20170803-中泰国际证券-New_opportunity_brings_by_dual_camera,broad_prospect_of_fingerprint_module_48页_2mb

Smartphone Component Sector Summary

Core Content

The Smartphone Component Sector is expected to experience significant growth due to the increasing adoption of dual camera systems and the broad application of fingerprint modules. These technologies are not only enhancing smartphone performance but also driving profitability and market share for component manufacturers.

Main Points

1. Smartphone Market Trends

• Stable Shipments: Smartphone shipments are expected to remain stable over the next five years.
• Replacement Cycle: The average replacement cycle of smartphones is 12-18 months, offering a large development space for the component industry.
• Domestic Brands: Chinese smartphone brands like Huawei, OPPO, and vivo are gaining momentum, with their performance catching up to international competitors.
• Global Market: In 2017, global smartphone shipments reached 353.3 million units, with a notable increase in the market share of Chinese manufacturers.

2. Dual Camera Technology

• Image Quality Improvement: Dual cameras help overcome the pixel bottleneck and improve low-light performance, significantly enhancing image quality.
• Standard Configuration: Dual cameras have become the standard in flagship smartphones, with penetration rates expected to exceed 50% within three years.
• Technical Challenges: High manufacturing thresholds and the need for advanced algorithm support are barriers to entry for module manufacturers.
• Manufacturing Solutions: Adaptive Active Alignment (AA) is a key technology used to improve the alignment of optical components, which is crucial for image quality.

3. Fingerprint Module (FPR)

• Standard Feature: FPR is now a standard configuration in mid and high-end smartphones.
• Market Growth: The FPR market is expected to reach USD $4.7 billion by 2022, driven by mobile payment applications.
• Future Trends: Implicit FPR is gaining traction, with potential to transition to full-screen fingerprint recognition.

4. Component Manufacturers

• Recommendations: Zhongtai International recommends "Buy" ratings for Sunny Optical (2382), Q-tech (1478), and Cowell (1415).
• Profitability: The profitability of component manufacturers is higher due to the use of high-quality camera and fingerprint modules.
• Cost Trends: The cost of dual camera modules is high but is expected to decline in the future, making them more accessible to mid and low-end devices.

Key Information

• Dual Camera Penetration: Expected to exceed 50% in 3 years, driven by cost reductions and increasing demand.
• FPR Market Size: Projected to reach USD $4.7 billion in 2022.
• Camera Module Types:
  • Fixed-focus: Includes sensors, lens, and PCB/FCB.
  • Zoom: Adds VCM for focal length adjustment.
• Packaging Technologies:
  • CSP: Thicker, lower image quality, higher success rate.
  • COB/COF: Relatively thin, higher image quality, moderate success rate.
  • FC: Thinner than COB/COF, higher image quality, but lower success rate and higher investment.
• CMOS Market:
  • Dominance by Foreign Firms: Sony, Samsung, OmniVision, and ON Semiconductor are leading in CMOS supply.
  • Market Share: CMOS accounts for ~60% of the total cost in the camera module.
  • Growth Projections: The CMOS market is expected to grow from USD $9.9 billion in 2015 to USD $15.2 billion by 2020.

Analyst Insights

• Jupiter Zheng from Zhongtai International highlights the importance of dual camera and FPR technologies in driving the growth of the smartphone component industry.
• Investment in AA Equipment: High initial investment in AA equipment is a challenge, but some leading manufacturers are developing their own equipment to reduce costs.
• Industry Chain Coordination: Collaboration between algorithm companies and chip manufacturers is crucial for the successful integration of dual camera systems.

Conclusion

The smartphone component sector is poised for substantial growth, driven by advancements in dual camera and fingerprint technologies. With increasing demand, stable shipments, and a favorable domestic environment, companies like Sunny Optical, Q-tech, and Cowell are well-positioned to benefit from this trend. However, challenges such as high manufacturing costs and the need for advanced algorithms remain.