ChiNext-listed chip companies collectively voiced their opinions: the localization of analog chips is accelerating, with technological breakthroughs achieved in specific sectors.

The 2024 Annual Performance Briefing for the Sci-Tech Innovation Board's IC Design Sector was held today (April 17), with 17 companies including Espressif Systems, Amlogic, Bright Power Semiconductor, and Semidrive participating. They addressed investor inquiries on market concerns, business progress, and product strategies. Attendees noted that recent overall order growth has been significant, driven by localisation and digitalisation trends, with strong end-use demand. Despite global market challenges from trade policies, several companies indicated limited impact due to their small direct export share to the US, autonomous product technology development, competitive advantages in niche areas, diversified supply chains, global operations, and deep collaborations with customers. The localisation of analog ICs is accelerating, with breakthroughs in niche segments. Against the backdrop of China's countermeasures to the US's so-called "reciprocal tariffs," the analog IC sector has garnered sustained attention in the A-share market this week. Given that analog ICs predominantly use the IDM model and half of the top ten global analog IC companies are US-based, coupled with the current localisation rate of around 20%, institutions anticipate substantial room for localisation. At today's briefing, an analog IC company executive reported noticeable growth in customer orders recently. Jiang Yanbo, Chairman and CEO of Semidrive, stated that the company's production, operations, and orders remained normal in Q1, with customer orders up YoY. Semidrive's products include battery safety ICs, battery gauge ICs, and charging management analog ICs. Yu Faxin, Chairman of Zhanrui Technology, also noted a significant increase in new orders and projects recently, expressing strong confidence in the company's 2025 business development. Zhanrui's main products include RF transceiver ICs, high-speed high-precision ADC/DAC ICs, power management ICs, microsystems, and modules. Yu highlighted that the company's products are 100% domestically sold, with no export business to the US, benefiting from factors such as accelerated special equipment construction, increased defence informatisation, and higher localisation rates. Despite the strong comprehensive capabilities and extensive product lines of US giants like Texas Instruments (TI) and Analog Devices (ADI), which dominate significant market shares, several domestic producers at today's briefing stated that through deep collaborations with local end-users, they have achieved product substitution or technological parity in many niche product lines, gaining broad customer recognition. Emerging industry innovations further meet market demands. Hu Liqiang, Chairman and CEO of Bright Power Semiconductor, noted that the analog IC design industry has long been characterised by lengthy R&D cycles and reliance on designers' experience. Currently, most domestic producers focus on low and mid-end power supply ICs, with only a few breaking the long-standing monopoly of foreign companies in high-end ICs. Bright Power continues to iterate in leading technological areas and optimise its product structure while enhancing market competitiveness through major asset reorganisations, such as the Sichuan Yichong project, complementing customer resources, technological accumulation, and supply chains. Jiang Yanbo of Semidrive stated that while ADI and TI still hold significant market shares due to their strong capabilities and extensive product lines, Semidrive competes with them in the battery management IC sector. Compared to competitors, Semidrive is more agile and responsive to customer needs, leveraging stable supply capabilities and strong brand recognition to secure a good market share. The company is now a major domestic supplier in the battery management IC sector, with products used by renowned clients globally. Yu Faxin of Zhanrui Technology claimed that some of the company's core products have reached international advanced levels comparable to ADI and TI. Xie Pengcun, Chairman and CEO of Beken Corporation, emphasised the company's continuous focus on analog and mixed-signal ICs, mastering numerous core technologies and upgrading products over years of innovation. Some technologies and products have achieved international and industry-leading standards, incorporating more innovations to meet customer needs while completing localisation. Lu Guojian, Chairman and CEO of Chipsea Technologies, highlighted the company's active expansion of domestic and overseas clients aligned with its strategic direction. Several ICs, such as high-precision ADCs, EC series, PD ICs, BMS ICs, and sensor conditioning ICs, have achieved localisation. The company aims to meet user needs with more innovative products and services, gradually achieving localisation in its strategic focus areas. AI-driven SoC IC producers saw explosive performance in Q1. Telink Semiconductor previously forecasted Q1 revenue of approximately 230 million yuan, up 43% YoY, with net profit attributable to shareholders of around 35 million yuan, turning a profit YoY. Actions Technology expects Q1 revenue of about 191 million yuan, up 61% YoY, with net profit attributable to shareholders of 41.3 million yuan, up 383.91% YoY. Amlogic achieved Q1 revenue of 1.53 billion yuan, up 10.98% YoY, a record high for the period. AI end-use applications have become a key driver of growth in the SoC IC industry. Hu Shengfa, Chairman and CEO of Anyka, noted that market information received in Q1 indicates high enthusiasm for AI-enabled end-use demand. However, actual purchases by end-users will validate these demands. Hu predicted that AI glasses would see explosive growth this year, though the market remains relatively small. Emerging applications like biometric and smart lock-related ICs, which began shipping last year, will significantly impact performance. Zhou Zhengyu, Chairman and CEO of Actions Technology, observed a flourishing trend in emerging applications like AI glasses and AI toys, with high investment enthusiasm from domestic and overseas downstream clients. Developers and potential consumers are widely distributed. The company will continue to closely monitor downstream market demands and innovation trends, optimising its product matrix. Zhang Ruian, Chairman and CEO of Espressif Systems, noted that while the company's products are not yet used in AI glasses, its business has achieved steady growth due to deep digitalisation across industries. Globally, downstream application scenarios are expanding, driving more digital demands. Espressif has seen significant growth in industrial control, energy management, and healthcare. As the company enters more markets, it can enjoy broader market growth benefits, smoothing out cyclical fluctuations in single industries. Notably, while strong end-use demand for domestic SoC ICs drives shipment growth, the industry is concerned about upstream IC products falling into homogeneous competition. Hu Shengfa of Anyka stated that the SoC IC industry faces homogeneous competition, potentially intensifying price and supply chain capacity pressures. Since Q4 last year, the industry has been on an upward trajectory, but price pressures persist. Hu believes such competition is normal and that companies should enhance product competitiveness through technological innovation and increase customer stickiness by expanding product categories and improving coverage in niche markets. Zhang Ruian of Espressif Systems argued that homogeneity is superficial, reflecting the value differentiation capabilities of products. The company's core strategy includes continuous innovation and R&D investment, upgrading SoCs from "communication ICs" to "platform-level ICs." Espressif's ESP32-series integrates AI, graphics, audio, and low-power management, expanding single-chip system boundaries. Its software, development toolchains, and ecosystem support form integrated advantages, offering system-level solutions rather than mere hardware sales. Yu Li, Director and Board Secretary of Amlogic, highlighted the vast application fields of edge SoCs, with increasing application areas and forms as intelligent technologies advance. The edge SoC market is a growing incremental market, with R&D companies intensifying investments, rapidly responding to market demands, and implementing new technologies. Competition lies in R&D strength, market responsiveness, and customer service capabilities. Zhou Zhengyu of Actions Technology noted the immense scale and variety of the AIoT market, with SoC IC producers expanding in their specialised categories and focused customer groups. The company will continue to focus on the trend of AI upgrades in edge products, building low-power edge AI computing platforms, and investing in chip computing power, wireless connectivity, and AI development ecosystems to maintain competitive advantages. Regarding the impact of the US's so-called "reciprocal tariffs," several companies today reiterated their assessments. Yu Li of Amlogic stated that the company's global strategy, with products sold worldwide and a diversified, non-single overseas market, ensures a mature and stable global operation system. As its export products are not delivered in the US, the tariff policy has no direct impact. The rising demand driven by intelligent technologies, enhanced competitiveness from new product launches, and improved operational efficiency will continue to strengthen the company's profitability.

Zhengyu Zhou from Actions Technology stated that based on the analysis of the company's chip downstream application scenarios, customer regions, and the distribution of end consumers, the US tariff policy has a relatively small direct impact on the company.

"Firstly, the company's chip sales model mainly involves customers placing orders, which are then delivered to designated processing plants or ODM producers, and finally integrated into AIoT end-use products for whole machine sales. The company does not directly export chips to the US, and typically, SoC chip suppliers not only provide chips but also offer integrated hardware and software solutions with algorithms. Brand customers, once they have selected a chip supplier, are unlikely to change easily, showing strong customer stickiness. It is understood that ODM producers and processing plants have also globally distributed their capacity and production lines."

"Secondly, the company's customers come from regions including Mainland China, Europe, Japan, South Korea, Singapore, North America, Australia, and India, showing diversity in customer geographical distribution. US-based brand customers like Harman and Bose also sell to the global consumer electronics market. AIoT end consumers are relatively evenly distributed across regions, and in the consumer electronics field, tariff costs are usually borne by importers, with limited impact on the price transmission mechanism for consumer electronics supply chain companies."

"Finally, the company has fully communicated and prepared with downstream customers and ODM producers, actively making corresponding contingency plans from the perspective of supply chain security, and collaborating to address the uncertainties brought by the tariff policy," Zhou Zhengyu stated.

Rui'an Zhang from Espressif Systems mentioned that the company's direct exports to the US are very small, and the indirect proportion cannot be statistically determined, making it currently impossible to estimate the impact. "We do not bear the tariff portion, so the profit per unit will not be squeezed."

Yanbo Jiang from Semidrive Technology stated that the company does not have direct export business to the US, but the US tariff policy has a relatively large impact on the company's end customers selling to the US. Semidrive's end customers include several well-known ODM producers, and the products are widely used in end-use products of well-known brands in the industry. These end customers' products are widely sold in the US, and if trade friction intensifies, it will have a significant impact on the company's end customers' sales in the US, potentially affecting the company's overseas end-use market product sales, and may have a certain impact on the gross margin of the company's products sold overseas.

Guojian Lu from Chipsea Technology stated that the company's exposure to overseas business is low, with overseas business revenue of 27.92 million yuan in 2024, accounting for 3.98% of the company's revenue, so the US tariff policy has had a relatively small overall impact on the company to date. The company is long committed to independent innovation in full signal chain chips, and tariff conflicts are expected to further increase the share of domestic chips, benefiting domestic chip companies with core technologies and customer bases. Moreover, the company highly values the construction of supply chain capabilities, and the multi-source supply chain system is conducive to the company's supply chain security and can effectively ensure the company's capacity supply, reducing the impact of capacity fluctuations on the timeliness of product delivery.