A detailed account of the in-depth layout of mobile phone industry companies in the VR field

With the accelerated development and technological improvement of 5G technology, computing power, and interactive capabilities, commercial VR will be implemented more quickly, which will boost the development and breakthroughs of the entire VR industry. Analysts also point out that the VR industry has entered the early stage of an explosion.

At the end of August, ByteDance officially acquired VR company Pico. This investment also attracted the attention of the capital market. Subsequently, under the support of the Metaverse concept, VR A-shares ushered in a general rise. Concept stocks such as Jinlong Electromechanical, Huali Technology, and Baotong Technology hit the daily limit. Goertek's share price once rushed to 51.2 yuan/share, an increase of nearly 8%. As of September 8, Goertek closed at the daily limit, with a quotation of 52.25 yuan/share, an increase of 10.00%.

Since mobile phone industry chain manufacturers already have advantages in chip R&D, software and hardware ecosystems, and financial strength, and have been baptized by the market for a long time, they also have a relatively complete and mature industry chain, which overlaps with the core technologies and devices of VR products. Therefore, with the huge market scale and demand of the VR industry, mobile phone industry chain manufacturers including Goertek will undoubtedly get the first share.

VR industry capital acquisition + the explosion of the metaverse concept has made VR completely popular

As early as August 29, a letter to all employees sent by Pico showed that the company had been acquired by ByteDance. It also pointed out that the company will be incorporated into ByteDance's VR-related businesses and increase investment in product research and development and developer ecology, so that users can enjoy more content support and technology upgrade services in the future on the basis of enjoying the original services.

In terms of market share, Pico has always been in the leading position in the domestic VR industry. According to IDC data, in Q4 2020 and Q1 2021, Pico ranked first in domestic VR shipments with a market share of 57.8% and 41% respectively. The short-term outlook indicates that many companies represented by Pico will shift more low-cost 3DOF headset consumers to more immersive 6DOF headsets.

At the same time, Pico and Goertek have a deep connection. In terms of equity relations, Goertek Group once became Pico's largest shareholder with a shareholding ratio of 35.09%; in terms of personnel relations, Pico's current CEO Zhou Hongwei was once the vice president of Goertek, and the current ultimate beneficiary and legal person are Jiang Bin and Jiang Bin's younger brother Jiang Long, respectively, and Jiang Bin and Jiang Long are also the chairman and vice chairman of Goertek Acoustics; at the business level, Goertek is the OEM supplier of many VR products (optical and hardware) of Pico. After the merger and acquisition, Pico will continue to cooperate with Goertek as a head customer.

Subsequently, Goertek stated on the investor interaction platform that the company does not hold shares in Pico Qingdao Xiaoniao Kankan. Pico is currently an affiliate of the company and the two parties have cooperated in the VR field.

Industry insiders analyzed that the main reason for this merger is that Goertek is one of the main OEMs for Facebook's Oculus VR products, and it is also a supplier of Pico, which inevitably triggered discussions about comparing Pico with Facebook's Oculus.

Sources said that not only Oculus, but also Sony and Pico have business conflicts. Therefore, in order to maintain good relations with customers such as Facebook and Sony, the best way for Goertek is to sell Pico, which will not damage its business dealings with Pico. It is revealed that in addition to ByteDance, Tencent also intended to acquire Pico, but eventually gave up after bidding.

In fact, Goertek, known as the leader of Apple's supply chain, has been involved in the VR field for a long time. Despite the sluggish consumer electronics market caused by the epidemic and parts shortages, it still delivered a brilliant report card in the first half of this year, and VR and other related businesses are undoubtedly one of the biggest boosts to its performance surge.  

In the first half of the year, Goertek achieved revenue of 30.288 billion yuan, a year-on-year increase of 94.49%; and realized a net profit attributable to the parent company of 1.731 billion yuan, a year-on-year increase of 121.71%. Among them, the smart hardware business (including VR/AR, smart wearables and other products) achieved revenue of 11.210 billion yuan, accounting for 37.01% of the total revenue, a year-on-year increase of 210.83%.

Compared with the growth rates of revenue of the other two precision components and smart acoustic machine businesses, its smart hardware business dominated by VR/AR is undoubtedly shining. This is closely related to the accelerated 5G construction and the prosperity and demand growth of the VR industry. It can be said that the explosion of the VR industry has brought new opportunities to many related companies.

In addition, since the beginning of September, the concept of the metaverse has completely exploded. In just three trading days, the metaverse concept sector has risen by nearly 30%, among which VR is a very important part of the metaverse concept. In April this year, ByteDance invested 100 million yuan in the metaverse game developer Code Universe, and Facebook also proposed to transform the company into a metaverse company in five years!

VR layout of mobile phone industry chain companies

IDC predicts that VR shipments will increase by 28.9% year-on-year in 2021. In the long run, the VR headset market will maintain strong growth, with shipments expected to reach 28.6 million units in 2025, a five-year compound growth rate of 41.4%. According to Omdia's forecast, by 2025, the number of active VR users will exceed 45 million, and the number of consumer VR devices is expected to increase to 45 million.

Although there is a large gap between domestic manufacturers in hardware technology, application areas, etc., it is undeniable that the huge market size and demand of the VR industry have still attracted many domestic companies to make investments, and mobile phone industry chain manufacturers will undoubtedly get a share of the rapidly growing VR market demand.

Similar to crossover cars, mobile phone industry chain manufacturers already have advantages in chip R&D, software and hardware ecosystems, and financial strength. Moreover, after long-term market experience, they have a relatively complete and mature industry chain. Their related products are also recognized by customers and the market, and overlap with the core technologies and devices of VR products. Therefore, whether it is the layout of the automobile or VR industry, mobile phone industry chain companies will be the best choice.

Industrial Securities pointed out that the VR industry is currently in a period of rapid development. The mainstream VR brands are mostly Internet brands, game console brands and mobile phone brands. The current major suppliers are mostly leading suppliers in the mobile phone chain, and their businesses are mostly related to electronic components, modules and assembly.

According to incomplete statistics, in addition to Goertek mentioned above, many mobile phone industry chain companies such as Luxshare Precision, TCL Technology, Changxin Technology, and BOE A have already made some layouts in the VR field, and some products have been mass-produced and shipped.

Currently, many electronic technology companies around the world have launched VR headsets, such as Samsung, Facebook, Google, Microsoft, Sony, etc. As for domestic mobile phone brand manufacturers, Huawei, Xiaomi, ZTE, Meizu, Nokia, and OnePlus have also made some layouts in the VR field. The entire VR industry presents a "hundred flowers blooming" pattern. With the increase in shipments and the gradual improvement of the application ecosystem, consumer VR devices are expected to enter a period of rapid penetration.

In short, both mobile phone terminal manufacturers and supply chain manufacturers have already laid out their plans for the VR market. It can be foreseen that once the VR industry explodes, it will become a new growth point for the future performance of mobile phone industry manufacturers!