In the last episode, we introduced the general situation of Goodix Technology and compared the advantages and disadvantages of several different unlocking solutions. Friends who have not watched the previous episode, please click on the link to read it
The Shanghai Composite Index fluctuates, semiconductor adjustments, Apple’s votes bounce, and where does the private enterprise Goodix Technology go?
What I want to do in this issue Let me focus on talking to you about besides technological changes, what other factors will affect the performance of Goodix Technology?
1. Key points and trends
In fact, we have cueed the word "mobile phone" so many times before. I believe that the more sensitive friends must have noticed it. Because the under-screen fingerprint chip is installed on the phone. Mobile phone shipments are certainly closely linked to the company's revenue.
1. Mobile phone shipments
As can be seen from the above figure, the company's revenue growth before 2015 was due to touch chips, and from 2015 to 2017 The growth is mainly due to the improvement of capacitive fingerprint recognition business. From 2017 to 2018, the company's revenue has almost remained unchanged, which is actually related to the decline in smartphone shipments. From 2017 to 2018, mobile phone shipments dropped from 1.326 billion units to 1.307 billion units, a decrease of 1.5%, which caused the pie to become smaller. The company's operating income can only benefit from a small penetration rate. Increase.
So the second factor we consider about future prospects is how mobile phone shipments will change. In the first half of 2020, due to the impact of the epidemic, mobile phone shipments fell by 14.60% compared with the same period last year. Most of this decline is "due to" the decline of Samsung (-22.95%), and Goodix Technology has not been a supplier of Samsung before the newly released Samsung Galaxy A71 5G in April 2020. This time Cooperation is a “new revenue” for Goodix. This also reflects Samsung’s recognition of optical fingerprint recognition and Goodix Technology.
Of course, we cannot ignore that Huawei's sales in the first half of the year also fell by 11.04%. Since Goodix and Huawei cooperate very closely, we have to worry about Goodix's semi-annual report performance. Sure enough, its revenue in the 2020 semi-annual report showed almost no year-on-year growth and net profit decreased by 41.3%.
So, will this trend continue? Maybe, maybe not. It may be because the U.S. ban on Huawei officially came into effect the day before yesterday (9.15), officially blocking Huawei's neck; although Huawei has actively stocked up and taken adequate countermeasures, this impact cannot be eliminated in the short term. Yes, Huawei’s mobile phone shipments will definitely still decline. It won't be because, although Huawei's shipments are declining, this does not mean that the entire smartphone market will shrink. The decline in mobile phone shipments in the first half of 2020 is partly due to the epidemic, and on the other hand, it is also because everyone is waiting. A more mature 5G signal and a more mature 5G phone. When the epidemic gradually recovers and 5G gradually becomes popular, mobile phone shipments will at least not get worse.
2. OLED screen development trends
The second relevant aspect is the OLED screen we mentioned before. Since optical technology requires the self-luminous performance of OLED screens, the development trend and shipment volume of OLED screens also indirectly affect the development of optical technology.
Speaking of screens, we have to mention two major types of screens, LCD and OLED.
As for LCD screens, they have always had a relatively high market share because they have no risk of screen burn-in, low cost, eye protection, no severe screen flickering, and better imaging effects. Since OLED screens have no liquid crystal layer, the overall structure is relatively thin, can be bent, even folded, and self-luminous. The overall color is very uniform and saturated, the visual effect is better, and the black state does not emit light. Among "thin and light" and "folding screens" ” and other usage scenarios are more favored by flagship manufacturers, which has also led to the continuous increase in the penetration rate of OLED screens.
It can be seen that OLED screens may become a future trend, which also opens a channel to the future for optical screens.
In addition, the optical market is still very small, with only 150 million shipments in 2019 and a penetration rate of less than 12%. There is still huge room for development to be explored. .
2. Other highlights
In addition to the most important aspects we have mentioned above, there are also some details that I would like to tell you.
As a technology company, being able to grasp the technological trends of the future and achieve technological leaps such as "under-screen optical fingerprint" is the key to future success. To do this, we must first be able to accurately grasp the needs of consumers. Although the past does not represent the future, if a company has been able to seize opportunities to achieve growth in the past, we can also roughly determine their understanding of consumer psychology. A certain understanding.
For Goodix Technology, their past three revenue increases were all due to seizing the opportunity to transform. Especially the recent one that ushered in the era of under-screen optical fingerprints is undoubtedly very successful.
But today’s mobile phones want to hold more and more things, but they also want to be lighter and thinner. Especially the future trend of 5G mobile phones, they need to install more power amplifiers (PA) to increase the wireless communication distance, signal and supported frequency bands of mobile phones; they also want to place more CIS (image sensor) modules to support Multi-camera solution; if these two components are increased, the power consumption will be greater. In order to make the phone last longer, the battery capacity will be increased. So there is really not much space left for fingerprint molds.
As a result, Goodix Technology also seized this pain point and launched ultra-thin optical fingerprint technology, compressing the chip from the traditional 0.7-1mm to 0.3-0.5mm, although it only seems to be reduced by 0.5mm. mm, but for this chip it is half the size, which is already a technological leap.
This solution has now been successfully commercialized on flagship 5G mobile phones such as Xiaomi 10, Huawei P40 series, and OnePlus 8. As the trend of “lighter, thinner but more” continues in the future, I believe more mobile phones will be equipped with this solution.
Moreover, recently (January 2020) the Bluetooth SIG launched a new generation of Bluetooth audio technology - LE audio, which allows dual earphones to receive device signals independently at the same time, solving the problem of using one earphone in the past. As the main earphone, it consumes a lot of energy, is prone to breakage, is unstable, and has delays; it breaks the patented "monitoring" seal of airpods. On the occasion of its release, Goodix Technology teamed up with OnePlus to simultaneously release its own TWS audio solution using this standard. It can be said that this hot spot was caught very promptly.
Of course, even if you sometimes know what consumers want, it’s useless if you can’t make it happen. Therefore, a large amount of investment in technological research and development is very important for a company to be able to transform "ideas" into products.
Goodix Technology’s R&D personnel account for as high as 91%, and the employee team is all highly educated talents, with more than 95% having a bachelor’s degree or above, of which 4% have PhDs. R&D investment accounted for 22.5% of revenue in 2018, 16.7% in 2019, and almost 30% in both 2020Q1 and Q2.
In addition, in fact, Goodix Technology’s revenue in 2020Q1 and Q2 both increased slightly year-on-year. However, due to a large amount of R&D expenses, net profits decreased. On the premise of reduced profits, It is very rare to attach great importance to research and development.
Generally speaking, the company does have the possibility of being replaced by ultrasonic in terms of under-screen optical fingerprints. The short-term damage to mobile phone shipments will also bring certain obstacles to the company's development. However, there may still be a certain gap before ultrasonic technology can be commercialized on a large scale, and the export of Qualcomm's chips to Huawei, the leader in ultrasonic technology, will be restricted by the United States. We believe the impact on Goodix Technology will be limited.
The long-term increase in the penetration rate of OLED, the increase in the penetration rate of mobile phones with under-screen fingerprint scanners, and the arrival of the 5G replacement wave will instead be a new opportunity for Goodix Technology.
However, since it is currently unclear which of the two forces will be better, based on Goodix Technology's own strength and potential, we still intend to cautiously put it into our "observation pool" , wait and see what happens.
This nearly 6k-word analysis of Goodix Technology has come to an end. I believe that friends who have read it will at least have a deeper understanding of fingerprint unlocking. So what impact do you think the US ban on Huawei will have? Between the increase in penetration rate and the short-term decline in mobile phone production, which of the two forces will be better? Welcome to leave a message in the comment area to discuss with us~
Special note:
The above is our understanding of this industry and the company. It is for reference only and does not constitute investment advice. Readers please Think independently.