In 2015, Wingtech Technology (600745. SH) landed on the capital market through restructuring and listing, becoming the leader of A-share mobile phone ODM (original design and manufacturing).
The threshold of the ODM industry is low, and the competition among small and medium-sized manufacturers is fierce, but the concentration of the industry has increased in the past two years. The data shows that the market share of Wingtech, Huaqin and Longqi CR3, the top three ODM manufacturers, has increased from 35.9% in 2016 to 65.1% in 2019, and the market share of Wingtech Technology has also increased from 18.6% to 27.6%.
It is worth noting that the gross profit margin of the mobile phone ODM industry is lower. According to Tonglian data Datayes! From 2016 to 2018, the gross profit margin of Wingtech Technology was 8.02%, 8.98% and 9.06%, respectively, and the net profit margin was 1.43%, 1.98% and 0.42%, respectively.
At the same time, after years of development, China's smart phone market is gradually saturated, in order to enhance profitability and find a new blue ocean market, Wingtech Technology ODM business from smart phones to tablets, laptops, servers and other fields to expand, and in 2019 acquired Nexperia, directly becoming the world's top power semiconductor companies.
At present, Wingtech Technology has turned its attention to automotive semiconductors.
Nexperia: The world's sixth-largest power discrete device company
Nexperia was born from NXP and focuses on the design, production and sales of discrete, logic and MOSFET devices.
In December 2019, Wingtech Technology acquired a 74.46% stake in Nexperia for 26.8 billion yuan. Subsequently, in June 2020 and September 2020, it acquired the remaining shares of the company, achieving a 100% control of Nexperia.
Nexperia adopts the IDM business model, has its own wafer manufacturing and packaging and testing plant, and independently completes the design, manufacturing and packaging and testing of the whole process. According to the research of The Core, Nexperia has jumped to the sixth largest power discrete device company in the world in 2021, up 3 places compared with 2020.
Deng Anming, director of Wingtech Technology Planning Department, said in an exclusive interview with CBN, "Nexperia's rise in the global power semiconductor market ranking is due to the growth of industry demand in the past two years, and we are also increasing investment to continue to expand market share in the automotive, consumer and industrial fields. ”
In 2019, after the merger of Nexperia, Wingtech's performance soared by 140%, and the level of profitability is gradually rising, from 2018 to 2020, Wingtech Technology's gross profit margin was 9.06%, 10.32%, and 15.21%, respectively; the net profit margin increased from 0.42% in 2018 to 3.32% in 2019 and 4.76% in 2020.
Correspondingly, the goodwill of Wingtech Technology also increased from 1.3 billion yuan in 2018 to 22.7 billion yuan in 2019. As of the third quarter of 2021, wingtech technology has a goodwill of 22.697 billion yuan. In its announcement in March last year, Wingtech Technology said in the "Reply Report on the Second Feedback on the Application Documents for the Public Issuance of Convertible Corporate Bonds" that goodwill had not been impaired and there was no risk of material impairment.
The semiconductor business contributes most of Wingtech's profits. According to the semi-annual report of 2021, in the first half of 2021, the company's semiconductor business achieved revenue of 6.773 billion yuan, an increase of 53.25% year-on-year, business gross profit margin of 35.06%, and net profit of 1.310 billion yuan, an increase of 234.52% year-on-year; product integration business revenue of 18.010 billion yuan, down 7.25% year-on-year, gross profit margin of 9.02%, and net profit of 0.75 billion yuan.
"Nexperia has a very large customer base, with 25,000 customers, 15,000 products worldwide, and more than 800 new products added every year, which is equivalent to a Walmart supermarket in the field of power devices." Deng Anming said.
Zhang Xuezheng, chairman of Wingtech Technology, previously said that it plans to promote nexperia's output value of more than $10 billion over a 10-year period to further strengthen its global competitiveness.
Step into the field of optics
After the acquisition of Nexperia, Wingtech Technology has not stopped the pace of mergers and acquisitions. In 2021, Wingtech completed two large-scale mergers and acquisitions.
In early 2021, Wingtech Technology announced that it would acquire Guangzhou Delta (former sony South China factory, with a net asset of 1.6 billion yuan at the end of 2020) held by OFILM for a consideration of 2.42 billion yuan, and resume parts business for specific customers.
Guangzhou Delta was previously a key subsidiary of OFILM, responsible for supplying camera modules to specific customers. On December 12, 2021, Wingtech Technology announced that guangzhou Delta's pre-sample delivery products have passed the final verification of specific overseas customers, and the products have entered the formal mass production and normalized batch shipment stages in accordance with the shipment plan agreed with the customers.
Deng Anming told First Finance that optics is a major innovation direction for future electronic products and smart cars, and Guangzhou Delta's technical strength in this area is also very strong. After the acquisition of Wingtech, it can also help it enter the broader field of Android mobile phones, Windows laptops, including cars. Guangzhou Delta's technology can also help Wingtech improve the competitiveness of its telecom ODM business.
"From the perspective of capacity expansion, guangzhou Delta's capacity expansion rate is very fast, we are building a new factory in Zhuhai, the first phase of the third quarter of 2022 can be put into operation, the second and third phases will be put into operation in 2023 and 2024 respectively. Wingtech is also helping Guangzhou Delta to introduce his cameras into Wingtech Windows' laptops, tablets, automotive electronics and other products to quickly expand its market share. ”
Huatai Securities believes that Wingtech Technology's ODM and optical module business is expected to gradually increase its market share in specific customers, gradually expand into new areas such as servers and automobiles, and become one of the core suppliers of front and rear camera modules for specific customers, and its revenue in 2025 is expected to grow by 78.4% compared with 2020.
On March 10, 2022, Wingtech Technology announced that the company's product integration business has carried out a number of business cooperation and signed cooperation agreements with specific overseas customers such as computers and smart homes. Recently, the company's smart home projects cooperating with specific overseas customers have officially begun mass production and achieved normal shipments, and the total amount of project cooperation is expected to be about 5 billion yuan.
Aiming at automotive semiconductors
Another acquisition came in August 2021, when Nexperia acquired Newport Wafer Fab (NWF), Britain's largest chipmaker, for £63 million ($87 million). With this acquisition, Nexperia acquired 100% ownership of the Welsh semiconductor silicon chip production plant.
Wingtech Technology is targeting the automotive semiconductor market. Wingtech said that the addition of NWF will effectively enhance Nexperia's IDM capabilities in the field of automotive grade IGBTs, MOSFETs, analog and compound semiconductors such as gallium nitride and silicon carbide. There are only a handful of automotive-grade 8-inch fabs in the world, and NWF expects to introduce capacity to Nexperia from the fourth quarter of 2021. It is understood that NWF was established in 1982, with a production capacity of more than 35,000 pieces / month (the maximum can be expanded to 44,000 pieces / month).
In fact, Wingtech's layout of automotive semiconductors began with its acquisition of Nexperia. In the first half of 2021, 45% of Nexperia's revenue came from the automotive electronics sector, and the company's core downstream customers include Bosch, BYD, Continental, Delphi and other automotive plants.
According to Wingtech Technology's 2021 semi-annual report, the company's goal is to become a supplier of smart cars and smart travel pre-installed vehicle specification solutions for the automotive electronics industry. In the era of gasoline vehicles, the average application of Nexperia chips in global automobile bicycles has reached more than 300, and the number of particles of Nexperia products in electric vehicle applications is expected to show several times growth, and the application output value is also expected to increase by multiples. At the same time, it is expected that the planned capital expenditure in 2021 will be 1.84 billion yuan, mainly to expand production capacity and investment in equipment related to research and development.
In January 2021, Wingtech Technology's controlling shareholder, Wen Tianxia Technology Group, invested in the construction of China's first 12-inch automotive-grade power semiconductor automation wafer manufacturing center in Shanghai Lingang, which was successfully capped on February 28, 2022. According to the first financial understanding, in the second and third quarters of this year, the Lingang factory began to install equipment and commissioning, and the small batch trial production in the fourth quarter of this year can form the first batch production capacity next year, and the first phase of the planned monthly production capacity is 30,000 pieces. The second and third phases will be built later, and the production capacity will gradually increase.
It is worth noting that Nexperia is also laying out the third generation of semiconductor products, and has launched a series of GaN FET products, which have passed the vehicle level certification and are applied to the field of new energy vehicles.
Huatai Securities said that in the next few years, wingtech technology semiconductor business segment research and development investment is expected to reach more than 15%, mainly invested in medium and high voltage MOSFETs, third-generation semiconductors and IGBTs and other fields.
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