In the 1920s, the Hawthorne Works of Western Electric in the United States conducted "illumination experiments," revealing that changes in workshop lighting could have a significant impact on productivity. Nowadays, even in the absence of light, the factory can still operate efficiently, and realize automatic unmanned production in the whole process of production management, machining and packaging and transportation. This is the "black lamp factory", also known as "smart factory".
One of the key technologies for the establishment of "Smart Factory" is Internet of Things technology. The internal logic of the Internet of Things is to connect object information to the Internet, so as to realize the connection between things and people. The Internet of Things can connect the "smart factory" with the needs of consumers, share the data and information generated by the factory to the mobile users, and the users can directly send orders to the factory, thus realizing remote control. The "Internet of Things" exists in many people's prospects for the future. Only with the support of fast enough wireless communication technology can things keep connected and interact at any time.
First, the importance of wireless communication module industry
Wireless communication module uses wireless technology to transmit, so that all kinds of terminals can realize communication or positioning functions. As an important carrier of the Internet of Things, it is also an important medium to realize wireless communication. With the rapid expansion of the Internet of Things market, the demand for wireless communication modules is expected to continue to grow at a high speed.
With the popularization of smart home, Internet of Vehicles and other applications in consumption scenarios and the penetration of industrial Internet in industrial scenarios, the number of Internet of Things connections is still expected to maintain a high-speed growth trend, and the general trend of "Internet of Everything" will help the Internet of Things market to continue to grow. According to IoT Analytics statistics, it is estimated that the number of global Internet of Things connections is expected to reach 27 billion in 2025, and the compound growth rate will reach 22% in 2021-2025, among which the compound growth rate of 5G Internet of Things will reach 159%.
Figure1: Global Active Internet of Things Connections and Future Forecast
Second, the wireless communication module industry chain
The wireless communication module industry chain consists of "upstream chip-midstream communication module-downstream Internet of Things application". Wireless communication module manufacturers purchase chips, PCBs, discrete devices and other components from upstream meta-equipment manufacturers, and enter downstream terminal applications through customized software and hardware design, testing and certification, thus promoting the development of the Internet of Things industry.
Figure2: Industrial chain composition of wireless communication module
Upstream: Chip manufacturers are highly concentrated
Upstream of wireless communication module industry chain are manufacturers of various electronic components such as chips, PCBs, discrete devices and structural components. Among them, chip cost accounts for about 80%. Baseband chips, RF chips and memory chips are the three major communication chips, with high market concentration, and overseas manufacturers basically occupy the majority share, with relatively high technical barriers; PCB, resistance-capacitance inductive components and other raw material industries are completely competitive markets with strong substitutability.
Midstream: Market share is concentrated to domestic manufacturers
With the advantage of cost, the market share of wireless communication module industry is gradually concentrated to domestic manufacturers. In the first half of 2017, the top five manufacturers of cellular module shipments were all overseas manufacturers (accounting for 65% of the total market share); In the first quarter of 2022, domestic module manufacturers accounted for more than 60% of shipments and took four seats among the top five in the world.
Downstream: The application scenarios are fragmented and the market scale is expected to continue to expand
The downstream of the wireless communication module industry chain is mainly the Internet of Things intelligent terminal equipment manufacturers. With the continuous development of 5G technology, the efficiency of diversified artificial intelligence Internet of Things scenarios such as intelligent manufacturing, intelligent driving, smart medical care, smart education and smart city has been improved. The research department of CICC believes that wireless communication modules are expected to land in various Internet of Things scenarios.
Figure3: Matrix diagram of 5G application field
Third, the specialization and novelty in the wireless communication module industry
In the wireless communication module industry chain, overseas manufacturers occupy the majority of the upstream chip market, while the localization rate of baseband chips, memory chips and RF chips with higher gross profit margin is still at a low level, and the participation of specialized and innovative enterprises is low. The localization rate of communication modules is at a high level, and the participation of specialized and innovative enterprises is high. Taking cellular communication modules as an example, in the first quarter of 2022, there were 6 Chinese-funded enterprises among the top 10 manufacturers in the world, of which 4 were specialized and innovative enterprises.
Figure4: Profit level and localization process of wireless communication module industry chain. Note: Bubble size indicates market segment space in 2021, and red bubble indicates that there are more specialized and new enterprises in this market segment
The gross profit margin of overseas manufacturers of communication modules is about 30-45%, and that of overseas business of Chinese manufacturers is about 20-35%. However, due to the high labor cost, high expenses and small market share of overseas manufacturers, the net profit margin of domestic manufacturers is still higher than that of overseas manufacturers under the condition of low gross profit margin.
Benefiting from the rapid expansion of the Internet of Things, the wireless communication module industry is in a rapid growth, and the innovation vitality of small and medium-sized enterprises promotes the rapid development of the industry. The downstream demand of wireless communication module industry is fragmented, and there are customization requirements for wireless communication modules in sub-sectors. Small and medium-sized enterprises can focus on sub-sectors to cultivate competitive advantages and help the industry develop with high quality. It is hoped that more enterprises will take the road of specialization and innovation in the future, break the monopoly of technology, open up the supply chain of wireless communication module industry chain, deepen domestic substitution and promote industrial upgrading.
Internet of Everything turn into reality, and wireless communication module promotes the development of Internet of Things industry-China exportsemi.com)
