According to a research re↕™port released by China Internationa'♣l Capital Corporation, b"™→enefiting from the rap' "id expansion of the Internet of T 'hings, the wireless communica £tion module industry is in a fast grow≤®th channel, and the innov←φation vitality of small and medium←•-sized enterprises promotes th≈∞e rapid development of the indu€÷™stry, Zhitong Finance has learned. The downstream demand of ×≈the wireless communication modσ→ule industry is fragmented, and custo§"×mized requirements ex✔≥ist for wireless communication modu•λ→les in the segmented fields. Small an×↕d medium-sized enterprises can≠β focus on the segmen✘←σted fields to cultivate©$≈≥ competitive advantages and promoδ£∏"te the high-quality developmeβ♦nt of the industry. It is hope♠™d that in the future, more enterp"rises will take the road of speciali↑™•₩zation, refinement and innovationφ, break the technolo±÷gy monopoly, open up the industrial ch®★™ain and supply chain of wireless com↑"™εmunication modules, deepen domesti₩♠≠c substitution and pro÷>≈λmote industrial upgrading.
Cicc's views are as follow¥↓₩s:
1. Why is the wireless ←∑communication module $&industry so important?
Wireless communicatio ↓n module uses wireless techno×☆$logy to transmit, so tha§&↓t all kinds of terminals ca™β∑₹n realize communication or position÷₽ing functions. As an important carrie¶¶r of the Internet of Things→÷, it is also an important m<φ$™edium to realize wireless co©±mmunication. In the context✔> of the rapid expans•™<∏ion of the Internet of Thingγs market, the wireless communicatio± ≥n module plays a key ✘δ'role of "water seller"↓&$ and is expected to usher in¥σ a sustained and rapid groφ> wth of demand.
The bank believes that th><e "Internet of γ®≤everything" trend will♣λ★ help the Internet of Things m♣$↑arket scale continue to grow.> With the popularity ÷± ☆of smart home, Internet of $φ∏vehicles and other applications in th×✘±™e consumption scenario and the p±≈enetration of the industrialε∑∞ Internet in the indu€λ εstrial scenario, the number of Internetα↕ of Things connections is st♦÷↑ill expected to maintain a r©≥≤₽apid growth.
According to IoT Analytics♠←←, the number of global Intern↔↔£$et of Things connecti÷↑π✘ons is expected to reach 27 billion →δφ in 2025, with a compound growth ra<σ'te of 22% between 2021 and 2025, of &∑≈which 5G Internet of Tφφ₹hings composite growth ra€&te of 159%.
2. What is the indust☆≠ry chain of wireless co§ ↕εmmunication modules?
Wireless communication module¶ § industry chain is composed of ✔Ω ¥"upstream chip -- midstream cΩ&λommunication module -- downstream Inter∞≥net of Things application". W§±ireless communication module m↓↓anufacturers purchase chiλβps, PCB, discrete devices and oth↕→ βer components from upstream eq¶±βuipment manufacturers, and ente→¶<r downstream terminal a§ ≤βpplications through custoε→mized hardware and s→ oftware design, testing, certification♠φ and other links, thus ®¥promoting the development♦π∏λ of the Internet of Things i§☆≈ ndustry.
Upstream: high concentration of∞ chip manufacturers
Upstream of the wireless communicaΩ←↔≈tion module industry chain are chip, ≤↕→≥PCB, discrete devices, struc☆σtural components and other e αlectronic components m∏✘≠anufacturers. Among th₹β£em, the cost of chip accounts for ab↑ €out 80%. Baseband chip, radi↔•≈o frequency chip and memory chip are thγe three major communication chip₹$↓s. The market concentr$≈σ ation is relatively h™∞♥÷igh. PCB, resistance andφ capacitance sensing components and oε≠ther raw materials industr§δδ≈y belongs to the perfec→Ω↑§t competition market, ♥ strong substitution.₩®
Midstream: Market share is ≥→≤concentrated among domestic m™✘>anufacturers
By virtue of cost advantaσ€£ge, wireless communication module γ€<industry market share gr☆σadually concentrated to dom☆Ωestic manufacturers. Inλ↔™π the first half of 2017, ' the top five cellula∑§€≥r module shipments were a✔ ≤₩ll overseas (with a c®¶ombined 65% market share)↕' ; In the first quart♥≈♠αer of 2022, domestic module ma €nufacturers accounted for mor♥e than 60% of the shipments and fou∏r of the top five in t"→↑he world.
Downstream: Fragmented application&↓♥ scenarios, market size is expected σΩto continue to expand
The downstream of the wireless coφ∏mmunication module industry chaγ<in is mainly the intellπ®φ£igent terminal equipme₩♠nt manufacturers of the Internet of ₽Things. With the continuous deve£↕Ω§lopment of 5G technology, th±™£e efficiency of intellγα∏ igent manufacturing, intel×₩★ligent driving, intelligent mΩedical treatment, intelligent edu ♦cation, smart city and other dive₽≤"rsified AI iot scenarios£←←₩ will be improved. The bank beli♦÷ eves that wireless comα£↑munication modules are expected to lπ ✔✘and in various iot scenarios.
3. Look for the expertise in thγ↑e wireless communica±Ωαtion module industry
In the wireless communication modαφβule industry chain, δ≥the upstream chip market is d>α±ominated by overseas manufacturers. Tφα→he localization rate of b€£aseband chips, memory chips and RF Ωδchips with higher gross profit r∑→∞↔ate is still at a low level, and t↔πhe participation of spδ≠€±ecialized and special enterprises is∏× low. The localization ∏§rate of communication≠§ module is at a high level₽§, and the participation o∑★f specialized and spe<∑ cial new enterprises is α★Ωhigh.
Take cellular communication module as∞β₽ an example. In the first quart✘♥÷er of 2022, there were six Ch ©€inese companies in the top 10 globa↔×€εl market share, and four of th>∞✔♦em were specialized and special start-✘ ups.
The gross profit rate of overseaλλs manufacturers of communication δα↕♠modules is about 30-45%, and the∞€ gross profit rate of π♥ ₩Chinese manufacturers' ov₹φerseas business is about≥∑ 20-35%. However, due to the h© igh labor cost, high φ≥♥expense and small maα↑'∏rket share of overseas♦∞ manufacturers, the net profit rate oα★f domestic manufactu♠≤Ω♣rers is still higher than that of overseas manufacturers ₩σ÷βin the case of low gross σ♠profit rate.
The bank believes that benefiting frπβom the rapid expansion o♦↕f the Internet of Things, the• ₩™ wireless communicati∏₩∞γon module industry is in a fasεγβt growth channel, and tσ∏αhe innovation vitality of small and mα™™≈edium-sized enterpris£$es promotes the rapid deγ↑↓velopment of the indust¥→ry. The downstream demand of the wi₩∑•reless communication module"& industry is fragmen¶©δted, and customized requirements exi≈st for wireless comm♠£>unication modules in the<α™ segmented fields. Smε• all and medium-sized enter×∏§♣prises can focus on the segmented f♦ ields to cultivate competit"₩♥ive advantages and promote the high-↔¶¥quality development ₩₹¶of the industry. It ↓™is hoped that in the future, more enter ≠♠prises will take the road of specia¥↑£$lization, refinement and♠™↕ innovation, break the technolo→β$gy monopoly, open up the industr→φ ♣ial chain and supply chain of ₽©wireless communication modules, dee™&pen domestic substitution and promo•®te industrial upgrading.
