Development of Electronic Component Market
Passive components mainly include capacitors, resistors, inductors, as well as transformers, crystal oscillators, etc. The overall market size of passive components is huge. Among them, passive components such as MLCC, chip inductance, and chip resistance have a much larger market share due to their large downstream application space in mobile phones, PCs, consumer, automotive, and industrial sectors.
Due to the compression of low-end production capacity on the foreign supply side, represented by Murata in Japan in 2018, Samsung Electric's extended delivery cycle, and the driving force of new applications such as automotive electronics and wireless charging on the demand side, Taiwanese companies seized the opportunity of tight supply and demand relationships and took a series of price increase measures. The sustained and significant price increase also led to the industry hoarding a large amount of inventory. Since the second half of 2018, the demand side has been impacted by the trade between China and the United States, as well as the overall decline in sales of mobile phones and cars. The entire passive component industry in 2019 has been in the stage of destocking, resulting in a significant decrease in product prices. After nearly a year, by the end of the third quarter of 2019, the industry had basically completed destocking and inventory levels were below normal. Starting from 2020, product prices began to continue to rebound.
With the advent of the 5G era, the increasing demand for PCs/tablets driven by the epidemic, the rapid growth of IoT equipment shipments, and the supply and demand of new energy vehicles in the market, the impact of the previous epidemic on the release of production capacity in Southeast Asia has prompted the industry to usher in a new round of business cycle. The industry inventory gradually accumulated until Q3 2021, when market demand for mobile phones, PCs, home appliances, and other products began to weaken. The release of new production capacity on the supply side and the gradual elimination of the impact of the epidemic on Southeast Asian production capacity, the MLCC industry once again entered a downward cycle. Especially in 2022, global economic growth pressure has emerged, industrial demand has weakened, and the industry has continued to be sluggish, which has also triggered internal competition among domestic independent brands.
1、 Domestic substitution has led to a significant expansion of production by domestic manufacturers, resulting in reduced market demand and overcapacity
For the passive electronic component market, it is important to note that in recent years, with the rapid development of domestic new energy industries such as new energy vehicles and photovoltaics, the high prosperity of downstream industries has driven sustained strong demand for electronic components, and domestic brands have also become strong competitors while developing rapidly. In just a few years, its market sales have surpassed the performance of previous years, and domestic independent brand manufacturers have ushered in a sustained and rapid development period of high prosperity. During this period, domestic brands extensively expanded their production capacity to meet their own market development. With weak market demand, domestic terminal factories are also facing development difficulties, and passive electronic component suppliers are even more affected. Many passive electronic component companies have expanded a large amount of production capacity, which can fill the peak market demand. When demand decreases, there will immediately be overcapacity and storage backlog. In this situation, some independent brand enterprises have started to reduce prices and promote orders in order to recover funds and solve their inventory pressure problems, which has caused a chain reaction in the industry and further led to a decline in the industry situation.
2、 Sales channels are too single, resulting in insufficient competitiveness
In the electronic components industry to this day, distributors have an important say in the production end. Even some companies, which mainly focus on low-end products and have a relatively single category, have their main orders controlled by a small number of distributors. Therefore, in the event of market weakness, they lack response measures and measures. In order to ensure the interests of the company, distributors usually transfer risks while further lowering prices, leading to further reduction of their discourse power, resulting in a decline in market competitiveness and resistance to pressure.
3、 The domestic market has been influenced by low price thinking for a long time, resulting in a further decrease in the quality of domestic brands
"Winning at low prices" has always been a common model for domestic electronic component brands, which has helped domestic brands quickly occupy the low-end market in the initial stage. However, with the gradual pressure from foreign brands and the imminent encirclement of joint venture independent manufacturers, the survival space of independent brands is further compressed, especially in the downward stage of the industry. Most domestic independent brands further adopt a low price strategy and rely on low prices to compete in the market. However, due to low prices, lowering quality standards to reduce production costs has become a common strategy, resulting in unstable product performance. After undergoing certain market tests, the brand's premium ability significantly decreases.
Faced with the sluggish electronic component market and the overall downward trend of domestic brands, how domestic brands can move forward has become a focus of industry attention. Under the current market downturn and increasingly severe industry competition, Anhui Fujie Electronic Technology Co., Ltd. (referred to as Fujie Electronics), a subsidiary of Fuxin Electronics FOSAN, did not blindly follow the market's low price competition thinking. Instead, it further prompted Fujie Electronics to clarify its rational thinking on the current market difficulties and its development plan for domestic substitution. After experiencing rapid development and changes in the industry, Fujie Electronics has continuously explored its own development path through its scientific industrial layout, gradually clarifying its own development path and business principles.
Diversified layout, continuous optimization and upgrading of products
A scientific and reasonable product layout is definitely the primary prerequisite for a company to establish a foothold. Since its establishment, Fujie Electronics has gradually developed from a slightly singular SMT resistor product to a diversified product line layout covering SMT resistors, thick film resistors, thin film resistors, alloy resistors, high-power resistors, automotive grade resistors, and anti vulcanization resistors in its current product chain. In addition, Fuxin Electronics FOSAN also has another major business unit: Anhui Fuxin Semiconductor Technology Co., Ltd. (hereinafter referred to as Fuxin Semiconductor) business unit, which includes multiple product categories such as diodes and transistors, MOS, etc., covering a diverse range of electronic products, automobiles, energy storage, and mobile peripheral products. The complete product chain can meet the diverse needs of different customers. Fujie Electronics has stood out among domestic independent brands in electronic components in recent years, and has been able to occupy a leading position in the consumer electronics market with severe homogenization, largely due to its diversified product layout. At the same time, it has also overcome the problem of excessive dependence on a single market and improved its risk resistance ability.
Adhere to the high-quality development path and make good use of products to give back to the market
In addition to a diversified product layout that fully satisfies the market, core technology and quality are also crucial. To this end, Fujie Electronics continuously strengthens the absorption and cultivation of professional and technical talents, and has attracted a large number of experienced and highly educated technical talents from well-known universities and enterprises at home and abroad, providing core competitiveness for the development of the enterprise. At the same time, Fujie Electronics is investing heavily in technology research and quality control, investing heavily in advanced instruments and equipment such as American and Japanese, building first-class testing laboratories, ensuring reliable product quality, and further enhancing the authority of its own products. Fujie Electronics has established strategic partnerships with well-known technology companies such as Haier and BYD, and passed the factory audit certification of Samsung Electronics, a world-class customer, in 2022. Becoming a representative of Chinese electronic components industry's reverse export to foreign countries.
Scientific and rational production capacity regulation to reduce potential market risks
It is well known in the industry that the electronic component terminal industry is now a popular non mobile field, including smart cars, IoT, smart homes, wearable devices, and so on. These enterprises are undoubtedly the first to be affected by smart cars, and have almost become a "must compete" place for industry chain manufacturers. Many passive electronic component enterprises, in order to seize the market, compete to shorten product delivery time as a means, resulting in an increase in their own product inventory. In a market downturn environment, they will inevitably increase enterprise risk factors due to their own inventory, and will further bring internal competition to the entire industry due to their own inventory reduction and low price sales.
In the market competition, Fuxin Electronic FOSAN fully develops its diversified product layout while scientifically developing its advantageous categories, and gradually opens up the market by focusing on industries and key products. Secondly, products are the foundation for enterprises to establish themselves in the market. Enterprises should make products according to market demand, have the ability to meet market demand, and continuously upgrade and create industry boutiques. Ultimately, they should form their own production capacity regulation thinking of focusing on product efficiency and diversifying products to ensure development.
Go against the trend and drive brand upgrading with long-term goals
At present, the market for passive electronic components is constantly changing, and in the face of the next wave of turbulence, it is necessary to have full security to rise with the trend.
Fujie Electronics has established a certain brand influence in the market with its diversified product layout and reliable product quality, and has established closer cooperation with customers by continuously improving its research and development strength and design level, thereby increasing market share. However, in the increasingly competitive and segmented product demand environment, Fujie Electronics will not only meet the needs of the market, but also further update and iterate through market insights, innovative research and development, and technological upgrades to meet the next step of market demand.
No matter how the market changes, Fujie Electronics will continue to deeply cultivate the field of high-end resistance components, leverage its professional and resource advantages, and create a higher quality series of resistance products through technological research and development and high-quality production, promoting the steady progress of the industry. Keep moving forward with the original intention of building an independent brand for electronic components, known as the "Chinese Dream and World Chip".