On December 2, A-share semiconductor leader Weir (313.100, 7.16 , 2.34%) daily limit, the market value returned to 250 billion yuan. It is worth noting that the daily limit of Weir shares may have a certain relationship with the current market lack of core.

At the end of November this year, BYD (269.560, -10.43,  ;-3.73%) Group Chairman and President Wang Chuanfu once said that in the field of semiconductors, the demand for semiconductors for electric vehicles has increased by 5-10 times compared with the demand for semiconductors for traditional vehicles. However, due to the lack of cores, about 7 million electric vehicles are not produced in the world. Electric cars are in the first half and smart cars are in the second half. Smart cars have a greater demand for semiconductors.

Weir shares have strong competitiveness in the CIS field. As the demand for chips for smart cars increases, the company's competitive advantage in the field of in-vehicle CIS may soon be transformed into high-speed growth.

Weir shares outstanding performance: profitability continues to improve

Weir shares were established in 2007, mainly engaged in semiconductor product design business and semiconductor product distribution business. The company's semiconductor product design business is mainly composed of three major business systems: image sensor solutions, touch and display solutions, and analog solutions.

Since its establishment, Weir shares have continued to enhance the company’s core competitiveness through mergers and acquisitions. The most worth mentioning is that in 2018, Weir shares spent 15 billion yuan on the acquisition of Beijing Haowei Technology and Sibeike, and the acquisition was approved by the China Securities Regulatory Commission in 2019.

The main business of Howe Technology and Spyco are the design, testing and sales of CMOS image sensors (CIS). Among them, Haowei Technology is a large-scale CIS design company in the world. Its market share ranks third after Sony and Samsung, and has a number of core technologies. After this acquisition, Weir's chip design capabilities have been significantly improved, and these subsidiaries have brought a large number of new high-quality customers to the company, and the effect of collaborative marketing is obvious.

In this context, Weir shares continue to grow. In 2020, the company achieved operating income of 19.824 billion yuan, a year-on-year increase of 45.43%; among them, the company's semiconductor design business revenue for the year reached 17.267 billion yuan, a year-on-year increase of 52.02%, accounting for 87.42% of the main business income.

In the first three quarters of this year, Weir shares revenue was 18.314 billion yuan, an increase of 31.11% year-on-year; net profit was 3.518 billion yuan, a year-on-year increase of 103.78%.

Not only is revenue rising, Weir shares’ profitability is also increasing. Take the gross profit margin of sales as an example. In 2019, the company's gross profit margin was 27.39%; in 2020, this figure has risen to 29.91%. In the third quarter of this year, the company's gross profit margin once again hit a record high, reaching 35.49%. Huatai Securities (17.320, 0.06, 0.35%) According to the research report, the main reasons for the increase in Weir’s profitability include, on the one hand, automotive, security, and medical CIS grew at a rapid rate compared to the previous month, and their profitability was higher than that of the mobile phone market; on the other hand, the TDDI business continued to prosper in the third quarter. Gross profit margin remained high.

Continuously strengthen R&D investment: leading technology and high brand awareness

In fact, Weir’s outstanding performance and increased profitability are not unrelated to its strong R&D capabilities.

As a semiconductor design company adopting the Fabless business model, R&D capabilities are the core competitiveness. In recent years, Weir shares have continued to increase R&D investment. In 2020, the company's R&D expenses will be 1.727 billion yuan, a year-on-year increase of 34.65%, accounting for 8.71% of operating income. In the first three quarters of this year, the company's research and development expenses were 1.519 billion yuan, an increase of 23.64% year-on-year again.

After years of independent research and development and technological evolution, Weir shares have established significant technical advantages in the fields of CIS circuit design, packaging, digital image processing and supporting software. The company is one of the first companies in the CIS industry to commercialize BSI (back-illuminated) technology. According to the mobile phone market’s demand for high-resolution, depth-of-field control, optical zoom, biometric identification and other application scenarios, the company PureCel, PureCelPlus, RGB- The application of core technologies such as Ir can provide mobile phones with high-quality still image capture and video performance in the industry.

In addition, Weir’s accumulation in LED flicker suppression technology, global exposure technology, Nyxel® near-infrared and ultra-low-light technology, etc., makes the company's high-end technology suitable for the automotive market Wide dynamic range image sensors, ultra-low power solutions suitable for the monitor market, near-infrared and low-light sensors suitable for the monitor market, and global shutter sensors suitable for emerging markets such as AR/VR have obvious competition Advantage.

What’s more noteworthy is that the CameraCubeChipTM technology product developed by the company can provide all the functions of image sensing, processing and single-chip output. The innovative combination of circular optical devices and CMOS image sensors provides ultra-small sensors suitable for equipment in the medical market, and has outstanding performance in medical equipment such as endoscope applications in the medical market.

According to the financial report, as of the end of June 2021, Weir shares have 4257 authorized patents, including 4,097 invention patents, 159 utility model patents, and 1 design patent. The company has 147 layout designs and 113 software copyrights.

With the advancement of Weir shares technology, the company’s brand influence and market visibility continue to increase. Take the company’s 64-megapixel product as an example. In May 2021, Weir shares released a high-resolution OV64A (new product) with 64 million pixels and a pixel size of only 0.61um. This sensor can be used in the front of high-end mobile phones. The small pixel size of the built-in and rear-mounted cameras is the industry leader. After the product was launched, the number of manufacturers that chose to cooperate with Weir shares continued to increase. Among them, Huawei uses the company's 64 million pixel products on the P50Pro mobile phone.

The demand for automotive semiconductors may surge, and Weir shares are favored by many brokers

Not just mobile phones. In recent years, the number and value of image sensors in the automotive and security fields have also been steadily increasing.

In fact, starting from 2020, the growth rate of mobile phone demand for CIS has slowed down, with a growth rate of only 5%, which is lower than the average growth rate of CIS of 7.3%. The demand for automotive cameras, security cameras, and industrial cameras has surged, and the growth rate of CIS applications in computing, automobiles, and security has surpassed that of mobile devices.

China Financial Securities(11.290, -0.01, < font color="green">-0.09%) The research report estimates that autonomous driving will increase the number of CIS on bicycles from the current 2 to 6/11.8 in 2025/2030; it is estimated that by 2030, the number of CIS onboard vehicles worldwide will be increased. The market size will reach 14.22 billion U.S. dollars, and the average annual compound growth rate will be as high as 28%.

Compared with smart phone CIS, automotive CIS has more stringent application environment and technical requirements. Automotive CIS manufacturers need to solve the problem through software and hardware design solutions, and perform well in related fields. Of manufacturers are gaining market and customer recognition. Weir shares entered the automotive CIS earlier. In 2005, it mass-produced the first automotive CIS product. It has been in this industry for more than 15 years. The company's product line in rear view, surround view and DMS has been relatively complete.

This year, Weir shares released OX03F10, an assisted driving integrated parking and high-definition surround view solution. The high image quality required. Currently, in the automotive CIS market, Weir shares are second only to ON Semiconductor in market share. In addition, in the fields of security and medicine, Weir shares also have strong competitive advantages in CIS products.

It is against this background that Weir shares have won the favor of many brokers. From the end of October to mid-November of this year, in just over ten days, Weir shares received recommendations or buy-in research reports from eight brokerage firms.

In fact, not only in the CIS field, Weir shares also have a strong competitive advantage in the TDDI field. Sinolink Securities predicts that by 2025, the penetration rate of TDDI in the mobile phone/tablet market will increase to 80%/75%, and the market size will reach US$1.93 billion. Weir shares will acquire and integrate Synopsys in 2020, fully inherit the development technology, and superimpose its own channel and brand advantages in the mobile phone field, which will become a new growth driver in the future.

Under the background of the rapid growth of market demand, Weir shares, which has established a strong competitive advantage, will not only achieve rapid growth, but will also bring rich returns to investors!