ADAS helps in-vehicle cameras, and domestic in-vehicle lens manufacturers enter the "fast lane"

Smart driving drives demand, while ADAS boosts demand for in-vehicle cameras

Driven by policies, technological innovation, and consumption upgrades, the production and sales of smart cars have grown strongly in recent years. The promotion of smart cars has opened up the market space for automotive electronics. Under the multi-faceted demands of consumers for safety, entertainment, and comfort, various automakers are seeking differentiated strategies. The interconnection, automation, and electrification of cars will accelerate the penetration from high-end models to mid- and low-end models, providing a broad market for automotive electronics upgrades. With the gradual penetration of ADAS, the demand for automotive lenses is roughly 9-22 per car.

From 2014 to 2020, global shipments of automotive cameras will increase from 28 million to 82.77 million, with a compound annual growth rate of 19.80%.

OFILM actively seizes the opportunity of industrial upgrading, and the proportion of high-end dual-camera module shipments continues to increase 

The industrial chain of OFILM's related terminal products is roughly divided into three links: upstream materials, midstream screens and modules, and downstream application products. The company's main production and manufacturing of integrated touch modules, touch screens, micro camera modules and fingerprint recognition modules are in the midstream chain of the industry chain. The production and manufacturing technology characteristics of each link are different.

The upstream materials are mainly protective glass cover, ITO conductive film, ITO conductive glass, flexible circuit board, sensor, lens, etc., with high degree of specialization and technical barriers, and its technical characteristics are mainly innovative inventions or other major breakthroughs. As of the beginning of 2018, companies in Japan, the United States, South Korea and other countries have mastered relevant cutting-edge core technologies. Enterprises generally protect new technologies by applying for patents, forming legal exclusivity and exclusivity.

Downstream application products are mainly laptops, tablets, mobile phones, etc., emphasizing product design technology. Since the final product is directly facing consumers, the design technology is characterized by patent technologies such as utility models and appearance designs.

OFILM has actively seized the opportunity of industrial upgrading and established optical innovation centers in the United States, Japan and Nanchang, China. Its research and development content includes lenses, driver chips, sensors, optical technology development, optical design and evaluation, equipment automation, etc.

The company has fully utilized the advantages of its innovative platform. With its high level of automation and large-scale mass production capabilities, the shipment share of high-end dual-camera modules has continued to increase. It was the first to launch a three-camera module and became the main supplier of three-camera modules. In addition, in terms of 3D face recognition, the company has simultaneously developed 3D structured light technology and TOF technology. It is currently one of the few manufacturers in China that has the ability to mass-produce 3D face recognition modules along these two routes.

Cars are becoming more humane and intelligent, and in-vehicle displays are expected to become new growth points

With the prosperity of the automobile market and the continuous development of technologies such as intelligent automobiles, driverless cars, and new energy vehicles, as well as the increasing demand for the breadth and depth of human-vehicle interaction, car displays have become the third largest small and medium-sized LCD display terminal application product after smartphones and tablets.

At present, in the field of in-vehicle displays, the main application sectors of LCD panels include in-vehicle GPS navigation, central control instruments, instrument panels, LCD rearview mirrors, and rear-seat entertainment display screens. As the application of display screens in cars is more diversified than before and their importance is increasing, the demand for in-vehicle displays continues to increase. In the future, with the further development of Internet of Vehicles and intelligent automobile technologies, the number of display screens in cars will further increase, thereby driving the market demand for LCD display modules and their supporting backlight display modules.

The optical industry is booming, and Sunny Optical and Q Technology have impressive monthly data

Lens is an industry with high technical barriers and high industry concentration. From the perspective of the market structure, the industry concentration is high and has a trend of further improvement. The proportion of lens revenue of each manufacturer in the company's total revenue is: Largan 99%, Yujing Optical 95%, Sunny Optical 18~22%, Lianchuang Electronics 15~20%, and United Optoelectronics 98%.

From the profitability of mobile phone lenses, Largan's gross profit margin is 20 percentage points higher than Sunny Optical, and Yujing Optical's profitability has recovered rapidly in the past two years. Historically, lens companies have two modes to survive, technology upgrades or differentiated production. The survival of lenses is either to accumulate sufficient technology, such as Largan, Yujing Optical, Sunny Optical, and Kanto Chenmei; or to focus on niche markets for differentiated competition, such as United Optoelectronics and Lianchuang Electronics.

Largan is the absolute leader in the mobile phone lens industry, and Sunny Optical, as the domestic lens leader, is gradually catching up. In addition, AAC Technologies has strong differentiated layout capabilities in the fields of hybrid lenses and WLO, United Optoelectronics in security lenses, and Lianchuang Electronics in the field of sports camera lenses, and will gradually enter the field of consumer electronics lenses. In the field of automotive lenses, Sunny Optical is far ahead, with the largest market share in the world.

Sunny Optical is a leading company in the domestic optical industry, and has grown rapidly with the upgrade of optics. Sunny Optical is a leader in high-end modules and lenses for consumer electronics, and has deep experience in the domestic optical field. Sunny Optical entered the mobile phone camera module market in 2004, and began to develop automotive lenses in the same year, and began to ship in 2007. Currently, Sunny Optical's optical parts products are relatively diversified, including consumer electronics, automobiles, security, industry, chemistry, life sciences, etc.

In terms of modules, the company's self-developed MOB and MOC technologies reduce the amount of AA process while reducing the size of the module, reducing costs while having differentiated competitiveness. Sunny Optical's technology is constantly upgrading, and the gap with leading manufacturers is narrowing. Sunny Optical's share in mid-to-high-end smartphones is gradually increasing. In 2018, the company achieved mass production of 48M and 7P lenses, and its technology and product specifications are constantly improving. Competitiveness, the gap with industry leaders is gradually narrowing.

Benefiting from the increased penetration of triple-cameras in the downstream and the enhanced competitiveness of Sunny Optical's products, the shipments of mobile phone lenses continued to grow. Sunny Optical released its shipment data for January 2020, showing that the shipments of mobile phone lenses increased by 33.2% year-on-year, mainly due to the increase in the company's mobile phone lens market share; the shipments of automotive lenses increased by 13.4% year-on-year, mainly due to the good development of the automotive camera field;

Shipments of mobile phone camera modules increased by 37.6% year-on-year, mainly due to the improvement of product structure. In the first half of 2019, the gross profit margin of Sunny Optical's optical parts business was 44.1%, an increase of 2 percentage points year-on-year; in the first half of 2019, shipments of mobile phone lenses with more than 10MP pixels accounted for 51.9%.

The gap between supply and demand in the optical industry is gradually expanding on both the supply and demand sides

Application side: The specifications of mobile phone lenses continue to upgrade. Now that smartphones have entered the stock era, major mobile phone manufacturers are looking for new mobile phone performance to seek differentiated competitive advantages and sales breakthroughs. In the process of smartphone evolution, the upgrade of cameras is obvious. From biometrics to face recognition, from 3D modeling to virtual reality, with the advent of the 5G era, revolutionary innovations in optics will be closely related to the new ARVR field, and will also bring more innovation directions and greater market space to suppliers.

High-pixel, multi-lens, mobile phone manufacturers promote the upgrading of lens specifications. The pixels of flagship models are constantly upgraded. The rear main camera is first upgraded from 20 million to 40 million, and the front camera is also gradually upgraded from 8 million to 24 million, improving the photo effect. In pursuit of super wide angle and large aperture, on the basis of high pixels, the lenses of domestic high-end models are gradually transitioning from 5P to 6P. IDC predicts that the penetration rate of 6P rear lenses will be about 40% in 2018. The pursuit of the ultimate night shooting effect has prompted mobile phone manufacturers to continuously upgrade the optical zoom of the camera, from the initial two times to the current three times or even higher.

The gap between supply and demand in the optical industry is gradually widening. On the demand side: the number of single-machine units has doubled, and the penetration of multi-cameras has accelerated. Mobile phone manufacturers continue to innovate and upgrade lenses, gradually shifting from dual cameras to triple cameras and multi-cameras. With the increasing demand of consumers for high-quality photos and videos, the evolution of camera modules is the only way for the development of smartphones. We believe that the popularity of triple cameras or even multi-cameras is also one of the important areas of mobile phone innovation in the next two years. Why use a triple-camera lens? The biggest advantage of triple cameras is that they have good shooting effects in low light, and can break through more than 3 times of optical zoom, support 4D predictive focus tracking, four-in-one hybrid focus, 5x hybrid zoom, 10x digital zoom and other functions, and the flash behind them also has multiple color temperatures to choose from, and the area of ​​the photoreceptor is increased, which can make noise control better.