Founded in 2012, Zhuosheng Micro is a leading domestic front-end chip company. Its products are mainly used in mobile intelligent terminal equipment such as smartphones. At this stage, Zhuosheng Micro’s RF low-noise amplifier products are widely used in mobile intelligent terminals such as smartphones.
Facing the east wind of 5G, Zhuosheng Micro’s stock price is rising steadily
The entire chip market is in a relatively hot state in 2021, and Zhuo Shengwei has delivered an eye-catching report card.
On the evening of August 23, Zhuoshengwei (300782.SZ) released its semi-annual report. In the first half of 2021, Zhuoshengwei’s operating income was 2.359 billion yuan, an increase of 136.48% over the same period last year, and it achieved a net profit of 1.014 billion yuan, excluding non-net profits. The profit was 994 million yuan, an increase of 187.37% and 192.42% respectively. It is worth noting that the cash flow generated from operating activities was 433 million yuan, a year-on-year increase of 594.12%, the basic earnings per share was 3.0559 yuan, a year-on-year increase of 180.46%, and the comprehensive gross profit margin for the current period was 57.63%.
After the annual report was disclosed, Zhuosheng Micro’s stock price has been rising. As of the close of trading on August 24, 2021, Zhuosheng Micro’s stock price has risen from the original issue price of 13 yuan to 439 yuan, with a market value of up to 146.4 billion yuan. It can be called a domestic radio frequency chip. The first share.
Of course, 5G is the reason that supports the strong rise in Zhuosheng Micro’s stock price. When Zhuosheng Micro went public in 2019, it was the first year of 5G’s implementation, and RF front-end devices entered a favorable stage of rising volume and price. The reason is that the 5G industry has brought about a wave of smartphone replacements.
The function of the RF switch is to connect any one or several channels of multiple RF signals through control logic to achieve switching of different signal paths, including switching between receiving and transmitting, switching between different frequency bands, etc., in order to achieve shared antennas and save money. For the purpose of terminal product cost, it is widely used in mobile smart terminals such as smartphones.
Depending on the applicable frequency, different products are produced. According to the latest forecast from Canalys, the share of 5G mobile phones will reach 69% by 2023, and the overall mobile phone market will gradually recover due to the strong penetration of 5G mobile phones. The rapid growth in 5G mobile phone shipments and the increased value brought by complex 5G communication technologies and applications will drive the rapid growth of the RF front-end market.
More importantly, the value of the radio frequency front-end on a 5G mobile phone is significantly higher than that of a 4G mobile phone. Taking filters as an example, a 5G mobile phone requires about 60-70 filters, which is twice that of a 4G mobile phone.
Domestic RF faces an inflection point, and the 5G PA market is ushering in a reshuffle
If you think of a smartphone as a person, the radio frequency front-end chip is equivalent to the person’s “sensory system” and is closely related to the process of receiving and transmitting information.
Zhuosheng micro-RF front-end chips are all involved in the four core components of power amplifiers (PA), RF switches, low-noise amplifiers (LNA), and filters, taking into account both discrete components and modules. Among them, radio frequency switches and low-noise amplifiers are key products. In 2020, the revenue of these two products accounted for nearly 90% of the total revenue. They also occupy an absolute advantage in the domestic market, with Samsung, Xiaomi, Huawei, Lenovo, Meizu, TCL, etc. Well-known terminal manufacturers have established cooperation with it.
Secondly, Samsung also contributed significantly to the rise of Zhuo Shengwei. Many years ago, domestic RF front-end chip manufacturers including Zhuosheng Micro had a difficult time under the suppression of foreign giants. However, with the support of Samsung’s large orders, Zhuosheng Micro still achieved rapid development. In May 2014, Zhuosheng Micro announced that its GPSLNA chip product MXD LN16S had shipped more than 20 million units to Samsung. In 2015 and since then, Samsung has been Zhuosheng Micro’s largest customer.
In the past, Zhuoshengwei chose to develop relatively low-noise amplifiers and radio frequency switches to start with, and successfully occupied the market share. Today, the low-noise amplifier and radio frequency switch business that made Zhuoshengwei famous may no longer be able to give it the same high growth momentum in the future.
On the one hand, Zhuosheng Micro’s RF switches and low-noise amplifiers do not occupy a high share of the entire RF front-end market. Relevant data shows that RF switches only account for 7% of the RF front-end market value, and low-noise amplifiers only account for 2%. Filters account for more than 50%, and the other 30% lies in power amplifiers.
On the other hand, new companies are joining the market, and their products are becoming increasingly homogeneous, which will inevitably lead to a price war between RF switches and low-noise amplifiers in the market. Data shows that from 2016 to 2018, Zhuosheng’s micro-RF switches and RF low-noise amplifiers are The unit prices of noise amplifiers continue to decline. The former dropped from 0.46 yuan/piece to 0.26 yuan/piece, and the latter dropped from 0.35 yuan/piece to 0.20 yuan/piece.
Therefore, Zhuosheng Micro needs to explore new areas and use new products to increase gross profit margins. Filters and power amplifiers with high value ratio are obviously the best choices, especially the 5G PA for mobile phones in power amplifiers. With the deepening of 5G technology, Have clear market demand.
However, it is undeniable that the research and development of filters and power amplifiers is difficult, and the market has been occupied by more than 90% of the market by foreign manufacturers. Moreover, mobile phone PA is transitioning from 4G PA to 5G PA. The iteration speed of mobile phone PA is fast, with an average of one year. The average R&D strength cannot keep up with the first generation of products.
If Zhuo Shengwei wants to rely on filters and power amplifiers to break through, it will need to deal with the challenges of extremely high R&D thresholds, rapid technology changes, stringent customer requirements, and competitors taking first-mover advantages. Moreover, Zhuo Shengwei will inevitably spend a long time and a lot of money, and even bear the risk of business failure again and drag down its own operations.
In the past ten years, Zhuoshengwei started from mobile phone TV chips and moved to mobile phone RF front-end chips such as RF switches and LNA. With its excellent technology and rich product lines, it has continuously opened up new blue oceans in the industry. Nowadays, the domestic radio frequency chip industry, which is inseparable from the mobile phone industry, is once again on the Long March. The company that once used many products to benchmark against giants will continue to do so.
Parole chiave: terminale wireless