Another giant has entered TWS and has entered the Huawei supply chain
Time:2020.08.11
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Insiders said that at present, BYD supplies batteries for two Huawei TWS headsets, the models are kept secret, and Huawei is also developing it. "In the TWS field, Huawei is our first customer. In the future, we will continue to focus on service brand manufacturers."
In addition to TWS batteries, there are also lithium battery protection ICs. On July 28, BYD Semiconductor's WeChat public account released a message that Honor recently released Earbuds X1 true wireless Bluetooth headsets, equipped with an integrated lithium battery protection IC-BM192 developed and produced by BYD Semiconductor.
Obviously, BYD, the former "battery king", has brought its accumulated advantages in the consumer battery field to TWS for many years.
However, the reason why BYD entered TWS, in addition to immediate dividends, may also be due to the decline in the new energy vehicle business. In 2019, China's new energy vehicle market ushered in the largest drop in subsidies in history. According to BYD's 2019 annual report, BYD's new energy vehicle revenue was 40.145 billion yuan, a year-on-year decline of 23.42%, which directly led to a decline in annual performance.
In addition, this year's new energy vehicle subsidy threshold has been further raised, making BYD have to "find a different path" and want to find a way out in TWS.
It can be seen that in the near future, BYD will use the advantages of Huawei, Xiaomi, vivo and other existing customer bases to compete with Yiwei Lithium Energy, Ganfeng Lithium, Xinwangda, etc. in the TWS battery industry to compete for more market share.
According to Datamaster, as an old mobile phone foundry, BYD has accumulated many brand customers. Perhaps TWS batteries are just the beginning of its entry into wireless headsets. It is not impossible to transform into a TWS foundry in the future.
Make a fortune with small batteries
"We made a fortune as a small battery. At the beginning of the company's establishment in 1995, the early business was to make consumer batteries, and we made nickel-hydrogen nickel-cadmium batteries." BYD's IR staff told Data Jun, and then started the mobile phone assembly business and entered Motorola. The supply chain of first-tier brands such as Nokia and Nokia have entered the automotive industry after acquiring 50% of Xi’an Qinchuan shares in 2003.
"Although the automobile business is the main business after 2005, the 3C consumer electronics business has not stopped." IR staff told Data Jun that small batteries for consumer electronic products have been developed and produced.
According to the annual report, the company has three main businesses: automobile business, mobile phone components and assembly business, secondary rechargeable battery and photovoltaic business, which accounted for 49.53%, 41.79%, and 8.22% of total operating income, respectively. Among them, secondary rechargeable batteries include lithium electronic batteries and iron battery products.
Although the proportion is relatively small, batteries have always been one of BYD's main business operations. Secondly, BYD also has a mature consumer battery product line. These are the advantages of BYD's entry into the TWS battery field.
Growth with TWS battery
For BYD, TWS is a tool to reverse the decline in performance.
According to the annual report, BYD's operating income in 2019 was 127.739 billion yuan, a year-on-year decrease of 1.78%, and its net profit was 1.614 billion yuan, a year-on-year decrease of 41.93%.
From the perspective of the three main businesses, the operating income of the automobile business was 63.266 billion yuan, a year-on-year decrease of 16.76%. The operating income of the mobile phone components and assembly business and the secondary rechargeable battery and photovoltaic business were 53.380 billion yuan and 10.506 billion yuan, respectively, up year-on-year. 26.40%, 17.38%.
Due to the sharp decline of new energy vehicle subsidies in 2019, the decline rate was more than 50%, resulting in a serious decline in BYD's new energy vehicle business. As new energy vehicles accounted for more than 60% of BYD's automobile business, it directly led to a decline in annual performance.
At the same time, the mobile phone components and assembly business and the rechargeable battery and photovoltaic business have performed well, which also enables BYD to continue to make efforts in these two areas. According to the announcement, BYD continues to be optimistic about the growth potential of the mobile phone business brought by the wave of 5G replacement and the future of AI new smart terminal products.
There is no doubt that TWS is the hottest part of the current new smart terminal products. As BYD, it leverages its own advantages in the research and development and production of consumer batteries, as well as its cooperation with terminal customers such as Huawei, Xiaomi, Samsung, and Apple. Basically, actively deploy TWS.
Fierce competition in the TWS battery field
According to the statistics of Datajun, among the top 25 TWS headset batteries, Valta, Xinwangda, Yiwei Lithium Energy, Penghui Energy, and Ganfeng Lithium ranked TOP5, with monthly production capacity of 7KK, 5KK, 4KK, 3.3KK, 2.5 KK.
From the perspective of customer groups, the customer group of Yiwei Lithium Energy is Samsung, and the cooperation with Apple and Huawei is also actively promoted. The customers of Penghui Energy button battery include Harman, TCL, Sannuo, Horn, Jiahe, Kejia Etc., Xinwangda has also entered the supply chain of Huawei and OPPO...BYD is a latecomer. Although it has entered Huawei, it is not yet known whether it can penetrate into the supply department of other brands.
From the perspective of production capacity, TWS is currently undergoing a period of rapid growth. Suppliers of parts and components such as silicon wheat and batteries in the industry chain and ODM plants are all expanding production. The capacity utilization rate and sales rate of TWS batteries are even closer to 100. %, in short supply, and since the beginning of the year, affected by the epidemic, overseas TWS batteries are in short supply, and many TWS battery suppliers are actively expanding their production.
In March of this year, Yiwei Lithium announced the non-public issuance of A shares. It plans to raise no more than 2.5 billion yuan to expand the production of lithium-ion batteries. 1.05 billion yuan of the raised funds will be invested in the TWS button battery project. Penghui Energy also said that the company's current production capacity of TWS headset button batteries will be expanded to 60 million per year. Ganfeng Lithium is not far behind, and plans to expand the production capacity of button batteries from 100,000 to 120,000 per day to 200,000 to 250,000 per day, which will be realized in the fourth quarter of this year.
The demand for rapid growth in production capacity is something that BYD has to deal with.
In addition to expanding production, the battlefield for TWS battery patents is also fierce. Valta frequently sued Yiwei Lithium for patent infringement of button batteries. Under Valta’s “eyes and eyes”, various battery factories have used their brains in structural design to avoid patent infringement. For example, Ganfeng Lithium Industry’s TWS battery uses soft Hard shell structure, applied for more than 30 patents...
It can be seen that the competition in the TWS battery field is fierce and not flat. However, compared to power batteries, the gross profit margin of TWS batteries is much higher. Penghui Energy has said that TWS batteries are expected to continue to explode in 2020, with button battery shipments doubling, with a gross profit margin of 50% to 70%, which is much higher than the gross profit margin of power batteries of less than 20%.
Therefore, at the time when new energy vehicles are weak, whether BYD can take advantage of the TWS battery to turn the tide, whether it can make deeper and greater achievements in the TWS field, it depends on the follow-up.