Will Shengbang Microelectronics become China's TI?

SG Micro Corp is a semiconductor company that focuses on the research and development and sales of high-performance, high-quality analog integrated circuits. SG Micro Corp's general-purpose analog IC products have excellent performance and quality and can be widely used in smart phones, PADs, digital TVs, DVDs, digital cameras, notebook computers, wearable devices, various consumer electronics, as well as automotive electronics, industrial control, medical equipment, test instruments and many other fields.

Shengbang shares' technical team is composed of senior experts in the industry, with advanced analog integrated circuit design, process, production, testing and reliability technology and rich quality management experience. Shengbang shares have always attached great importance to R&D investment. The strong technical strength has enabled Shengbang shares to rapidly increase the number of products independently developed and successfully launched on the market. The company has more than 1,000 products, all of which comply with EU RoHS standards and green environmental protection standards, such as 500MHz high-speed operational amplifiers, high-precision operational amplifiers, ultra-low power comparators with an operating current of 300nA, 50MHz ultra-low noise operational amplifiers, 500mA high-precision low-power low-noise LDOs, 0.4Ω analog switches, power monitoring circuits, 6th-order video filters, 1:3000 large dynamic backlight LED drivers, 2A dual flash LED drivers, high-efficiency and low-power DC/DC converters, lithium battery charging and protection management chips, load switches, level conversion chips, etc. The company focuses on R&D in high-end analog chip-related fields such as AD/DA, new energy battery management, new energy vehicles, and third-generation semiconductor power device drivers, and related new products are also being launched on the market. In 2019, we will continue to launch a series of new signal chain and power management analog IC products.

The company is a key integrated circuit design enterprise within the national planning layout and the first integrated circuit design enterprise to receive investment from the National Integrated Circuit Industry Investment Fund. It is a national intellectual property advantage enterprise and one of the largest integrated circuit design companies in the country.

The company's equity structure is stable and the equity is relatively concentrated. As of December 2018, Beijing Hongda Yongtai Investment Management Co., Ltd. holds 21% of the company's shares and is the company's largest shareholder. Zhang Shilong holds 100% of Hongda Yongtai's shares and is the company's actual controller. At the same time, Hongda Yongtai, Baoli Hongya, Harbin Junlin and Hongwei International signed a concerted action agreement to support and consolidate Zhang Shilong's control. Baoli Hongya, Harbin Junlin and Hongwei International are Hongda Yongtai's concerted action persons. During their holding of Shengbang shares, they made the same intention as Hongda Yongtai when exercising shareholders' voting rights at shareholders' meetings, exercising proposal rights to the board of directors and shareholders' meetings, exercising the right to nominate directors, independent directors and supervisors, and other business decision-making matters, and maintained consistent actions, which is conducive to the company's governance.

The company achieved operating income of 570 million yuan in 2018, up 7.7% year-on-year, and net profit attributable to the parent company of 100 million yuan, up 10.5% year-on-year. Affected by the cyclical nature of the market segments and macroeconomic uncertainties, downstream customers in the industry showed signs of slowing down procurement, and the company's operating income growth has slowed down in the past two years.

The company's business is mainly divided into two business segments, namely power management products and signal chain products. In 2018, the operating income of power management products was 340 million yuan, a year-on-year increase of 7.5%, and the operating income of signal chain products was 230 million yuan, a year-on-year increase of 8.1%.

The company's gross profit margin in 2018 was 45.9%, an increase of 2.5 percentage points from 43.4% in 2017, and its return on net assets was 12.8%, a decrease of 4.5 percentage points from 17.3% in 2017. The company's ROE has shown a clear downward trend in recent years. A DuPont analysis of the company's return on net assets found that it was mainly due to the decline in the company's asset turnover rate. Due to the expansion of the company's business, the company's asset turnover rate dropped from 1.3 in 2014 to 0.57 in 2018, resulting in a drop in the return on net assets from 35.4% in 2014 to 12.8% in 2018.

The company's sales expenses and financial expenses remained stable at a low level, while the administrative expense rate increased year by year, mainly due to the increase in labor costs and the company's continuous increase in R&D funding to improve its own competitiveness, which led to an increase in administrative expenses year by year.

In order to improve the level of product technology innovation and optimize product performance, the company has always focused on R&D investment to improve the core competitiveness of its products. In recent years, R&D funds have continued to increase, with a CAGR of 35% in the past five years. In 2018, R&D investment was 92.659 million yuan, accounting for 16.2% of operating income.

The company's main products are analog ICs. Integrated circuits can generally be divided into two categories: analog integrated circuits and digital integrated circuits. Analog integrated circuits, or analog ICs, are integrated circuits that process analog signals. They mainly refer to integrated circuits composed of resistors, capacitors, transistors, etc., which are integrated together to process analog signals in the form of continuous functions (such as sound, light, temperature, etc.). Common analog integrated circuits usually include various amplifiers, analog switches, interface circuits, wireless and radio frequency ICs, data conversion chips, various power management and driver chips, etc. Their design is mainly carried out by experienced designers through transistor-level circuit design and corresponding layout design and simulation. Corresponding to this is a digital integrated circuit, which is an integrated circuit that performs arithmetic and logic operations on discrete digital signals. Power management and signal links are the two main applications of analog ICs.

The company's main products are high-performance analog chips, covering the two major areas of signal chain and power management. It has more than 800 product models available for sale, which can be widely used in many fields such as communications, consumer electronics, industrial control, medical instruments, automotive electronics, etc. The company's core technology and many independently developed products are at an advanced level, such as micro-power operational amplifiers with a static current of 300nA, ultra-low power comparators with an operating current of 300nA, high-precision operational amplifiers with a typical input offset voltage of 3μV, sixth-order video drivers, 1:500 large dynamic backlight LED drivers and other products.

Among them, signal chain products include high-performance operational amplifiers, high-voltage comparators, high-fidelity audio drivers, high-speed analog switches and interface circuits; power management products cover LED drive circuits, AMOLED display power chips, LDO, DC/DC converters, microprocessor power monitoring circuits, lithium battery charging and protection management chips, OVP, motor drive chips, load switches and other product series.

The signal chain includes all relevant parts of a complete set of signal processes from signal reception, amplification, conversion, transmission, and sending to the corresponding power device. The actual physical quantities received by the sensor, such as temperature, pressure, position, speed, etc., are converted into digital signals through amplifiers, converters, processors, etc.

The company's signal chain analog chip products currently mainly include various amplifier chips (including operational amplifiers, audio amplifiers and video drivers, etc.), analog switches and interface circuits, etc. Power management analog chips cover LED drive circuits and linear regulators, DC/DC converters, CPU power monitoring circuits, lithium battery charging management chips, overvoltage protection circuits and load switches and other non-drive power management products.

PMIC (Power Management IC), also known as power management IC, is a special-purpose integrated circuit whose function is to manage power for the main system. PMIC is often used in devices that use batteries as power sources, such as mobile phones or portable media players. Since such devices generally have more than one power source (such as battery and USB power), the system requires multiple power sources with different voltages, and the battery charging and discharging must be controlled. Meeting such requirements in a traditional way will take up a lot of space and increase product development time, which led to the emergence of PMIC.

The intelligent power management chip is an integrated circuit that adds channel management, battery charge calculation and dynamic power consumption management functions based on an integrated multi-channel converter. Compared with discrete power devices (such as LDO, DC/DC, AC/DC, Charger, etc.), it can not only integrate several discrete devices together to save space, but also achieve higher overall system conversion efficiency and lower system dynamic power consumption through intelligent control such as power path management and dynamic voltage adjustment, thereby extending the battery life of smart terminals. Therefore, it has become the mainstream trend of power management in smart systems.