A radio frequency switch disrupted a pool of spring water.
With a small RF switch, Zhuoshengwei has a market value of 150 billion yuan, a gross profit of more than 50%, and annual sales will exceed 5 billion yuan. These numbers are too impactful for the domestic chip industry and capital market, making people feel incredible.
As a result, more and more companies join the RF switch circuit, and more and more people imagine that they can become the second Zhuoshengwei.
The old saying goes: There are specializations in the arts, and there is a sequence of admissions. It is also the best comment on the RF switch chip. Write this article, express personal opinion, domestic RF switch, Zhuo Shengwei will not have a second child after that, maybe one day, Chunmengjue comes from the heart and responds like the past.
RF switches in terms of chip technology, supply chain and customers
It is not difficult to make a radio frequency switch, but it is difficult to make the performance of the radio frequency switch bigger, and it is even more difficult to make the company profitable through the radio frequency switch. Answer from three aspects:
1. RF switch chip technology
Back in 2014, the RF switch was still a high-end product, and there were very few R&D personnel in China, let alone a good one.
By 2020, RF switches have become conventional chip products, which can be done by a large number of RF engineers in China, and they are doing it well. If anyone compares domestic RF switches with Skyworks and Qorvo, then this person must be a layman, and compare with Zhuo Shengwei.
Zhuoshengwei not only achieves the best performance, but also maximizes the cost. The best reference for making RF switches in China is Zhuosheng Micro, which cannot achieve the performance and DIE area of Zhuosheng Micro RF switches. It is recommended not to do it again, wasting resources.
It doesn't take a few people to make an RF switch. One or two RF R&D engineers are enough, and it doesn't require a lot of money. Tens of millions are enough. It is useless to pile up people and money, it is useful to find the right RF R&D engineers and product managers.
Mobile phone PA companies make RF switches, and technology, R&D personnel, supply chain and customers are all incidental. Just like Sanwuwei, a WiFi FEM company, it is also easy to make RF switches. R&D personnel can design discrete switches when they are free. Customer demand determines mass production, which costs almost nothing.
The WiFi switch and the 5G mobile phone RF switch are very similar in performance indicators, and the PIN pin can be changed to become a 5G mobile phone RF switch. It's easy to make, but it's not easy to make a lot of RF switches and make money. Through product analysis and market research, Sanwu Micro has a certain technical advantage in making 5G mobile phone RF switches. While improving the performance, it can also reduce the DIE area by 30% (refer to Zhuo Sheng Micro), so Sanwu Micro is going to do a A 5G mobile phone RF switch to impact the market.
2. Supply chain
When there is no threshold for technology, the supply chain becomes the core competitiveness.
RF switches do not have too many technical upgrades and iterations, and the most work is to reduce the area of DIE, which is also the advantage of Chinese companies. If there is no innovative thinking, it is difficult for new entrants to find opportunities.
RF switches have become an operational product. The unit price of large-scale products is between 1.5 and 4 cents. It requires a very large amount to support sales. The cost of wafers accounts for a small part, and the cost of packaging and testing is the bulk. Without quantity, there is no bargaining power.
Zhuoshengwei has the lowest cost in the entire supply chain, with a large amount of SOI wafers and the lowest cost; the packaging and testing end purchases and arranges a large number of machines, and the cost is also the lowest.
The second is the mobile phone PA company, which consumes a large amount of SOI wafers for switches and LNAs in the module, and the wafer price is also competitive, which is estimated to be second only to Zhuoshengwei; in the packaging and testing factory, the PA company is also a major customer, and the packaging and testing prices of switches Should be fine too. On the whole, the cost is at least 10-20% higher than that of Zhuoshengwei.
Judging from the current shipments of other domestic RF switches in the market, the overall cost of the supply chain is at least 20-30% higher than that of Zhuoshengwei.
Large customers are a very important threshold for RF switches. The more brand customers, the higher the price, followed by several major mobile phone design companies, and the most cost-sensitive module companies. More than 95% of the demand for RF switches is concentrated in mobile phone customers.
Zhuoshengwei has become the main supplier of RF switches for all major mobile phone customers except Apple mobile phones. In 5 years, no second company will be able to do this. Zhuoshengwei has occupied the first supplier of these customers with the right time, place and people. As the first supplier, the client supply ratio is generally 50%~80%.
All customers know that Zhuoshengwei's gross profit is very high, why doesn't the customer purchase side cut Zhuoshengwei's price? Zhuoshengwei's RF switch gross profit should have reached its peak. The production capacity is in short supply this year. The main job of customers is to ensure delivery and production. Once the production capacity is not tight, the price will still be suppressed. But if Zhuo Shengwei's gross profit drops from 50% to 30%, other companies basically have no gross profit. Therefore, Zhuo Shengwei's gross profit can still be maintained at around 40% for a period of time.
Looking at RF switches from product classification and market demand
RF switch products can be divided into three categories: discrete switch, antenna tuner, switch module
How big is the market size of RF switches? The information given by some market research agencies and online often gives people a wrong perception. For example the following picture:
According to the above picture, the market size of RF switches in 2020 is more than 2 billion US dollars, and the Chinese market has at least 50% market share. It seems that Zhuoshengwei accounts for up to 40% of the market, and other domestic switch manufacturers add up to less than One-fifth of Zhuo Shengwei. So where are the other half of the RF switches? In fact, it is in the mobile phone PA module, and there will be more and more switches integrated in the mobile phone PA module.
From the perspective of mobile phone standard RF switches, mobile smartphones need to continuously increase the number of RF switches to meet the needs of receiving and transmitting signals in different frequency bands. The number of demand for 5G mobile phones has increased, and it is expected that the single-unit usage of 5G mobile phones will reach 12-18, and the single-unit usage will double. The picture below is from the Internet:
The figure above shows that from 2G to 5G, the amount of RF switches has increased significantly. The number of these switches includes the switches in the mobile phone PA module and the receiving module. From 4G to 5G, the number of discrete switches has not increased so much. In the era of 2G and 3G, discrete switches were basically not used, and Zhuoshengwei also developed with 4G mobile phones.
In 2021, it may be the peak of the market demand for discrete switches, and PA modules and receiver modules will integrate more switches. It is learned from the market that a new 5G mobile phone PA module will integrate four more discrete switches, which were originally hung outside. This new 5G mobile phone PA module will be launched at the end of the year.
The demand for receiving modules will continue to increase, but the design of modules integrating switches, LNAs and filters will increase, and the requirements for company scale and investment will also increase. Zhuoshengwei is the largest supplier of receiving modules in China, followed by mobile phone PA companies. It can be seen from several 5G disassembly reports that mobile phone PA companies also provide receiving modules while providing PA modules.
From the perspective of technology, supply chain and customer resources, apart from Zhuoshengwei, there is no domestic manufacturer that can compete with PA mobile phone companies. Other RF switch companies can make discrete switches, but once they make receiver modules, the technical, supply chain and customer thresholds are even higher.
Therefore, making RF switches not only depends on Zhuoshengwei, but also depends on the mobile phone PA company. Now the discrete RF switches and receiving modules of mobile phone PA companies are getting better and better.
From the product layout and coping ability of Zhuosheng Microelectronics, the RF switch
In the first half of 2021, Zhuosheng Micro achieved revenue of 2.359 billion yuan, a year-on-year increase of 136.48%, and net profit attributable to the parent was 1.014 billion yuan, a year-on-year increase of 187.37%.
In the first half of the year, Zhuosheng micro-discrete devices maintained a stable growth rate, achieving a revenue of 1.661 billion yuan, a year-on-year increase of 70.57% and an increase of 11.57% compared with the second half of last year. This rapid growth was brought about by 5G mobile phone switches. The RF receiving module business is the main driver of the high revenue growth in the first half of the year. The RF receiving module has been sold since the second half of 2020, mainly from the receiving end LFEM.
At the same time, Zhuoshengwei continues to enrich the receiving module products suitable for 5G NR. The transmitter has launched the main module L-PAMiF in the 5G NR frequency band. The market client has already made some comments on the product.
In order to maintain the growth of the discrete device market, Zhuosheng Micro has built its own production line and improved its modular product layout:
(1) Zhuosheng Micro continuously promotes the product iteration of discrete devices in combination with market demand, and at the same time continues to optimize product manufacturing costs. In the process of chip design, we design products with the best cost according to the needs. In the process of chip manufacturing and packaging and testing, we establish long-term and stable cooperative relations with suppliers, negotiate and lock in production capacity, participate in the research and development of key processes and technologies, and purchase key equipment ourselves. , improve product yield.
(2) In order to cope with the low production rate of RF modules in China, the company signed a strategic cooperation with the Management Committee of Wuxi Liyuan Economic Development Zone to jointly build a semiconductor industrial production base for the construction of filters and RF module packaging Test the production line. In November 2020, the initial total investment was 800 million yuan, and then an additional 2.7 billion yuan was invested in March 2021. As of June this year, the main structure of the construction project has been successfully capped, and it is planned to be put into use before the end of the year.
In fact, Zhuoshengwei's RF switch performance began to grow rapidly in 2017. Before 2015, RDA, Feixiang Technology, and Weijie Chuangxin all provided RF switch products. Until today, these companies' RF switch products It is also promoted in the market. There is no growth in the RF discrete switch business, and the client is gradually marginalized, and Zhuoshengwei is the only one.
Today, there are more than 15 domestic RF switch manufacturers. According to market information, except Zhuoshengwei, there are no companies with annual sales of discrete switches exceeding 100 million yuan. For example, Xiaomi, the domestic RF switch suppliers include Zhuoshengwei, Onray, Weijie Chuangxin, Awinic, Weir and other manufacturers, except Zhuoshengwei, other companies get a very small share. With the reduction of discrete switches and price reduction, it will be difficult for companies to achieve 100 million RF switches in the future. On the one hand, Zhuoshengwei will not give such an opportunity, on the other hand, large customers regard Zhuoshengwei as the first supplier The strategy will not change, and the remaining part will be divided among more than 10 companies, and no one will account for the majority.
It is difficult to beat the market, and it is even more difficult to defend the market. Zhuosheng Micro must maintain the market share of RF switches, strictly prevent the emergence of second children, and will continue to work hard in technology research and development, supply chain optimization, and customer relations.
Zhuosheng Micro RF switch/LNA and receiving FEM have a complete range, the supply chain is guaranteed, and the customer relationship is strong. If there is no price war, it is difficult for other companies to have great opportunities. If there is a price war, only mobile phone PA companies have this capability, but mobile phone PA companies must be listed, and they will not invest a lot of resources in RF switches and reduce profits, let alone lose money. Awinic and Weir are listed companies and also need to pursue reasonable profits. Other RF switch start-up companies have a huge cost gap, and there is no profit margin when Zhuoshengwei maintains more than 50% of the profit. If Zhuoshengwei's price sinks, they will face losses. There is no chance to burn money to make RF switches.
Since making RF switches in 2015, I have walked, seen and understood them. With the existence of Zhuoshengwei, the RF switch can only be used as an additional product, as a product line of the company; if the RF switch is used as the main product to start a business, the result is doomed. Similarly, if the RF receiving module is used as the main product to start a business, it can only be a wrong decision.
Because of the domestic RF switch, Zhuoshengwei has no second child after that.
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