BYD Electronics: The basic brand of the car is unstable, and the OEM will make a breakthrough

A few days ago, Foxconn, the world’s largest Electronic product foundry, announced its entry into the car manufacturing industry; while BYD, the leader in the new energy vehicle industry, has recently seen its share price surge due to its foundry of Honor mobile phones.

After Huawei removed all related products from the shelves, Honor also completely “decided” with Huawei, not only the brand is independent, but also the foundry is completely separated.

At this time, BYD Electronics took the shot in time and took over the big order of Glory.

According to supply chain news, BYD Electronics and Shenzhen Technology will produce OEM for Honor, of which BYD Electronics’ OEM capacity exceeds 50 million units.

The news sent shares of BYD Electronics soaring by 17%.

The basic brand of the car is unstable, and the OEM will make a breakthrough

When it comes to BYD, the first reaction of many people may be the car.

Indeed, the current focus of BYD’s business is the direction of new energy vehicles, but from the perspective of BYD’s revenue composition, the automotive business accounts for only half. According to BYD’s financial report for the first half of 2020, BYD’s auto and related products business accounted for only 52% of the total revenue. In addition, BYD’s old business – battery business and photovoltaic business accounted for 8%.

The remaining 40% is contributed by mobile phone components and assembly services.

BYD Electronics: The basic brand of the car is unstable, and the OEM will make a breakthrough

In the first quarter of 2019, Wang Chuanfu, chairman and president of BYD’s board of directors, said at the shareholders’ meeting that the company has opened up new smartphone projects for the world’s leading mobile phone manufacturers, and has successfully expanded into new products and businesses such as tablet computers, and the group’s mobile phone components and assemblies. The substantial increase in business income and profit is also the main reason for the increase in BYD’s profit.

This also officially announced the return of the foundry business.

Bind Android major customers

As early as the end of the last century, BYD entered the field of IT foundry, and in 2003, it began to poach more than 400 employees from Foxconn and compete for customers. long-standing litigation battle.

With the outbreak of Apple, Foxconn’s momentum is fierce, while BYD Electronics, which is betting on traditional mobile phone manufacturers such as Nokia and Motorola, has slumped.

In 2019, due to its own over-expansion, BYD Group’s main businesses, including automobile and auto parts manufacturing, and new energy industries, have fallen into crisis.

At this time, Wang Chuanfu decisively chose to resume his old business and return to the foundry business. Not only can it make up for the losses left by the photovoltaic industry, but more importantly, it can snatch the market left when foreign foundries withdraw from the Chinese market.

In the era of smart phones, BYD’s teammates have changed from Nokia to a domestic mobile phone camp led by Huawei, and a large number of orders have made BYD Electronics rise rapidly.

For example, when Huawei was sanctioned by the United States in the first round, BYD successfully took over the Flextronics Changsha factory that “betrayed” Huawei. And in just 70 days, the process from signing the contract to the first mobile phone offline was completed.

BYD’s takeover helped Huawei tide over the difficulties and successfully replaced Foxconn as Huawei’s largest foundry.

Since then, BYD Electronics began to accelerate the binding of major Android customers, and the top 10 Android mobile phone brands in global shipments began to choose BYD Electronics as the foundry.

When Honor chooses BYD Electronics as its foundry, BYD Electronics’ mobile phone assembly business will maintain continuous growth in the next two years.

Hold Apple tight and complete business growth

In 2020, on the tenth anniversary of the birth of the iPad, Apple announced that the new generation of iPad Air and iPad 8 will be manufactured by BYD. In addition, BYD Electronics replaced Quanta as the exclusive assembly supplier for the iPod Touch.

The transfer of these orders is of great significance to BYD Electronics, which not only brings direct performance contribution to the company, but also represents BYD officially joining hands with Apple’s supply chain.

Before the foundry of iPad, BYD Electronics began to cut into electronic products. In 2015, it produced MagicKeyboard and charger assembly and mass production of structural parts. In 2016, it entered the Macbook and AppleTV product line. In 2017, it supplied ceramic back covers for AppleWatch. Provide AirPods plastic case and iPod touch assembly, and start to manufacture iPad in 2019.

Correspondingly, Foxconn is facing a dilemma in recruiting workers in China due to mass incidents and rising labor costs. Not only has revenue suffered a sharp decline, but also the instability of cooperation with Apple has become its biggest crisis at present.

With the sharp increase in the demand for tablet computers during the epidemic, BYD Electronics’ demand for orders continued to increase. After obtaining more transfer orders from Compal, BYD’s iPads accounted for at least 10-20% of shipments. In the future, BYD Electronics is expected to become the main supplier of Apple iPad, and the revenue scale will have room for several times of growth.

In addition to the iPad business, BYD Electronics has also entered the Apple Watch sapphire & ceramic back case business. As the only company in the world that can produce a full range of mobile phone structural parts such as plastic, glass, metal, and ceramics, as well as complete machine design and manufacturing solutions, this is Foxconn’s research institute. advantages that are not available. Through differentiated competition with Foxconn, BYD has successfully taken a seat in Apple’s supply chain.

Three major areas work together to achieve growth

In fact, the rapid growth of BYD Electronics is not only relying on mobile phones, but also the three major fields of consumer electronics, new intelligent products and automotive intelligent systems.

First of all, in terms of new smart business, BYD Electronics adopts an active market expansion strategy. Its products cover AI, IoT, smart home, robots, drones, electronic cigarettes, smart speakers, smart commercial equipment and industrial control, etc., and there are many downstream customers.

In the field of automotive electronics, relying on the parent company BYD Group, BYD Electronics actively develops automotive supporting products and services. The product business covers multimedia vehicles, intelligent network connection systems, communication modules, sensor modules, etc. The company’s DiLink intelligent network connection system, It is the first product in the industry to fully open all sensors and controllers of the car.

In the context of the general lack of cores in the global automotive industry, BYD has repeatedly stated that it has “no impact”, which is precisely because BYD has completed the self-sufficiency of chips in the automotive field.

Finally, during the epidemic, BYD Electronics began to produce masks across borders, and its production capacity jumped to the first place in the world. This is also one of the company’s layouts in the medical care business. The company quickly obtained various medical qualification certifications, which is conducive to the subsequent layout of the medical electronics business.

Although BYD Electronics has been on the rise, BYD’s other businesses are still under enormous pressure. On the one hand, the power battery sector has been overtaken by the Ningde era. On the other hand, the auto industry is also facing competition from new car manufacturers and other car companies, and sales are not as good as before. The huge losses in the photovoltaic sector have put BYD on the back of debt.

Therefore, the development of BYD not only depends on OEM, but if it really wants to achieve a breakthrough, the revitalization of the automobile business is the top priority of development.

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