中国手机芯片行业市场发展分析与投资前景研究报告

1、handset ic & supply chain | china t e chno log yaaron jeng, cf a+886 2 2547 9332aaron.jeng n o m u r a.co mnewnom ura int e r n at ion al ( h k) lim i t e d t a i p e i b r a nch themeits about speed rather than sizewe are going against consensus with our reduce call on mediatek, as we believe its d

2、ominance in the china handset ic market will not be enough to deliver earnings growth in 2010. our proprietary analysis of pcba costing suggests persistent pricing competition in the 2g ic market, with spreadtrum and potentially mstar undercutting mediatek by 20% or more, and this will only be exace

3、rbated by the rapid take-off of3g handset shipments. unfortunately, we dont think mediatek will benefit from 3gmigration either, as its 3g ic solutions are not competitive enough, in our view, likelystocks for actionwe reiterate our buy call on byd electronics amid chinas fast transition into 3g. we

4、 downgrade mediatek to reduce from neutral given our view that 2010 is a transition year for its products.leading to patchy product transition and falling market share. with a forecast for zerolocalpriceearnings growth for the company in 2010, we see a valuation de-rating coming ratherstocktickerrat

5、ingprice targetthan the street view of a 3g-driven re-rating. we think investors looking to play the 3g theme would be better off further down the supply chain, where we have a buy rating on byd electronics. we expect byd electronics to gain share in the td-scdma handset odm market, spurred by nokia

6、s speedy commitment to the technology.c ongoing pricing pressure for ic vendorsd 2g handset ic market: persistent price pressuree 3g handset ic market: all eyes on td-scdmaf mediatek cut to reduce; byd electronics remains a buybyd electronics 285 hkbuy 6.32 8.37mediatek2454 tt reduce 529400 downgrad

7、ing from neutralpricing date 22 february, 2010analystaaron jeng, cf a+886 2 2547 9332aaron.jeng n o m u r a.co mcompany section contributorchitra gopal, cf a+65 6433 6980chitra.g o palnomur nomura anchor reports examine the key themes and value drivers that underpin our sector views and stock recomm

8、endations for the next 6 to 12 months.any authors named on this report are research analysts unless otherwise indicated.see the important disclosures and analyst certifications on pages 38 to 40.a n c h o rr e p o r t nomura25 february 2010handset ic & supply chain | china t e chno log yaaron jeng,

9、cf a+886 2 2547 9332aaron.jengnomura.c omnewnom ura int e r n at ion al ( h k) lim i t e d t a i p e i b r a nch theme actionmediateks 2g ic will see continued pricing pressure, in our view, from both direct competition and the fast migration to 3g. also, chinas fast transition to 3g looks negative

10、for mediatek in the initial one-two years, since its solutions are arguably not competitive. byd electronics is likely to expand its share of the tdscdma handset odm market, owing to nokias growing commitment to tdscdma.a catalystsin 2010f, potential catalysts are rising asp pressure in the 2g ic ma

11、rket andchinas fast transition to 3g.stocks for actionwe reiterate our buy call on byd electronics amid chinas fast transition into 3g. we downgrade mediatek to reduce from neutral, given our view that 2010 is likely to be a transition year for its products.localpricestocktickerratingprice targetanc

12、hor themeswith intensifying competition in chinas 2g ic market and chinas rapid transitionto 3g, companies that can benefit from (or avoid) price competition in 2g chips and grow market share with the transition to 3g will likely be winners in the supplychain, but also vice versa.its about speed rat

13、her than sizec ongoing pricing pressure for ic vendorswhile 3g handsets are set to take off from 2010 onwards, price competition in the2g ic market is rising. ironically, chinas transition to 3g is one reason for greater pricing pressure in the 2g ic market. companies that can benefit from (or avoid

14、) price competition in 2g chips and grow market share with the transition to 3g will likely be winners in the supply chain, but also vice versa.d 2g handset ic market: persistent price pressurethe 2g handset market is still growing, thanks to ongoing demand from global emerging markets. however, our

15、 analysis of pcba costs using different handset ic solutions suggests that price competition in chinas 2g ic market will continue, rather than stabilise, in 2010. in addition, chinas transition to 3g will lead to further pricing pressure for 2g ic vendors, in our view.e 3g handset ic market: all eye

16、s on tdscdmawe expect chinas 3g handset shipments to grow tenfold y-y in 2010. of the three3g standards, tdscdma is particularly in the spotlight, since it is chinas home- grown standard with a supply chain in greater china. we expect tdscdma handset shipments to hit 15mn units in 2010, up from 2mn

17、units in 2009. however, tdscdma handset ic prices will likely fall by at least 30-40% in 2010.f mediatek cut to reduce; byd electronics reiterate buywe are cautious on mediatek in 2010. its core 2g ic business will likely encounter ongoing pricing pressure from both direct competition and chinas mig

18、ration to 3g. also, chinas fast transition to 3g looks negative for mediatek in the initial one-two years, since its solutions are not competitive enough, in our view. following a transfer of analyst coverage, we downgrade our rating on mediatek to reduce from neutral. for byd electronics, we expect

19、 it to grow its share in the tdsdma handset odm market, spurred by nokias greater commitment to tdscdma. plus,the sharply falling tdsdma ic price is sustaining odm makers margins.byd electronics 285 hkbuy 6.32 8.37mediatek2454 tt reduce 529400 downgrading from neutralpricing date 22 february, 2010an

20、alystaaron jeng, cf a+886 2 2547 9332aaron.jeng n o m u r a.co mcompany section contributorchitra gopal, cf a+65 6433 6980chitra.g o palnomur nomura125 february 2010handset ic & supply chain | chinaaaron jeng, cfacontentsexecutive summary32g handset ic market intensifying competition42005-09 mediate

21、k dramatically changed the competitive landscape4spreadtrum to trigger the competition, mstar to add more pressure?5forthcoming 3g popularity to lead to further pricing pressure for 2g ic market73g handset ic market all eyes on tdscdma8how big was chinas 3g device market in 2009?8we expect 3g handse

22、t demand to grow tenfold in 20109tdscdma handset and handset ic vendors11tdscdma handset ic vendors we expect t3g to strengthen its leading position in 201012about 10mn-unit tdscdma handset inventory in the supply chain?13we expect tdscdma handset ic prices to fall by at least 30-40% in 201013nokias

23、 intensifying commitment to tdscdma should benefit byd electronics 14the puzzle how big is the china handset ic market?15nokias comments on white-box handset market15a market as big as 500-550mn units per year and still growing16latest company viewsmediatek17byd electronic33nomura225 february 2010in

24、vestment viewexecutive summaryin this report, we draw attention to the two most important themes for chinas handset ic market and its supply chain in 2010. first, persistent pricing competition in the 2g ic market, triggered by spreadtrum and potentially mstar. we analyse the pricing competition by

25、comparing the pcba costs of different ic solutions, an approach we have not seen used in the market. however, this is a powerful approach, given that what matters to handset manufacturers is not ic cost, but pcba cost in our view.second, the take-off of 3g handset shipments, where we focus more on t

26、he tdscdma handset supply chain. we expect china 3g handset shipments to grow tenfold in 2010. our recent china handset supply chain survey surprised us from the perspective that most china handset companies are starting to turn positive on the tdscdma handset market and are willing to invest more i

27、n developing tdscdma handsets this is a complete reversal from what we found a year ago.however, the strong 3g handset shipment growth in 2010 will not benefit every player. in our view, chinas transition to 3g is one reason for greater pricing pressure in the2g ic market. companies that can benefit

28、 from (or avoid) price competition in 2g chips and grow market share with the transition to 3g will likely be winners in the supply chain, but also vice versa.as such, we have a negative view on mediatek since its 3g ic solutions are arguably not competitive enough, likely leading to an unsmooth pro

29、duct transition and falling market share with chinas transition into 3g. additionally, it is the major victim of price competition in the 2g ic market.on mediatek, we are different from the market with our view of persistent pricing pressure and a lack of a smooth product transition. if the company

30、cannot transition into higher asp products, such as wcdma, tdscdma and smartphone ics, on time, it will likely suffer from deteriorating blended asp for its existing products. we expect zero earnings growth for the company in 2010, accompanied by a valuation de-rating (rather than the general market

31、 view of a re-rating when china migrates to 3g). our fy10 eps estimate and price target are 12% and 26.5% below bloomberg consensus, respectively.on the contrary, we like byd electronics, which is not a direct peer to mediatek but is an important link in the supply chain, since we expect byd electro

32、nics to grow its share in the tdsdma handset odm market, spurred by nokias greater commitment to tdscdma. plus, the sharply falling tdsdma ic price is sustaining odm makersmargins.exhibit 1. coverage comparisonlocaltarget eps (lcy$/shr)epsp/e (x)p/bv (x)roe (%)stocktickerratingpriceprice upside (%)f

33、y10ffy11fgrowth fy10f fy11f fy10f fy11f fy10f fy11fbyd285 hkbuy6.328.3732.40.410.4918.415.412.91.71.413.113.6mediatek2454 ttreduce529400(24.4)33.5135.255.215.915.15.04.732.432.4source: nomura researchnomura325 february 20102g handset ic market2g handset ic market intensifying competitionthe competit

34、ive landscape in chinas handset ic market has changed significantly over the past few years; we note that 2g handsets comprised more than 99% of the market by end-2009. mediatek has grown significantly over the past five years and, in our opinion, its dominant position in chinas handset ic market pe

35、aked in 4q09-3q09 when it was so dominant that its handset ic faced negligible pricing pressure. yet, pricing competition returned from end-3q09, when spreadtrums sc6600l started hitting the market. we expect price competition in the 2g ic market to intensify (rather than stabilise as some market wa

36、tchers assume) because of spreadtrums (and potentially mstars) aggressive pricing strategy and, more important, forthcoming 3g popularity.2005-09 mediatek dramatically changed the competitive landscapein 2004, when mediatek started to mass produce its handset ic for the china market, market leaders

37、included ti, adi, nxp and infineon. however, mediateks innovative business model (to offer a friendly total solution, integrating not only ic hardware, but also software and firmware) reduced the entry barriers for handset manufacturers, creating a new “white-box” handset market with respective manu

38、facturers markets almost all using mediateks handset ics. by using mediateks handset ic, they do not need to make a great investment in software/firmware integration, and instead can focus on the channel (where to sell these mobile phones) and id (industrial design;how to make the appearance of phon

39、es attractive). more importantly, mediatek helped them to launch new products on a more timely basis (time to market) by significantly shortening the design cycle of a new handset model. not only white-box brands, but also local handset brands started to adopt mediateks handset ic (by giving up usin

40、g handset ics offered by western semiconductor companies), since that was probably the only way for them not to be squeezed out of the market.those traditional handset ic suppliers from the us or europe that opted to either stick with the traditional business model (offering ic only) or duplicate me

41、diateks business model all failed to win back market share from mediatek. those that opted to only offer ic did not want to adjust their business model for the china market, since they might have been very successful in non-china handset markets (eg, texas instruments). those that wanted to follow m

42、ediateks business model all failed, in our view, as they could not fully support such a business model (eg, nxp).in 4q08-3q09, we believe mediateks dominant position in chinas handset ic market (based on our definition/calculation of total handset ic sell-in shipments for china domestic handset manu

43、facturers, including known brands and white-box brands, domestic and export shipments) peaked at about 75-80%. the companys handset icprice has stabilised, since there was almost no other competitive solution.we believe price competition is rising, rather than stabilising, in china 2g ic marketmedia

44、teks friendly software- integrated solution helped the company win market share in china over the past five yearsin 4q08-3q09, we believe mediateks dominant position in chinas handset ic market peaked at about 75-80%nomura425 february 2010exhibit 2. china handset ic market share 2006exhibit 3. china

45、 handset ic market share 2009spreadtrum7%nxp10%others8%mediatek45%qualcomm8%spreadtrum7%ifx6%others4%adi10%ti20%mediatek75%source: isupply; nomura researchsource: nomura researchspreadtrum to trigger the competition, mstar to add more pressure?however, spreadtrums launch of the sc6600l at end-3q09 h

46、as altered the competitive landscape. an increasing number of mediateks china customers are trying and adopting spreadtrums sc6600l, a solution competing with mediateks mainstream ic, mt6225, with pcba (pcb + assembly), but at a 20-30% lower price. this was an inflection point, in our view. in order

47、 to keep its dominant market share, mediatek started to cut its ic price in september 2009. since then, the price of its mainstream ic, mt6225, has fallen by 10-20%.we expect price competition to persist, as we understand that spreadtrum also has reduced its ic price to make its solution more attrac

48、tive. more importantly, it is in handset manufacturers interest to have more than two ic suppliers, particularly given that the ic price was high for almost a year beginning in 4q08. as a result, we consider it somewhat nave to believe that price competition is over. in addition to spreadtrum, mstar

49、 intends to challenge mediatek. although there might be still some bumpy roads ahead for mstars handset ic, we note some encouraging signs after some model design-in by china tier-one handset brands.to elaborate on price competition in the china 2g ic market and explain why we expect greater price p

50、ressure, we compare pcba costs using different ic solutions. for handset manufacturers in china, what matters is not ic cost but pcba cost, in our view. if the ic price is higher but pcba by using that ic is lower (by integrating more components into main chips), customers are inclined to use it. in

51、 the china handset market, the most popular handset models (arm7 baseband with 104mhz frequency,vga camera, qcif+ panel resolution, mp3/mp4, bluetooth, fm are basic functions for this segment, 60-70% market penetration) are based on mediateks mt6225 with pcba cost at us$14-16 now.infineon dominates

52、the ultra low-cost handset market with a pcba cost far below us$10, a market that mediatek has not been able or willing to penetrate. mediateks lowest-end handset ic solution, mt6223d, has a pcba cost of about us$9-10. handset models with a pcba cost of more than us$20 are not popular in china, with

53、 a less than 10% penetration in china, by our estimates.the pcba price of spreadtrums sc6600l is about us$11-12. with sc6600l getting more mature and stable in 2010, we believe pricing pressure for mt6225 will also increase as the price gap is too significant to ignore. mediateks first-ever rf- inte

54、grated single-chip solution, mt6253, has a pcba cost of about us$14-15, according to our supply chain survey, and will likely also face pricing pressure despiteits superior performance compared with the mt6225.by comparing the pcba costs of different ics, we can understand why pricing pressure is on

55、going rather than stabilisingin the china handset market, the most popular handset models are based on mediateks mt6225 with pcba cost at us$14-16 nowthe pcba price of spreadtrums sc6600l is about us$11-12, which will increase pricing pressure for mt6225nomura525 february 2010because the residual bill of materials (rbom) of the mt6253 is only us$1-2 (depending on the components used) lower than that of the mt6225, mediatek may need to keep the price premium of the mt6253 o