This week, the CSI 300 rose by 1.11%, and the gem fell by 2.72%, of which the communication sector fell by 0.14%, and the price performance of the sector was weaker than the market; The turnover rate of 126 constituent stocks of the communication (CITIC) index this week was 1.65%; Over the same period, the turnover rate of 300 constituent stocks in Shanghai and Shenzhen was 0.50%, and the overall activity of the sector was stronger than that of the market. In terms of individual stocks in the communication sector, the companies with the highest growth this week are: Leon Technology Co.Ltd(300603) (20.36%), Shenzhen Chengtian Weiye Technology Co.Ltd(300689) (11.27%), Eastcompeace Technology Co.Ltd(002017) (10.42%), Zhong Fu Tong Group Co.Ltd(300560) (10.31%), Eoptolink Technology Inc.Ltd(300502) (10.03%); The companies with the top five declines were: Beijing Jiaxun Feihong Electrical Co.Ltd(300213) (- 16.57%), Hengxin Shambala Culture Co.Ltd(300081) (- 12.14%), Shenzhen Roadrover Technology Co.Ltd(002813) (- 11.93%), Keller Technology (- 11.55%) and bangxun Technology (- 10.64%).
China’s leading optical chip Yuanjie semiconductor plans to be listed and raise 980 million yuan, which will be used for capacity expansion and 50g product industrialization. Shaanxi Yuanjie semiconductor was founded in 2013. The company continues to focus on the R & D, design, production and sales of optical chips, and has become a leading optical chip supplier in China. The main products include 2.5G, 10g, 25g and higher rate laser chips, which have been widely used in the fields of optical fiber access, 4G / 5G mobile communication network and data center. The company has established an IDM whole process business system of chip design, wafer manufacturing, chip processing and testing. Downstream direct customers include the top ten international and Chinese mainstream optical module manufacturers such as Huawei, Hisense broadband, Zhongji Innolight Co.Ltd(300308) , Broadex Technologies Co.Ltd(300548) , Dongguan Mentech Optical & Magnetic Co.Ltd(002902) and large communication equipment manufacturers outside China such as Huawei, Zte Corporation(000063) , Nokia, which are finally applied to the networks of well-known operators outside China such as China mobile, China United Network Communications Limited(600050) , China Telecom Corporation Limited(601728) , at & T and so on. In 2020, the company’s revenue was 233 million yuan, a year-on-year increase of 187%, and the net profit was 79 million yuan, a year-on-year increase of 496%. The R & D expenses were 16 million yuan, accounting for 6.73% of the revenue. In the first half of 2021, the company’s revenue and net profit were 88 million yuan and 32 million yuan respectively. The company raised 980 million yuan in this IPO, including 120 million yuan for the industrialization of 50g optical chips, 570 million yuan for the expansion of 10G and 25g optical chips, 140 million yuan for the construction of R & D center, and the remaining funds are used for replenishment.
The high-speed optical chip market is growing rapidly and the application field continues to expand. Optical chips are used in the telecommunications and data communication markets in the communication field. At present, low rate optical chips are mainly used in the optical modules of optical fiber access and wireless forward transmission in the telecommunications market, and high rate optical chips are intensively used in the optical modules of data communication market. With the rapid development of information technology, the demand for global data volume continues to grow. According to omdia data, the data volume of global fixed network and mobile network increased from 920000 PB to 2170000 Pb from 2017 to 2020, with an average annual compound growth rate of 33.1%. It is expected to increase to 5.75 million Pb in 2024, with an average annual compound growth rate of 27.6%. As the support of upstream hardware, optical chips are also in the stage of rate upgrading and intergenerational change. The overall demand is expected to upgrade from 2.5g/10g to 25g / 50g and other higher rates. The market of high-speed optical chips of 25g and above is growing rapidly. According to omdia’s prediction of data center and telecom scene laser chips, from 2019 to 2025, the proportion of optical chips used in optical modules with a rate of more than 25g will gradually expand, and the overall market space will increase from US $1.356 billion to US $4.34 billion, with an average annual compound growth rate of 21.40%. While continuously meeting the requirements of high bandwidth and high rate, the application of optical chip has gradually expanded from optical communication to broader application fields including medical treatment, consumer electronics and vehicle lidar, such as face recognition under 3D information sensing in consumer electronics, real-time monitoring of intelligent wearable devices in medical field, laser optical chip, the core component of vehicle radar, Provide space for industry growth.
The industrial chain moves eastward + independent and controllable drive, and there is broad space for domestic optical chips to replace. Chinese optical module manufacturers have prominent advantages in technology, cost, market and operation. The optical module market has been transferred to China. At the same time, under the background of Sino US trade friction and chip localization, it has promoted the rapid development of Chinese optical chips. China has a high localization rate in the 2.5g/10g laser chip market and a low localization rate in the 25g and higher rate laser chip market. According to the roadmap for the technological development of China’s optoelectronic device industry (2018-2022), the localization rate of laser chips below 10g is close to 80%, and that of 10G laser chips is close to 50%. However, the localization rate of laser chips at 25g and above is not high, which mainly depends on imports from Sumitomo, Broadcom, lumentum, II-IV and other leading enterprises in the United States and Japan, The document specifies that the localization rate of 25g and above rate DFB laser chips will exceed 60% in 2022, so as to realize the goal of gradual domestic substitution of high-end optical chips. As the leader of China’s optical chips, relying on the core technology and IDM mode, the company took the lead in overcoming the technical difficulties and breaking the foreign monopoly, and has realized the mass supply of 25g laser chip series products. According to C & C’s statistics, in 2020, the company ranked first in the foreign sales revenue of indium phosphide semiconductor laser chip products of Chinese manufacturers, among which the shipment volume of 10G and 25g laser chip products ranked first among Chinese peers, and the shipment volume of 2.5G laser chip series products ranked first among Chinese peers. In addition, the company has accelerated the layout in the non communication field, and has reached cooperation intentions with some lidar manufacturers to realize a small amount of sample delivery of optical chips in the lidar field. In the future, the company will continue to lead Chinese peers to realize the localization of optical chips.
Investment suggestions: focus on optical devices and optical modules: Eoptolink Technology Inc.Ltd(300502) , Suzhou Tfc Optical Communication Co.Ltd(300394) , Accelink Technologies Co.Ltd(002281) ; Equipment manufacturer: Unisplendour Corporation Limited(000938) (Xinhua III), Zte Corporation(000063) , Fujian Star-Net Communication Co.Ltd(002396) ; Telecom operators: China Mobile, China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) ; Internet of things and Internet of vehicles: Quectel Wireless Solutions Co.Ltd(603236) , Fibocom Wireless Inc(300638) , Meig Smart Technology Co.Ltd(002881) , Wingtech Technology Co.Ltd(600745) , Wenzhou Yihua Connector Co.Ltd(002897) , Foryou Corporation(002906) , Queclink Wireless Solutions Co.Ltd(300590) , Hangzhou Hopechart Iot Technology Co.Ltd(688288) , Streamax Technology Co.Ltd(002970) etc; On board connector: Suzhou Recodeal Interconnect System Co.Ltd(688800) , Wenzhou Yihua Connector Co.Ltd(002897) ; Intelligent controller: Shenzhen Topband Co.Ltd(002139) , Shenzhen H&T Intelligent Control Co.Ltd(002402) , Shenzhen Longood Intelligent Electric Co.Ltd(300543) , Shenzhen Bestek Technology Co.Ltd(300822) ; Data center: Shanghai Baosight Software Co.Ltd(600845) , Kehua Hengsheng, Beijing Sinnet Technology Co.Ltd(300383) etc; Military communications and satellite applications: Jushri Technologies Inc(300762) , Tianjin 712 Communication & Broadcasting Co.Ltd(603712) , Shanghai Huace Navigation Technology Ltd(300627) , Chengdu Corpro Technology Co.Ltd(300101) , Guangzhou Haige Communications Group Incorporated Company(002465) , China Satellite Communications Co.Ltd(601698) etc; IDC HVAC equipment: Shenzhen Envicool Technology Co.Ltd(002837) , Nanjing Canatal Data-Centre Environmental Tech Co.Ltd(603912) , Yimikang Tech.Group.Co.Ltd(300249) etc.
Risk warning events: 5g investment is less than expected, market competition intensifies, overseas trade disputes, market systemic risks, etc
