New domestic competition for mobile phone components

Latest update time：2021-02-28

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Since smartphones entered the market, more and more functions have been added to them. In this process, diversified mobile phone chips have brought waves of new climaxes to the semiconductor industry, and at the same time, they have also promoted the growth of some chip design companies.

After many mobile phone chip design manufacturers have gone through rounds of competition, some of them have begun to take shape. Now, these mobile phone chip manufacturers have made new moves. Among them, Goodix Technology announced earlier that it plans to invest 1 billion yuan to build a western R&D and ecological headquarters project in Chengdu Hi-tech Zone to carry out R&D business in related fields such as CMOS image sensing, audio software solutions and low-power Bluetooth.

This shows that mobile phone chip players are frantically expanding their product lines.

Mobile CIS Competition

CMOS image sensors (CIS) can be used in mobile phones, automobiles, industry, consumption and other fields. Among them, mobile phones are the largest end-user market for CIS. After entering the era of smartphones, benefiting from the demand for camera functions in smartphones, CMOS image sensor (CIS) manufacturers have become stars in the development of mobile phones. As one of the most promising mobile phone markets, some local chip design manufacturers have also set their sights on the development of CIS.

GalaxyCore is one of the earliest chip design companies in China to develop mobile phone CIS. It entered this market in 2007. In 2014, under the rapid growth of mobile phones in China, the company's CIS chip shipments exceeded 940 million. After years of planning, its CIS has won the favor of the market.

In addition to GalaxyCore, in the process of mobile phones developing towards multi-cameras, Will Semiconductor has also begun to seek to develop into the CIS field, and acquisition is one of their ways to enter this market. In 2019, Will Semiconductor successively acquired OmniVision Technologies and Sipix. Among them, OmniVision Technologies is the world's third largest CIS supplier. Before being acquired, OmniVision Technologies already had a certain advantage in the mobile phone CIS market. Compared with OmniVision Technologies, Sipix, another CIS manufacturer acquired by Will Semiconductor, focuses more on low-cost, cost-effective products. Under such a layout, Will Semiconductor's mobile phone CIS business is also highly competitive globally.

Although there are already some giant manufacturers in the mobile phone CIS market, the development of this market is not saturated, so there are some new players who want to participate in the competition of mobile phone CIS. SmartSens, which joined the track last year, and Goodix Technology, which joined this year, are both new players challenging the mobile phone CIS market.

Judging from their development experience, Goodix is the leader in mobile phone fingerprint chips. However, with the iteration of mobile phone fingerprint chips, the revenue and profit growth space of traditional capacitive touch chips is limited. On the other hand, there are more and more competitors in the optical under-screen fingerprint market. In this case, it is reasonable to expand into more fields. At the same time, since Goodix has accumulated some technologies that can be communicated with CIS in the process of developing optical under-screen fingerprints, development into the CIS field may consolidate their position in the mobile phone chip market.

SmartSens was originally a manufacturer dedicated to the CIS field, and as mobile phones are the main driving force for the growth of the current CIS market, their development into this field will help them expand their position in the CIS market. In addition, SmartSens received investment from the second phase of the National Big Fund and Xiaomi Changjiang Industrial Fund last year. According to relevant reports, the funds raised this time will be used to increase the company's investment in innovation. Judging from SmartSens' actions, these funds may support their expansion in the automotive and mobile phone fields. Compared with the complexity of automobiles' demand for chips, the development results in the mobile phone field are coming faster-at the end of last year, SmartSens launched a full range of mobile phone CIS products. On the other hand, SmartSens' breakthroughs in new fields may also feed back to the development of companies affiliated with industrial funds (not only Changjiang Xiaomi has invested in SmartSens, but Huawei Hubble has also invested in it).

As more and more local chip design players participate in the competition for mobile phone CIS, some changes that cannot be ignored have also emerged. First, companies that have a certain advantage in the mobile phone CIS market are iterating to higher-end products to keep their advantages in competing with international giants. Second, new players are more inclined to create distinctive mobile phone CIS and win the favor of the market through differentiated performance. The product launched by SmartSens this time is to enable its many years of advantage in the security field, night vision imaging technology, to be used in mobile phone imaging applications.

In addition, these CIS players are trying to build their own production lines. Since CIS manufacturing is a special process, having their own production lines can better play the advantages of their products. Especially when chip production capacity is tight, having their own production lines is more conducive to ensuring their own supply (supply capacity is also a manifestation of competitiveness).

The melee in the mobile phone fingerprint chip market

Benefiting from the development of smart phones, Goodix, as one of the first companies to get rich, is expanding into more fields to seize the future position in the mobile phone market. At the same time, the market they occupy is also coveted by other manufacturers. For example, the mobile phone fingerprint chip market, which is Goodix's specialty, has also attracted the attention of other players.

While Goodix is trying to expand into the CIS field where Will Semiconductor is good at, Will Semiconductor is also trying to seize the market occupied by Goodix. In April last year, Will Semiconductor announced the acquisition of Synaptics' Asian TDDI business for US$120 million to expand the company's influence in the mobile phone field. The so-called TDDI is an integrated chip that integrates display driver IC and touch IC. In recent years, this technology has gradually become the mainstream technology for mobile terminal display and touch. Mobile phone manufacturers such as Huawei, Samsung, and Xiaomi have adopted this technology. After Will Semiconductor completes this acquisition, it can increase the company's product layout in the touch and display driver chip business field and realize the company's coordinated development in various product fields.

In addition, GigaDevice is also developing into the field of fingerprint recognition chips. To this end, GigaDevice acquired Silead in 2019 and began to deploy in the field of fingerprint recognition ICs. According to the 21st Century Business Herald, in 2018, as Silead entered the under-screen fingerprint industry chain and supplied mobile phone manufacturers, its performance achieved rapid growth. In the third quarter of 2018, Silead's under-screen optical fingerprint was mass-produced, and it became the only domestic supplier of optical fingerprint chips that can be mass-produced and supplied except Goodix Technology. Through this acquisition, GigaDevice will also gain new support in the mobile phone market.

In addition, since the beginning of this year, there have been reports in the market that Apple may adopt both the Face ID function and the Touch ID based on under-screen fingerprint recognition in the latest iPhone in 2021. The return of Apple's Touch ID may also bring new vitality to these fingerprint chip manufacturers, especially those dedicated to under-screen optical fingerprint chips.

Expansion in other areas

If CIS and fingerprint chips are markets that have grown thanks to new mobile phone features, then changes in mobile phone RF chips are expected as mobile phones move toward 5G.

A research report from West China Securities shows that domestic RF chip manufacturers started with relatively mature discrete RF chips, and in the window period before the widespread popularization of 5G mobile phones, they are gradually replacing imported RF front-ends for mid- and low-end models, while accumulating module capabilities and gradually moving towards full-category supply.

Under this trend, in order to improve its own market competitiveness and further enhance the level of domestic RF front-end chips, Zhuoshengwei disclosed its 3 billion yuan private placement plan in May last year, aiming at high-end RF filter chips and module R&D and industrialization projects as well as 5G communication base station RF device R&D and industrialization projects.

In addition to Zhuoshengwei, Wingtech Technology has also been working in the mobile phone industry for many years. Unlike other chip design companies, Wingtech Technology was one of the earliest domestic ODM manufacturers to enter the mobile phone field. After domestic mobile phone ODM manufacturers gradually calmed down from rapid development, Wingtech began to seek transformation. In 2018, Wingtech Technology acquired Nexperia, when new changes occurred in Sino-US trade. Nexperia, which has experience in mobile and wearable devices, has become the preferred supplier for domestic mobile phones and other electronic devices expected by the market.

The market behind the crazy expansion

Judging from the actions of the above-mentioned domestic mobile phone chip players, the competition for future hot product lines has already begun. Related chip design manufacturers have also entered the preparations for the crazy expansion of product lines. There may be several reasons behind their active expansion of product lines.

First, under the leadership of Apple, more and more mobile phone chips have appeared. As one of the most promising mobile phone markets, China has a great demand for the same type of chips. For the new blue ocean, manufacturers with accumulation in the mobile phone market are more willing to join the competition in the new market. At the same time, under the trend of integration, the products of these manufacturers may overlap, which may lead to more and more fierce competition among mobile phone chip players. Perhaps in the new round of market changes, there may be some integration and mergers and acquisitions. In addition, the overall solution may make it easier for terminal manufacturers to favor their products, which will help them expand their position in the mobile phone market.

Second, domestic mobile phone manufacturers have a large share in the global market, but these manufacturers do not currently have the chip research and development capabilities comparable to leading mobile phone manufacturers such as Apple, which provides opportunities for mobile phone chip manufacturers.

In addition, benefiting from the development of artificial intelligence in the future, mobile phones, as a bridge to the era of artificial intelligence, may be used in other scenarios in the future, thereby bringing greater profits. This is also reflected in many mobile phone chip manufacturers, from mobile phones to the Internet of Things to the automotive market, which may promote the long-term development of these manufacturers.

In summary, looking at the entire mobile phone market, domestic mobile phone chip manufacturers have entered a period of chaos, and expanding product categories may help them grab more mobile phone market share. After the domestic mobile phone chip market is settled, the mergers and acquisitions between these manufacturers may also give rise to some giants that can compete with international giants.

*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.

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