Under the strong return of Huawei, the long-dormant consumer electronics market is surging with a wave. After the release of a good signal in the series, will the consumer electronics connector market usher in a new turning point? In the winter, warm spring in the future period, connector manufacturers and how to respond?

At 14:30 on September 25, Huawei's autumn conference officially began, and it was completely "killing crazy".

As of 7 a.m. on September 24, the day before the press conference, about one million people had made reservations. On the day of the conference, the number of participants in the "Huawei Terminal" live broadcast room peaked at more than 100 million, and a total of 140 media broadcast online simultaneously, and mainstream official media such as Xinhua News Agency and People's Daily rushed to report.

Huawei carried a number of products have appeared, including tablet MatePad Pro 13.2, gold smart watch, smart screen V5 Pro and other series of new products, and before that, Huawei smartphone Mate 60 was also launched.

After the darkest moment, Huawei has come back strongly, stirring up the rare ripples of the downturn in the consumer electronics market. Some people believe that Huawei's new product conference is a positive signal that the consumer electronics market has bottomed out; But there are also voices that a single "star product" cannot solve the problem of the lack of creativity and innovation in the overall performance of consumer electronics.

A discussion about the consumer electronics market is under way.

Terminal market: no recovery signal is released

The pace of development of the consumer electronics industry dominated by smartphones and laptops has slowed down, and it has gradually fallen into the problem of technological innovation "squeezing toothpaste" and insufficient creative development. Due to the weakness of performance overflow and innovation, the enthusiasm of users to replace the machine has gradually declined, and consumer electronics has gradually changed from FMCG to consumer resistant products.

According to the well-known survey agency Canalys data, the global smartphone market shipments in the first quarter and the second quarter of 2023 were 270 million and 258 million, respectively, down 13% and 10% year-on-year. In the first quarter and the second quarter of 2023, the domestic smartphone market shipments were only 67.6 million and 64.3 million units, down 11% and 5% respectively. According to TechInsights data, global laptop shipments plummeted 30% in the first quarter of 2023, hitting a new low since 2020.

In general, the consumer electronics market is indeed still dormant in the winter period, but there are some new good signals beginning to release. With the in-depth development of 5G communication and AI technology and the return of leading brands such as Huawei and Apple, the consumer electronics industry chain has also ushered in new signs of warming.

According to understanding, since the release of Huawei and Apple new products, Industrial Fulian, a leading enterprise in the electronics manufacturing industry, has stepped up recruitment in Shenzhen, Chengdu, Zhengzhou, Ganzhou and other places. Near the Mid-Autumn Festival, the company is also in the recruitment network and other platforms to send out a large number of recruitment workers. With Huawei, Xiaomi and other major customers, Guanghong Technology also released the news of large-scale talent recruitment in the official micro, and the company responded: "The rapid growth of orders has brought a large number of personnel needs."

Connector status: Winter is still here but the dawn is coming

The connector industry is in the upstream of the supply chain, and its development status has been deeply affected by the flagging state of the consumer electronics market in recent years, and it was once Mired in development problems. According to the 2023 semi-annual report data of the 28 connector listed companies previously counted in the "International Cable and Connection", the performance of various connector listed companies in the consumer electronics business is still not optimistic. Among the 10 connector listed companies with outstanding consumer electronics business, a total of 8 connector manufacturers' business revenue showed a downward trend over the same period, and 3 of them even fell below 20% or more.

With smart terminal consumer electronics, mobile phone precision connectors for the business of Yihua shares, Leimu shares and other connector listed companies in the first half of 2023 consumer electronics business segment revenue compared with the same period are in a declining state. Lishun Precision, a major player in consumer electronics and communications, also saw a decline in its computer interconnection products and precision components business compared with the same period last year.

"For the connector industry, the consumer electronics sector is still in a weak state." Connector manufacturers Antai Ke, Gekang Electronics and Hantsuen Group, which have layout in the field of consumer electronics, have said that they still have not ushered in a rebound when talking about the development of consumer electronics connectors.

"From our Q3 and Q4 performance, the overall situation is still relatively depressed. At present, the condition of TV monitors and notebook computers is relatively good, and the order is full." Li Baiyi, marketing director of Hanquan Group, said that due to the previous accumulation, most connector manufacturers in the current industry although the order volume has risen, and new orders have arrived one after another, but most of them are in the state of overstock before clearing, rather than benefiting from the industry's recovery.

Xie Yingji, deputy general manager of Gekang Electronics, also believes that: "Affected by the global economic recession, supply chain disruption, inflation and other factors, the consumer electronics connector market demand has weakened, and the industry as a whole has shown a downward trend."

Of course, connector manufacturers all believe that the winter will not continue, the dawn of dawn is coming.

Yang Guoli, general manager of Antai Ke, predicted that the downturn in the consumer electronics market will continue at the end of this year, but under the background of continuous development and changes in the international environment, with the outward development of domestic capital and the import of foreign capital, the investment environment will be improved. In this situation, the first half of next year is expected to usher in a turning point in the consumer electronics market. Li Baiyi, marketing director of Hanquan Group, also believes that there will be a warming period after the Spring Festival next year. With the gradual consumption of the original overstocked inventory and the gradual addition of new products to mass production, there will be a new turning period after the Spring Festival."

Xie Yingji, deputy general manager of Gekang Electronics, also said that in addition to the domestic market, the foreign market is also a very broad space. At present, inflation in foreign markets is more serious, but driven by the global economic recovery, the gradual recovery of the supply chain, and the continuous development of new technologies, the consumer electronics connector industry is expected to usher in a recovery next year. When interest rates are cut next year, it will stimulate new consumer demand."

Countermeasures: Coexistence of transformation and persistence

In the winter period of several years, connector manufacturers have taken different measures.

Sufficient capital and resource strength is the biggest competitive advantage of the head enterprise, which also provides them with great business transformation or expansion in response to the downturn in the consumer electronics market. From the disclosed report for the first half of 2023, it can be seen that the head enterprises with consumer electronics connectors as the main business, such as Lichun Precision, Hongrida, Hexing Shares, have begun to expand their business scope in recent years on the basis of maintaining the original consumer electronics connector business, and march to batteries, new energy vehicles and other fields.

In February this year, Hexing Shares announced that it intends to issue convertible bonds to raise no more than 610 million yuan, and plans to invest in the construction project of new energy automobile electronic parts production base. As a connector leader in the consumer electronics and automotive fields, Lichun Precision has gradually increased its investment and development in the automotive field in recent years. In February 2022, Lichun Precision issued an announcement announcing an investment of 500 million yuan and Chery New Energy to jointly establish a joint venture company, specializing in the development and manufacturing of new energy vehicles.

In response to the downturn in the consumer electronics connector market, the answer given by Hanquan Group is "expand the breadth and promote the depth". Li Baiyi pointed out that the breadth layout is to first open up the industry's leading enterprises, and then win the trust of the industry through cooperation with leading enterprises, so as to constantly open up new customer sources; In depth expansion, Hanquan implements the strategy of promoting different types of products by the same company.

"For example, one of our customers in the smart home field started with cooperation on hair dryers and gradually extended to in-depth cooperation on products such as electric toothbrushes and toothwashers." Li Baiyi said

At the same time, by virtue of its advantages in overseas markets, Hanquan, which started from trade, began to gradually expand the layout of multiple product lines in overseas markets and hope to achieve upgrading and transformation. Previously, we may have only produced cable and connector products in Southeast Asia, but now we may include a broader range of standardized, highly automated Type-C connector products. Even in the future, we want to skip the production of some components such as connectors, and cooperate with customers across the border to provide complete supporting services."

However, whether it is business expansion or transformation, it needs to have a strong capital and resource base, which for general enterprises, need to face greater risks and challenges. Therefore, more enterprises still choose to continue to stick to the consumer field, and strive to deepen in this field to strive for higher competitiveness to seek development.

To consumer electronics as the main business of the connector manufacturer Hubu Jing is in the field of consumer electronics, in the Type-C connector and USB-A connectors and other products continue to launch new products. In an interview with "International Cable and Connection" Munich, Li Jianpu, general manager of Bubu Jing, pointed out that as A supplier of Huawei, Bubu Jing has launched an I/O connector assembly with superimposed USB-A connector and USB TYPE-C connector, which has been applied to Huawei 88W super fast charger. In fact, our technical capability can reach 15A, but the client does not have the actual demand at present." Compared with the market demand, step by step fine connector product technology has been ahead of time. Technological innovation and development have become the core competitiveness of step-by-step refinement.

In the downturn of the consumer electronics connector market, there are connector companies that seek a way out of transformation, connector companies that adhere to the promotion of competitiveness, and connector companies that choose to "try to avoid placing too much investment in the consumer electronics field" in the face of not optimistic market conditions.

In the interview, some companies in the field of consumer electronics have a layout, but the proportion is not large when talking about countermeasures, but frankly admitted that "the environment is so, the development of the field will always have a cycle, the current response plan is no longer too focused on this piece of business."

Future development: Offshore markets and smart cars are the future

In the international situation is changing, the domestic market volume phenomenon is prominent, terminal demand is becoming increasingly saturated, "going to sea" has become a lot of connector companies seeking new development opportunities, a small number of companies have begun to focus on the production of labor-intensive, low prices in Southeast Asia.

When talking about the turning point in the field of consumer electronics, Xie Yingji mentioned: "The continuous development of new technologies such as 5G, artificial intelligence, and the Internet of Things will promote the innovation and upgrading of consumer electronics products. With the popularity of new technology products, the demand for consumer electronics connectors will also increase, which will provide new growth opportunities for the consumer electronics connector market." Li Baiyi also said that the new international situation may usher in a "reshuffle" of the industry, which is a development opportunity that needs to be grasped for Hanquan, which has been deeply cultivating overseas markets for many years.

"At present, with the escalation of international trade frictions, under the oppression of a series of policies, many end manufacturers have begun to restrict the import of parts produced in China's interior. Many manufacturers began to seek development opportunities in overseas markets, and the upsurge of going to sea began. This is actually a new development opportunity for Hanquan, which started from trade."

"The future of consumer electronics is likely to be about smart cars." Lee makes an interesting point. With the development of automobile intelligence, the future car is a walking notebook. With the increase of terminal demand, there will be more smart devices placed in the car. So it's very likely that cars will be included in consumer electronics applications in the future."

Li Baiyi's point of view is not unreasonable, under the continuous in-depth development of automotive intelligence, there will be more and more peripheral devices such as smart speakers, displays, intelligent cabins, intelligent driving and so on applied to the car. Under this trend, smart cars are expected to occupy the majority of the consumer electronics market. Subsequently, the development of consumer electronics connector products towards high frequency, high speed and high current transmission is also the future trend.

In the face of the consumer electronics market that has entered the winter period for many years, it is far from enough to quickly recover only by relying on the "star" products, but also requires the entire industry chain to achieve a qualitative leap in performance and product iteration. Under the frequent release of a series of good signals, the winter of consumer electronics will always pass, and spring will eventually come. For consumer electronics connector manufacturers who are still in the winter period, focusing on improving the competitive advantage of their products, grasping market development opportunities, and meeting the arrival of warm spring in keeping with innovation may be the best policy.

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