Expert interviews related to power battery price reduction
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Expert interviews related to power battery price reduction

Posted Date: 2024-01-24

Xinwangda Institutional Research Minutes

1. How do you view the price reduction of power batteries?

Answer: The main reason for the decline in power battery prices is the decline in raw materials and cost reductions brought about by improvements in power battery technology.

In addition, the company adheres to the strategy of "focus + differentiation", actively deploys in the mid-to-high-end market, focuses on the development of super fast charging products, and has the leading advantage of differentiation in the industry. The company can meet customer needs for such differentiated products and compete on price There are certain advantages.

2. Who are the main customers of the company’s power battery business?

Answer: The main customers of the company's power battery sector are leading domestic and overseas car companies as well as emerging new car-making forces. Domestic customers include Geely, Dongfeng, Dongfeng Liuqi, Ideal, etc., and overseas customers include Renault, Nissan, etc.

In addition, the company has also won appointments with major customers such as Volvo and Volkswagen SAIC. The company will continue to actively explore domestic and foreign markets, strive to cooperate with more high-quality customers, and achieve stable growth in performance.

3. Are the company’s 4C batteries a ternary system?

Answer: The company’s current ultra-fast charging batteries use ternary cathode materials. In order to enrich the company's product categories, the company is developing fast-charging batteries using lithium iron phosphate cathode materials. The current progress is basically consistent with the advanced level in the industry.

4. Please introduce the company's 4C super fast charging batteries. Are there any technical barriers to super fast charging technology?

Answer: The company is relatively leading in the field of ultra-fast charging technology. At the beginning of 2023, the company has released a ternary 4C ultra-fast charging product, which can be adapted to 800V high-voltage and 400V normal-voltage systems, and is now commercially available. The barriers to fast-charging batteries are high. The company already has a large number of core patents in the field of fast charging and has accumulated a lot of technical reserves.

5. Has the company developed silicon-carbon anode battery technology for its consumer electronic batteries?

Answer: The company has the R&D and production capabilities for silicon-carbon anode batteries for consumer electronics batteries, and can carry out mass production according to customer needs.

6. Please briefly introduce the future prospects of the company's consumer electronics business and power battery business in 2024?

Answer: In terms of consumer electronics, with the arrival of the replacement cycle and the application of AI and MR on mobile phones and notebooks, the consumer electronics market is expected to grow in 2024. The company will actively explore new markets on the basis of maintaining its original customer share, continue to provide customers with "PACK + battery" integrated services, increase the self-supply rate of battery cells, and provide new growth points for the company's business.

In terms of power batteries, as the penetration rate of electric vehicles gradually increases, the entire downstream market will see certain growth. In 2024, with the transformation of the company's product structure and the gradual increase in the volume of new models in customer-specific projects, it is expected to bring certain growth to the company's performance.

Siyuan Electric Communication Minutes

Q: What will the expenditure look like in the next few years?

1) It was announced that the medium-voltage company’s infrastructure business will be worth RMB 300 million. Construction will start in the second half of 2023 and is currently under construction.

2) In 2021, it was announced that Nanjing will spend 400 million to establish a research and development center, which is currently in progress.

3) Energy Technology Co., Ltd., which spent 1 billion to register in Rugao in early 2022, is responsible for energy storage and is also under planning.

4) Jiangsu Siyuan New Energy Company, which was announced in 2023 and registered in Wuxi with a cost of 200 million, is responsible for power energy storage components.

The transformer production capacity is not enough. It will be moved to a new factory at the end of 2022. After two technical reforms, the production capacity is still not enough. There may be new production capacity investment in transformers in the future, but the plan has not yet been determined because it involves Toshiba of Japan.

To establish a low-voltage switch company, the registered capital is 30 million, the products have been released, and the supply chain needs to be built.

GIS production capacity is also felt to be insufficient, and the construction of UHV GIS production capacity above 700KV is also being planned.

Capacity expansion of tank circuit breakers.

Q: What is the order status of transformers?

The orders are in the double digits of 100 million (more than 1 billion), and the revenue is in the high single digits of 100 million (probably 600-700 million). Transformers have done well in 2023, with orders nearly doubling. The growth rate of overseas orders for transformers Very high, the management team began to realize the importance of internationalization. In 2023, overseas orders for transformer production lines accounted for more than 50%.

Toshiba's transformer technology is widely recognized in the transformer industry. In addition, Changzhou is the main production place of transformers, and transformers are the main equipment of substations. Based on these circumstances, the company invested in a transformer subsidiary, which achieved the company's planning goals at that time.

Q: What is the U.S. transformer market?

The global power market is divided into four parts: the United States/China/Europe/other countries. The company also attaches great importance to the US market. Siyuan is not saying that he has not entered the US market, but there is still a certain process. Difficulties encountered may be: product qualifications, performance qualifications, supplier list, currently it is still difficult to develop.

Q: Transformer gross profit margin

The gross profit margin of transformers is not very high. From a business perspective, it is an asset-heavy industry with low R&D investment, mainly personnel costs. The overall price is lower than that of conventional production lines.

Q: Overseas business situation

Overseas business is divided into five major areas: 1) South America, etc. (Spanish-speaking areas); 2) Europe and the Middle East (including Saudi Arabia, Israel, etc.); 3) Central Asia; 4) Mainly Southeast Asia (from the Martin Peninsula to Thailand) ); 5) Africa.

On the one hand, this division has a certain relationship with the requirements of traditional culture/language/equipment. Another reason is that the general business volume of Wukuai is about the same, with a higher one of 21-24 and a lower one of maybe 17-18.

23 years of development in South America is a highlight, including Mexico, Brazil, Chile, etc. The Middle East is also a bright spot. Central Asia is also okay. Southeast Asia is relatively poor.

EVA market current situation exchange and outlook

Q: How is the market performance of the EVA industry this year? What does the future look like?

A: For traditional industries, overseas orders shrank significantly in the first half of this year, and many factories withdrew up to 50% of their orders, including orders from Europe and the United States. Domestic orders from Anta and other companies are also in decline.

However, overseas orders increased in the second half of the year, although the relaxation of the epidemic in the second half of the year caused the backlog of inventory last year to be sold first, which affected the signing of some new orders. The cable business has grown steadily this year and is on par with last year. However, the hot melt adhesive business performed poorly because the peak season in the furniture sector was slow and prices were affected by EVA fluctuations.

For the future, from 2024 to 2028, if all planned enterprises are put into production, the production capacity may reach 8 million tons. In the short term, there will not be much investment in new production capacity in 2024. Baofeng's 250,000-ton unit and Jiangsu Saibon's 200,000-ton production capacity may be the only new production lines to be put into operation next year. There may be more major overhaul devices in 2024, the overall output growth will not be much, and the supply is generally stable.

In terms of short-term demand, photovoltaic demand will decrease in the fourth quarter and before the Spring Festival. In terms of policy, there may be stimulus measures in March. Under normal circumstances, prices tend to rise in the market. Therefore, the market price is expected to fluctuate between 1,800 and 14,000. The market price may reach a high point in the second half of 2024, and there may be a slight rebound in March and April in the first half of the year.

Q: What are the short-term and long-term views on EVA supply and demand?

A: In terms of demand, short-term photovoltaic demand will enter the off-season, and some factories will make large-scale purchases later. After the year, there may be a slight rebound due to policy influence and new purchase orders, but it will not be too significant. On the supply side, petrochemical companies are not under much pressure and have countermeasures to deal with possible inventory accumulation during the Spring Festival.

Companies such as Sinochem Quanzhou and Saibon took actions to relieve pressure in January, while Yan Petrochemical's production cuts in January led to tight supply. The market may experience sideways consolidation before the end of the year and the year before, and may see a slight rebound in March. . In the long term, market prices tend to stabilize and may return to historical levels within the next five years.

Q: What is the current inventory situation at each channel end of the EVA industry chain?

A: Currently, Sinopec has basically no inventory because they usually empty their inventory every month. Zhejiang Petrochemical's sales were relatively good in early January 2024. They sold about more than 20,000 tons in January. Although they had inventory, the inventory was about 30,000 tons, and Zhejiang Petrochemical did not pay much attention to inventory indicators because of their storage capacity. It is larger, so there is not much pressure on inventory.

Saibon does not have much inventory, because in January it even sold the same amount as early February, and they did not want to sell at a low price, so they only arranged one to two months of product supply. Yangba currently has very few products on the market, and orders are tight, indicating that there is no inventory pressure.

In terms of social inventory, especially in Fujian, there used to be 60,000 tons of inventory, which has been digested recently. However, because most of these goods are early-stage goods with higher costs, rising prices have led to sluggish transactions. Generally speaking, although the inventory in Fujian is relatively large, the market expects prices to rise, causing traders and downstream factories to temporarily hold stocks to wait for increases. Therefore, social inventory is currently a point worthy of attention.

Q: How are the major downstream manufacturers handling inventory, and what are their expectations for the market prospects?

A: On the downstream side, the inventory of foaming factories remains at normal levels, while leading companies such as Anta 301 factory have stocked up until March of the following year. Film factories generally maintain normal inventory levels. After the Yuan Dynasty, small and medium-sized film factories began to replenish part of the inventory for actual needs, but there was no excessive stocking.

At present, downstream companies are not too optimistic about subsequent orders or installed capacity, and what they purchase is mainly normal inventory to meet immediate demand. To sum up, although the current social inventory is relatively large, the inventories of various factories are generally in a normal state, so the impact on the overall market is relatively limited.

Top Group Communication Minutes

Q: What is the outlook for new business in 24 years?

A: 2024 will be the year for mass production of electronic products. The air-suspension closed system will gradually be replaced by the cut-out system. A set costs four to five thousand yuan. Thermal management in 2024 will be the year when FAW, SAIC, and Ideal start mass production; ibooster will be in 24 First year.

Q: What is the progress of robots?

A: North American customers are more sensitive and cannot use the word humanoid robot. Instead, they can use the word reducer. After the functional verification is over, reliability verification is needed. Finally, to determine how many times each part can be used, the material enters material-level fatigue testing. The driver actuator will eventually be completed, and we will proceed in an orderly manner.

Q: Competition pressure from domestic OEMs is relatively high. The new technology ibooster has entered into vicious price competition before it reaches large volumes. What do you think?

A: China is the leader in electric vehicles, and China's Top is the leader. From steering to suspension to braking, the only company in the world that can produce the entire industry chain is Top. Thanks to the Chinese electric vehicle industry, we have been in mass production for three or four years before they started.

Our chassis has the largest growth rate every year. We have a strong cost advantage. Chassis products require strict exposure experiments and are tested in extreme areas such as Xinjiang and Mohe. We will not test like this every year. It will not be the same as the interior and exterior decorations. Decorations like these need to be replaced every year and prices compared.

It is true that ibooster has not yet entered the profit stage. Bosch has a strong chip advantage, but our eight major systems can be sold in packages, and ibooster can maintain capital or make some profit. This kind of electronic products will definitely belong to our Chinese enterprises in the long term and will not be monopolized by Bosch and others.

Q: What is the annual decline situation? 24-year net interest rate?

A: We will not consider this issue. As long as the customer has the quantity or the customer reaches the expected quantity, we can reduce the price for the customer. Car factories are declining every year. This is their job. In 2024, we will mainly do the following things:

1) 300 acres of land in Mexico, an industrial park with 5 billion yuan, 24 years of ramping up, 25 years of mass production, 5 billion orders in hand, and 3,000 employees pose a great challenge to us. This climb will burn serious money, and the 25-year goal is to turn losses into profits;

2) Increase domestic revenue by 8-10 billion yuan;

3) 5 billion investment to build a 300-acre drive actuator production base, 2 years of construction, 5 years to reach production, and a planned scale of 30 billion yuan of drive actuators, involving R&D, manufacturing, training and other aspects.

Annual cost reduction is not a problem, we should be reducing technology costs, and we are doing so.

Q: The harvest period is 25 years?

A: Looking at 30 years on a rolling basis, 23 years is indeed relatively poor. A product can enjoy dividends from 5 to 10 years after it is put on the market. We cover all new energy sources. If we build 5 million vehicles, the revenue will be 150 billion, which is only 20 billion now.

Q: What’s the situation with cyber?

A: It’s a bit slow, but it’s going very smoothly. We’re preparing for 100,000 this year.

TSMC FY23Q4 results meeting minutes

Q: Technology leadership? Intel said that their PPA is better than TSMC's 2nm, and the cost can be lower?

A: 1) Intel is our customer and our competitor. Their new technology will be comparable to TSMC's N3P, and our evaluation will remain consistent with the last performance.

2) TSMC has a great advantage in technological maturity. They say that when the new technology goes into production in 2025, TSMC's equivalent technology will be ready for very high-volume production the following year.

3) What the other party claims may be correct, but only for their own products. IDM usually optimizes their technology for their own products, while foundries, or we, optimize our technology for customers' products.

4) I think we can know our technological leadership just by looking at the behavior of our customers.

Q: The chairman gave a speech in November last year, sharing how TSMC uses big data, machine learning and AI to improve operational efficiency. Now that generative A technology is available, will it enable competitors to do the same thing and close the gap with TSMC?

A: 1) My purpose in that speech was to believe that AI is a huge opportunity for Taiwan’s industry, just like Taiwan is a semiconductor powerhouse.

2) Competitors also use A technology, of course. But A is still in its infancy. Although m or sub-nm is challenging, we have been working hard for many years by leveraging our technological capabilities to accelerate innovation.

3) It is true that I will retire in June, and I hope we can definitely implement Wei Zhejia’s prediction for this year. Just now Wei Zhejia also mentioned that our technology development is achieving a series of successes. By June this year, we will know the situation in 2025. I'll give our executives a milestone that I can't share with you just yet, but it will be very exciting for TSMC.

4) What you mean by digital excellence means that we cannot just count on the hard work of Taiwanese engineers. We must re-create our work, tap their talents, and raise semiconductor technology engineering to a different level based on the existing foundation.

5) I have always valued corporate governance. During this transition, I expect every executive and board of directors to adhere to sound corporate governance.

Q: The dollar value of AI as a percentage of customer cost is much lower than that of smartphones and other chips. Can dollar revenue generated through AI be expected to increase in the coming years? Will more come from front-end process node wafer production? Or through advanced packaging?

A: 1) I'm delighted that our customers are succeeding in the Al space and we are a key enabler of A applications. So far, everything you've seen in A has come from TSMC.

2) Now the question is how do we get the value and we are doing that. If you look at the value of A components or semiconductors in the entire system, it does only account for a very small percentage. But for TSMC, AI is a CAGR, with an annual growth rate of about 50%.

We are confident of seizing more opportunities in the future. That's what we're talking about in 2027, a dozen times revenue in a very narrow range. We define the AI ​​application process, not to mention networking and others.

3) In order to further extend our value, virtually all edge devices, including mobile phones and PCs, have begun to add A applications. Therefore, the silicon content will be greatly increased. Although the quantitative ICAGR is in the low single digits, the silicon content is more important. So overall, the increase is quite large.

Q: TSMC has different opinions from its peers on whether to introduce High-NA EUV. Why has it chosen the current technology route? What are its advantages and disadvantages compared with its peers? How important is it to future technology decisions?

A: 1) Technology itself does not create value, it can only provide services to customers. Therefore, we always work with our customers to provide them with better transistor technology and optimal energy efficiency at a reasonable cost In high-volume production, technology maturity is very important;

2) Whenever some new structure or new tool (such as High-NA) appears, we will carefully observe the maturity, cost and timetable of implementing it. We always make the right decisions at the right moment to serve our customers;

3) So far, all customers are satisfied with TSMC's progress.

Review Editor: Huang Fei


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