The end of the year is approaching, and it is a good time to look back on the ups and downs of this year. In the electronics industry in 2021, the key word is differentiation.
First, the secondary sub-sectors perform differently.
From the beginning of the year to the close of December 14, the electronics market rose by 18%, among the four secondary classifications, semiconductors rose as much as 36%, and consumer electronics sectors rose or fell by only 1%.
Since the beginning of this year, semiconductors and passive components have been affected by the epidemic and global natural disasters, entering a long-term shortage cycle, and the logic of price increases has continued. But on the other hand, due to the shortage of key chips and components in the upstream and the increase in prices, consumer electronics appeared in the third quarter of the "traditional peak season is no longer prosperous", and the overall plate was under pressure.
Second, we can see structural differentiation within the consumer electronics sector – there are still some companies that show enough resilience. Two of the targets with a market capitalization of more than 25 billion yuan rose by more than 50% - he and Tai (002402. SZ) range gained 57.27%, Goertek (002241. SZ) range increase of 54.39%.
In fact, Goertek has repeatedly set new highs in 2021, showing the characteristics of "evergreen growth". 2021 is the twentieth birthday of Goertek. In the past two decades, Goertek has continued to climb to the new peak of its career, and with it, its stock price has repeatedly broken new highs.
As the classic work "Top of the Tide" said: science and technology is the main driving force for the advancement of society in our time, and the wave of technological revolution has created the successful people who stand on the top of its waves, and bury the losers who cannot catch up with the tide.
Whether it is the past, the present, or the predictable future technology trend, Goertek always seems to be able to step into the rhythm of the times and walk in the forefront of the industry.
Goertek's "long-termism"
Twenty years is actually a very long time for the world of technology.
In the era of the information technology revolution, Big Blue rose and fell in just 18 years – IBM made an annual profit of $6.6 billion in 1984 and lost nearly $5 billion in 1992. In the subsequent Internet era, the former portal giant Yahoo was only a decade from birth to peak to decline.
In the two decades from 2001 to 2021, Goertek has developed from a start-up in the field of acoustics to a leading technology leader in the world, and has experienced the wave of traditional acoustics, the wave of intelligent acoustics led by smart phones, and then the phenomenon-level innovation of TWS and VR in recent years, and will usher in the boom cycle of automotive electronics, AR and watches in the next three to five years. We clearly see the development of Goertek shares that have repeatedly stood at the forefront of the trend of science and technology.
This is due to goertek's long-term sustainability values. This value orientation makes Goertek show strong resilience, and after each technological change, it can not only quickly adapt to the new ecology, but even lead the development of new technologies.
This is very important. Because hardware companies that "can't catch up with the tide", under the shackles of Moore's Law, must face the pressure of halving the price of products every eighteen months. The cycle of each product innovation is very short, so the company's long-term layout and continuous innovation ability are highly demanding.
Looking back at the company's history, the key words of large customer strategy, forward-looking layout and vigorous research and development run through its development context, and clearly reflect the spirit of "long-termism" of Goertek.
In 2001, Goertek started in the field of acoustics, and quickly expanded its production scale by seizing the market for Bluetooth, MEMS semiconductors, 3D glasses and other products through a large customer strategy. Then, Goertek started with microphone and speaker components, realizing the expansion from components to accessories, components and complete machines. The technological layout of one step ahead of others made Goertek firmly grasp the wave of smart phones. From 2008 to 2013, the operating income of Goertek increased from 1 billion to 10 billion, an increase of 10 times.
After 2014, the company entered a long period of strategic transformation, committed to extending the advantages of acoustics to other industry landscapes. In the 2014 annual report, Goertek proposed a strategic transformation for the first time, deciding to actively expand into the fields of sensors, wearables, AR/VR and intelligent manufacturing. In the following three years, the company continued to correct the development strategy, gradually improving the layout of audible, visible and perceptible sound, light and electricity, and abandoning the low-value OEM business and transforming the ODM and JDM models. This allowed the company to shine after cutting into Apple's supply chain. The company's revenue exceeded 20 billion in 2017, with a 3-year compound annual growth rate of more than 26%.
At this point, the model of "parts + finished products" of Goertek shares has basically taken shape - this is the prototype of the "4+4+N" model of Goertek shares.
Figure: Phase II: Strategic transformation of Goertek
Figure: Cinda Securities, Finished by Gelonghui
Goertek can firmly grasp the needs of large customers, carry out diversified layout and cultivate future phenomenon-level products in advance, the key behind the company attaches great importance to independent research and development.
In recent years, Goertek's annual R&D investment accounts for 6%-8% of total revenue, and the investment in the past five years has exceeded 10 billion yuan. The company has nearly 12,000 full-time R&D personnel and has applied for more than 23,000 patents, of which about half are invention patents and more than 2,700 are PCT patents. In addition, the company has also established a "government industry-university-research" mechanism, and established long-term strategic partnerships with well-known universities and scientific research institutions at home and abroad such as Tsinghua, Zhejiang University, Harbin Industry, Chinese Academy of Sciences, Tohoku University of Japan, Stanford University, Massachusetts Institute of Technology, Qualcomm and so on. In the first half of 2021, the company continued to increase the development of new technologies, new products and new processes, and actively introduced high-end technical talents.
On the basis of technology, Goertek has created a "4+4+N" business map, that is, with intelligent manufacturing as the support, the layout of acoustics, electricity, optics, precision structural parts four types of components and TWS headphones (the first "4"), VR/AR, wearable devices, smart home four major intelligent machine areas (the second "4"), while expanding automotive electronics, wireless charging, haptics and other new business areas (N).
The company is deeply involved in the upstream and downstream of the industrial value chain, and has built industry-leading precision manufacturing capabilities in VR/AR, acoustics, optics, MEMS microelectronics and other fields, with innovative competitive advantages. Through cross-field integration technology, vertical integration of acoustics, optics, microelectronics, structural parts and other precision components, independently created a highly vertical integration of precision machining and intelligent manufacturing platform in the value chain, providing "one-stop" intelligent manufacturing services from ID design, research and development, testing to automated production, to provide customers with a full range of services. In 2021, the company will continue to actively lay out emerging technology fields such as SiP system-in-package technology, optical waveguide technology, and nano-embossing technology, and continuously enhance the company's core competitiveness.
With technical advantages, Goertek has seized every wave to complete the switching of business driving force, and has become a global leader in micro speakers, receivers, micro microphones, smart wearables, wireless headphones, and high-end VR.
According to Yole Development, Goertek rose to sixth place in the 2020 MEMS vendor revenue ranking, after ranking in the top ten for the first time last year, ranking sixth in only one year, and is the only Chinese company in the top ten, the report also pointed out that in terms of MEMS microphones, Goertek surpassed Lou's Electronics for the first time in 15 years to become the first in the industry.
In addition, goertek's current global shipments of VR equipment account for more than 70%; from the perspective of TWS and smart watch shipments, Goertek's market share maintains a global leading position.
Trillion blue ocean, the first taste of "sweetness"
VR is not just the concept of "metaverse" hype.
It's too early to talk about what the metaverse will look like in the future. There has been so much speculation from both the market and academia about what the next age of technology will look like, so much so that we still can't be sure when and when the metacosm will be realized in what concrete form. But one thing we can be sure of - the user's immersive experience and the need for interactive upgrades in the metaverse determine that VR/AR devices on the user side will become one of the important access points in the metaverse in the future.
This year, VR has exceeded 10 million units sold. Qualcomm CEO said in a recent live broadcast on Investor Day that it expects Oculus Quest 2 sales to reach 10 million units. Zuckerberg has said that once the threshold of 10 million is crossed, the content and ecosystem will show explosive growth. A good ecosystem will support the rapid increase in vr/AR hardware penetration. On the other hand, whether it is hardware technology or communication technology has matured, the characteristics of 5G large bandwidth, high reliability, low latency and massive connections can effectively reduce the vertigo of the user VR experience.
To this end, the market has reached a consensus: VR/AR devices are expected to gradually undertake the application of smart phones and develop new application scenarios, and their shipments may exceed the level of 1 billion in the future. There is no doubt that the "wind" of VR has arrived and is about to become a phenomenon-level consumer electronic product after Airpods.
The most concerned target in the VR industry chain is Goertek shares. At present, Goertek has reached long-term in-depth cooperation with the world's mainstream VR headset brands, occupying more than 70% of the global market share of high-end virtual reality headsets, and sitting firmly in the leading position in the VR/AR industry.
Looking forward to the future, Goertek still adheres to the "long-termism" of large customer strategy, advance layout and emphasis on research and development in VR. Strong competitiveness is expected to put it in a leading position for a long time.
Goertek is one of the earliest companies to lay out VR. The company and the industry giants deep binding joint research and development of VR products, is one of the few manufacturers in China can provide one-stop solutions. The company has a leading layout in the fields of optics, display, sensors and other fields, and has built a world-leading VR/AR high-end optical components industry base.
According to public information, in the field of VR optics, Goertek can provide a variety of VR optical solutions such as aspheric lenses, Fresnel lenses, diffractive optical components, Pancake, etc., with the design and manufacturing capabilities and mass production experience of VR-specific lenses. In 2020, the company issued convertible bonds to raise 1 billion yuan for AR/VR and related optical module projects, and the project product content involves an annual output of 5 million precision optical lenses and module products.
Goertek displays the field through the Kopin layout and lays out micro-OLED in advance. In addition, Goertek has a product line of electret microphones, MEMS microphones, barometric pressure sensors, optical sensors, gas sensors, integrated sensor devices and related modules, etc., which can provide customers with sensor "chip + device + algorithm" overall solutions.
Figure: VR core hardware (the red box is the layout field of Goertek)
Source: Company Announcement, Compiled by Grandway
Goertek continues to reach strategic alliances with the leader. This year, the company cooperated with Qualcomm to establish an XR optical core component test laboratory to help the development of XR key technologies. Goertek joined qualcomm's VR headset accelerator program in 2017, and in 2019, it established The Qingdao Core Valley Qualcomm China Goertek Joint Innovation Center to support the development of intelligent hardware such as XR. As a strategic partner of Qualcomm Intelligent Hardware, Goertek and Qualcomm have exported a series of XR device reference designs, and qualcomm has been awarded the Outstanding XR Terminal Solution Provider Award. The combination of the two is to continuously upgrade the hardware and ecology, leading the trend of VR development.
The company focuses on core customers in the global technology and consumer electronics industry, continuously expands and optimizes the VR layout around the customer strategy, and continues to lead the development of the VR industry in the future with the first-mover advantage it has built.
The "wind" has come, how to paint a new blueprint
In addition to VR equipment, the prospect of the current forward-looking layout of Goertek has become clearer - the "wind" of smart watches and automotive electronics has also come.
The author believes that the "unlocking" of the Apple Watch ECG function of the National Bank of China is an important signal. In June, the State Drug Administration published a "Medical Device Approval Document (Import) Information to Be Collected", which includes Apple's mobile ECG atrial fibrillation reminder software. With the maturity of sensing technology, in addition to electrocardiogram, important physiological data such as heart rate monitoring, blood oxygen, blood pressure, blood glucose, and sleep tracking have gradually been added to smart watch applications. With the breakthrough of technology and application, people's understanding of smart watches is also reshaping, and bringing about the rapid growth of consumer demand for smart watches.
The penetration rate of smart watches in the future may not be lower than that of TWS headphones. According to IDC, global shipments of smartwatches are 91.4 million units in 2020, and shipments are expected to reach 132 million units in 2023, with a compound annual growth rate of 12.92%. Entering 2021, Android smart brands have accelerated their layout, including Samsung's launch of the Galaxy Watch4 with a new operating system, OPPO's launch of the main long-lasting Watch2 series, and the fourth quarter of Xiaomi, Huawei, etc. have released related new products.
Opportunities from automotive electronics are also beckoning to Goertek.
The new generation of electric vehicles led by Tesla and BYD has opened a revolutionary subversion of the automotive industry. Automobiles are rapidly evolving in the direction of "electrification" and "intelligence", and driving the great development of the automotive electronics market.
Compared with the consumer electronics industry, the barriers to the automotive electronics industry are very high - automotive electronic products pay more attention to safety and reliability requirements, automotive electronics manufacturers generally need 2 to 3 years to pass the industry general certification; in addition, the automotive electronics industry is relatively more closed in terms of software, the automotive industry recognized embedded software development architecture Autosar is the authoritative software development standard of the automotive industry, controlled by the industry's head host manufacturers, Tier1 and other parts suppliers. But just as there are two sides to the coin, although it is very difficult to enter, once it enters the supply chain system, it can form a relatively stable and sustainable cooperative relationship.
In November, Goertek's subsidiary, Goertek, reached a strategic cooperation with BYD. Goerdanna has top acoustic solutions, and BYD's intelligent technology represented by DiLink 4.0 (5G), e-platform 3.0, and BYD OS is also at the forefront of technology and the industry. The two sides agreed to start from the aspects of intelligent cockpit, acoustic entertainment, and safe driving assistance to break through the barriers to scene connection, improve personalized user services, improve the driving experience of intelligent and connected vehicles, and promote the prosperity and development of the intelligent automobile industry ecology.
Closely following the development dividends of smart watches and automotive electronics, the kinetic energy switching point of Goertek shares has been relatively clear. In the next three to five years, the company is expected to continue to open new growth boundaries and accelerate the "breaking of the cocoon".
epilogue
In 2021, goertek disclosed a profit forecast of 4.244 billion to 4.528 billion yuan, an increase of 49% to 59% year-on-year, and the high growth of performance was mainly due to the growth of the company's sales revenue of VR virtual reality and other products. Major brokerage research institutes predict that the proportion of VR revenue will continue to increase next year, providing strong growth momentum.
There is no doubt that the twenty-year-old Goertek is once again standing at the "top of the wave" of a new round of technology.
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