Module manufacturers for market reshuffling or have accelerated development start

mode is emerging. According to the business revenue statistics of majorlte m2 module manufacturers, in 2020, Yuan Yuan ranked the first with 600 million module ...

Jul 19,2022 | Anita

mode is emerging. According to the business revenue statistics of majorlte m2 module manufacturers, in 2020, Yuan Yuan ranked the first with 600 million module business revenue, and Guanghe Tong ranked the second. Nissan Intelligence (Nissan Intelligence) ranked third, the company quickly entered the module business through the acquisition of Satcom and Longsang Technologies. In terms of gross margin, due to the large number of participating vendors and the low price competition strategy adopted by module vendors to capture the fast-rising share of IoT, the gross margin of module vendors will basically be between 15%-22% in 2020.

Operator profitability maintains a leading position. From the perspective of profitability, Guangdong Grid focuses on strategies in high-value areas such as automotive networking and consumer electronics to achieve higher profitability, with a net margin of 10.34% in 2020 , significantly ahead of other module manufacturers. As a platform module manufacturer, Telecommunication pursues scale advantage. In the process of rapid product volume, followed by scaling up to build cost advantages and profitability. (Source: Future Think Tank)

Looking ahead, we believe that small manufacturers will gradually lag behind and market concentration is expected to increase. On the one hand, low-speed products have lower requirements for sexual performance and more serious product homogenization, so the value of the channel may be more prominent. Compared with small manufacturers, leading manufacturers have access to a wider range of channels, and leading manufacturers have greater scale advantages in procurement and processing, and can obtain higher profit margins for the same price. On the other hand, the 5G era has arrived. 5G is more difficult to develop technology than 3G and 4G because of the high frequency band and faster speed. At the same time, it also brings multiple costs of 5G chips, testing and patent licensing. Based on the fierce competition of low-speed products, we think it is difficult for small module makers to have enough profit margin to bear a large amount of R&D investment, and it is an inevitable trend for small module makers to clear out. Under the background of upstream chip tension and epidemic affecting business development, small module makers have weaker risk resistance, market liquidation or accelerated start, and industry concentration is expected to increase.

Investment analysis

With the rapid growth of the global IoT enterprise market, the number of IoT connections continue to explode, the relevant national policies to support the system and for the downstream of various new applications for scenario design demand, IoT management industry boom will continue to be healthy upward. We can think of cellular module as an important part of the IoT connection layer, will continue to benefit from the rapid start of the connection layer hardware facilities and equipment; with the development of 5G technology, 5G module shipments began to gradually enter the company's scale release phase, the future is expected to usher in the volume and price rise. With the global financial market rising in the east and falling in the west, and the market concentration further increasing, MobileTech and GWT have been increasing their market share by virtue of their superiority in products, cost, services, channels and marketing, and the double-leader pattern has been highlighted.