Research Report | This week's focus is on smart driving and capacitor price increases

Report source: Changjiang Electronics Mo Wenyu Team

Focus on intelligent driving and capacitor price increases

Last week, the electronics sector rebounded, with the electronics sector index rising 2.43%, underperforming the market by 0.55 pct. At the beginning of 2018, the consumer electronics and LED sectors, which had undergone adjustments in the early stage of the electronics industry, and the PCB sector driven by 5G communications and environmental protection production restrictions performed better. From the perspective of the future development of various sub-industries, the electronics sector still has excellent configuration value. Driven by AI and 5G, multi-dimensional innovative solutions from materials to components continue to emerge in consumer electronics, and the trend of multi-terminal intelligence is obvious. The "Intelligent Vehicle Innovation and Development Strategy" (Draft for Comments) drafted by the National Development and Reform Commission was publicly solicited for comments from the public on January 5 this year, proposing a goal of 50% of new smart cars by 2020. Smart cars equipped with advanced sensors, processors, and controllers will drive the rapid development of domestic automotive electronics. In the display field, Japanese panel manufacturer JDI adjusted its production line as scheduled, and its LTPS production capacity will be further reduced. It is optimistic that domestic small and medium-sized panel manufacturers will take the LTPS market capacity gap in the short term and compete with overseas manufacturers with flexible OLED technology in the long term.

Automotive electronics: "Smart Car Innovation and Development Strategy" promotes the development of the smart car industry

From the perspective of time schedule, we believe that the "Intelligent Vehicle Innovation and Development Strategy" is expected to promote the rapid development of the intelligent vehicle industry from 2018 to 2020. In addition, the draft opinion proposes that by 2025, the new generation of vehicle wireless communication networks (5G-V2X) should basically meet the needs of intelligent vehicle development, and determine the strategic goals of future 5G communications. 5G communication is a key technical node for the upgrade of intelligent driving from L3 to L4. Its accelerated popularization means that the technological development progress of intelligent driving will also be followed up in a timely manner. The draft opinion emphasizes the importance of Chinese standards and industrial chain collaboration. As the hardware foundation of intelligent driving, the electronics industry, including ADAS, vehicle communications and vehicle entertainment, will usher in strategic development opportunities .

Passive devices: Focus on capacitor price increases

The price increase of MLCC is due to the structural change of downstream demand. The change in demand structure is reflected on the supply side. The production capacity of large factories has shifted to the high-gross-margin automotive and ultra-small MLCC fields, which has directly led to the contraction of mid- and low-end production capacity supply, resulting in this round of MLCC price increases. Judging from the expansion of production capacity, the overall supply and demand may still be tight in 2018. The price increase of aluminum electrolytic capacitors is due to the increase in upstream raw material costs. We believe that this round of price increases of aluminum electrolytic capacitors is caused by upstream environmental protection production restrictions, and its sustainability is still unclear. If there is no capacity expansion in the short term, a strategy of following the price increase can be adopted; if the company has plans for substantial capacity expansion in the future, taking this opportunity to seize market share will be a longer-term benefit.

Recommended Target

Consumer electronics: Lens Technology, Han's Laser, OFILM, Luxshare Precision, and Sunway Communication; semiconductors: San'an Optoelectronics, Changdian Technology, and Yangjie Technology; smart driving: OFILM and Jingwang Electronics; passive devices: Aiwa Group, Torch Electronics, Fara Electronics, and Sanhuan Group; display: BOE A and Jingce Electronics.

risk warning

1. Downstream demand in the electronics industry is lower than expected;

2. The implementation of innovations such as 5G, AI and consumer electronics has not been as expected;

3. The progress of localization of semiconductors in my country is slower than expected.

Table of contents

Core Viewpoint

Hot Spots in Segmented Fields

Consumer electronics: The bottleneck of wireless charging is expected to be gradually broken

Huawei smartphone shipments total 153 million units in the whole year, with global market share exceeding 10%

Apple's new patent reveals long-distance wireless charging is no longer a dream

Automotive electronics: "Smart Car Innovation and Development Strategy" is about to be released

Semiconductors: Pay attention to the price increase of wafer foundry, which is good for wafer foundries

Display: Pay attention to the production line adjustments of overseas panel factories

JDI Nomi Factory shuts down to switch to OLED production

Analysis of TV technology development path in 2018

Passive devices: Focus on capacitor price increases

Production capacity and expansion of major MLCC manufacturers worldwide

Aluminum electrolytic capacitor price increase coming in 2018

Industry key data tracking

Market Review

Industry data

WitsView Panel Prices (Early January Edition)

Main Industry Activities of LCD Branch in 2018

Report Content

Core Viewpoint

Last week, the electronics sector rebounded, with the electronics sector index rising 2.43%, underperforming the market by 0.55 pct. At the beginning of 2018, the consumer electronics and LED sectors, which had undergone adjustments in the early stage of the electronics industry, and the PCB sector driven by 5G communications and environmental protection production restrictions performed better. From the perspective of the future development of various sub-industries, the electronics sector still has excellent configuration value. Driven by AI and 5G, multi-dimensional innovative solutions from materials to components continue to emerge in consumer electronics, and the trend of multi-terminal intelligence is obvious. The "Intelligent Vehicle Innovation and Development Strategy" (Draft for Comments), which was organized and drafted by the National Development and Reform Commission, was publicly solicited for comments from the public on January 5 this year, proposing a goal of 50% of new smart cars by 2020. Smart cars equipped with advanced sensors, processors, and controllers will drive the rapid development of domestic automotive electronics. In the display field, Japanese panel manufacturer JDI adjusted its production line as scheduled, and its LTPS production capacity will be further reduced. It is optimistic that domestic small and medium-sized panel manufacturers will take the LTPS market capacity gap in the short term and compete with overseas manufacturers with flexible OLED technology in the long term.

Consumer electronics: The consumer electronics sector remains stable this week, and the expectations for innovation in 2018 are expected to come as expected. We are optimistic about the growth potential and investment value of excellent white horses in the mobile phone industry chain at the current point in time, and we will use innovation to drive the continuous increase in market share and unit added value. We are optimistic about the increase in the penetration rate of OLED, glass back cover, wireless charging, 3D camera, and full screen in 2018. The optimization of terminal product structure, from a single model to a full range of models, will drive the continuous growth of supply chain performance. We recommend paying attention to Lens Technology, Han's Laser, O-Film Technology, Luxshare Precision, Xinwei Communication, and Desay Battery.

Passive devices: MLCC price increases are caused by structural changes in downstream demand. The development trend of diversified functions and thinner appearance of mobile phones has increased the number of MLCCs and the demand for ultra-miniaturization; the demand for MLCCs in pure electric vehicles is several times that of traditional fuel vehicles, and the demand for automotive-grade MLCCs will accelerate in the future. The change in demand structure is reflected in the supply side, that is, the production capacity of large factories has shifted to the high-gross-profit automotive and ultra-small MLCC fields, which directly led to the contraction of mid- and low-end production capacity supply, resulting in this round of MLCC price increases. Judging from the expansion of production capacity, the overall supply and demand may still be tight in 2018. We recommend focusing on Sanhuan Group and Torch Electronics.

The price increase of aluminum electrolytic capacitors is due to the increase in upstream raw material costs. Under the condition of continued tightening of environmental protection, the production restriction of aluminum foil has caused its supply to change from oversupply to shortage. From the information we have learned from the industrial chain, the upstream aluminum foil is currently in short supply, and the payment method of large aluminum electrolytic capacitor manufacturers has also changed from bill payment to cash payment. Many small capacitor manufacturers have stopped production due to shortage of raw materials; from the situation of electrode foil manufacturers, Xinjiang Zhonghe said in an investor reception event in January that some electrode foils have increased in price by about 3%. We believe that this round of aluminum electrolytic capacitor price increases is caused by upstream environmental protection production restrictions, and its sustainability is still unclear. If there is no capacity expansion in the short term, a strategy of following the price increase can be adopted; if the company has plans for substantial capacity expansion in the future, taking this opportunity to seize market share will be a longer-term benefit. We recommend focusing on Aiwa Group.

Display field: Last week we paid attention to the adjustment strategies of Korean panel manufacturers. This week we will turn our attention to Japanese manufacturer JDI. JDI is formed by the integration of several traditional Japanese panel manufacturers. Although it was established a short time ago, it has the ability to use the current new display technology. However, the original technology and market direction are relatively single, and the company has performed poorly in recent years due to market trends. JDI entered a period of transformation and adjustment in 2016, developing towards the automotive market and OLED technology. We believe that the three years from 2016 to 2018 can be regarded as an overall adjustment period for Korean and Japanese manufacturers. On the one hand, we can get a glimpse of overseas manufacturers' judgment on the future of display technology; on the other hand, the closure and transformation of production lines during the adjustment period will bring structural supply and demand imbalances to the panel market, and the panel price will be reduced by a small margin during the adjustment period. We recommend paying attention to BOE A and Shenzhen Tianma A.

Integrated circuit field: In Q3 2017, global semiconductor equipment shipments reached $14.3 billion, setting a new record for single-quarter shipments. The high prosperity of the global semiconductor equipment industry reflects from one aspect that the global semiconductor manufacturing industry is accelerating. SEMI estimates that 26 of the 62 new wafer fabs put into production in the world from 2017 to 2020 are from mainland China. In the future, China's share of global semiconductor equipment demand will accelerate. The world is experiencing a wave of AI applications. Tesla is currently becoming a new entrant, and the AI ​​chips it develops will be used in the field of intelligent driving. In the era of artificial intelligence, chips based on GPU, FPGA, ASIC, etc. will be widely used, driving the complexity of core chips to become increasingly higher. AI chips will become an important new growth pole for integrated circuits in the future. We recommend paying attention to Changdian Technology, Huatian Technology and Yangjie Technology.

Hot Spots in Segmented Fields

Consumer electronics: The bottleneck of wireless charging is expected to be broken

Huawei Smartphone shipments in South Korea total 153 million units, global share exceeds 10%

华为轮值 CEO胡厚崑在新年献词中透露，2017年，华为与荣耀双品牌并驾齐驱，市场规模快速增长，华为（含荣耀）智能手机全年发货1.53亿台，全球份额突破10%，稳居全球前三，在中国市场持续保持领先。华为新推出的Mate10成为首款加载人工智能芯片的手机，为消费者带来了真正意义上的、足以称为由AI主导的智能手机。

News source: Securities Times http://kuaixun.stcn.com/2017/1229/13870275.shtml

Changjiang View : Huawei is one of the few brands that maintained double-digit growth in 2017. It has now achieved a step-by-step layout with the P series and Mate series covering high-end users, the Honor V series covering mid-to-high-end users, and the Nova and Honor Play series covering young users. At the same time, the expansion of overseas markets, especially the European market, has also achieved remarkable results, occupying a certain share in mainstream European markets such as Finland, the Netherlands, Belgium, Poland, Spain, Italy, and the Czech Republic.

Therefore, we believe that Huawei's future growth momentum in terminal shipments and global market share will mainly come from conquering overseas markets and invading the mid- and low-end markets. Overseas high-end markets are located in Japan, South Korea, North America, and Europe, with major competitors being Samsung and Apple. Huawei will leverage its AI and camera advantages to target a breakthrough in the large U.S. market. The mid- and low-end markets include South America, Africa, India, and other Southeast Asian countries. Currently, domestic brands such as Xiaomi, OV, and Lenovo are all making plans. Under the trend of consumption upgrading, consumption below 1,000 yuan is gradually moving up. It is expected that Huawei will increase its investment in 1,000 yuan phones, which will also make competition in this field extremely fierce.

Apple's new patent reveals long-distance wireless charging is no longer a dream

Recently , foreign media exposed Apple's latest patent technology, which makes long-distance wireless charging possible. In addition to the long-distance wireless charging function that everyone is interested in, the patent also has a power scheduling function, which means that users can choose which device to charge first. It can be seen that if this technology becomes a reality, friends who have multiple mobile phones at the same time will only need one charger.

News source: PCpop.com http://www.pcpop.com/article/4482143.shtml

Yangtze River View:

The biggest bottlenecks of wireless charging currently lie in several aspects:

1. The application scenarios are not rich enough. That is, the density of transmitters is low, especially in public places, and it is currently only popularized in some businesses. However, in the future, with the unification of wireless charging technology paths and protocols, and the increase in Qi Alliance members, the convenience of use will gradually improve.

2. Wireless charging efficiency is limited. Wireless charging is usually only 80% of the traditional limited charging rate, which seems a bit useless at a time when large-capacity batteries and fast charging are popular. In response to this, Apple launched a 7.5W wireless fast charging function in the iOS11.2 update. Although the actual test effect is only slightly higher than the 5W charging efficiency, it is believed that after the heat dissipation and power management problems are solved, the wireless charging efficiency will make great progress.

3. Limitation of the sensing distance of wireless charging. Currently, the maximum sensing distance of wireless charging based on the principle of electromagnetic induction is usually within 5-10cm, which makes it almost impossible to use and charge the phone at the same time, which is the advantage of wired charging. If Apple solves this contradiction in the future, the trend of wireless charging replacing wired charging will be more certain .

Related targets: Luxshare Precision, Sunway Communications, Sunlord Electronics

Automotive electronics: "Smart Car Innovation and Development Strategy" is about to be released

According to the Beijing News, in order to accelerate the innovative development of my country's smart cars, the National Development and Reform Commission organized the research and drafting of the "Smart Car Innovation and Development Strategy", which was publicly solicited for public opinions from January 5. The draft for soliciting opinions proposes that by 2020, the proportion of new smart cars will reach 50%; and that smart cars will be demonstrated in relatively closed areas such as airports, ports, and tourist attractions, as well as major projects such as the Beijing Winter Olympics and Tongzhou Sub-Center Smart Transportation, and Xiong'an New Area Smart City.

News source: Beijing News http://tech.163.com/18/0106/07/D7F03BM900097U7T.html

Changjiang Viewpoint: The "Smart Car Innovation and Development Strategy" (Draft for Comments)[1] proposes three development stages: by 2020, the proportion of new smart cars will reach 50%, the coverage of vehicle wireless communication networks (LTE-V2X) in large cities and highways will reach 90%, and Beidou high-precision space-time services will achieve full coverage. By 2025, the technical innovation, industrial ecology, road network facilities, regulations and standards, product supervision and information security systems of China's standard smart cars will be fully formed; new cars will basically achieve intelligence, and high-level smart cars will achieve large-scale application. By 2035, China's standard smart cars will be world-renowned and China will take the lead in building a strong smart car country. This "Strategy" will become the main document guiding the development of China's future smart car industry.

First of all, from the perspective of time schedule, the progress of smart cars accounting for 50% of new cars in 2020 is faster than market expectations. According to statistics from the China Association of Automobile Manufacturers, the penetration rate of smart driving passenger cars in China was 15% in 2015, and iResearch predicts that it will be 20% and 32% in 2016 and 2017 respectively. According to the planned data, we believe that the entire smart driving industry will continue to maintain a rapid development trend from 2018 to 2020 .

In addition, pay attention to the application of 4G and 5G communications in intelligent driving. The Strategy points out that by 2020, the coverage rate of vehicle wireless communication networks (LTE-V2X) (4G) in large cities and highways will reach 90%, and Beidou high-precision space-time services will achieve full coverage. By 2025, the new generation of vehicle wireless communication networks (5G-V2X) will basically meet the needs of the development of smart cars. We believe that due to the huge advantages of 5G technology in ultra-high speed, ultra-low latency and massive connections, it will become the key technical support for the future upgrade of intelligent driving and Internet of Vehicles, and will become a turning point for the upgrade of intelligent driving from L3 to L4-L5.

The Strategy emphasizes Chinese standards and the overall development of the industry chain. We believe that the domestic smart car industry chain will fully benefit from the introduction of this national strategy. The electronics industry is the hardware foundation of smart cars, and many companies have taken the lead in deploying smart car ADAS, in-vehicle communications, and in-vehicle entertainment. Currently, electronic companies entering the ADAS field include Joyson Electronics, Desay SV, OFILM, Allwinner Technology, Lianchuang Electronics, etc.; in the field of in-vehicle communications, companies such as Datang NXP and Derun Electronics have already made arrangements; in the field of in-vehicle entertainment, companies such as OFILM have actively deployed.

Related target: OFILM Technology

Semiconductors: Pay attention to the price increase of wafer foundry, which is good for wafer foundries

8-inch wafer foundry price increased by 10-20%

According to Jiwei.com, the price of upstream silicon wafers continues to rise. As the demand for 8-inch wafer fabs stabilizes and the overall production capacity is tight, the demand for power management IC (PMIC), fingerprint recognition IC, etc. continues to grow. It is expected that the price of 8-inch wafer foundry will be smoothly increased by 5-10% in the first quarter of this year. The overall demand for 8-inch wafer fabs was relatively flat in the first half of 2017. As the peak season demand in the third quarter emerges, and the 8-inch wafer foundry is difficult to expand production significantly in the short term, the overall production capacity is still tight. It is expected that as the silicon wafer price continues to rise, the price of 8-inch wafer foundry is expected to increase by 5-10% in the first quarter of this year, and SMIC may become a beneficiary. The increase in foundry prices by 8-inch wafer fabs is expected to pass on the cost of the price increase of silicon wafer materials, which will help the gross profit margin performance. In addition, it is expected that prices will continue to rise in the future, and customers will increase the amount of wafers during the off-season, which will help support the off-season operations in the first half of this year. In 2017, 12-inch silicon wafers were in short supply and their prices increased quarter by quarter. The prices of 8-inch silicon wafers also increased in the second half of 2017, with a cumulative increase of about 10%. The prices of 8-inch silicon wafers will increase again in the first quarter of 2018.

News source: Jiwei.com http://jiweinet.com/ss6/html/13/n-659113.html

Changjiang Viewpoint : With the arrival of the high prosperity of the semiconductor industry in 2017, there is a gap in the supply and demand of silicon wafers, which are key materials for semiconductors. Due to the insufficient production capacity reserves of major silicon wafer suppliers in the early stage and the long expansion cycle, the global 12-inch silicon wafer orders have been scheduled until the end of 2019, and the price of silicon wafers has been rising all the way. Silicon wafers are the largest link in semiconductor materials, accounting for about 30% of the overall material cost, which brings certain cost pressure to wafer foundries. The adjustment of wafer foundry this time will help improve the profitability of wafer foundry companies. At present, the 8-inch lines in operation in China mainly include SMIC, Huahong Semiconductor, Silan Integrated Circuit, Shanghai Advanced Semiconductor, China Resources Shanghua and other companies.

Related targets: SMIC, Hua Hong Semiconductor

Display: Pay attention to the production line adjustments of overseas panel factories

JDI Nomi Factory shuts down to switch to OLED production

Japan Display (JDI), a small and medium-sized display panel manufacturer in Japan, has stopped production at its Nomi factory in Ishikawa Prefecture, one of its six factories in Japan, since December 27, 2017. 268 workers will be transferred to other factories, and the factory is expected to be transferred to its OLED panel production technology factory JOLED, which will start producing OLED panels from the end of 2019.

News source: Sohu.com http://www.sohu.com/a/214693371_339916

Changjiang Viewpoint: JDI was established on April 1, 2012, integrating the LCD businesses of Toshiba, Sony and Hitachi, aiming to revive Japan's LCD industry. Since its establishment, JDI has specialized in LTPS technology and fully connected with the smartphone display market. The single display technology and downstream applications did not last long for JDI, as mainland panel manufacturers seized its share of the smartphone market, and the breakthrough of OLED display technology caused the loss of high-end customers.

Therefore, "transformation" has become the keyword for JDI in the past two years. The reserve of OLED technology and the automotive market have opened the first step of JDI's diversified development. This time, the closure of the Nomi production line in Ishikawa Prefecture and the transfer of the factory to JOLED may indicate that printed OLED technology is expected to be mass-produced.

Related target: Shenzhen Tianma A

TV technology development path in 2018 Analysis

According to Sigmaintell, the global TV panel shipments will remain at 261 million units in 2018, but the rapid growth in the large-size panel market will drive the average size to increase by 1.7 inches, thereby driving the demand area to increase by 7.6% year-on-year. At the same time, the whole machine manufacturers are also actively planning the layout of large-size products in 2018. The average size of global TV whole machines has increased to 44.8 inches, an increase of 1.5 inches.

News source: Qunzhi Consulting http://mp.weixin.qq.com/s/0JQPXbfP7vxTrjg4DXTCNA

Changjiang Viewpoint: Against the backdrop of the rapid growth of data volume, we proposed in our annual strategy report that display technology is taking high definition, diversification, large screen, and low consumption as the core breakthroughs, driving the upgrade of information interaction experience. Detailed to the development trend of TV panels in 2018: 4K is rapidly popularized, 8K is ushering in its first year, large-size is accelerating, and forms such as quantum dots and borderless will start differentiated competition. In addition, the price of large-size panels has begun to decline since July last year, and has been consistent with the price level in the third quarter of 2016. The price of typical panel sizes has fallen by more than 20% in the past six months. We believe that the correction of TV panel prices has eased the cost pressure of the whole machine factory, which is conducive to the diversified innovation of the whole machine manufacturers. TV whole machine manufacturers can use more methods other than vision to enhance consumer purchasing interest, such as voice interaction, intelligent operation and other methods. At the upcoming 2018 CES exhibition, LG is expected to launch the ThinQ series of TVs equipped with Google Voice Assistant, leading the innovation trend.

Related target: BOE A

Passive devices: Focus on capacitor price increases

8-inch Wafer foundry price increased by 10-20% Global major MLCC original factory production capacity and expansion situation

Yirong.com has provided the current production capacity of major global MLCC manufacturers and the expansion plans of some original manufacturers for colleagues in the electronics industry through multiple contacts. Overall, the production capacity is mainly concentrated in Murata, Samsung Electro-Mechanics, and Taiyo Yuden. In 2018, Huaxin Technology, Samsung Electro-Mechanics, Yageo, Eyang, Fenghua High-Tech, and Taiyo Yuden all have plans to expand their production capacity.

News source: Yirong.com http://mp.weixin.qq.com/s/YcUv9uNmqdSCg57OtgIVmg

Changjiang's view: MLCC downstream applications are mainly concentrated in the fields of mobile phones, computers, audio and video equipment, and automobiles, among which the mobile phone and automobile markets have undergone the greatest changes. The demand for MLCC has increased due to the diversified development of mobile phones. In addition to the increase in quantity, the development direction of thin and light mobile phones has also put forward new requirements for the ultra-miniaturization of MLCC; the demand for MLCC by pure electric vehicles is several times that of traditional fuel vehicles, and the popularization of pure electric vehicles is the general direction of development. In the future, the demand for automotive-grade MLCC will accelerate. The change in demand structure is reflected in the supply side, that is, the production capacity of large factories has shifted to the high-gross-profit automotive and ultra-small MLCC fields, which has directly led to the contraction of mid- and low-end production capacity supply, which has led to this round of MLCC price increases. Judging from the expansion of production capacity, supply and demand may still be tight in 2018.

Related targets: Sanhuan Group, Torch Electronics

Aluminum electrolytic capacitor price increase coming in 2018

Since 2017, domestic environmental protection control has been strengthened. The upstream raw material of aluminum electrolytic capacitors, aluminum foil, is subject to strict government control of wastewater treatment quotas. Some small manufacturers have been eliminated, resulting in a shortage of aluminum foil, which has led to longer delivery times for Japanese electrolytic capacitor manufacturers.

Since electro-etching foil and chemical foil (key raw materials for manufacturing aluminum electrolytic capacitors) consume a lot of electricity, the production of electrode foil will emit acidic wastewater and irritating gases. The government has strictly controlled the wastewater treatment quota this year for environmental protection. The increased environmental pressure has led to the suspension of some production capacity and the elimination of small aluminum foil factories.

In addition, Japanese electrolytic capacitor and aluminum foil manufacturers changed their sales strategies, releasing the consumer electronics capacitor and material market to non-Japanese manufacturers. Japanese air conditioners, home appliances, washing machines and other home appliances require a large amount of aluminum electrolytic capacitor aluminum foil materials, and manufacturers purchase aluminum foil products from mainland China aluminum foil manufacturers. As a result, mainland China's aluminum foil products have been in short supply since June 2017. As Japanese manufacturers do not expand production at the same time, the supply of aluminum foil is tight.

The shortage of aluminum foil materials has led to another price increase for passive components such as downstream aluminum capacitors. The delivery time of Japanese capacitor manufacturers has been extended from the original 6 weeks to 12 weeks, and the delivery time of some Japanese electrolytic capacitor manufacturers has even reached half a year. The order demand of non-Japanese aluminum electrolytic capacitor manufacturers is also relatively bullish, which provides more business opportunities for non-Japanese capacitor manufacturers.

News source: Baidu Experience Network https://jingyan.baidu.com/article/363872ec01da146e4ba16fa0.html

Changjiang's view: With environmental protection continuing to tighten, the production restrictions on aluminum foil have caused its supply to shift from oversupply to shortage. From the information we have learned from the industrial chain, the upstream aluminum foil is currently in short supply, and the payment method of large aluminum electrolytic capacitor manufacturers has also changed from bill payment to cash payment. Many small capacitor manufacturers have stopped production due to shortage of raw materials; from the situation of electrode foil manufacturers, Xinjiang Zhonghe said in an investor reception event in January that some electrode foils have increased in price by about 3%. We believe that this round of aluminum electrolytic capacitor price increases is caused by upstream environmental protection production restrictions, and its sustainability is still unclear. If there is no capacity expansion in the short term, a strategy of following the price increase can be adopted; if the company has plans for substantial capacity expansion in the future, taking this opportunity to seize market share will be a longer-term benefit.

Related target: Aihua Group

Industry key data tracking

Market Review

Industry data

WitsView Panel Prices (Early January Edition)

Main Industry Activities of LCD Branch in 2018

Securities Research Report : [Changjiang Electronics Weekly ] Focus on intelligent driving and capacitor price increases

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