In, the Production Capacity of 5.028 Billion Packaging Test Products Was Added, and the Digestion Capacity of Blue Arrow Electronics Market Needs to Be Tested

Foshan Blue Arrow Electronics Co., Ltd. (hereinafter referred to as "Blue Arrow Electronics"), which is impacting the science and innovation board, disclosed the first round of inquiry Reply of the science and innovation board.

Blue Arrow Electronics is mainly engaged in semiconductor packaging and testing. The market competition in the packaging and testing industry is fierce, the market concentration is increasing, and the leading packaging and testing manufacturers occupy the main market share. Although in 2018, Lanjian electronics ranked eighth with an annual production capacity of 13 billion discrete devices and fourth among domestic enterprises. However, from the perspective of market share, the market share of blue arrow electronic discrete devices was only about 0.1% in 2018. In addition, in 2019 and from January to June this year, the market share of the company's integrated circuit business was about 0.08% and 0.10%.

In addition to the gap between the market share and leading enterprises, in the technical direction, at present, bluearrow electronics is mainly based on traditional packaging technology, while leading packaging and testing manufacturers such as Changdian technology, Huatian technology and Tongfu micro electricity have a number of advanced packaging technologies such as FC, BGA, WLCSP and SIP in the field of advanced packaging, "the company has a large gap compared with leading packaging manufacturers in the industry".

It should be noted that at present, traditional packaging still occupies the main body of China's market, accounting for more than 70% of the packaging market share. With the wide application of third-generation semiconductor materials, the packaging and testing market capacity continues to increase, and traditional packaging and testing manufacturers will usher in market incremental space. Blue Arrow Electronics disclosed in its reply that it is developing flip chip technology Research and development of sealing and testing technology related to the third generation semiconductor materials. In addition, the new capacity of the company through fund-raising projects is concentrated in DFN and other packaging series, so as to improve product competitiveness.

The reporter of the science and Innovation Board daily learned that the above-mentioned raised investment projects are expected to form a production capacity of 5.028 billion new packaging and test products per year. Under the background of high industry concentration, Blue Arrow Electronics gave his answer in the reply letter.Transistor prices continued to fallThe improvement of packaging industry concentration is a double-edged sword. For example, it will lead to intensified competition among sealing and testing manufacturers in terms of technology, capacity, cost and after-sales service.

From the perspective of discrete device products, the fierce competition between bluearrow electronics and some packaging and testing manufacturers in diodes, triodes and other products has led to a downward trend in the prices of related products, thus squeezing the profit space.Take triode products as an example. The products are mainly private brands, and the proportion of private brand products in the revenue of triode products is 97.81%, 98.76%, 99.49% and 98.99% respectively. However, the reply letter shows that the average unit price of triodes has decreased from 468.99 yuan / 10000 in 2017 to 378.20 yuan / 10000 from January to June this year.Blue Arrow Electronics explained that in the absence of significant growth in market demand, product price competition is the key to enterprise competition. At the same time, due to the efforts of manufacturers to improve the degree of production automation,..., the price decline of products has a foundation.

In addition, due to the limited scale of blue arrow electronic triode products, it can not effectively use the scale effect to reduce the production cost, resulting in low gross profit margin.Of course, the improvement of industry concentration also brings new development opportunities. Blue Arrow Electronics said that on the one hand, the intensification of the industry competitive environment objectively prompted enterprises to speed up technology R & D and improve production efficiency; On the other hand, the improvement of industry market concentration also provides market-oriented verification for the company to clarify its product direction.Blue Arrow Electronics said that it took sot23-x, DFN and other packaging forms as its main packaging products,... And became the main product type for the company to participate in market competition.

The reporter of science and Innovation Board daily learned that the fund-raising, investment and production expansion project of Blue Arrow Electronics in this IPO involves sot23-x, DFN series and other packaging forms. The product types corresponding to sot23-x include DC-DC, MOSFET, lithium battery protection IC, charging management IC, etc., while the product types corresponding to DFN series include lithium battery protection IC, charging management IC, MOSFET, etc.Market digestion capacity to be testedIt is worth noting that Blue Arrow Electronics has not yet ranked among the first echelon of domestic packaging enterprises. From the perspective of packaging technology, bluearrow electronics currently focuses on traditional packaging technology, and the main packaging series include Sot, to, SOP and other series. The market competition of this series of products is fierce, and the packaging and testing manufacturers in the same industry have the production capacity of this series of products.

Under the questioning of Shanghai Stock Exchange, Blue Arrow Electronics admitted that its current product structure is relatively single, in which some general products such as triodes of the company have standardized production processes and processes. Compared with enterprises in the same industry, the difference is small, the entry threshold is low, and the degree of product homogeneity is high. Blue Arrow Electronics said that the new demand promotes the development of products to high-end, which makes the company's general products have a certain substitutability.In this context, through the fund-raising project, Blue Arrow Electronics focuses its new production capacity on DFN and other packaging series to improve product competitiveness.The reporter of science and Innovation Board daily learned that Blue Arrow Electronics disclosed in its reply that after the completion of the raised investment project, it is expected to form a production capacity of 5.028 billion new packaging and test products per year. Then the question comes one after another. Does the company have enough market digestion capacity for new production capacity?

From past cases, Blue Arrow Electronics has been involved in the R & D, production and sales of LED products, but since 2016, the downstream market demand of LED products has slowed down and overcapacity has become prominent. In addition, since 2017, the company's LED products have batch quality problems, and the company was once dragged down by LED products, which affected its overall revenue, gross profit and other financial indicators.Blue Arrow Electronics said in its reply that as of the disclosure date of the reply, there had been no similar LED products.From the perspective of capacity utilization, from 2017 to January to June 2020, the capacity of bluearrow electronics reached 7.488 billion, 8.397 billion, 9.41 billion and 4.934 billion respectively. The capacity utilization rates of the previous years were 83.08%, 87.31%, 88.38% and 87.79% respectively. In addition, from January to June this year, the company has six contracts under performance, and its operating revenue from January to June 2020 has reached 243 million yuan.

According to SEMI, 18 semiconductor projects will be put into operation in the world by 2020, Chinese mainland accounts for 11 of these projects and will invest 24 billion US dollars. Founder securities mentioned in the research report released in July this year that with the release of the capacity of a large number of new wafer factories and the improvement of the capacity utilization of domestic mainstream OEM factories, the capacity expansion of wafer factories is bound to spread to the middle and downstream packaging manufacturers, which will bring more new demand for semiconductor packaging and testing.