\u3000\u3 Guocheng Mining Co.Ltd(000688) 123 Giantec Semiconductor Corporation(688123) )
Key points
Event:
The company released its annual report for 2021. In 2021, the company achieved an operating revenue of 544 million yuan, a year-on-year increase of 10.17%, and a net profit attributable to shareholders of listed companies of 108 million yuan, a year-on-year decrease of 33.57%.
The company released the first quarterly report of 2022. 22q1 company achieved an operating revenue of 201 million yuan, a year-on-year increase of 50.75%, a net profit attributable to shareholders of listed companies of 57 million yuan, a year-on-year increase of 246.90%, and a net profit attributable to shareholders of listed companies deducting non recurring profits and losses of 75 million yuan, a year-on-year increase of 356.78%.
Comments:
22q1 performance exceeded expectations. 22q1’s SPD EEPROM products applied to ddr5 memory modules were shipped in large quantities in 2022, driving the rapid growth of operating revenue; In addition, the sales volume and revenue of EEPROM products used in automotive electronics and industrial control have also increased rapidly. 22q1’s net profit after deducting non recurring profit and loss increased more than its operating revenue, which was mainly due to the increase in the sales proportion of the company’s products used in high value-added markets such as ddr5 memory modules, automotive electronics and industrial control, especially SPD EEPROM products, as well as the adjustment of the price system of some products of the company, Drive the rapid growth of net profit after deducting non recurring profits and losses.
I. rapid growth of SPD business
According to the definition of JEDEC organization, in ddr5 generation, the server memory module rdimm / lrdimm is equipped with a registered clock driver (RCD), a serial detection chip (SPD), a power management chip (PMIC) and two temperature sensors (TS). In addition, lrdimm needs to be equipped with 10 data buffers (DB); The memory module udimm / sodimm commonly used in ordinary desktop and notebook computers is matched with an SPD and a PMIC. Compared with DDR4, the market scale of ddr5 related chips is expected to increase significantly.
1.1. Serial detection hub (SPD)
The company and Montage Technology Co.Ltd(688008) jointly developed the first generation serial detection hub (SPD) of ddr5. The chip integrates 8kbit EEPROM, I2C / I3C bus hub and temperature sensor (TS), which is suitable for ddr5 series memory modules (such as lrdimm, rdimm, udimm, sodimm, etc.), and the application scope includes server, desktop and notebook memory modules. SPD is an indispensable component of ddr5 memory module and a key component of memory management system. It includes the following functions:
First, its built-in SPD EEPROM is a nonvolatile memory, which is used to store the relevant information of the memory module and all the configuration parameters of the memory particles and related devices on the module. According to JEDEC’s memory specification, each memory module needs to be equipped with an SPD device, and the contents of spdeeprom are written according to JEDEC’s data structure. After the motherboard BIOS is powered on, it will read the information stored in the SPD and configure the memory controller and memory module according to the read information. Ddr5 SPD data can be accessed through I2C / I3C bus and can be write protected according to storage block, so as to meet the high-speed and security requirements of ddr5 memory module.
Second, the chip can also be used as an I2C / I3C bus hub. One end is connected to the main control equipment of the system (such as CPU or substrate management controller (BMC)), and the other end is connected to the local components on the memory module, including RCD, PMIC and ts. it is the communication center between the main control equipment of the system and the components on the memory module. In ddr5 specification, a maximum of 8 hubs (8 memory modules) can be connected to an I2C / I3C bus. Each hub and the local components on each memory module managed by the hub are assigned a specific address code to support unique address fixed addressing.
Third, the chip also has a built-in temperature sensor (TS), which can continuously monitor the temperature of the SPD. The main control equipment can read the temperature detected by the sensor from the relevant registers in the SPD through the I2C / I3C bus, so as to facilitate the temperature management of the memory module and improve the stability of the system.
1.2 SPD jointly developed by the company and Montage Technology Co.Ltd(688008) has achieved rapid growth
Montage Technology Co.Ltd(688008) is a global SPD core supplier. At present, there are three manufacturers that mass produce ddr5 first generation memory interface chips in the world, namely Montage Technology Co.Ltd(688008) , Renesas electronics and Rambus. There are two manufacturers that mass produce ddr5 first generation SPD and TS, namely Montage Technology Co.Ltd(688008) and Renesas electronics. Montage Technology Co.Ltd(688008) is one of the two suppliers that can provide a complete set of solutions for ddr5 memory interface and module supporting chips in the world Giantec Semiconductor Corporation(688123) has accumulated profound experience in the field of ddr5 EEPROM. At present, the memory module market is in the era of popularization of DDR4 memory modules. The company has sold EEPROM products in DDR4 to downstream end customers such as adata, avant, memory technology and g.skill, and has formed a good business cooperation relationship, which provides convenience for the market promotion of SPD EEPROM products applied to ddr5. With the listing of Intel’s 12th generation alderlake platform, the new generation ddr5 memory module has been officially introduced into the market in the fourth quarter of 2021. Compared with DDR4 and ddr5, DDR4 is expected to replace DDR4 and ddr5 in memory with higher power consumption in the future.
Giantec Semiconductor Corporation(688123) and Montage Technology Co.Ltd(688008) jointly cooperate on SDP chip. Aiming at the latest ddr5 memory technology, the company closely follows JEDEC ddr5 standard and cooperates with Montage Technology Co.Ltd(688008) to develop spdeeprom products supporting the new generation of ddr5 memory modules. The product series strictly follows the JEDEC ddr5 standard and integrates I2C / I3C bus hub (hub) and high-precision temperature sensor (TS). It is mainly used in udimm and sodimm memory modules in the computer field and rdimm and lrdimm memory modules in the server field. It is not only an indispensable component of ddr5 memory module, but also a key component of memory management system. The company’s product has passed the test and certification of major downstream memory module manufacturers, and successfully achieved mass production in the fourth quarter of 2021, establishing a leading edge in the ddr5 segment.
The SPD EEPROM products jointly developed by Giantec Semiconductor Corporation(688123) and Montage Technology Co.Ltd(688008) were put into mass production in 2021q4.
Ddr5 related chips began mass production and shipment in 2021q4, and the quantity is continuous and large-scale. If referring 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 at the end of 36 months
The descendants have completed most of the penetration of the market. It is assumed that the demand for EEPROM in DDR memory module field from 2022 to 2025 is consistent with 420 million in 2020. We assume that the penetration rate of ddr5 is 22%, 50%, 80% and 100% from 2022 to 2025. Considering that the suppliers of ddr5 SPD EEPROM are only Montage Technology Co.Ltd(688008) ( Giantec Semiconductor Corporation(688123) ) and Renesas (IDT), and Montage Technology Co.Ltd(688008) accounts for about 40% – 50% of RCD, we assume that Montage Technology Co.Ltd(688008) and Giantec Semiconductor Corporation(688123) account for 50% Giantec Semiconductor Corporation(688123) and Montage Technology Co.Ltd(688008) jointly developed SPDs will have an annual shipment of 46 million, 105 million, 168 million and 210 million SPDs from 2022 to 2025.
II. The long-term growth space of automobile EEPROM is huge
With the continuous development of automotive intelligent networking and electrification, the penetration rate of automotive electronic products will increase rapidly, further driving the growth of EEPROM market scale. According to CCID Consulting data, the demand for EEPROM in the automotive electronic field is expected to reach 2.387 billion by 2023.
Actively layout automotive EEPROM products. The company’s automotive EEPROM products have been widely used in vehicle camera, LCD, entertainment system and other peripheral components, and gradually extended to BMS battery management system, intelligent cockpit, MDC and other core components. The end customers include SAIC, FAW, BAIC, GAC, Geely, Chang’an, Byd Company Limited(002594) , Great Wall, Chery, Weilai, ideal, Xiaopeng, Tesla, Volkswagen, Renault, Toyota, Nissan, Hyundai Kia and other mainstream automobile manufacturers at home and abroad. In order to enhance the company’s market competitiveness in the field of automotive electronic applications, the company actively improves the technical accumulation and product layout of automotive EEPROM at A1 and A0 levels, formulates higher product objectives, and further develops automotive EEPROM products that meet different levels of ISO 26262 functional safety standards.
In the field of automotive EEPROM competition, foreign competitors have formed a relatively mature automotive EEPROM product series, with relatively obvious advantages in technical level and customer resources; As a leading supplier of automotive grade EEPROM products in China, the company has a full range of automotive grade EEPROM products of A2 grade and A3 grade. The automotive grade EEPROM products of A1 grade with mainstream capacity have also passed the aec-q100 reliability standard certification of a third-party authority at the end of 2021, but there is still much room for expansion in the field of high-grade automotive grade EEPROM.
III. intelligent machine and liquid crystal panel EEPROM grow steadily and continue to develop nor flash products
The company is a leading brand of smart phone camera and LCD EEPROM chip. EEPROM suppliers in the global market mainly come from Europe, the United States, Japan and Chinese Mainland. In addition to the company, they also include STMicroelectronics, microchip technology, on semiconductor, ablic, Inc., etc. At present, the company has become a leading brand of smart phone camera and LCD panel EEPROM chip, and has established a leading advantage in these segments.
Continue to develop nor flash products. In 2021, some of the company’s low and medium capacity nor flash products have been sent to target customers for small batch trial, and the customers will test and inspect the performance and applicability of the products. The company further develops higher capacity nor flash products and improves the product layout in the field of NOR flash. Profit forecast, valuation and rating: the company’s first quarter report in 2022 exceeded market expectations. As the leading company of China’s EEPROM, considering the pulling effect of ddr5’s rapid penetration on the company’s EEPROM business in 2022, as well as the product upgrading of the company’s voice coil motor and smart card chip, as well as the expansion of downstream smart phone cameras, automotive electronics and other application fields, We raised the forecast of the company’s net profit attributable to the parent company from 2022 to 2023 to RMB 330 / 450 million, an increase of 32% / 28% compared with the previous time. The forecast of the new company’s net profit attributable to the parent company in 2024 was RMB 580 million, corresponding to PE of 26 / 19 / 15x respectively, maintaining the “buy” rating.
Risk tip: the growth rate of consumer electronics slows down and the demand is weak; Risk of rising material costs
