Connector is the basic component of system connection, and it has a wide range of downstream applications
Connector is the basic element that constitutes a complete system connection, and it is an electronic component that transmits and exchanges current or optical signals between electronic system devices. As a node, it transmits current or optical signals between devices, components, equipment and subsystems independently or together with cables, and keeps the changes of signal distortion and energy loss between various systems.
Connectors can be classified into four categories based on the transmission medium: electrical connectors, microwave connectors, optical connectors, and fluid connectors. Each type of connector has different functionalities and application domains. For example, electrical connectors are used for electrical signal links between devices, components and equipment, and are widely used in communication, aerospace, computers, automobiles and industries; Microwave radio frequency connector is used for the connection of microwave transmission circuit, which belongs to high frequency electrical connector and is mainly used in communication, military and other fields; Optical connector is a reusable passive device used to connect two optical fibers or cables to form a continuous optical path. It is widely used in transmission trunk, regional optical communication network, long-distance telecommunications, optical detection, and other optical transmission network systems.
Different types of connectors implement different functions, so there are differences in design and manufacturing requirements. Generally speaking, electrical connectors must meet the requirements of good contact and reliable operation. For high-power electrical transmission, connectors need to have low contact resistance, high current-carrying capacity, low temperature rise, and high electromagnetic compatibility. For high-speed data signal transmission, good circuit impedance continuity, low crosstalk, low delay, and high signal integrity are required. Microwave RF connectors, in addition to reliable contact, have strict requirements for impedance design and compensation, and need to meet performance requirements such as insertion loss, return loss, phase, and third-order intermodulation. Fiber optic connectors require precise alignment of components, leading to high demands for the machining accuracy and cleanliness of the contact parts, as well as accurate positioning.
The upstream of connector industry chain is raw material production, while the downstream covers many application fields. From the perspective of industrial chain, the upstream of connectors is the production of raw materials, including metal materials, plastic materials, electroplating materials and structural materials, as well as equipment suppliers such as mechanical processing equipment, electroplating processing equipment, testing equipment and assembly equipment, the midstream is the design and manufacture of connectors, and the downstream is the brand of electronic products and their direct end consumers, covering many application fields such as automobiles, communications, computers and industrial transportation.
Figure1: Connector industry chain
According to different application fields, different connectors have different design emphases. Connectors in different application fields need to meet three basic performances, such as electrical performance, mechanical performance and environmental performance. Because of their different application scenarios, there are differences in functional characteristics and technical level.
Automobile connector
The automotive industry is the largest application field for connectors worldwide. Due to the safety requirements in the automotive sector, automotive connectors, especially those used in new energy vehicles, emphasize electrical performance such as high voltage, high current, and interference resistance. They also need to possess excellent mechanical performance, including long mechanical lifespan and resistance to vibration and impact, as they operate in dynamic working environments for extended periods. At present, automobile connectors are mainly electrical connectors, but with the development of automobile intelligence and networking, vehicle-mounted RF connectors have also begun to be used.
Communication field
The communication industry is the second-largest application field for connectors globally. Connector products in this industry need to meet electrical specifications such as characteristic impedance, insertion loss, and voltage standing wave ratio. They are required to achieve low signal loss, low standing wave ratio, and minimal microwave leakage, among other functional requirements. Due to the rapid changes in communication technology, connector products in this field are often customized. The communication industry utilizes a combination of electrical connectors, RF connectors, and optical connectors to meet its specific requirements. In communication data centers or server-side applications, there is a high demand for high-speed connectors. On the other hand, in wireless base stations, the emergence of 5G MASSIVE MIMO technology has led to a significant demand for RF connectors. With the rapid iteration of technology in the field of communication, connector manufacturers in this field need to have the ability of product pre-research in order to keep the matching between connector technology and application scenarios.
Industrial traffic
Industrial and transportation connectors include wind energy, solar energy, industrial robots, mechanical equipment, elevators, rail transit and other application scenarios. Connector products are mostly electrical connectors with long lifespan and slow iteration speed. Besides the aforementioned fields, the application fields of connector products also include military, aerospace and other special fields. To qualify for tasks in weapons systems or space missions, military or aerospace connector suppliers are subject to rigorous scrutiny and approval processes by authorized authorities. Additionally, there are significant national and geographical restrictions associated with these suppliers. In addition, aerospace connectors must undergo rigorous degassing and residual magnetic elimination tests to ensure their normal operation in aviation applications, and must withstand severe environmental conditions.
The market scale of the connector industry has grown steadily, and the domestic substitution space is broad
Connectors are widely used downstream. As one of the important electronic components industries, they have been widely used in automobile, communication, computer and other consumer electronics, industry, transportation and other fields. According to Bipshop & Associates data, automotive connectors accounted for 23.7% and 22.6% of the connector market in 2019-2020, ranking first and second respectively, which is one of the most important application scenarios in the connector field.
Figure2: Downstream Application Distribution of Global Connectors in 2020
In recent years, the global connector market as a whole has shown a steady growth trend, and the scale growth and technological change of the terminal market will promote the continuous expansion of the connector market in the future. From 2011 to 2020, the global connector market increased from US $48.923 billion to US $62.727 billion, with a compound growth rate of 2.80%. Driven by the rapid development of China's economy, the downstream application industries of connectors such as communication, automobile and consumer electronics have developed rapidly in China, which has enabled China's connector market to maintain rapid growth. The domestic connector market has increased from 11.296 billion US dollars in 2011 to 20.184 billion US dollars in 2020, with a compound growth rate of 6.66%, far higher than the global average; The domestic connector market has also increased from 23.09% to 32.18% in the world, surpassing Europe and North America to become the largest connector market in the world.
Connector industry is a fully competitive industry with the characteristics of market globalization and specialization of division of labor, and the competitive pattern is relatively stable. The world's major connector manufacturers have chosen different development directions and business domains based on their own technological capabilities and customer resources. Among the global connector manufacturers, overseas enterprises include TE Connectivity, AMPHENOL, MOLEX and other global leaders. With the advantages of technology and scale, they occupy a leading position in high-end connector markets such as communication, aerospace and military industry, meanwhile, this companies outsource a large number of standardized manufacturing businesses to OEM(Original Equipment Manufacture ) enterprises, and profit level is relatively high; Japan's connector enterprises such as YAZAKI and JAE leveraging their advantages in precision manufacturing and occupy a high share of connector products in the fields of medical equipment, instrumentation and automobile manufacturing; Taiwan has gradually formed leading enterprises such as HON HAI Precision Industry and ZHENG UEI Precision Industry through OEM production. It has established cost advantages through large-scale and standardized production, and enable to control cost and process technology, and occupies a major share in the consumer electronic connector market; Mainland enterprises include LUXSHARE Precision Industry, AVIC Optoelectronics, GUIZHOU SPACE Appliance, ELECTRIC CONNECTOR Technology and WENZHOU YIHUA Connector, etc. Although they started later compared to overseas industry leaders, they have rapidly developed in recent years and have gained a foothold in the global connector market.
From the view of concentration ratio, overseas enterprises such as TE Connectivity and AMPHENOL have great advantages in product quality and industrial scale due to sufficient R&D funds and years of technical precipitation, and are in a leading position in high-performance professional connectors, and lead the industry direction by continuously introducing high-end products. Currently, the phenomenon of the strong getting stronger in the global connector market is becoming increasingly apparent, with industry shares gradually concentrating towards the top companies. Since 1980, the market share of global top connector manufacturers has increased year by year, from 38% in 1980 to 61% in 2020.
Figure3: The market share of the top ten connector manufacturers continues to increase
Connector industry has significant scale effect, high technical barriers in production process, and high industry barriers in customers and markets. According to Bishop & Associates data, in 2019, the global connector companies were dominated by European, American and Japanese companies, and only LUXSHARE-ICT entered the top ten in Chinese mainland. The market share of the top ten connector manufacturers in the world totaled 60.8%, and the market concentration was high, which was rising in recent years.
In terms of automobile connectors, automobile connector enterprises are mainly American and Japanese manufacturers, while domestic enterprises start late, and insufficient technical reserves and relatively weak competitiveness. The market share of the top ten enterprises in the world is 86.5%, which is higher than the overall connector market. In recent years, China's connector manufacturing enterprises in the field of communication and automobile have achieve rapid development in terms of technology and scale. Taking advantage of the opportunities presented by technological iterations in the communication field and the rise of domestic new energy vehicle manufacturers, domestic enterprises have successfully broken the monopoly of foreign connector companies in these two areas. They have managed to penetrate the supply chain systems of major global communication equipment integrators and renowned automotive manufacturers. With the rapid iteration of technology and the growth of demand scale in downstream industries, communication and automobile have become the two largest application markets of connector products at home and abroad.
Compared with overseas giants, China's connector industry started late and at a lower starting point. However, in recent years, with the rapid development of China's electronic information industry, especially the rapid growth of demand for high-end precision electronic products in mobile communication, automobile, consumer electronics and other industries, and push the upstream connector industry rapidly development of China's electronic information, and a number of outstanding enterprises in technology research and development, product quality and brand awareness have emerged, gradually breaking the monopoly of leading enterprises in the international connector industry on technology. Taking automobile connectors as an example, the electrification, intelligence and networking of automobiles offer vast development opportunities for China's connector industry. Domestic connector enterprises are closer to downstream automakers, have quick response capability, have certain market competitiveness in terms of production cost, quick response and customer service, and have long-term development space.
The quantity and prices of automotive connectors have risen simultaneously, and the rise of the domestic new energy vehicle industry has provided a fertile ground for the development of the industry.
1. Automobile electrification increases the demand for high-voltage connectors, and automobile intelligence increases the demand for high-speed connectors
Automobile connectors are widely used in power system, body system, information control system, safety system, vehicle-mounted equipment, etc., involving oil circuit, valve, exhaust device, power distribution system, instrument panel, anti-lock braking system, GPS navigator, display screen and other equipment, including circular connector, radio frequency connector, FCP connector, I/O connector and so on. According to Bishop & Associates data, the global automotive connector market in 2019 was 15.21 billion US dollars, and the compound growth rate from 2014 to 2019 was 5.33%, which was higher than the growth rate of the global connector market; It is estimated that by 2025, the market size of automotive connectors is expected to reach 19.452 billion US dollars.
Figure4: Application of Automobile Connector in Vehicle System and Charging System
According to different transmission media, automobile connectors can be divided into high-speed connectors and electrical connectors. Among them, high-speed connectors are used to transmit and exchange data signals, and electrical connectors are used to transmit exchange currents. According to different application scenarios of automobiles, high-speed connectors can be roughly divided into two categories: RF connectors and Ethernet connectors, among which RF connectors include Fakra, Mini-Fakra, HSD and other categories; According to the different working voltages, electrical connectors can be further divided into low-voltage connectors and high-voltage connectors. The working voltage of low-voltage connectors is generally 14V, which is mostly used for BMS, air conditioning system and headlights of traditional fuel vehicles, while high-voltage connectors are mostly used for batteries, PDU (high-voltage distribution box), OBC (on-board charger), DC/DC, air conditioning, PTC heating, DC/AC charging interfaces of new energy vehicles, etc.
Automotive electrification increases the demand for high-voltage connectors. New energy vehicles adopt the principle of electric drive motor, and the core components are battery, motor and electronic control system. In order to achieve large torque and torque, it is necessary to provide high-power driving energy, corresponding high voltage and large current, and increase the demand for high-voltage connectors. The value of low-voltage connectors used in traditional fuel vehicles is about 1,000 yuan, while the material cost, shielding and flame retardant requirements of high-voltage connectors are higher than those of traditional low-voltage connectors, and the value of connectors used in new energy vehicles is much higher than that of low-voltage connectors.
In recent years, new energy vehicles have made remarkable progress in power performance, charging speed and cruising range, and their market competitiveness has been significantly enhanced. Driven by both policies and markets, they have become an important direction for the development of the automobile industry. Although China's automobile sales have entered the stock market since 2017, the sales of new energy vehicles represented by electric vehicles continue to grow, and the penetration rate continues to increase. CAAM predicts that the sales of new energy vehicles in China is expected to exceed 9 million in 2023, and the penetration rate will be further improved. With the decrease in production costs due to economies of scale, improvements in battery technology leading to increased driving range, and the gradual improvement of infrastructure such as charging stations, the domestic new energy vehicle industry is expected to shift from policy-driven to demand-driven. The significant price reduction in new energy vehicles led by Tesla in January 2023 is also expected to accelerate the further promotion of vehicle electrification, which bodes well for the increased quantity and prices of high-voltage connectors in the automotive industry.
Figure5: Monthly sales and year-on-year growth rate of new energy vehicles in China since 2018
Automobile intelligence needs to add various sensors such as high-definition camera, millimeter wave radar, laser radar and ultrasonic radar, as well as antenna modules such as 5G, V2XS, GPS and BEIDOU, and ECU such as ADAS control module, radar control module and high-speed network management. Compared with traditional fuel vehicles, the data transmission between modules is greatly increased, which requires high-speed, reliable and low-delay data transmission, thus greatly promoting the demand for high-speed connectors. With the increasing penetration rate of autonomous driving above L2 level in China, it is expected that the domestic high-speed connector market will further expand.
Autonomous vehicles means that without the driver's operation, the vehicle has the ability of road environment perception, route decision planning and vehicle control execution through artificial intelligence, visual computing, radar and other technologies. According to relevant documents, automobile automation is divided into six levels, namely L0-L5, in which L0-L2 is assisted driving, the system can assist drivers to perform dynamic driving tasks, L3 and above are called automatic driving, the system can perform all dynamic driving tasks, and L3 needs to be taken over as needed.
In order to create differentiated competition, terminal car companies have increased intelligent configuration in recent years, and launched related models equipped with intelligent driving functions, including adaptive cruise, automatic parking, active lane keeping, automatic lane change and other functions. As of 2022Q1, IDC data shows that the penetration rate of domestic L2 self-driving passenger cars has reached 23.2%, a significant increase of 15.7 percentage points year-on-year, and L2 has gradually become standard. Since 2022, LI AUTO, XPENG, NIO and other models with embedded L3 hardware have been intensively released and put on the market, and lidar has entered the first year of popularization. With the intensive introduction of models with embedded L3 hardware by top-tier automotive companies, it is expected that other terminal car companies will follow suit one after another, and the penetration rate of L3 is expected to continue to increase.
Figure6: LI AUTO L9 sensing element
The realization of autonomous driving requires a complete process of environment perception, decision-making and planning, and control execution. This process gives rise to the perception layer, decision layer, and execution layer. According to the data provided by the decision layer, the perception layer completes information fusion, environment perception and path planning through high-precision automatic driving algorithm and vehicle-mounted computing platform, thus outputting the decision control scheme; According to the decision made by the system, the executive layer replaces human beings to control the steering, driving and braking of the vehicle. This process puts forward higher requirements for the accuracy, reliability and low delay of vehicle data perception and transmission, and increases the demand for high-speed and high-frequency connectors. According to the forecast of CAAM, the sales volume of domestic cars will be about 27.6 million in 2023, an increase of about 3% year-on-year. If 28% of cars are equipped with self-driving cars above L2 level and the average value of high-speed connectors per bicycle is 1,200 yuan, the domestic market size of high-frequency and high-speed connectors is expected to reach 9.27 billion yuan in 2023.
In June 2022, Shenzhen authorities promulgated the "Regulations on the Management of Intelligent Networked Vehicles in Shenzhen Special Economic Zone", which is the first regulation on the management of intelligent networked vehicles in China. It is clear that intelligent networked vehicles can drive on the road after being registered by relevant departments; Expanded the application scope of road testing and demonstration, and chose to realize the global open road test in the administrative area with relatively perfect vehicle-road collaborative infrastructure; In addition, the use management norms and the division of traffic accident responsibilities are also defined. In addition, the Safety Service Guide for Self-driving Vehicle Transportation (Trial) issued by the Ministry of Communications authorities in August stipulates the service scope of self-driving vehicle transportation and lists the application scenarios to encourage the use of self-driving vehicles. Recently, there has been a dense implementation of industry-related policies from national regulatory authorities to local governments, further highlighting the level of attention given to the autonomous driving industry. With the continuous improvement of relevant laws and regulations, the industry's development is expected to accelerate further.
2. Automotive connectors are middle and high-end products, and terminal car factories provide development soil for domestic connector manufacturers
Due to the safety requirements in the automotive field, the performance of automotive connectors, especially new energy automotive connectors, focuses on high voltage, high current and anti-interference, so they have high technical and technological barriers, and the production threshold is higher than that of general connector categories. Therefore, the global automotive connector industry has a high market concentration, which is still controlled by overseas leading manufacturers, and the industry concentration is higher than the overall level of the connector industry. Overseas industry leaders in the automotive connector field have an early start, with advantages in production experience, technological expertise, and production scale. They have played a dominant role in setting industry standards and have established a strong industry moat. At present, overseas TE Connectivity is the global leader in vehicle connectors, with a market share of 39.1% in 2021, and enterprises such as YAZAKI, APTIV, ROSENBERGER, SUMITOMO and JST have the highest market share; However, due to the late start of domestic manufacturers, their market share and market discourse power are low at present. Taking high-speed connectors as an example, the domestic market is dominated by Rosenberg and TE Connectivity, but domestic manufacturers represented by ELECTRIC CONNECTOR Technology and CZT Co., Ltd. are also accelerating domestic substitution.
With the development of China's manufacturing industry, the domestic new energy vehicle-making force has risen rapidly and become the largest new energy vehicle production base in the world. Among the top 15 new energy automobile manufacturers in domestic retail sales in 2022, 12 are domestic automobile brands, occupying a dominant position. Although local automobile connector manufacturers are inferior to overseas leading enterprises in terms of starting time, development starting point and production scale, they have advantages in response speed, cost control and rapid delivery, and can produce and deliver large quantities of products in a short time, which is expected to achieve rapid development by taking advantage of the rise of new energy automobile brands in downstream terminals.
Figure7: Competitive Advantage of Local Automotive Connector Manufacturers
This article Source: VZKOO
With both quantity and price on the rise, the automotive connector industry is encountering opportunities for domestic substitution.-China exportsemi.com
