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on October 28, gkewei (688728.SH) disclosed the announcement on the provision for asset impairment in the first three quarters of 2023, saying that the company's provision for inventory depreciation was relatively large, and the total amount of inventory depreciation loss in the first three quarters of 2023 was 0.1847 billion yuan. As a result, the company's non-net profit in the first three quarters was only 0.05 billion yuan, down 91.05 year on year.

Figure source micro-announcement

since the performance freezing point was disclosed, the frequency and range of block transactions in Gecco micro have increased significantly this month. among them, the discount of four block transactions is more than 12%, and the turnover reached 0.449 billion yuan on November 8 alone. Gecco micro's 10th largest shareholder is suspected of liquidation. coincidentally, the company's stock price has bottomed out and recovered.

Inventory de-stocking is lower than expected

in the past two years, for CMOS image sensor manufacturers, the biggest challenge is to deal with the inventory backlog. Although this year has recovered, the overall demand is still weak compared with previous years. In terms of the first three quarters, the extreme weakness of consumer electronics continues to lead to the rise of chip inventory across the board. According to agency Canalys data, the global smartphone market fell 10% year-on-year in the second quarter of 2023 to 0.258 billion units, and the market recession has slowed down.

according to core intelligence news, in the early third quarter, sibco's CIS inventory was about 200KK (billion), gekmicro reached 300KK (billion), and the inventory side of sibco, which focuses on the security market, was relatively low, but it also had 100KK (billion). Gecco Micro's CMOS business contributes more than 80% of its revenue. The company's main business is the development, design and sales of CMOS image sensors (CIS) and display driver chips. The main downstream application area is mobile phones.

in the past three years of successive decline in revenue, Gecco micro-inventory all the way up to the current historical extreme of 4.022 billion yuan, while Weir shares, Stway in the third quarter fell 46.49 percent, 15.6 percent, this year's de-conversion is obvious.

the semi-annual report shows that the provision for inventory impairment in the first half of the year was reduced from the 0.53 billion at the beginning of the period to the 0.49 billion, a decrease of 0.04 billion yuan. the loss of inventory impairment and the impairment of contract performance costs were 0.175 billion yuan. in the first three quarters, the total decline was 0.184 billion yuan, an increase of 5% from the previous month.

comparing the number of days in inventory with the turnover rate, gekowi's 451 days is more than double that of weir shares, and far exceeds the average level of 113 days for the world's major mobile phone chain chip manufacturers.

At present, Gico Micro's inventory is mainly 2 million and 5 million pixel CIS products, supplying medium and low-end machines. This high barrier lake is created by the "high and low dislocation" of the mobile phone market. According to whale staff data, Q3 low-end machine market is nearly saturated in 2023, the stock market competition is fierce, from 1000 yuan to 5000 yuan each price band sales are down as much as 30% year-on-year, while 5000 yuan above the high-end models show a growth trend, price band sales increased by 8% year-on-year. Q3 Jingdong platform mobile phone sales totaled about 11 million pieces, sales of about 35 billion yuan, down less than 2% year-on-year, the increase is mainly contributed by high-end machines.

This is the reason why some indexes of Geco Micro have not recovered as well as their peers: the low-end CIS has bottomed out in the price war. Even if the average single selling price lower than that of 3 yuan "kills all small factories", the long production road and gap between the medium and high-end is enough to make the company stretched in the severe winter. Especially since Q4 2021, the low-end CIS price has dropped significantly, 2021Q4 to 2023Q1, and 2M pixel CIS price has dropped 40%, the price of 8M pixel CIS fell 20%.

looking back at the results of the third quarter, after deducting the government subsidy of 52.63 million yuan, the net profit of gekewei actually fell 20.33 year on year. after deducting the government subsidy of 0.1 billion yuan in the first three quarters, the net profit for the whole year fell 105.86, and the gross profit margin of sales fell nearly 7% from the beginning of the year. it is basically far from the net profit targets of 1.23 billion yuan and 0.77 billion yuan given by founder securities and CICC this year.

suspected ten shareholders discount bulk trade clearance

as the performance continued to bottom out, gekewei's "ankle cut" fell below the issue price at the end of August, and quickly rebounded by more than 45% in early September, reaching a new high in the first half of the year, taking advantage of Huawei's fiery industrial chain.

daily k-line chart of geco micro stock price

on the way to this round of sharp rise, the frequency and amplitude of geke micro-block trading increased significantly. among them, the discount of four-hand block trading was more than 12%, and the turnover on November 8 alone reached 0.449 billion yuan, accounting for 63.46 of the total turnover on that day. the transaction price was 17.72 yuan, with a total turnover of 25.3643 million shares, 8.42 lower than the market closing price.

geco micro since September detailed titanium media APP mapping

in particular, the total number of 25.3643 million shares traded on this day is exactly the same as the latest number of shares held by CLP huadeng (Ningbo) investment management co., ltd.-CLP huadeng (Chengdu) equity investment center (limited partnership), the tenth largest shareholder of gekewei. 0.98 of its total shares may be liquidated by Beijing fuwai street securities business department with 8 transactions on the same day, with a total discount of 8.42.

Tuyuan Company Announcement

In March 2020, the cost of CLP Walden's A- 2 round of financing to take a stake in Gico Micro was $14.204 million, a net profit of at least $0.346 billion at current exchange rates.

On the other hand, CLP Walden and Pacven Walden, the fifth largest shareholder of Gico Micro, are closely related Ventures V,L.P. The management institutions of CLP Walden and Pacven Walden Ventures V,L.P. are the largest institutional shareholders of Walden International, a well-known venture capital institution. This is not the first time that it has reduced its holdings of Gecowei. On July 5 this year, its Walden Fund received a warning letter from the China Securities Regulatory Commission for failing to disclose its holdings of 100000 shares of Gecowei in advance.

Walden International invested in Gico Micro in 2006 and is one of Gico Micro's most important VC institutions. According to the prospectus, the list of shareholders of the company includes WaldenV, WaldenV-A, WaldenV-B, WaldenAssociates, WaldenV-QP and other Walden funds, with a shareholding ratio of 1.02, Pacven Walden Ventures V,L.P. with a shareholding ratio of 4.56 and 0.118 billion shares.

on the brink of a micro-break, discount clearance institutions for the rebound in the stock price to send some cool, in the past four trading days in the micro-drop 4.8 back to below 20 yuan.

High-end and domestic substitution of the broken problem

Deeply trapped low-end CIS inventory stems from the delay in fulfilling the mid-to high-end layout promises of Geco's micro-listing.

Since 2022, the overall smartphone market has declined. Among them, the shipments of low-end and mid-end mobile phones have fallen sharply, and high-end mobile phones have grown against the trend, with a share of nearly 30%. Correspondingly, Sony, the traditional giant that guarantees Apple, will become the only CIS player to achieve positive year-on-year revenue growth in 2022.

For domestic CIS companies, this once again demonstrates why high-end is a key breakthrough based on the market. When Sony and Samsung adjusted their product structure and turned to the CIS field of high-pixel mobile phones to offset the decline in shipments with unit price increases, manufacturers such as Gico and SK Hynix could not escape the impact of the market downturn.

At least 3 years ago, Gico Micro has started the middle and high-end process. On March 5, 2020, GicoMicro signed a cooperation agreement with the Management Committee of Lingang New Area of China (Shanghai) Pilot Free Trade Zone to invest in the construction of "12-inch CIS Integrated Circuit Characteristic Process Research and Development and Industrialization Project", with an estimated investment of US $2.2 billion million, which is the largest foreign investment project introduced in Shanghai that year.

the project plans to build a 12-inch CMOS image sensing chip factory with 60000 wafers per month, which will be started in mid -2020. the first phase is expected to be completed in 2021. after the project is fully completed, the annual output value is expected to be 11 billion yuan. Geco Micro said that there are certain shortcomings in medium and high-order products, and is promoting the research and development of medium and high-order pixel CMOS image sensors, AMOLED driver chips, TDDI (touch and display driver integration) chips, etc., and strive to achieve rapid catch-up.

by the third quarter of this year, goko micro said that the 12-inch BSI fab had completed the installation and commissioning of the first batch of equipment and successfully produced qualified products with expected yield. through long-term reliability test and acceptance, the current line-passing products are 8 million pixel products, which are still low-end products.

in terms of research progress, it was not until October 17 that gkewei announced that 32 million pixel products had been mass produced and shipped and 50 million pixel products were being verified by customers that the high-end substantive results were displayed. gkewei said in the institutional research that the above products were "confident of getting orders within this year".

This progress is much behind the head of the enterprise. Last year, Samsung and Howay (Weir) both announced their products with 0.2 billion pixels. The new CIS products with more than 50 million pixels of Weir have been mass-produced and delivered in the third quarter of this year, and have gradually gained a firm foothold in the high-end market. such as 640The 0-pixel OV64B has become many flagship popular sub-telephoto lens CIS, such as VIVO X90 PRO, Huawei P60 and iQoo12, while the 50 million-pixel OV50H is used as the flagship main camera level on Xiaomi 14 and iQoo12(VIVO).

with the help of Huawei's technical team, the rising star steve has made a rapid breakthrough in 50 million pixels in the past two years. the mass-produced SC550XS has surpassed Sony IMX766 in specifications, while the other SC550XS has a comprehensive performance or equal to Sony IMX800 and closely follows IMX989. Stway said in an institutional survey that the SC550XS image sensor, which focuses on the high-end flagship main camera market, has begun mass production and shipment in the second quarter, and another high-end product SC520XS has also entered a small-scale mass production stage in this quarter.

Map source network

Map source network

take Huawei Mate60 as an example. its main camera Sony IMX989 is equipped with a 50 million-pixel ultra-light variable camera, a 12 million-pixel ultra-wide angle camera and a 48 million-pixel ultra-macro telephoto camera. the wide-angle main camera supports F1.4 ~ 4.0 adjustable aperture, and the latent telephoto provides 5-50 times zoom. the OV50A, OV60A and OV64B of weir shares can be easily controlled, and the same SC550XS and SC520XS.

according to the analysis report of huawei Mate 60 Pro released TechInsights by the world-renowned advanced technology analysis and intellectual property service provider, the research report on Kirin 9000s chip Analysis of the huawei Mate 60 Pro RevealsSMIC 7nm(N 2) points out that huawei has expanded its dependence on howay (a subsidiary of weir shares) in the procurement of image sensor products, stevie is also expected to enter the supply chain of 50MP cameras for Huawei smartphones. In addition, Howe's high-resolution OV50A, OV60AOV64B CIS continues to be adopted by Huawei's leading smartphones.

From the perspective of the semiconductor industry chain, products that meet the needs of domestic customers for large computing, high-bandwidth storage, high-speed transmission, high-precision signal chains, and high reliability at the industrial and automotive levels are now on the road to recovery. On the contrary, those who are too dependent on the demand for PC, mobile phone and household appliances may not be able to rebound even if they stay up until next year. (this article started in titanium media APP, by Huang Tian, editor | Liu min)