Huawei's ban came into effect, and mobile phone sales declined. Will the wave of 5G substitution become an opportunity for Ding Hui's science and technology?

In the last episode, we introduced the general situation of Ding Hui Science and Technology, and compared the advantages and disadvantages of several different unlocking schemes. If you haven't seen the last episode, please click the link to read it.

Shanghai Composite Index Fluctuation, Semiconductor Adjustment, Apple Bounce, Where Will Private Enterprise Ding Hui Science and Technology Go?

In this issue, I'd like to focus on talking with you about what other factors will affect the performance of Ding Hui's science and technology besides technological changes.

I. Highlights and trends

In fact, we have also suggested so many words "mobile phone" before, and I believe that sensitive friends must have noticed it. Because the fingerprint chip under the screen is carried on the mobile phone. Mobile phone shipments are definitely closely linked to company revenue.

1. Mobile phone shipments

As can be seen from the above figure, before 20 15, the company's revenue growth was due to touch chips, while the growth from 20 15 to 20 17 was mainly due to the improvement of capacitive fingerprint identification business. From 20 17 to 20 18, the company's revenue has hardly changed, which is actually related to the decline in smartphone shipments. From 20 17 to 20 18, the mobile phone shipments dropped from13.26 million units to13.07 million units, a decrease of 1.5%, resulting in smaller cakes, and the company's operating income can only benefit from a small increase in penetration rate.

Therefore, the second factor for us to consider the future prospect is to see how the shipments of mobile phones will change. In the first half of 2020, due to the epidemic situation, mobile phone shipments decreased 14.60% year-on-year. Most of this decline is due to the decline of Samsung (-22.95%), and Ding Hui Science and Technology was not a supplier of Samsung before the newly released Samsung Galaxy A7 1 5G in April 2020. This cooperation is Ding Hui's "new income". This also reflects Samsung's recognition of optical fingerprint identification and Ding Hui technology.

Of course, we can't ignore that Huawei's sales in the first half of the year also dropped by 1 1.04%. Due to the close cooperation between Ding Hui and Huawei, we have to worry about the semi-annual performance of Ding Hui. Sure enough, its revenue in the semi-annual report in 2020 hardly increased year-on-year, while its net profit decreased by 4 1.3%.

So, will this trend continue? Maybe, maybe not. It will be because the US ban on Huawei came into effect the day before yesterday (9. 15), which officially stuck Huawei's neck; Although Huawei has been actively stocking up and taking adequate measures, this influence will not be eliminated in the short term, and the shipment of Huawei mobile phones will definitely decline. It won't be because although Huawei's shipments are declining, it doesn't mean that the entire smartphone market will shrink. On the one hand, the decline in mobile phone shipments in the first half of 2020 is due to the epidemic, on the other hand, everyone is waiting for more mature 5G signals and more mature 5G mobile phones. When the epidemic gradually recovers and 5G gradually becomes popular, the shipment of mobile phones will at least not get worse.

2. Development trend of organic light-emitting diode screen.

The second related aspect is the OLED screen we mentioned earlier. Because the optical type needs the self-luminous performance of the organic light-emitting diode screen, the development trend and shipment of the organic light-emitting diode screen also indirectly affect the development of the optical type.

Speaking of screens, we have to mention two kinds of screens, LCD and OLED.

As for LCD screen, it has always occupied a relatively high market share because of its characteristics of no screen burning risk, low cost, eye protection, less screen flicker and better imaging effect. The organic light-emitting diode screen is more favored by flagship manufacturers in "light and thin" and "folding screen" use scenarios because of its overall structure, bending, uniform folding and self-luminescence, uniform and saturated overall color, better visual effect and black non-luminescence.

It can be seen that the organic light-emitting diode screen may become the future trend, which also opens a channel to the future for optics.

In addition, the optical market is still very small. In 20 19, the shipment was only10.50 billion, and the penetration rate was less than 12%. There is still huge room for development to be tapped.

Two. Other highlights

In addition to the most important aspects mentioned above, there are some details I want to tell you.

As a scientific and technological enterprise, grasping the future technological outlet like "off-screen optical fingerprint" and realizing technological leap are the keys to future success. To do this, the first thing is to accurately grasp the needs of consumers. Although the past does not represent the future, if a company can seize the opportunity to achieve perennial growth, we can roughly judge that they have a certain understanding of the psychology of consumers.

Compared with Ding Hui Science and Technology, their income growth in the past three times is due to the change of the market. In particular, the recent arrival of the era of optical fingerprint under the screen is undoubtedly very successful.

Nowadays, mobile phones want to hold more and more things, but they want to be lighter and thinner. Especially in the future trend of 5G mobile phones, it is necessary to install more power amplifiers (PA) to increase the wireless communication distance, signals and supported frequency bands. I also want to put more CIS (Image Sensor) modules to support the multi-camera scheme. When these two components are installed, the power consumption will increase. In order to make the battery life longer, the battery capacity will increase. So there is not much room left for the fingerprint mold.

Therefore, Ding Hui Science and Technology also seized this pain point and introduced ultra-thin optical fingerprint technology, which reduced the chip from the traditional 0.7- 1mm to 0.3-0.5mm. Although it seems to be reduced by 0.5 mm, it is half smaller than this chip, which is already a technological leap.

The scheme has been successfully commercialized on flagship 5G mobile phones such as Xiaomi 10, Huawei P40 series and One Plus Eight. As the trend of "lighter, thinner but more" continues in the future, it is believed that more mobile phones will be equipped with this scheme.

Moreover, recently (June 5438 +20201October), Bluetooth SIG introduced a new generation of Bluetooth audio technology-Leaudio, which realized that two earphones receive equipment signals independently and simultaneously, and solved the problems of high energy consumption, easy failure, instability and delay when one earphone was used as the main earphone in the past. Break the closure of airpods' "listening" patent. On the occasion of its release, Ding Hui Science and Technology jointly released its own TWS audio solution adopting this standard. This hot spot is very timely.

Of course, even if you sometimes know what consumers want, it's no use not doing it. Therefore, a large amount of investment in scientific research and development is very important for a company to realize the transformation from "creativity" to products.

The proportion of R&D personnel in science and technology in Ding Hui is as high as 9 1%, and the staff is highly educated, with bachelor degree or above accounting for more than 95%, among which doctors account for 4%. R&D investment accounts for 22.5% of revenue in 20 18, 6.7% in 20 19, and almost 30% in 2020Q 1 and Q2.

In addition, in fact, the revenue of Dinghui Technology 2020Q 1 and Q2 increased slightly year-on-year, but the net profit decreased due to a large amount of R&D expenses. It is very rare to attach great importance to R&D under the premise of reduced profits.

Generally speaking, the company does have the possibility of being replaced by ultrasound in the off-screen optical fingerprint, and the short-term shipment damage of mobile phones will also hinder the company's development. However, before ultrasonic technology can be commercialized on a large scale, there may still be a certain gap, and the export of chips by Qualcomm, a leading manufacturer of ultrasonic technology, to Huawei will be restricted by the United States. We think the impact on Ding Hui's technology is limited. However, the long-term increase in the penetration rate of organic light-emitting diodes, the increase in the penetration rate of off-screen fingerprint mobile phones, and the arrival of the wave of 5G replacement are new opportunities for Ding Hui science and technology.

However, because we are not sure which of these two forces will be better for the time being, based on the strength and potential of Ding Hui Science and Technology Company, we still intend to carefully put it in our "observation pool" and wait and see.

This is the end of the analysis of nearly 6k words in Ding Hui Science and Technology. I believe that friends who have seen it will at least have a deeper understanding of fingerprint unlocking. So what do you think will be the impact of the US ban on Huawei? Which is better, the increase of penetration rate or the short-term decline of mobile phone production? Welcome to leave a message in the comment area to discuss with us ~

Special instructions:

The above is our understanding of this industry and company, which is for reference only and does not constitute investment advice. Please think for yourself.