Intelligent controller: the “central system” of intelligent equipment, with many downstream fields and broad industry prospects. Intelligent controller is the brain of intelligent equipment and is located in the middle of the industrial chain. In the cost composition, the direct material cost accounts for a high proportion, and the upstream chip is the most important raw material. The downstream end market includes automotive electronics, household appliances, electric tools, medical equipment, smart home and other fields. We believe that the threshold for Industry entrants is high.
The industry rises in the East and falls in the west, and the overseas income of Chinese manufacturers continues to increase: affected by the covid-19 epidemic, the delivery cycle of major overseas chip manufacturers is prolonged, the international supply chain is blocked, and the production and operation of overseas controller manufacturers are affected to a certain extent. Compared with overseas manufacturers, Chinese controller company has the advantages of low labor cost, complete supporting industrial chain, less affected by the epidemic and relying on China’s huge demand. It has continuously increased its market share in international competition and gradually occupied a certain advantage in subdivided fields. We believe that with the advantages of low cost and China’s huge demand market, the sales of Chinese manufacturers will continue to increase, so as to support more R & D investment and gradually catch up with international giants such as Dai AO and inves.
The intelligent trend promotes the expansion of the industry, and the downstream terminal market has broad prospects: under the intelligent trend, the market scale of each segment of intelligent controller is growing rapidly, and the penetration rate of intelligent controller is gradually increasing. In terms of home appliances, smart home brings huge incremental demand for smart controllers. According to Frost & Sullivan’s prediction, the market scale of China’s small home appliances is expected to exceed 200 billion yuan by 2024. In terms of electric tools, the penetration rate of b-end of China’s electric tools is expected to increase, and the market scale of China’s electric tools is expected to reach 93.7 billion yuan by 2025. In the field of automotive electronics, new energy vehicles are gradually leading the automotive electronics and intelligence. The scale of China’s automotive electronics market is expected to reach 978.3 billion yuan in 2022, which will drive the demand for intelligent controllers. We believe that under the superposition effect of permeability and profit margin, the intelligent controller industry will usher in rapid growth.
The leading advantages are becoming more and more obvious, and the industry concentration is increasing: we believe that China’s leading manufacturers have all-round advantages, including technology, cost and customers. In terms of technology, leading companies are in a leading position in terms of R & D personnel and R & D investment. In terms of cost, the head company has stronger upstream and downstream bargaining power by virtue of its scale advantage. When the upstream raw material capacity is insufficient during covid-19 epidemic, it can also give priority to locking orders, so as to ensure stable supply and price and on-time delivery of orders. In terms of customers, the head manufacturers have a large number of tens of millions of head customers, the supply system of head customers is stable, and there are strong barriers to entry. We judge that the scale effect of China’s intelligent controller industry is becoming more and more obvious. Under the background of the shortage of upstream chips, the gap between the cost advantage and technical advantage of head manufacturers and other companies will be gradually widened, so as to help manufacturers enter the supply chain of key customers and obtain more market share.
Investment suggestion: we believe that the leading enterprises in the intelligent controller industry will be more flexible in the upward stage of the industry boom cycle because of their advantages such as lower production cost, more stable supply of raw materials, higher R & D investment and stronger customer stickiness. In addition, in the era of aiot and 5g all things intelligence, the domestic substitution wave opens the growth space for Chinese chip manufacturers upstream of intelligent controllers. 1. Intelligent controller track: recommended Guangzhou Shiyuan Electronic Technology Company Limited(002841) , Shenzhen H&T Intelligent Control Co.Ltd(002402) , Shenzhen Topband Co.Ltd(002139) ; 2. MCU track: it is recommended to pay attention to Gigadevice Semiconductor (Beijing) Inc(603986) , Sino Wealth Electronic Ltd(300327) , Nations Technologies Inc(300077) , Chipsea Technologies (Shenzhen) Corp.Ltd(688595) , Espressif Systems (Shanghai) Co.Ltd(688018) , Beken Corporation(603068) , Giantec Semiconductor Corporation(688123) , etc; 3. SOC track: it is recommended to pay attention to Amlogic (Shanghai) Co.Ltd(688099) , Rockchip Electronics Co.Ltd(603893) , Allwinnertech Technology Co.Ltd(300458) , Shanghai Fullhan Microelectronics Co.Ltd(300613) , Bestechnic (Shanghai) Co.Ltd(688608) , Ingenic Semiconductor Co.Ltd(300223) , etc.
Risk tip: upstream and downstream risks, and the risk of gross profit margin decline due to fierce competition.
