In 2023, the company will invest 250 million yuan in R&D, and in 2024, R&D will increase to 450 million yuan, a year-on-year increase of 80%, which has become the confidence of the company's products to compete in various fields.

While the global technology giants are still fighting hand-to-hand in the field of cloud large models, the Chinese AI laboratory DeepSeek was born - condensing hundreds of billions of parameters into the range that consumer-grade graphics cards can bear, instantly activating the terminal AI ecology that has been dormant for many years. Developers around the world are discovering that GPT-like capabilities can be deployed on smart cars, XR glasses, and even home robots without the need for sky-high computing power.

This "liberation movement" of computing power not only tore the gap of the large model monopoly alliance, but also allowed AI end-side devices and applications to break free from the shackles of cloud computing power. It also makes the data storage industry unexpectedly capture the golden window that occurs once in a decade, forcing the data storage infrastructure to enter the PB era.

A few days ago, BIWIN Storage (688525. SH) released its 2024 annual performance report, benefiting from the recovery of the industry, the wave of AI and the company's vigorous expansion of customers, the company's revenue and net profit have achieved substantial growth, and the company has successfully turned losses into profits. When the financial reports of data storage giants are collectively red, people begin to realize that this revolution, which began with the breakthrough of algorithms, is reshaping the entire industrial chain from chip architecture to data infrastructure at an unimaginable speed.

DeepSeek breaks the game and gives birth to a new AI ecosystem

If ChatGPT has given people a real sense of the disruptive power of AI, then DeepSeek has opened the industry's eyes to the potential to turn it into reality. Just as smartphones replaced feature phones, 3 billion electronic devices around the world are now waiting to be reborn with the help of AI, and storage technology has become the invisible engine of this revolution.

IDC data shows that China's AI mobile phone shipments will reach 118 million units in 2025, with 16GB of memory becoming standard, and some models have been equipped with 24GB of memory to support the operation of local tens of billions of parameter models. Not only mobile phones, AI is spreading to all terminals. Canalys predicts that in 2028, global AIPC shipments will reach 208 million units, with 32GB of RAM and 1TB SSDs becoming mainstream configurations. With an estimated shipment of 646 million units, smart wearable devices are generating demand for low-power storage.

The qualitative change in the storage market has become unstoppable. Yole, a well-known organization, predicts that the global storage market will reach $263 billion in 2027, of which AI terminals will contribute more than 35% of the increase. Haitong Securities estimates that the AI-driven storage market will exceed US$80 billion in 2025, and technology players will reap the biggest dividends.

It is the first to deploy the AI device side, and has solid advantages

In the wave of AI terminal explosion, BIWIN Storage is quietly building a technical moat. With more than ten years of deep cultivation in the industry, it has established a first-mover advantage in AI end-side tracks such as AI glasses, AI mobile phones, and AIPC. The company said in the 2024 performance forecast that the revenue of smart wearable storage products in 2024 will be about 800 million yuan, a significant year-on-year increase.

The "arms race" of AI terminals is rewriting the rules of hardware. In order to maximize the capabilities of device-side AI, many mobile phone manufacturers have begun to adjust the storage configuration of their flagship products, and BIWIN Storage is expected to benefit from the development of AI mobile phones, and has launched embedded storage products such as UFS3.1, LPDDR5/5X, and uMCP for AI mobile phones, and has deployed large-capacity LPDDR products such as 12GB and 16GB; In the PC field, AIPC has increased the demand for high-capacity advanced process DRAM products based on the computing power requirements of large models, and at the same time, in order to effectively manage AI data running on PCs, it will also increase the demand for NAND products, BIWIN Storage has also launched high-performance storage products such as DDR5 and PCIe 5.0 for AIPC. These leading technological innovations in the field of AI devices can help BIWIN Storage gain a larger market share among its top customers.

What really makes BIWIN Storage stand out is the precise card position in the smart glasses track. When Meta monopolized 60% of the market share with Ray-Ban smart glasses, driving global smart glasses shipments to soar by 210% to more than 2 million units in 2024, BIWIN's ePOP memory chips have been deeply implanted in the product supply chain. Thanks to the company's R&D, packaging and testing integration layout, this memory chip the size of a grain of rice not only has 2GB of memory space, but also can achieve a read speed of 300MB/s and a high-frequency operation of 4266Mbps and maintain excellent low-power performance, which perfectly meets the ultimate requirements of AI glasses for "small size, high energy efficiency, and low power consumption".

Ray-Ban Meta AI glasses

The global AI smart glasses market has ushered in explosive growth. Zuckerberg said at an all-hands meeting at the end of January this year that Ray-Ban Meta has already sold more than 1 million units in 2024, and sales are expected to increase to 5 million units in 2025. RayBan's parent company, EssilorLuxottica, has also previously revealed that it is actively expanding its production capacity and expects to expand its smart glasses production capacity to 10 million pairs by the end of 2026. From 2024 to 2026, Ray-Ban Meta's sales will increase from 1 million to 10 million pairs, with a 10-fold growth space in two years.

According to the industry dismantling report, the value of the ePOP memory chip supplied by BIWIN Storage in Ray-Ban Meta is second only to the main control chip, which is the second largest core component and has become the core link of the value distribution of the industrial chain. In addition to Meta, BIWIN Storage has also entered AI glasses manufacturers such as Rokid, Thunderbird, and Xiaomi, and has significant competitive advantages in the industry.

AI smart glasses products of various brands

In the era of AI computing power, we have increased wafer-level advanced packaging and testing manufacturing capabilities

Under the dual opportunities of the recovery of the storage industry cycle and the wave of AI, BIWIN's main storage business continues to grow. At the same time, the company also focuses on the upstream and downstream industry chain of memory, builds a 2.0 layout of R&D packaging and testing integration, and increases the chip design and wafer-level advanced packaging and testing secondary growth curve.

It is understood that in the field of semiconductor memory, the original factory occupies a leading position in storage technology and supply guarantee by virtue of the IDM model. The strength of memory solution manufacturers lies in the middle and back-end links of the industrial chain such as storage media research, main control chip design, firmware algorithm development, product software and hardware development, advanced packaging and testing, etc., and the standardized wafers are transformed into a variety of memory products.

BIWIN Storage, with its subsidiary Tailai Technology as the advanced packaging and testing and memory manufacturing base, specializes in memory packaging and testing and SiP packaging and testing; In 2023, the company will start to lay out the wafer-level packaging and testing business that is urgently needed for AI end-side equipment, and the project will land in Songshan Lake; On March 18 this year, BIWIN received the approval issued by the China Securities Regulatory Commission, agreeing to the company's registration application for issuing shares to specific objects, and the total amount of funds raised in the private placement did not exceed 1.9 billion yuan, which was used for the expansion and construction project of Huizhou BIWIN's advanced packaging and testing and memory manufacturing base and wafer-level advanced packaging and testing manufacturing project.

It is not difficult to see that under the wave of domestic substitution of storage, it has become an important competitive advantage for domestic manufacturers with both independent research and development and advanced packaging and testing capabilities. Especially in the era of AI computing power, the development of advanced memory is inseparable from the development of wafer-level advanced packaging and testing technology.

Driven by the AI computing revolution, storage-compute and packaging technology is becoming the core path to break through the bottleneck of the "memory wall", and end-side AI devices have a wide range of requirements for energy-efficient storage-computing integration, packaging and testing. BIWIN Storage deploys wafer-level advanced packaging and testing, provides advanced storage solutions for the AI era, and serves the future trend of storage, computing integration, packaging and testing. Wafer-level advanced packaging and testing manufacturing projects can collaborate with BIWIN's main business to drive the demand for high-performance storage. In terms of the value of the industrial chain, the integrated storage + advanced packaging and testing service has a significant amplification effect in revenue and value compared with the separate advanced packaging and testing service, so the company's high-performance storage + wafer-level advanced packaging and testing integrated solution layout will bring greater revenue increment. BIWIN Storage is expected to become a leading provider of storage solutions + advanced packaging and testing services, and through the significant synergy between the two, it will increase customer stickiness and enjoy greater industry dividends.

In addition, Samsung's "VCS" technology is being developed using a wafer-level advanced packaging process to stack more LPDDR DRAM through vertical wire bonding packaging technology to increase the number of I/O interfaces, reduce power consumption, and improve performance to meet the needs of on-device AI applications and other scenarios. It can be seen that wafer-level advanced packaging technology is in line with the future development trend of the industry. BIWIN Storage expands storage + wafer-level advanced packaging technology to meet the development needs of advanced memory in the AI era.

Samsung's VCS process display diagram

Thanks to the company's forward-looking vision and long-termism, even in the trough of the industry, BIWIN Storage also insists on increasing technological innovation, investing 250 million yuan in R&D in 2023 and 450 million yuan in 2024, a year-on-year increase of 80%, which has become the confidence of the company's products to compete in various fields.

Shanxi Securities Research Report pointed out that with the recovery of the storage industry, BIWIN Storage, as a leading enterprise in storage solutions, is expected to further increase its market share through a full range of differentiated product systems and services. At the same time, the company actively deploys in the field of advanced packaging and testing, explores the second growth curve, and promotes the complementary and strong chain of the semiconductor industry in the Greater Bay Area, so as to ensure the company's competitive advantage in AI and the post-Moore era and achieve long-term steady growth.