The demand and importance of memory chips are becoming increasingly apparent

In recent years, driven by national policy support and integrated circuit market applications, China's integrated circuit industry has maintained rapid growth, and the IC design industry has always been the most dynamic industry in the integrated circuit industry.

In the era of the Internet of Everything, the high-speed, low-latency, and high-bandwidth characteristics provided by 5G, combined with the development of artificial intelligence, have put forward higher requirements for data storage. At the same time, the industry has also paid more attention to the reliability and security of storage. The demand and importance of storage chips have become increasingly prominent, which has given local storage chip companies huge room for development.

Driven by downstream market applications, the demand for EEPROM continues to expand

As a sub-segment of memory chips, EEPROM (Electrically Erasable Programmable read only memory) is one of the world's mainstream memory products. Due to its advantages such as high reliability, long service life and high cost performance, driven by multiple downstream markets, the global demand for EEPROM is expanding.

According to data from the Xinshijie Industry Research Center, the global EEPROM memory chip market has an average annual compound growth rate of 6.3% from 2016 to 2020, showing a continuous upward trend. In 2020, the global EEPROM memory chip market size is about US$800 million, and it is expected to be close to US$850 million in 2021.

my country's EEPROM memory chip manufacturers mainly include Juchen Co., Ltd., Fudan Microelectronics, Purui Co., Ltd., etc. Among them, Juchen Co., Ltd. is the leader of my country's EEPROM memory chip industry and the third largest EEPROM memory chip manufacturer in the world. In the sub-sectors such as smartphone cameras, LCD panels, and notebook/server markets, it occupies the position of global leader and mainstream EEPROM supplier.

Since its official separation from ISSI (Integrated Silicon Solution Inc.) in 2009 and its successful listing on the Science and Technology Innovation Board in 2019, Juchen Holdings currently has three major businesses: non-volatile memory chips, voice coil motor driver chips, and smart card chips.

As smartphones develop towards multi-cameras, imaging functions improve, and data/parameter storage requirements increase, EEPROM is more widely used in smartphones. According to CCID Consulting, from 2016 to 2018, the global demand for EEPROM in the field of smartphone cameras increased from 908 million to 2.163 billion, and is expected to reach 5.525 billion by 2023. Non-volatile memory chip business is the core business of Juchen Co., Ltd., especially in the field of EEPROM, Juchen Co., Ltd. has 20 years of R&D experience.

However, Juchen's EEPROM products are not only used in the field of smart phones, but are also widely used in many fields such as LCD panels, Bluetooth modules, communications, computers and peripherals, medical equipment, white appliances, automotive electronics, industrial control, etc.

Due to changes in the global supply structure and the trend of domestic substitution, the growth rate from the non-mobile phone camera module field has exceeded that of the mobile phone camera module field. This change in details reflects the rapid growth trend of EEPROM in other fields, which not only enables Juchen EEPROM's performance to grow, but also makes the distribution of application fields more balanced.

According to the 2021 semi-annual report of Juchen Co., Ltd., during the reporting period, the sales revenue of Juchen Co., Ltd.'s major product lines such as non-volatile memory chips, voice coil motor driver chips, and smart card chips were RMB 205.3198 million, RMB 32.6941 million, and RMB 25.0144 million, respectively, in the first half of the year, an increase of 9.27%, 126.76%, and 67.95% over the same period last year. It can be seen that the compound growth rate of voice coil motor driver chips and smart card chips has increased rapidly. Li Qiang, senior vice president of marketing and sales and core technical personnel of Juchen Co., Ltd., also stated that this year the company's three mature product lines - EEPROM, smart cards, and voice coil motor drivers - will achieve a healthier performance ratio.

Li Qiang, Senior Vice President of Marketing and Sales and Core Technical Personnel of Juchen Co., Ltd.

The logic behind Juchen's development of two product lines, smart card chips and voice coil motor (VCM Driver) chips, is to further expand the EEPROM technology accumulation and comply with the needs of the downstream application market. Now it seems that the market space behind it is also huge.

Among them, smart cards benefit from the increase in applications in mobile communications, financial payments, public utilities and other fields. According to the world-renowned consulting firm Sullivan, the global shipment of smart card chips will reach 27.98 billion by 2023, and the market size will reach US$3.86 billion. Li Qiang said that China is the global smart card manufacturing center, and the vast market space has attracted many companies to layout.

It is understood that Juchen Co., Ltd.'s dual-interface CPU smart card chip has obtained the National Cryptography Administration's Commercial Cryptography Product Model Level 2 Certificate; the annual shipment volume of the contactless logic encryption card chip series exceeds 400 million pieces, and is mainly used in residence permits, bus cards, membership cards, access control, campus cards and other fields.

Based on China's leading position in the smart card field, the overseas market has become another major growth space, which has also brought a lot of revenue to Juchen Co., Ltd. Li Qiang said that this is closely related to the company's global layout and its background as a foreign-funded enterprise.

The camera module of smartphones is an important application field of voice coil motor driver chips. The increasing demand for smartphones and higher demand for photo shooting have prompted the current voice coil motor driver chip market to maintain steady growth. With the increase in the application of multi-cameras and front autofocus cameras, the market size of voice coil motor driver chips will further grow. According to Sullivan, the global market size will reach US$270 million by 2023.

It is worth mentioning that in the field of voice coil motor chips, Juchen is a leading supplier in China and one of the suppliers that can provide a full range of VCM Driver products worldwide. It is also the only manufacturer in the market that can provide high-performance EEPROM and VCM Driver chips at the same time. Juchen's VCM Driver series chips shipped 230 million units in 2020 and have been widely recognized by the market.

The strong strength of Juchen has also been recognized by investment institutions. According to Jiwei.com, Juchen Hong Kong, one of Juchen's shareholders, is actually controlled by the investment institution IPV Capital. In the past decade, IPV Capital Global Fund has led the investment in more than 50% of the world's most valuable semiconductor start-ups, such as GigaDevice, Shengbang Shares, and Zhuoshengwei, and has achieved good returns. The investment in Juchen is enough to show that investment institutions are optimistic about the development of Juchen.

Automotive electronics becomes new growth space for memory chip market

As the storage application market gradually opens up, based on the above three product lines, Juchen will also develop a new blueprint around its own moat. Li Qiang said that Juchen is further extending its product line to explore markets with high technical barriers and added value such as automotive electronics and DDR5 memory; in addition, Juchen has also started to deploy in the NOR Flash field to further strengthen its layout in the storage chip market.

With the accelerated development of automobile electrification, intelligence and networking, and the rise of domestic automobile manufacturers, automotive electronic products such as BMS, instruments, gateways, MDC, body control, and smart cockpits are becoming another important application scenario for EEPROM.

China Business Industry Research Institute predicts that the global and Chinese automotive electronics market will reach 2018.9 billion yuan and 889.4 billion yuan in 2021. Among them, the demand for automotive electronic EEPROM memory chips will reach 2.165 billion.

However, the stringent requirements of automotive applications for performance and safety have set a high threshold for domestic manufacturers. An automotive chip practitioner once told Jiwei.com that cars are related to human lives, so the threshold is very high. Taking the most basic AEC-Q100 automotive-grade certification standard as an example, manufacturers need to complete various rigorous reliability verifications for three consecutive batches. To meet these standards, they must strictly follow the AECQ requirements from the R&D and design stage. These are more complex and demanding than the design of consumer ICs.

As a leading domestic EEPROM company, Juchen Co., Ltd. has a full range of A2-level automotive-grade EEPROM products and mainstream-capacity A1-level automotive-grade EEPROM products. They were initially used in peripheral components such as on-board cameras, LCD displays, and entertainment systems, and gradually extended to core components such as BMS battery management systems, smart cockpits, and MDC.

After ten years of technology accumulation and market promotion, Juchen has become a supplier to many Tier 1 & Tier 2 manufacturers at home and abroad. The terminal car manufacturers include BYD, Tesla, Porsche, Hyundai, Toyota, Volkswagen, Mazda, Geely and other domestic and foreign first-line automobile brands.

In the first half of this year, Juchen Co., Ltd. made key progress in its automotive-grade EEPROM. According to Juchen Co., Ltd.'s interim report, the company has obtained the IATF 16949:2016 automotive industry quality management system compliance certificate issued by a third-party authority, which is the basic specification for entering the automotive field to meet zero defects. In addition, Juchen Co., Ltd. is actively promoting the verification of automotive-grade EEPROM. Some new A1-level EEPROM products are expected to be launched in the fourth quarter of this year and complete the AEC-Q100 reliability standard certification.