tech

In recent years, thanks to the support of national policies, the dividends of domestic substitution, and the drive of the capital boom, a large number of chip manufacturers have emerged. These chip manufacturers quickly entered from a point and captured a certain market share. However, they also face the fierce competition of the red ocean market. To avoid getting involved in the fierce market competition, these manufacturers have to start exploring new development directions.

The domestic chip industry is really competitive, with products, prices, and sales strategies all being competitive. Now, even the expansion of the product line is also "competitive". Where is it heading? One direction is power management chips. Power management chips have become a hot field for chip manufacturers of different fields and sizes in China. In all electronic-related products, power is the most basic demand. With people's requirements for the functions and performance of electronic devices continuously improving, the importance of power management chips is also increasingly highlighted.

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These manufacturers all focus on power management chips. According to the semiconductor industry observation, a domestic RF giant is looking for growth opportunities in the field of power management chips and is currently recruiting talents in this field.

For the RF chip track, all players are in a dilemma of internal and external troubles. On the one hand, the RF chip market is still firmly in the hands of international giants. At present, the global RF front-end chip industry has a more mature industrial chain, and the industry barriers are very high. On the other hand, the domestic RF front-end industry has seen a large influx of new entrants, making the disorderly competition in the RF front-end industry more intense, especially in some homogenized products.

Moreover, the semiconductor industry is in a downswing cycle, and for a large number of domestic chip manufacturers mainly focused on the consumer market, they have been more or less impacted, exerting certain pressure on the company's performance.

Therefore, in order to continuously develop their strategic highlands, RF chip manufacturers not only need to layout and invest in the upstream of RF chips and high-end module products, moving towards the higher value chain end. But also need to develop diversified businesses.

There are also many domestic flash chip suppliers who focus on the power management chip market, including NOR Flash and NAND Flash. At present, the industry concentration of the NOR Flash market is relatively high. With Infineon (the business acquired by Cypress) and Micron gradually withdrawing from the consumer NOR Flash market with a larger share, they are attacking the industrial and automotive markets with higher gross margins. At present, the global NOR Flash market is mainly dominated by four manufacturers: Winbond, Macronix, GigaDevice, and Infineon, accounting for about three-quarters of the market share. The market pattern of SLC NAND Flash is similar to that of NOR Flash.

At the same time, other domestic NOR Flash manufacturers are also gradually increasing, including mainland manufacturers such as Puyan Shares, Hengshuo Shares, and Xin Tian Xia, etc. The market share of these manufacturers is increasing year by year, and NOR Flash also shows a trend of diversified competition. However, the market competition for flash chips is very fierce, and the price pressure is also relatively large. These flash chip manufacturers need to expand diversified businesses and seek new growth points to maintain rapid growth.GigaDevice, as the largest NOR Flash manufacturer in Mainland China, has gradually formed a diversified product layout of storage, MCU, and sensors in recent years, and its MCU and sensor chips have started to generate revenue in volume. According to its financial report data, GigaDevice's total revenue in 2022 was 8.1 billion yuan. Among them, the revenue from storage chips was 4.8 billion yuan, accounting for 59% of the total revenue; the revenue from MCU chips was also considerable, with a revenue of 2.8 billion yuan, accounting for 34%, indicating the continuous growth of market demand and product competitiveness in this field; while the revenue from sensor products was 400 million yuan, accounting for 5%.

However, since 2021, GigaDevice has further expanded its product line of Power Management Integrated Circuits (PMIC), launching the GD30 series of PMICs around MCU-related applications. GigaDevice is targeting the TWS (True Wireless Stereo) market segment. In TWS applications, PMICs are responsible for charging the battery inside the charging case on one hand, and on the other hand, they are responsible for boosting the output of the battery inside the charging case and quickly charging the earphones. In addition, real-time safety protection functions also rely on PMICs to prevent overcharging, over-discharging, overcurrent, and short-circuit of the built-in lithium batteries. The annual shipment of TWS earphones is in the hundreds of millions, which also reflects the demand for PMICs. Compared with other standalone PMIC manufacturers, the integrated solution of MCU + PMIC is a major selling point for GigaDevice. This integrated solution provides customers with a more convenient choice, reducing the complexity of design and integration, while improving the efficiency and performance of the system.

Founded in 2014, Xin Tian Xia is also a company engaged in the research and development of code flash memory chips, which can provide code flash memory chips with a tolerance range from 1Mbit to 8Gbit, and is one of the manufacturers with a more comprehensive coverage range.

In recent years, Xin Tian Xia has gradually extended from a flash memory chip manufacturer to a multi-category manufacturer of MCUs and power management chips. At present, Xin Tian Xia provides 8-bit general-purpose MCUs. In the field of power management chips, on April 19, 2023, Xin Tian Xia released four types of power products, including two LDO low-dropout linear regulators, charging management chips, and motor drive chips. It also revealed that several new power products are about to be launched, showing a heavy investment in the layout of power management chips.

Hengshuo Semiconductor's main business income also comes from NOR Flash, and it has also developed MCU products. In 2022, the company's revenue was 400 million yuan, of which NOR Flash achieved 349 million yuan, and MCU revenue was 82.19 million yuan. Because its products are mainly sold in the consumer electronics field, they are greatly affected by the market, with a year-on-year decrease of 24.76%. Moreover, the unit price has also decreased. The average unit price of the 32Mb capacity product of NOR Flash, which accounts for the highest proportion of Hengshuo's sales, has decreased by more than 10% compared with the same period last year, and the average unit price of MCU products has decreased by about 15% year-on-year.

However, different from the strategies of GigaDevice and Xin Tian Xia, Hengshuo Semiconductor chooses to focus on AI chips in addition to flash memory chips and MCUs. Hengshuo's strategic layout is to base on storage, develop control, and layout AI as a trinity. It is developing a research and development of terminal inference AI chips based on NOR flash memory technology in conjunction with the University of Science and Technology of China, and has designed ultra-low power consumption CiNOR chips for IoT applications. Moreover, Hengshuo is also promoting the deployment of AI applications based on MCUs and research on model quantization. Integrating AI into MCUs is currently a hot development trend in the industry, and the emerging micro-machine learning artificial intelligence technology (Tiny ML) will promote more and more ultra-lightweight AI algorithm models to run on MCU chips, which is also the approach of major MCU manufacturers.

In summary, the development path of these flash memory chip suppliers is: Flash Memory -> +MCU -> +Power Management Chip or other such as AI chips, etc., and ultimately become a platform-type company.

Analyzing the logic behind this development, from the application and demand of products, flash memory chips usually need to be used in conjunction with power management chips and MCUs to form a complete functional unit, where flash memory chips store running code, power management chips manage power supply, and MCUs control program operation. Flash memory, MCUs, and power management chips, as basic electronic components, have similar main application scenarios and customer groups, and customers of flash memory chips also have the demand for power management chips and MCUs. So this is a normal product extension and expansion logic. Moreover, this helps to increase the revenue from other product lines during market downturns.

Whether it is in the field of RF chips or flash memory chips, players can increase customer stickiness by using the sales resources formed by their main products, coupled with packaged solutions such as MCUs and power management chips, which is a strategic good strategy.

The increasingly crowded power management chip trackIt can be seen that power management chips have become a very important step in the diversified product layout of major domestic manufacturers. But why are these manufacturers all doing power management chips? It should be noted that in mainland China alone, there are already more than 20 listed companies making power management chips, including Jingfeng Mingyuan, Shengbang Shares, Nanxin Technology, Aiwei Electronics, Biywei, Xidi Micro, Saiwei Microelectronics, Dianwei Micro, Shengbang Shares, Yingjixin, Zhenlei Technology, Rui Xinwei, Sirui Pu, Quanzhi Technology, Tiande Yu, and so on, not to mention a large number of unlisted power management chip manufacturers.

In such a crowded track, there are still manufacturers joining one after another, for two possible reasons:

First, the huge market space for power management chips. Power management chips belong to the category of analog chips, which also include signal chain chips and sensors. From consumer electronics to aerospace, almost all electrical and electronic systems use power management chips. Power management chips account for more than half of the analog chip market. According to Gartner data, the market size of power chips in China in 2022 is about 13 billion US dollars, and it is expected to reach 20 billion US dollars in 2025, with a compound growth rate of about 15.4%. In addition, according to the international market research institution TMR, the global market size of power management chips will reach 56.5 billion US dollars by 2026, with a compound annual growth rate of 10.7% from 2018 to 2026.

The second is that the threshold for power management chips has been relatively reduced, and it is no longer a big problem for the current many capable companies to enter the mid and low-end power management chips. As the domestic market gradually opens its doors to domestic power management chips, more manufacturers have the opportunity to try the water.

However, as these manufacturers have entered the field of power management chips, the market that has been very competitive will become even more intense. Power management chips are highly cost-driven markets, and they are not exclusive suppliers that must be supplied by someone, so in order to maintain competitiveness, price wars are challenges that power management chip manufacturers have to face. Even strong as Texas Instruments, it has to compromise.

Recently, the news of Texas Instruments (TI) "bottomless price reduction" has been widely discussed. The target of TI's price reduction is the power management chip. According to the news of "Mobile Chip Expert" on May 12, TI has significantly reduced the price of power management ICs in the Taiwan market by 20%-30%. In order to grab market share, it is said that TI's price reduction has no fixed range and bottom line. This puts more pressure on the domestic power management chip manufacturers that have just started.

However, it must be said that the development speed of domestic power management chip manufacturers in recent years is indeed not slow, an important signal is that mergers and acquisitions in the field of power management chips are emerging. On June 6, 2022, Jinjie acquired Ju Xun Semiconductor, Jinjie was established in 2015 and is a domestic automotive sensor chip supplier. Ju Xun's main products are power chips and signal chain chips. After the merger of the two companies, they will focus on the integration and integration of automotive-grade sensor chips and power chips; on March 15, 2023, power management chip manufacturer Jingfeng Mingyuan announced that it will acquire 38.87% of the equity of Nanjing Lingou Chuangxin Electronics Co., Ltd. Lingou Chuangxin's core product is the MCU chip. The company's power management chips and motor control drive chips can form a complete set of motor drive solutions with Lingou Chuangxin's motor control MCU. Domestic power management chip manufacturers are getting bigger and stronger.

In conclusion, power management chips, MCUs, sensors, and even flash memory chips, the combination layout of multiple product lines has become a road that domestic chip manufacturers have to take, because everyone is developing towards this trend. This combination layout of multiple product lines will also be a major measure for them to hedge risks. They can form different business climbing periods and explosive periods by following the changes in demand, supply, and the continuous expansion and upgrading of application scenarios, thus achieving long-term stable and sustainable growth.

However, this similar development path will more test their performance, power consumption, and cost-effectiveness. The end of the universe is still rolling!