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Power management IC continues to be "out of stock" Chipeng Micro doubles its revenue and net profit in the first half of the year
On the evening of August 6, Chipeng Micro (688508, SH), an enterprise in the power management chip industry, disclosed the 2021 semi-annual report. In the first half of this year, Xinpeng Micro achieved revenue of 326 million yuan, a year-on-year increase of 109.07%; net profit was 70,278,400 yuan, a year-on-year increase of 119.93%.
Xinpengwei said that the revenue growth was mainly due to the increase in sales revenue, and did not explain the specific reasons for the revenue growth. Considering that the company mainly provides power management chips (ie, power ICs), and power ICs are one of the most serious sub-sectors in the current round of semiconductor chip shortages, other companies in the same industry have raised product prices. Therefore, Chipeng Micro’s half-yearly reported revenue and net profit have both doubled, which may also benefit to a large extent from the industry’s business cycle, and the continued "price increase" and "out of stock" of power supply ICs.
On August 6, Xinpeng Micro closed at 154.78 yuan per share, up 4.51%. Since mid-July, Xinpengwei's share price has continued to rise. From July 15 to August 6, the range rose as high as 74.03%.
Power management IC "delivery" is delayed seriously
Chipeng Micro’s main business is the R&D and sales of power management integrated circuits, including household appliances, standard power supplies and industrial control power, which are widely used in household appliances, chargers for mobile phones and tablets, adapters for set-top boxes and notebooks, and automotive Chargers, smart meters, industrial control equipment and many other fields.
This round of "chip shortage" began in the fourth quarter of 2020, and the shortage of automotive MCU products was the most serious. By the middle of 2021, the supply of in-vehicle MCUs has eased, and power management IC products have become in short supply. A research published by Susquehanna Financial Group (SIG) on June 22 showed that chip delivery in May was further delayed to 18 weeks, and the power management IC was the most delayed, with a delivery time of 25.6 weeks.
The business model adopted by Xinpengwei is Fabless (fabless), which means that Xinpengwei needs to obtain production capacity from the foundry. According to Xinpengwei’s survey minutes, in order to cope with the tight production capacity, the company has adopted various methods such as strengthening strategic consultations, pre-determining production capacity, purchasing and adding production equipment, expanding new suppliers, and dispatching personnel to the factory to coordinate. Support to ensure the delivery and interests of customers.
In addition, integrated circuits are mainly divided into digital chips and analog chips, and analog chips have higher requirements for talents than digital chips. An insider told the "Daily Economic News" reporter: "Analog chips are more difficult to design than digital chips. It depends on the designer's ability. Different people have completely different effects."
According to Sullivan's research, the core of analog circuit design lies in circuit design, which needs to be adjusted and compromised based on actual product parameters. In addition, digital circuit design aids (EDA) are more abundant, and analog chip design aids are far less than digital devices. Therefore, the design of analog circuits is more dependent on manual design, and the experience requirements for engineers are also higher. However, domestic simulation talents are scarce, and experience accumulation is insufficient.
Xinpengwei's 2021 semi-annual report shows that the company's core technology management team has rich experience and has formed an orderly and stable echelon of young and middle-aged talents. At present, the company has formed a R&D team of 167 people including 3 PhDs, accounting for 73.57% of the company's employees.
Domestic substitution competition is fierce
It is worth noting that under the industry's boom cycle, Xinpengwei’s performance has skyrocketed, but the company is also facing fierce competition in the power management industry.
Sullivan’s research shows that leading international manufacturers in Europe and the United States have a large amount of technology accumulation and a complete industrial chain supporting environment, and have leading advantages in terms of production and sales scale and brand reputation. In addition, the high gross profit of the power management chip industry has also attracted potential entrants into the market. Although some domestic manufacturers have made certain breakthroughs in high-end products and gradually broke the monopoly of foreign manufacturers, most companies still focus on low-end power management chips. With the continuous increase of market participants, there will be limited room for development in the low-end and mid-range sectors in the future, competition will become more intense, and profit margins will continue to shrink.
Chipengwei said that from the perspective of overall market share, the main players in the domestic power management chip market are still European and American companies, which account for more than 80% of the market share. Domestic companies are currently unable to compete with Texas Instruments (TI) and PI. (Power Integrations), Infineon (Infineon), STMicroelectronics (ST) and other companies compete on the scale of production and sales.
In terms of domestic competitors, Xinpengwei said that the domestic IC design industry is developing rapidly, with a large number of participants, and market competition is becoming increasingly fierce. The company's product market share is low, and there is a gap between its technical strength and market share compared with overseas competitors, and it faces greater competition risks from domestic and foreign brands. If a competitor uses its brand, technology, and capital advantages to increase investment in the company's market, it may squeeze the company's market share and sales, thereby affecting the company's profitability.
In addition, recently, a number of power management chip companies have also taken advantage of the industry boom and are seeking IPOs. According to the "Daily Business News" reporter, since May 2021, the power management chip companies that are planning to IPO include Xinlong Semiconductor, Ruiyuan Semiconductor, Injixinke, Xidi Micro, and Weiyuan Semiconductor. In addition, Lixin Micro (688601, SH), which landed on the Sci-tech Innovation Board at the end of June, also mainly provides power management chips.
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