Currently, compared to integrated circuits that stand on the main stage and discrete components experiencing a surge in demand, connectors are undoubtedly the most marginalized. However, despite being a foundational component that receives less attention, domestic manufacturers have a long history of substitution and rich international competition experience. The domestic connector market holds a crucial position globally.
General situation of connector industry
A connector is a coupling device that connects electrical terminals to form a circuit. As a critical foundational component, connectors are used to establish connections between wires, cables, printed circuit boards, and electronic components. They enable the transmission of signals or electromagnetic energy while maintaining signal integrity and minimizing energy losses between systems. In different application scenarios, the functional characteristics and technical level of connectors are different. According to the classification of transmission media, connectors can be divided into three types: electrical connectors, microwave connectors and optical connectors.
Figure1: Source: RECODEAL Prospectus, CITIC Securities Research Department
General situation of global market and competition landscape
1. Market overview
Automotive market is the largest demand area for connectors in the world. According to Bishop & Associate statistics, automobiles are the largest downstream application field of connector products at present. In 2021, the global automobile connector market will grow to 17.08 billion US dollars, which is higher than the growth rate of the total global connector scale in the same period. It is estimated that the global automobile connector market will reach 19.452 billion US dollars in 2025.
Figure2: Source: ASKCI Consulting
2. Industry competitive landscape
According to the data of Bishop & Associates, the compound annual growth rate of China's connector industry in recent 10 years from 2010 to 2020 is as high as 19.34%, while the growth rates of Europe, North America and Japan in the same period are 2.07%, -3.73% and 1.39% respectively. In 2021, China's connector market is US $26.9 billion, accounting for 32% of the world's market share, be the world's largest connector sales market.
Figure3: Source: Bishop & Associates
The industry is still dominated by overseas enterprises, and have difficulty
At present, the global automotive connector industry is still dominated by overseas enterprises. According to the data of 2019, TE Connectivity, YAZAKI and APTIV account for 66.8% in total, while the proportion of domestic enterprises is still low.
Technical barrier
The entire process of connector production involves complex processes, including precision injection molding, precision stamping, die casting, machining, surface treatment, assembly, and testing. It requires high capabilities in mold design and manufacturing, as well as advanced levels of intelligent equipment for production. For example, TE Connectivity STRADA Whisper series backplane connectors have a data transmission speed of up to 25 Gbps and support up to 112 Gbps. The product is also surrounded by folding signal pins with strong C-shaped shielding layer; DuraClik of MOLEX adopts a single row of needles, with an overall height of only 6.4 mm and a needle spacing of 2.0 mm. The embedded welding aid further reduces the width, SMT welding, does not occupy the space of the back panel, and has strong performance.
Patent barrier
Due to their early-mover advantage, overseas manufacturers have established patent barriers, with multiple core technologies being protected by patents. New entrants attempting to bypass these patent barriers for design, research, and manufacturing will likely need to invest higher costs in exploring new technologies.
Figure4: Data source: Official website integration
Customer barrier
According to different downstream application fields, customers have different requirements for connector performance indicators, and it takes a long time from the early stage of supplier access qualification examination to the final entry into the supplier system. For example, in the cooperation between RECODEAL and T Company of the United States, the company began to contact T Company in 2015, entered its supply chain in 2016 and obtained the official designation of the first batch of connector products for the first electric car model, received mass production orders in 2017, and gradually entered mass production in 2019, which shows that the cycle from customer certification to mass production shipment is long.
New Energy Automobile Industry: New Development Trend in Connector Field
For low-voltage automotive connectors, the space for domestication is limited.
At present, the market size of low-voltage connectors accounts for more than 70% of the automotive connector market. However, the technological barriers for low-voltage connectors are lower than high-voltage connectors. Currently, the domestic production rate for low-voltage connectors is only at 5%, indicating a low level of localization. In the long run, the localization space of low-voltage connectors is limited, and domestic manufacturers will be under great pressure.
For high-voltage automotive connectors, both domestic and foreign manufacturers are actively participating in the market.
High-voltage connectors have always been a field with high technological barriers. If issues occur with high-voltage connectors, it can result in overheating, high temperatures, or even combustion accidents. From a technical point of view, the maximum current capacity of HVP/HVA of well-known foreign manufacturers is currently in the range of 350/100 A to 450/100 A, and the large current capacity TE and AMPHENOL are industry benchmarks. At present, the highest large current capacity in China is RECODEAL, 400/40 A, and the current carrying capacity of HVP can completely match the first echelon. In addition, the performance of JONHON, RECODEAL, QUICK-CONTACT, etc. in the electric vehicle market is also very bright, and the gap is gradually shortened, so as to achieve sustained growth in share.
For hight speed automotive connectors, domestic productions meet opportunity
Automotive high-speed connectors include Fakra, Mini-Fakra, HSD and Ethernet connectors. Currently, high-speed connectors, especially automotive Ethernet connectors, generally feature modular and scalable designs to accommodate automotive interfaces. HSD (High-Speed Data) and HSL (High-Speed Link) connectors used for high-speed data transmission are also expanding their range of PCB board-end combinations to fit automotive interfaces. At present, the domestic vehicle high-speed connector market is expected to reach 23.4 billion yuan in 2025 with a compound annual growth rate of 20%. ROSENBERGER, TE, AMPHENOL and APTIV are firmly in the first echelon in the world, while domestic manufacturers include Power Connection Technology, CZT, LISHARE and LAIMU Electronics, which are in the second echelon in the world and are accelerating to catch up to narrow the gap.
Automotive charging/swapping connectors are emerging incremental markets driven by the demand for electric vehicles.
The power exchange connector belongs to a kind of high voltage, which is installed in the car to realize quick power exchange. At present, most connector manufacturers are laying out liquid cooling technology. Sichuan YONGGUI is the head manufacturer of super-fast charging in China, and its products have been commercialized and mass-produced. Customers include GEELY, HUAWEI and Li Auto; The super liquid-cooled high-power charging gun developed by RIFENG Co., Ltd. has also completed the core technology development and related verification, and will be mass-produced and shipped soon. By September 2021, 890 power stations have been built nationwide, and it is estimated that the scale of power stations in China will exceed 15,000 by 2025. Automobile manufacturers such as NIO, BAIC, SAIC and GEELY are all representative enterprises which prepare break into electricity market.
Currently, the high-end connector market is still dominated by international leading manufacturers. However, the rise of domestic downstream manufacturers has also contributed to the growth of domestic companies in this sector. Local manufacturers have a demand to reduce raw material costs and a desire for proximity to suppliers, which is why an increasing number of domestic downstream manufacturers are inclined towards domestic connectors. This trend accelerates the localization and substitution of connectors, leading to increased domestic production. With the continuous improvement of China's manufacturing capabilities and the gradual expiration of foreign manufacturers' connector patents, the development of connectors in China is currently in a transitional phase from manufacturing to innovation. With the effected by external environment and internal market demand, connector enterprises aiming promote domestic productions and strengthen technology research and development, attempt to enhance the whole level of domestic connector.
In response to the historic development opportunities, the process of domesticating the connector industry chain is accelerating- China exportsemi.com
