Recently, Heng Xuan Technology said in an institutional survey that the company's first-generation watch chips are already used in Xiaomi Watch color2 and Huawei Watch GT3/Runner series products, and more terminal products will be released one after another; the second-generation watch chips are already under development and are expected to be launched on the market next year.
With regard to the current size of the smartwatch market, Heng Xuan Technology said that according to the reported data of some research institutions, about 91.4 million smartwatches were shipped worldwide in 2020, of which about 40 million were shipped in China. In the long run, Heng Xuan Technology is optimistic about the growth of the smartwatch market. As more health testing functions are gradually improved on the watch, smartwatch is expected to become a rigid demand for health management in the future, and its growth space will be very large.
When talking about the growth space of TWS business, Heng Xuan Technology believes that there is still a lot of room for growth in the TWS market. From the perspective of TWS penetration, according to data from some research institutions, the penetration rate of non-A brand headphones relative to mobile phones was about 10% last year, and the penetration rate was still low; from the perspective of white brand replacement, white brand TWS headphones shipped several times more than brands last year, and brand replacement for white brands is also a long-term trend.
Heng Xuan said that our customers attach great importance to the TWS market, are actively investing, the reserves of technology and products are constantly accumulating, the company's chip capabilities are also rapidly iterating, and a new generation of flagship chips using 12nm advanced processes will be released next year.
As for the growth driving force of the company's TWS business, Heng Xuan Technology said that on the one hand, the company benefits from the continued growth of the TWS industry; on the other hand, the company's supplier position in brand customers is also more stable, and its market share is expected to further increase in the future.
In addition, in the face of the competitive pattern of the WiFi market, Heng Xuan Technology revealed that the technical barriers of WiFi are relatively high, especially in the field of high-speed WiFi. It is reported that last year, Hengxuan Technology cut into the market through the innovative WiFi 4 intelligent speaker SoC chip, which laid the foundation for the layout of smart home SoC and WiFi technology. Its dual-band WiFi (2.4GHz and 5GHz) products have been produced in large quantities among brand customers, and their technical strength in the field of WiFi has been recognized by customers. In addition, Hengxuan Technology is also making relatively smooth progress in the research and development of WiFi 6 technology, and is expected to achieve mass production next year.
According to the data, Hengxuan Technology's direct sales model accounted for about 30% of the revenue last year, and the distribution model accounted for about 70%. Talking about the distribution of the company's direct sales model and distribution model in the future, Heng Xuan Technology said that it is expected that the proportion of the company's direct sales will increase in the future. As the company's position as a supplier to brand customers becomes more and more stable, we have also gradually become a direct supplier to more customers. In fact, this is also reflected in the Q3 accounts receivable index. The main reason for the increase in the company's Q3 accounts receivable is the increase in the proportion of direct sales. For direct sales brand customers, the company will give a certain reasonable account period.
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