Produced | Tiger Sniff Technology Group
Author | Zhang Xue
Edit | Utada
Cover | IC photo
Some people say that 2019 is the worst year of the past ten years, but it is also the best year of the next ten years. Under the enveloping external environment, this kind of argument is also applicable to Huawei.
The haze caused by the epidemic has not yet dissipated, and the United States has announced that it will further escalate the “entity list” restrictions.
In the past year that the United States was included in the “Entity List”, Huawei has experienced 5G blockades in some Western countries abroad, has passed the hesitation of partners, and has also made a series of intensive adjustments, Including HiSilicon’s “spare tire plan” turned right overnight, increased openness and transparency of information, and the establishment of a Hubble investment company.
Among them, the establishment of the Hubble Investment Company may seem low-key, but it has built a new line of defense against future risks for Huawei.
Speaking of Huawei ’s revenue and architecture
Before analyzing the Hubble investment layout, let ’s take a look at Huawei ’s organizational structure. On Huawei’s official website, there is such a clear architectural diagram:
Overall, in addition to the functional departments, Huawei’s business is mainly divided into ICT business and consumer business. Among them, ICT business covers operators BG, enterprise BG and Cloud & AI BG, which correspond toBusiness customers, government and enterprise customers, and the cloud and computing industries have also supported Huawei’s huge revenue.
Taking 2019 as an example, Huawei ’s annual sales revenue was RMB 885.8 billion, a year-on-year increase of 19.1%. In this year, the consumer business accounted for more than 50% of total revenue for the first time, and before 2018, the carrier business was Huawei ’s highest revenue-producing business.
However, some analysts believe that Huawei’s consumer business and carrier business’ revenue will return to the track in 2020, mainly due to changes in the communications industry cycle and the decline in the mobile phone industry.
On the one hand, as 5G deployment speeds up, Huawei ’s operator business revenue will increase accordingly. For example, in the opening year of this year, the three major Chinese operators threw out bidding projects with a total price of up to 70 billion yuan, of which Huawei won more than half of the bids. In the overseas market, more and more countries have begun to lift Huawei’s ban. Huawei is or will be harvesting more 5G contracts, which will be reflected in 2020 revenue.
On the other hand, the IDC report shows that the shipments of the smartphone industry continue to decline. Although Huawei has a tendency to grow against the trend, sales volume is unlikely to achieve large-scale growth, so Huawei ’s consumer business is also opening up notebooks. New categories such as computers and smart screens have opened up new growth points. At present, the mobile phone business is still the basic market for Huawei’s consumer business.
This ups and downs seems to be predictable that at least 2020 will be the harvest season for Huawei in the construction of 5G networks.
Why was selected by Huawei
It should be pointed out that the current business development that occupies nearly 90% of Huawei’s revenue is inseparable from chips, and Huawei, which is a common problem in the domestic chip industry, has not escaped-relying heavily on American companies.
Some people may be suspicious: Has n’t many of Huawei ’s businesses fully adopted Hisilicon chips?
FactsSo, in terms of chip operation mode, Huawei belongs to the Fabless (fabless manufacturing design) category. These chip companies are only responsible for the circuit design and sales of the chip, and other production, testing, packaging and other links are outsourced.
That is to say, Huawei HiSilicon is in the middle of the chip supply chain, and there is a large demand for upstream and downstream industries. Especially in terms of EDA software, chip manufacturing, etc., Huawei does not have the ability to produce and sell itself.
In the context of the current relationship between China and the United States, we can draw Huawei ’s future focus and nugget market, and then look at Hubble ’s investment targets. This causality is obvious.
Public information shows that Hubble Technology Investment Co., Ltd., a subsidiary of Huawei, was established in April 2019 and is 100% controlled by Huawei Investment Holdings Co., Ltd. It has only one business scope: venture capital business.
The establishment of the company has also attracted considerable attention in the investment circle. It is regarded as an important signal for Huawei to invest deeply and restructure the supply chain.
Many industry insiders said that in the past, Huawei was a global supply chain and did not purchase much from domestic semiconductor companies.
Huawei ’s long-term strategy is to avoid the risk of a single-source supplier, and preferably have multi-produced manufacturing resources for key components, and at the same time, strive for a backup solution for key components to reduce supply interruptions or products due to a single supplier The impact of quality problems on product supply and delivery.
On this point, we can find the answer in the “Prospectus for the Second Medium-Term Note of 2019” released by Huawei. According to the prospectus, Huawei’s 2018 purchase amount was 76 billion US dollars, covering more than 2,300 purchased categories and 13,000. Suppliers, with more than 2,700 procurement employees, and procurement operations are distributed in more than 140 countries.
The data shows that the total purchase amount of the top five suppliers in 2018 accounted for about 24.52%. From January to June 2019, the total purchase amount of the top five suppliers declined further, about 22.99%. Devices, computer systems and components, multimedia equipment and accessories, etc.
So, even with this kind of defense, Huawei still does not rely heavily on the US in the supply chain.
At Huawei ’s 2020 analyst conference,Guo Ping, Huawei ’s rotating chairman, said, “Entering the entity list has a great impact on Huawei ’s business. Huawei did not actually realize our business plan last year, which is probably a difference of 12 billion US dollars. Growth is also declining . “
However, after encountering the “entity list”, Huawei’s attitude toward the supply chain has changed significantly. In order not to make his position more passive, over the past year, Hubble has made aggressive moves in the country and frequently shot. This rhythm is enough to show Huawei’s anxiety and urgency in the layout of the chip supply chain.
At present, the companies invested by Hubble have covered many fields such as third-generation semiconductors, wafer-level optical chips, power management chips, clock chips, and radio frequency filters.
The following are the investment targets of Hubble Investment, which is organized by Tiger Sniff:
In addition, Huawei’s official website also disclosed major US supply chain manufacturers.
By contrast, most of the companies invested by Hubble are domestic companies with chip-related and unicorn potential, and many companies have direct competition with Huawei supply chain manufacturers.
For example, Shandong Tianyue is mainly based on the third generation semiconductor silicon carbide material. Its core product, silicon carbide material, is an ideal substrate material for manufacturing high-temperature, high-frequency, high-power semiconductor devices. Silicon materials can be upgraded thousands of times, pushing 5G base stations,The rapid growth of new energy vehicles, photovoltaic devices and other markets.
In 2019, its benchmarking company, Cree, announced that it will invest US $ 1 billion to build a silicon carbide super manufacturing plant, which will increase the silicon carbide wafer manufacturing capacity by 30 times to meet the expected market growth in 2024.
It is reported that silicon carbide materials are extremely difficult to technology. There are both conductive and high-purity semi-insulating processes. There are only four manufacturers worldwide covering 2-6 inches, and Shandong Tianyue is one of them. One family .
In addition, Jiehuat is known in the industry as “Little Silicon Power.” The core members of its team are from Texas Instruments and American Xinyuan Company. Jiehuat products are widely used in mobile phones, laptops, etc. Mobile electronic equipment directly competes with Texas Instruments. Today, Jiehuat has replaced some Texas Instruments products and has become a supplier of Huawei-related products.
For another example, the surface acoustic wave filter products produced by Haoda Electronics are mainly used in the field of mobile phones and base stations, which happens to involve Huawei’s two main businesses.
Reported that , to achieve 5G + 4G Global Connect may need to support more than 90 frequency bands, and one frequency band usually needs two filters, which also means that a 5G mobile phone may need hundreds of filters in the future, and the current 4G mobile phone requires about the number of filters For more than 30.
It is understood that , Skyworks ’competitor Skyworks is the main provider of Huawei ’s radio frequency, and its second largest camp The source of income is mainland China, accounting for 25.4% in fiscal 2018 and 22.1% in the first half of fiscal 2019.
However, the ability of Haoda Electronics to replace Skyworks is very limited. Currently, it can only be used as a low-end acoustic wave filter, and there is still a big gap with Skyworks in high-end products. In addition, due to the large number of low- and mid-end SAW filters, it is impossible to predict the extent to which Haoda Electronics can achieve the replacement.
Regarding the significance of these invested companies to Huawei, some chip industry observers have claimed to tigers that although Huawei rely on invested companies to achieve a comprehensive domestic replacement at once, it is a fancy. However, the existence of these companies can at least Huawei To achieve “live”, in other words, if Huawei does not actively promote the investment in the chip industry in 2019, it may not be able to support it now.
Large companies do big business
In 2019, although Huawei began to “buy, buy, buy” in the chip field, it did not stop its own pace of chip layout.
So far, Huawei ’s HiSilicon has launched a variety of chip products, covering mobile phone SoC, baseband chips, base station chips, AI chips, server chips, video surveillance chips, NB-IoT chips and many other product lines.
Data shows that in 2019, HiSilicon not only ranked among the top ten semiconductor companies in the world for the first time, but also ranked first in revenue growth. In the first quarter of this year, Kirin chip is the first super Qualcomm Snapdragon ranked first in the domestic market share.
In the final analysis, Huawei is only a company that “has strengths and weaknesses”, and it is impossible to do everything in every link of every product line.
So how does Huawei balance its investment company with its own business?
A senior chip industry practitioner who did not want to be named said that these companies invested by Hubble all have this in common:
One of the areas involved in the market is very small, but it is also indispensable in the chip industry;
The two have mastered the key technologies in their field or can replace the technology provided by foreign manufacturers;
Huawei is not willing to do the three areas involved, and this is also the most important point.
Taking optical devices as an example, optical devices are the core components in chips, and the performance limitations of optical products are often obstacles to innovation in networks and switching equipment.
Optical devices are now becoming an increasingly large part of the bill of materials for optical transmission equipment, switches and routers. On the other hand, the main problem in the optical device and module industry is that it is only a very large industry A littlesection.
And Haoda Electronics is one of the few companies in China that can partially replace Skyworks in technology and products.
Regarding the third point, a person close to Huawei said that the standard for Huawei ’s work has always been to do a big market and big business. For example, in the vertical scene of the chip field, the demand for chips from mobile phones, servers and security is very large, and the market space has great potential.
In addition, as mentioned earlier, most of the companies invested by Hubble will get orders from Huawei. It can be said that if these companies develop, they will be supported by Huawei in the early stage.
Sometimes it is not entirely an advantage to lean against a big tree, because such enterprises have certain risks, that is, Huawei can give it and can take it at any time. The Cambrian is a good precedent .
However, the difference between the invested companies and the Cambrian is that Huawei ’s current chip product line does not conflict with them, and the Cambrian IP chips can be replaced by HiSilicon chips. In fact, from this point, we can also see why Huawei only gave Cambrian orders before, but did not invest in it.
So, at a deeper level, the field of Hubble investment also represents Huawei’s business that is not touched to some extent.
“Wolf” investment: clear goals, decisive start
It is no exaggeration to say that every shot of Hubble Investment affects the heart of the semiconductor industry and investment institutions.
However, when Tiger sniffed about the changes that Hubble Investment had brought to the investment industry or the semiconductor industry in the year after its establishment, many investment institutions chose to refuse, or simply responded to “not easy to say” or “don’t want to say.”
Later, a person familiar with the matter told Hu Sniff, “No investor in the semiconductor industry should have studied the investment target of Huawei. The reason is simple. If there is no major change in the invested company, it will definitely be in the future. It ’s developing very well, even going public. ”
Why believe Huawei ’s choice and judgment so much? The person further explained that, unlike ordinary investment institutions, Huawei invests in enterprises, not only for money, but more importantly for orders and talents .
Taking the upcoming Srippo as an example, in its prospectus