China's smart terminal chip industry adapts to the trend

Following the National Strategy Paper, we selected the smart terminal chip with large market capacity, rapid growth, and innovative product concentration as the second topic of the semiconductor special report. The intelligent terminal industry has gradually transformed China from a world factory to a world factory + world market. At the same time, terminal applications such as wearable devices, smart cars, and smart homes are rising. As a result, the Chinese semiconductor industry will benefit mainly from the following three aspects: 1) 4GLTE variable chip Requirements; 2) Incremental chip requirements for smart terminals; 3) All-round demand for IC design, manufacturing, and packaging testing brought about by the rise of Chinese terminal brands. China Semiconductor will take advantage of the eastward and upward shift of the industrial chain to complete and upgrade the upstream short board of the electronic industry chain. With the completion of the privatization of overseas-listed smart terminal chip companies such as Spreadtrum and RDA, the two companies’ A-share listing is expected to have basically taken shape, and the rising trend of Chinese IC design is also expected to form in 2015.

This report is the first part of the A-share system to explain the depth of the topic of the smart terminal chip, analyze the development trend and pattern of various sub-sectors, as well as 15 international leading and 10 A-share companies, in order to serve as an industry must-read report.

4G smart phones are the most important driving force for the terminal chip industry. Smartphones are the only human device in the history of human electronic devices. 4G smart phones have the potential to become personal computing centers.

Smartphones have been the main engine for the growth of the global semiconductor industry in the past few years. From this year, the growth rate of smart phones has slowed down. However, the growth is far from over. 4G penetration is expected to continue the strong growth of mobile phone chips for 2-3 years.

The semiconductor consumption of a single smart phone is about 50 US dollars, accounting for 40-50% of the BOM. The chip is the core component of the smart phone. In the future, smart phones will continue to develop along the PC-like hardware structure, with baseband/AP as the core (50% of the mobile phone chips), and balance in the three major directions of convergence, technology, and price.

Wearable devices, smart cars, and smart home appliances show up. The rapid rise of new smart devices, such as wearable devices, smart cars, and smart homes, has created a demand for chips that are not inferior to PCs and mobile phones. The potential market size is tens of billions of dollars. The AP mode wearable device is expected to take the lead in the competition with the MCU mode, while the wearable device sensor application will be larger than the mobile phone. Automotive infotainment system will accelerate the penetration of traditional consumer electronics semiconductor companies into automotive applications; ADAS is the main driving force for automotive image sensors and non-optical sensors; new energy vehicles will revolutionize automotive semiconductors due to its new interior architecture. Growth opportunities. The development of smart home chips is still early, and sensors and network connectivity will be essential core components.

China's smart terminal chip variables, incremental, industrial transfer three major opportunities:

1) The chip change requirements brought by the evolution of 3G smart phones to 4G LTE technologies, such as the redraw of the industrial layout caused by changes in baseband/APSoC and front-end modules.

2) Incremental chip requirements brought by 4G smart phones, wearable devices, smart cars, and smart homes, such as NFC, fingerprint identification, wireless charging, and sensor chips.

3) All-round demand for IC design, manufacturing, and packaging and testing brought about by the rise of China's terminal brands.

Investment Suggestions 1) Spreadtrum, RDA returns A shares, and six A-share listed companies under Tsinghua Holdings and other possible IC design backdoor companies.

2) Companies that have benefited from 4G baseband/APSoC and front-end module requirements such as Datang Telecom, National Technology, Haoyuan Industry, Quanzhi Technology (pre-disclosure) and others.

3) Intelligent terminal incremental chip providers such as NFC chip Tongfang Guoxin, fingerprint identification chip Huiding Technology (pre-disclosure), sensor Jingfang Technology and Gekewei (to be listed in Hong Kong); 4) Direct rise of Chinese smart terminal brand The beneficiaries such as SMIC, Changjiang Electronics Technology, Huatian Technology, and other manufacturing and sealing measurement leaders.