Module manufacturers breed leaders

The module takes over the upstream and downstream ends of theiot module manufacturers IoT industry chain, directly benefiting from the high prosperity of the upstream and downstream. The upstream of the IoT industry chain is dominated by hardware suppliers and module contract manufacturers, mainly providing chips, PCBs, structural hardware and contract manufacturing services; the midstream is a wireless communication module manufacturer. They design and develop standardized or customized module products for downstream customers; downstream are industry-specific applications, mainly including smart phones, smart homes, smart cities and other scenarios.

From the perspective of industry chain information flow, modules are in the transmission layer. Modules are the central nervous system of IoT, providing customized development components for communication chips and making downstream verticals possible. The information flow direction is mainly divided into the perception layer, network transmission layer, platform layer and application layer.

From a technical perspective, the IoT industry chain is divided into "cloud - management - edge - terminal - use". The communication module of IoT is located in the end layer of the underlying core communication components, which plays an important enabling value to the top and bottom. Globally, overseas mainstream module manufacturers include Sierra Wireless, Telit, Gemalto, U-Blox, etc. The domestic mainstream manufacturers are Farcom, GlobeHub, Megaphone, and Good Technology. Combined with the revenue compound growth rate of each module manufacturer in the past five years, the overall revenue CAGR of domestic mainstream module manufacturers is higher than that of overseas manufacturers, and the market share of domestic mainstream module manufacturers is steadily increasing.

Domestic manufacturers to carry out the share of rising enterprises obviously, the impact of industrial strategy eastward shift can basically be completed. According to Counterpoint statistics, domestic cell phone manufacturers such as move far communication, day sea intelligence, wide and pass, have square aspect technology and so on account in the global digital cellular communication module shipments of the market economy share development has been from 52% in 2017 up to 60% in 2020, and overseas society mainstream module design manufacturers such as Sierra, Gemalto, Telit market value share are declining, and the pattern of the industry rising in the east and falling in the west has gradually started to take shape.

The global wireless communication module market size is expected to reach 86.5 billion yuan in 2025, with a CAGR of 29.0% from 2020 to 2025. Counterpoint said that the global 5G module is in an accelerated expansion phase, the 4G module market is growing steadily, and 2G/3G modules are gradually exiting the market. According to Counterpoint and Berg Insight, global shipments of wireless communication modules are expected to reach 1.19 billion units by 2025. Among them, 5G/4G/3G/2G/NB-IoT/other LPWAN shipments will reach 170 million/210 million/69 million/55 million/380 million/310 million respectively. We base on the following assumptions.

(i) We believe that since 5g modules are still in the early stage of development and have a low initial base, they have greater resilience in the short term and can be expected to maintain a high growth rate from 2002 to 2025. In the transition and upgrade process to 5g, the accelerated growth of 4g module shipments is on a downward trend, but the overall shipments are on a stable growth trend. 2g/3g module shipments will continue to decline. nb-iot shipments are increasing significantly with the support of IoT.

2) Considering the year by year decline of electronic products, it is expected that the price of 5G module will drop to 315 yuan block, 4G3G module price will drop to 9052 yuan block and LPWAN module price such as NB-IoT will drop to 1319 yuan block in 2025.

(3) We can expect that the convergence and iteration of cloud computing, IoT, edge computing and other information technology will push the IoT system equipment and market to grow greatly, which can stimulate the midstream communication module to realize the company's sales volume.