(1) Industry competent authorities, management system and industry policies and regulations

       

1. Industry authorities and management system

         The corresponding competent authority of the connector industry is the Ministry of Industry and Information Technology of the State Council. This competent authority is responsible for industry planning and industrial policy and organizes implementation, guides the formulation of industry technical regulations and industry standards, and guides the coordinated and orderly development of the entire industry.

         The connector industry self-regulatory organization is the China Electronic Components Industry Association. The China Electronic Components Industry Association was established on November 16, 1988. It is a voluntary, industrial, national, and non-profit social organization formed by enterprises (institutions) in the electronic components industry. The main role of the plug-in component branch and other branches is to assist government departments in the industry management of the electronic components industry; carry out industry investigations and research; strengthen industry self-discipline and maintain a fair market environment; help companies develop markets and organize new products with the approval of relevant government departments Appraisal, review of scientific research results, formulation of industry standards and quality supervision.

         2. Major laws, regulations and policies of the industry

         Refer to the "2018-2023 China Connector Industry Market Competition Status Survey and Investment Prospect Planning Forecast Report" released by Guanyan Tianxia

要法律法規(guī)及政策

         (2) Technical level and characteristics of the industry

         

Since the 1990s, driven by the gradual maturity of applications in my country’s communications equipment, computers, consumer electronics, automobiles, and industry, my country’s connector market has made considerable progress, which has promoted the formation and development of connector-related technologies. mature.

         1. Precision mold manufacturing technology required by miniaturization

         With the development of miniaturization and thinning of mobile products, led by mobile phones, consumer electronics connectors are also developing toward miniaturization, and precision mold manufacturing technology has become the core technology required by domestic connector manufacturers. From the perspective of the gradual changes in the current spot market, the pin spacing and height of the board-to-board connector will become smaller and smaller. According to relevant data, the contact spacing of the current standard connector is 0.5mm, and it is now moving towards 0.3mm. The direction of development will eventually reach 0.2mm. The main technologies include: precision plastic welding technology, pulse hot-press welding technology, laser welding technology and visual welding spot tracking technology.

         2. Signal integrity and electromagnetic compatibility technology required by high speed

         The typical high-speed is the replacement of USB 2.0 by USB 3.0. The transmission rate has been increased from 480Mbps to 5Gbps, the signal frequency has been increased tenfold, and the interference caused by the alternating magnetic field has also been significantly strengthened. The introduction of USB3.1 is a further step Increase the transmission rate to 10Gbps. Connector manufacturers not only need to refine operations in process links such as molds and welding to reduce magnetic field interference, but also need to use electromagnetic simulation software for rigorous evaluation and consideration in product design.

         3. Reliable design and manufacturing process for high current requirements

         With the increase in the computing speed of the central processing unit of computers and mobile devices and the advancement of semiconductor technology, the working voltage of transistors is gradually reduced, which is conducive to reducing power consumption, but its physical characteristics determine that the reduction in power consumption is less than the voltage, so The current increases. The increase in power supply current (and the increase in signal complexity) increases the "connection point" between the central processing unit and the motherboard. In the case of limited area changes, the diameter of the "connection point" will decrease. The smaller the connection point leads to the increase of the process difficulty and the reduction of the absolute error tolerance; the increase of the connection point leads to the increase of the reliability requirement of each point under the same system reliability requirements. Therefore, this increase and decrease add up to greatly increase the difficulty of designing and manufacturing the central processing unit connector, that is, the socket.

         The comprehensive technical level and competitiveness of my country's connector industry companies have clearly shown a two-level differentiation. Most small and medium-sized connector companies are at the low end of the technical level, with weak research and development capabilities, low product value-added, and low corporate competitiveness; a few are relatively large Large connector companies have strong comprehensive competitiveness, regardless of production scale, technical level, and innovation capabilities have reached or basically reached the international advanced level. In order to meet the needs of large downstream customers, these companies have brought their technical level close to or reached the international advanced level by introducing advanced equipment and adopting new processes, which objectively promoted the overall improvement of my country's connector technology level.

         The specific impacts of wireless connection technologies that have emerged in recent years are as follows:

         1. From the perspective of product application scenarios, the difference between the main product application scenarios and the current wireless connection technology application scenarios determines that the wireless connection technology will not have a major impact

         (1) The characteristics of wireless connection technology at this stage determine that its application scenarios have limitations

         In recent years, wireless connection technologies represented by WI-FI, Bluetooth, nRF, Zigbee, and SmartAir have developed rapidly. These wireless transmission methods use electromagnetic waves to transmit and receive high-frequency signals to achieve the purpose of information transmission. However, compared with fixed-line wired connection technology and optical fiber connection technology, wireless connection technology has limitations such as small data transmission, short transmission distance, and unstable transmission signal. Take WI-FI wireless connection technology as an example. After continuous technological innovation and progress, although the wireless transmission rate has been greatly improved, there is still a big gap compared with the transmission rate of wired connection technology. Moreover, when the device is working for a long time, the wireless transmission rate of WI-FI will also decrease to a certain extent. In addition, although the wireless connection technology will ensure the user's information security through an encryption system, this authentication system still exists Certain loopholes, compared with wired connection, the security performance of wireless connection technology is still lacking. The entire communication network mainly includes data centers, backbone networks, metropolitan area networks, access networks, and terminal applications. The limitation of wireless connection technology essentially determines that it is mainly suitable for wireless connection and communication between access networks and terminal applications.

         (2) The application scenarios of most products do not overlap with the application scenarios of wireless connection technology at this stage

         The main products are communication connectors and consumer electronics connectors. Among them, in terms of communication connectors, high-speed connection technology is vigorously developed. Among them, SFP series products and high-speed RJ45 (with transformer and common mode magnetic ring) series products are represented by high-speed Communication connectors are mainly used in products such as servers and switches. The products have high data transmission rate requirements and are located in the data center, backbone network and metropolitan area network. They do not overlap with the current wireless connection technology application scenarios. In terms of consumer electronics connectors, the main research and development and production of USB 3.0, USB TYPE C, HDMI and other series of products have high transmission rates. They are mainly used for high-speed audio and video and data transmission, as well as charging and supplying power, and are also compatible with the current wireless connection technology application scenarios. There are differences.

         However, it is undeniable that traditional low-speed connector products such as RJ11 have a low transmission rate and are mainly used for fixed-line terminals. They will be impacted by wireless connection technology and gradually replaced by wireless connection products.

         2. From the perspective of research and development strength, it has strong new technology research and development and new product development capabilities, and can quickly respond to industry technological changes

         Adhere to the technological development strategy of new product development and innovation and production and manufacturing technology innovation, set up a new product research and development center, high-speed connector division and optical interconnection product division and other product research and development departments, respectively responsible for RJ connectors, high-speed connectors and optical Design and development of interconnected products. At the same time, a production engineering department is established to cooperate with the product research and development department to formulate product production standards; to set up R&D personnel in key production technology departments such as mold R&D center, machining factory, intelligent manufacturing department, and safety, energy saving and environmental protection department , Carry out the innovation of connector production process and manufacturing technology. The improvement of existing product production technology and the development of new products promote the continuous optimization of product and business structure, which further enhances competitiveness.

         3. From the perspective of the development pattern and sales layout of global fixed network products, the products have a certain buffer period to adapt to market fluctuations

         From the perspective of the development pattern of global fixed network terminal products, the global fixed network development is uneven. Some developed countries and regions such as Japan and the United States have realized fiber to the home and used wireless terminal products such as wireless optical modems. In these countries or regions, traditional low-speed connector products will be greatly impacted by wireless connection products. However, other underdeveloped countries and regions, or some countries and regions that are considering the use of old equipment at cost, will also use traditional copper wire fixed networks, and these products still have a large market space. In addition, as far as the Chinese market is concerned, the improvement of wireless connection technology and the popularization of 5G networks also require a certain transition period.

         (3) Barriers to entering the industry

       

1. Certification barriers to enter the supply chain system of large customers

         Connectors are indispensable basic components for communication equipment, computers, consumer electronics, automobiles, etc., and stable product quality is crucial to the function of terminal products. To become a qualified supplier of large manufacturers in the downstream industry, connector manufacturers must not only meet the basic standards of the industry, but also pass its strict qualification certification.

         Large enterprises such as Huawei, ZTE, Hon Hai, Zhengwei, Pegatron, Flextronics, Molex, Full Rise, Duratel, FCI and other large companies usually conduct strict qualification verification on suppliers. During the verification process, the supplier’s R&D and testing capabilities, Manufacturing equipment, process flow, quality management, working environment and even business conditions put forward very strict requirements. Only for a single product, it needs to go through product review, production line rectification, small batch trial supply, batch supply, etc. Only after this link can we obtain large quantities of orders. Once the cooperative relationship is confirmed, large enterprises usually do not easily change suppliers in order to ensure product quality and maintain stable supply.

         This strict supplier qualification certification mechanism and long-term strategic partnership have formed a higher barrier for companies that intend to enter the connector industry.

         2. Technical barriers

         Connectors belong to the supporting industries of communications, computers, consumer electronics, automobiles, and industries. They have a wide range of uses, but each industry has different needs. There are many types of related products, complex specifications, and high product process design requirements. Some electronic products, such as mobile phones, are updated very quickly, and product demand may show a spurt of growth in a short period of time, and then fall into silence after a period of time. Therefore, connector manufacturers are required to have strong market information capture capabilities, and must have rapid product design and research and development capabilities to shorten the reaction time, and continuously develop new products in a timely manner based on the rapid update of downstream products and technologies. At the same time, the connector industry has a great demand for experienced design and development personnel, and there is a serious shortage of design and development personnel for some products. For small and medium-sized connector manufacturers, since the training cycle of design and development personnel is as long as 4-5 years, it is impossible to obtain sufficient design and development personnel in the short term.

         In addition, in recent years, in order to reduce labor costs and improve production efficiency, some connector companies have begun to adopt automated or semi-automated production. The introduction of advanced production equipment has higher requirements for the company’s technological digestion and absorption capabilities, and also for those who intend to enter the industry. Enterprises have formed certain technical barriers.

         3. Barriers to large-scale production

         First of all, with the gradual increase in the concentration of downstream industries such as data communications, consumer electronics, automobiles, and medical care, downstream manufacturers have higher requirements for accessory suppliers’ product quality, R&D capabilities, price levels, and delivery periods. Companies provide supporting services for them, and help them continuously reduce costs and improve the price competitiveness of their products. Secondly, the individual product value of the connector product is low, so it generally has the characteristics of mass production. Only after the realization of large-scale production can the cost of a single product be reduced. The large-scale production is an overall test of the company's production efficiency, procurement costs, process management and other links. It requires the company's long-term accumulation in research and development, production, customers, and management.

         4. Supply chain management barriers

         Connector manufacturers have a wide variety of raw material requirements and large-scale procurement. Due to the uneven production efficiency, product quality, coordination ability and credit level of upstream raw material suppliers, supply chain management is the key for connector manufacturers to quickly respond to customer needs, effectively reduce costs, and ensure product quality. Enterprises must respond quickly and efficiently to the needs of downstream customers, and quickly pass this demand to the upstream of the supply chain. The more customers a company has, the larger and more intensive the sales orders, the larger the scale of corresponding purchases, the more frequent the frequency, and the greater the difficulty of supply chain management: it is necessary to ensure the quality of products and the timeliness of supply, but also to consider upstream suppliers Factors such as the ability to accept orders and production efficiency, as well as the time consumption of logistics and transportation. This requires connector manufacturers to have the ability to effectively integrate and manage the supply chain, so supply chain management has formed a strong barrier to the expansion of the enterprise and the realization of scale benefits.

         

(4) Favorable and unfavorable factors affecting industry development

         1. Favorable factors affecting the development of the industry

         (1) Support of national industrial policy

         The connector industry and the upstream and downstream industries of the industry are supported by national industrial policies, and the industry has a bright future. The State Council’s "Twelfth Five-Year" National Strategic Emerging Industries Development Plan, and the Ministry of Industry and Information Technology’s "Electronic Basic Materials and Key Components "Twelfth Five-Year Plan"" and other documents all regard new components as the key development areas of my country's electronic information industry.

         (2) Continuous and rapid growth of downstream industries

         With the development of my country's economy, downstream communications, consumer electronics, automobiles and other industries have achieved rapid growth. Connectors are indispensable components for communications, consumer electronics, and automobiles. my country's connector industry is developing rapidly driven by the strong demand of downstream industries such as communications, consumer electronics, and automobiles. In 2015, the sales revenue of my country's electronic information industry reached 15.4 trillion yuan, a year-on-year increase of 10.4%. Among them, the electronic information manufacturing industry achieved a revenue of 11.1 trillion yuan from its main business, a year-on-year increase of 7.6%13.

 

       

In recent years, with the rapid growth of demand in my country's communications, consumer electronics, automotive and other industries and the continuous innovation of industrial technology, network communication equipment connectors, consumer electronics connectors, and automotive connectors will be the focus of development in the next few years. These fields Will continue to be the continuous growth point of connector applications.

         (3) Concentration of international production bases in China

         In order to reduce production costs and open up new markets, more and more international manufacturers have shifted their manufacturing operations to developing countries including China. Due to the vast consumer market, mature manufacturing capabilities, and relatively cheap labor costs, a large number of electronic product and equipment manufacturers have transferred their production bases to China on a large scale. This not only expands the market space of connectors, but also introduces advanced production technology and management methods to domestic enterprises. After excellent connector manufacturers become qualified suppliers of downstream manufacturers, they have obtained opportunities for substantial progress in business and technology, which has promoted the overall development of the domestic connector industry.

         (4) Accelerating domestic industrial concentration

         With the changes in the competitive landscape, a number of industry-leading companies such as Huawei and ZTE have gradually formed in downstream industries such as domestic communications and computers. Leading companies in these industries have put forward higher requirements on the product quality, R&D strength, price level, and delivery deadlines of component suppliers, and they need companies of comparable scale to provide them with supporting services and help them improve their product competitiveness. Therefore, the concentration of the downstream manufacturing market has led to the continuous concentration of the connector industry, and advantageous companies have grown rapidly in the process of market concentration.

         2. Unfavorable factors affecting the development of the industry

         (1) There is a gap between the domestic technology level and the international advanced level

         At present, high-end connector technology and high-end products are basically monopolized by international giants in the industry. Although a few domestic companies also produce high-end connector products, they are still small compared to international giants. Most domestic small and medium-sized connector manufacturers do not Have independent development and design capabilities. The overall domestic technical level still has a certain gap with the international level, and is at a relatively technical disadvantage in international competition.

         (2) Shortage of professional talents

         In the product design process, professional technicians not only need to have professional knowledge of the customer's industry, but also need to have professional connector manufacturing work experience. Professional talents and comprehensive talents undoubtedly have played an important role in the connector manufacturing and service process. At present, the training and education of relevant talents in China is still relatively backward, mainly relying on the development needs of various enterprises for internal training. The shortage of professional talents also hinders the rapid development of the domestic industry.

         

         (5) Relevance between the industry and its upstream and downstream industries

         The industry is the connector industry. The connector is the interface and channel for energy and information interaction when forming an electronic system.

         As an indispensable electronic part in electronic equipment, the connector is mainly used to set up a communication bridge between blocked or isolated circuits in the circuit, so that the current can flow, so that the circuit can realize the predetermined function. The form and structure of the connector are ever-changing, with the application object, frequency, power, application environment, etc., there are various types of connectors.

         As a communication bridge in electronic circuits, connectors are widely used in consumer electronics, automobiles, data communications, industrial, medical, aerospace, and military fields. Connector products are mainly used in data communications, consumer electronics and automotive fields. The structure of the industry chain is shown in the figure below:

 
         

The correlation between the connector industry and its upstream and downstream industries is mainly manifested as:

         1. Relevance to upstream industries

         The upstream raw materials of the connector industry include non-ferrous metals, plastic raw materials, rare and precious metals and auxiliary materials. Among them, non-ferrous metals are mainly used to make connection terminals. In order to avoid excessive obstruction or degradation of signals during transmission, the terminals mostly use copper alloy plates such as brass, beryllium copper, phosphor bronze, etc. as raw materials; plastic raw materials are PBT, PPS , NYLON, LCP resin, etc., mainly used to make the connecting shell part; rare precious metals are mainly gold, palladium, nickel, etc., which are the most commonly used electroplating materials; auxiliary materials are mainly chemical reagents required for electroplating. On the whole, non-ferrous metals and rare precious metals account for the largest proportion of connector cost, followed by plastic raw materials and auxiliary materials.

         2. Relevance to downstream industries

         As a bridge of communication in electronic circuits, connectors are widely used in different fields including data communications, computers and peripherals, consumer electronics, automobiles, industry, medical treatment, aerospace and military. With the rapid development of terminal product technology in various application fields and the rapid growth of the market, the connector industry is showing a trend of specialized segmentation, and downstream application manufacturers will generally strengthen cooperation with midstream connector manufacturers to ensure quality , Stability in cost.