Huitian Technology is a total application solution provider based on chip design and software development, creating system-level total solutions integrating hardware, software and algorithms, providing one-stop services for customers, focusing on chip design and development, while wafer fabrication, packaging and testing are outsourced to professional foundries, packaging and testing vendors.
Currently, our products focus on fingerprint identification (optical fingerprint chip, traditional capacitive chip) and human-computer interaction (touch chip), and the market we are facing is mainly the mobile smart terminal market represented by smartphones (core market), tablets and laptops, etc., of which fingerprint identification is the core business of the company.
Looking to the future, the company expanded into the field of Internet of Things (IoT) to build a comprehensive IoT platform for chip design and hardware and software product technology.
Internet of Things: Through physical perception (sensors), information processing (smart chip), wireless transmission (5G, wifi, Bluetooth) and other technologies to achieve the connection between things, things and people, to achieve intelligent life.
The company's development history can be summarized in the following stages:
MeetingPoint started with fixed-line telephone chip business.
First explosion: capacitive touch chip
Capacitive touch chip (HCI business) was developed in 2006.
2010 capacitive touch chip to achieve small volume production and sales.
2011-2014, with the rapid promotion of global smart phones, driven by the company's capacitive touch chip sales rapidly, ushered in the first explosive growth, 2012 operating income of 560 million, an increase of 543%.
The second outbreak: capacitive fingerprint recognition chip
In September 2013, Apple released iPhone 5s, equipped with capacitive fingerprint recognition technology (fingerprint unlocking), which set off a fingerprint recognition trend.
Based on the accumulation of touch chip technology, in 2013, we began to develop fingerprint identification chips, and in 2014, we successfully developed and launched capacitive fingerprint identification chips, and quickly became the world's major supplier, and in 2016, the operating income of 3.08 billion yuan, a year-on-year increase of 175%, ushering in the second explosive growth, Huitian surpassed FPC (a Swedish manufacturer) in 2018 to become the capacitive fingerprint identification chip global leader.
The third outbreak: optical fingerprint chip
In 2016, Huitian began to take under-screen fingerprint recognition technology (optical fingerprint chip) as the new main direction of attack.
In 2017, it took the lead in exhibiting the world's first under-screen fingerprint identification technology, becoming a pioneer and vanguard.
In 2017, Vivo launched the first optical under-screen fingerprint phone X20 Plus (all-screen phone), Huawei, OPPO, Xiaomi, Samsung then followed, and in 2018, Apple released the iPhone X, which for the first time opened the era of face swiping by replacing fingerprint recognition with face recognition.
In 2018, Huitian launched commercial under-screen fingerprint recognition technology.
Operating revenue of 6.47 billion in 2019, up 74% year-on-year, ushering in the third explosive growth.
Growing Profitability
In 2012, 2016, and 2019, with the launch of new products, explosive growth was ushered in, followed by a slowdown in the growth rate, and weakened profitability.
Due to technological externalities, the fingerprint chip industry latecomers catch up faster, the market space is squeezed, saturated, and competition is fierce, so for industry participants, it is core competitiveness to take the lead in the development of new products and to achieve mass production and commercialization before the emergence of next-generation technology upgrades.
In 2017, due to the capacitive fingerprint technology is maturing, market saturation, competition is intensifying, the product unit price is decreasing, profitability declined until the second half of 2018, the optical fingerprint chip began to realize the scale of commercialization, and ushered in a new round of growth again, the annual revenue growth of 1.1% in 2018, earnings declined by 16%, and at the same time, the stock price is also the lowest point.
In 2019, optical fingerprint chips ushered in explosive growth.
In 2020, due to the continued increase in R&D investment efforts, the decline in net profit is relatively large.
Asset-liability structure
The company has sufficient funds.
Bills receivable, accounts receivable, inventory accounted for less and less.
We are a design company, with a relatively low proportion of fixed assets, mainly driven by research and development, so the per capita output, per capita salary, per capita R&D investment can reflect the company's most direct competitiveness.
Operational capacity
R&D investment has been increasing, especially after 2016.
As a chip design industry, keeping up with the times and innovating is the key to development.
Competitiveness
The company's comprehensive competitiveness in the field of fingerprint identification chips is strong, and it is one of the few companies in the industry that has the core technical capabilities in three areas: image sensor design, optical design and algorithm, and the integration of hardware, software and algorithms, which is more compatible and shortens the cycle of product updates and iterations. The company's competitors, Silicon Valley and Shield, still need to outsource their algorithms.
Future Outlook
1 Market Prospects
The IC industry is the foundation and core of the modern information industry, and it is a strategic industry for the nation.
IC design is based on market demand for the development and design of various types of chip products, and its growth is mainly dependent on the development of the terminal market, such as smart phones, tablet PCs, mobile Internet, automotive electronics, medical electronics.
In 2020, the global semiconductor market sales totaled $440 billion, of which the U.S. semiconductor companies accounted for about $208 billion in sales, accounting for 47%, and China's sales were about $151.7 billion, accounting for 35%.
Intelligent terminal market, global smartphone shipments growth slowed down, with the construction of 5G infrastructure, followed by a wave of 5G replacement will help boost the market recovery.
The field of Internet of Things (IoT), in the context of the demographic dividend and the basic end of the traffic dividend, with the accelerated advancement of connectivity (5G, wifi, bluetooth), sensors (eyes), smart chip (brain) technology, so that the IoT ecosystem is constantly improving and maturing, and the intelligent life is becoming a reality, the IoT industry contains a huge opportunity of the times in the future.
In recent years, in the wearable field of IoT technology applications, global shipments of smart wearable devices have maintained high growth.
2 , the industry pattern
The integrated circuit industry mainly consists of three areas: integrated circuit design, manufacturing and packaging testing.
FPC is a Swedish biometric sensor technology company, the initial stage mainly rely on major banks in mainland China to provide fingerprint identification system, or a little-known fingerprint identification manufacturers.
In 2012, Apple acquired AuthenTec, and since then AuthenTec has only supplied Apple and no longer provides any products or technology to other manufacturers.
In September 2013, Apple released iPhone 5s with capacitive fingerprint recognition (fingerprint unlock), which started the fingerprint recognition trend.
FPC in the field of fingerprint recognition into the game earlier, and benefit from AuthenTec only supply Apple products, in 2014 Huawei hand in hand with FPC launched a fingerprint recognition phone Mate7, followed by the FPC and other Android-based cell phone brands, quickly take the majority of the domestic market share, in 2015, FPC revenue growth of 1,142%, an increase of 20 times in two years.
The top of the convergence of science and technology to touch business (touch chip) into the cell phone market, in 2014 to adjust the strategic focus, the main direction of attack to the fingerprint identification market, focusing on research and development of capacitive fingerprint chip, the launch of the fingerprint identification chip products in 2014, but as a latecomer, its initial did not get the recognition of the big manufacturers, 2015 revenue growth of 31%, the top of the convergence of the cooperation with the Meizu launched MX4 Pro, after that, Huitian continuously increased R & D investment to start the technical attack, in 2016 developed the world's first live fingerprint detection program, this program can identify fake fingerprints, improve the security of mobile payment, the advantages are obvious, and cooperate with Meizu, ZTE and other companies to launch the live fingerprint technology products PRO 6 Plus and so on.
At the end of 2016, we also developed the world's first IFS fingerprint identification solution that combines touch and fingerprint into one, which was adopted by Huawei P10 and other models, breaking the dominance of FPC in the mid- to high-end Android cell phone market, and increasing revenue by 175% in 2016.
In 2015, FPC monopolized the domestic Android machine fingerprint chip market.
In 2016, FPC accounted for 40% of the share of fingerprint chips for Android phones, ranking first.
In 2017, Huitian and FPC had a fierce competition, and FPC had a slight advantage.
In 2018, Huitian overtook FPC to rank first and became the first supplier of global fingerprint identification solutions for the Android camp.
With Huitian's continuous technological breakthroughs, the advantages that FPC used to have no longer exist, and then by virtue of the advantages of low-cost localization and rapid response capability, it has become the mainstay of the industry.
Full-screen cell phones with large screen size, visual aesthetics to quickly occupy the market and become mainstream, the current full-screen cell phones are divided into face recognition (face ID recognition technology) of Apple's cell phone lineup and fingerprint recognition (under-screen fingerprint recognition technology) of the Android cell phone lineup, due to the user experience is good, easy to unlock, low-cost, etc. Fingerprint recognition is still advantageous.
In the future, the dual combination of face recognition + fingerprint recognition is expected to become the mainstream trend.
Under-screen fingerprint recognition technology is divided into ultrasonic and optical.
Ultrasonic fingerprint recognition: Ultrasonic scanning of the finger, the establishment of 3D fingerprint images and recorded fingerprint images for comparison and identification, due to the penetration of ultrasonic, the design of the phone is very small limitations.
Optical under-screen fingerprint recognition: When the finger squeezes the screen, the reflected light is transmitted to the sensor at the bottom of the screen, and a clear fingerprint image is obtained for comparison with the recorded fingerprint image.
Currently, optical fingerprints dominate the market. Although ultrasonic fingerprints may be more ideal in theory, in practice, fewer phones use this solution due to low yield, high cost, and immature technology, while optical fingerprints have become the mainstream market due to mature technology, guaranteed supply chain, and low cost, and there is a tendency to extend this solution from the mid-range and high-end to the mid-range and low-end machines, and the market scale has increased. The improvement of market scale makes the optical type cost lower again.
The optical fingerprint solution accounted for about 82% of the overall under-screen fingerprint market in 2019.
In the optical fingerprint recognition market in 2019, Huitian gained 75% of the market share by virtue of its technological advantage.
With the gradual popularization of 5G phones new folding screen phones, Huitian has a leading edge in both ultra-thin optical fingerprints and side fingerprints.
5G cell phone parts more, space design requirements are higher, ultra-thin optical fingerprint for 5G cell phones, ordinary optical fingerprint thickness of 2-3 mm, ultra-thin optical fingerprint thickness of about 0.3 mm.
LCD full screen + back fingerprint recognition is used in low-end phones.
LCD full screen + side fingerprint recognition is being widely used in mid-range phones.
OLED full screen (thinner) + under-screen optical fingerprinting is used in high-end flagship smartphones.
AMOLED full-screen + side fingerprint recognition will be used in folding phones, which are considered to be the mainstream form in the future.
Capacitive fingerprint recognition chip players include: Authen Tec, FPC, Huitian Technology, etc.
Optical fingerprint chip major players include: Synaptics, Huitian Technology, Silicon Power, Shield.
Summary
In the face of the wave of technological change, that is, the challenge is also an opportunity, the top of the industry chain is mature cost-effective route, Europe and the United States companies chose the industry chain is immature cutting-edge routes, the current top of the advantage.
The top has been the mainstay of the global fingerprint identification field, will face the pressure of growth under market saturation? Or will it continue to grow as new technologies are developed and the number of competitors decreases?
Subdimensional Space 2021.6.5