that the huge market of intelligent networked vehicles can support the birth of more world-class companies in the field of complete vehicles and Tier1 in China.
