What kind of ups and downs has GoerTek experienced?

This article is written based on public information and is only used for information exchange and does not constitute any investment advice. The author has a column of the same name in Xueqiu.

Twenty years ago, in June 2001, a Weihai native named Jiang Bin founded Yilida Electroacoustic Co., Ltd. in Weifang, which is the predecessor of GoerTek (SZ:002241).

Initially, Jiang Bin was just a workshop technician at the Eighth Radio Factory in Weifang. After the factory closed in the 1990s, as a graduate of Beihang Electronic Information Engineering, he was naturally unwilling. Now that he was familiar with technology, Jiang Bin took a few resigned colleagues to form a partnership to form GoerTek.

In 2004, Jiang Long, who returned to China after completing his Ph.D. in Strategic Management at the University of Maryland, joined in. His older brother Jiang Bin is good at acoustic technology, and his younger brother Jiang Long specializes in marketing and business management.

Over the past two decades, from a small factory in Weifang to a technology company with hundreds of billions of dollars, what kind of trials and hardships has Goer experienced? In the next two decades, can Goertek continue to ride the wind and waves?

We use time as the axis and Luxshare Precision (SZ:002475), which has a bright plot, as a reference to explore Goertek’s business, culture, and strategy.

table of Contents:

(1) Listening

(2) Apple Opportunities and Luxshare’s Counterattack

(3) Non-mainstream foundry culture

(4) Go out

(5) VR /AR: Conversion of new and old kinetic energy

(6) TWS is in the ascendant

(7) Dreamers in the foundry industry

01

Listen

After Jiang Bin started his business, he still does things within his sphere of ability, that is, the manufacture and sales of microphones, speakers and other acoustic components. The difference is that after Jiang Bin can control his destiny, he has stronger hopes for products and brands.

At the beginning of its business in 2001, Goertek built a leading anechoic room in the industry and built the first dust-free purification workshop in the same industry;

In 2003, under the guidance and exploration of the “key customer strategy”, the first fully automated microphone production line independently developed by Goertek was put into use, achieving a breakthrough from zero to one and becoming famous in the industry;

In 2004, Goertek’s first Bluetooth headset product GBH100 was born, creating the company’s highest sales record for a single Bluetooth headset, laying a foundation for gaining major customers, and laying the groundwork for future listing;

In 2008, on the eve of the Olympic Games, GoerTek was listed on the Shenzhen Stock Exchange and stepped onto a new level.

This is the few years before Goertek entered the Apple industry chain, and it has become a rising star.

In the parallel period around the millennium, Wang Laichun, a “working girl” on the Guangzhou Foxconn assembly line, resolutely chose to leave and set up a factory with her brother Wang Laisheng, mainly engaged in TV rear shells and wire plug-ins. In this regard, in Dongguan, Guangdong, another part of China, two thousand kilometers away from Weifang, Goertek’s old rival, Luxshare Precision, was also born.

In 2002, Luxshare Precision (SZ:002475) received Foxconn’s PC converter order and began to grow rapidly, and gradually expanded its business to the foundry of notebooks and consumer electronics. In 2010, Luxshare was also listed on the Shenzhen Stock Exchange.

02

Apple Opportunity and Luxshare’s Counterattack

In 2010, Goertek, which has a good reputation, successfully entered Apple’s supply chain, supplying speaker modules, microphones, and wired headsets for iPhone and iPad. Apple, as Goertek’s long-term largest customer, injected Goertek’s development in the next ten years. Powerful motivation.

A year later, rival Luxshare also cut into Apple’s supply chain through the acquisition of Kunshan Liantao, providing it with cables, iPad internal cables, MacBook power cords, Apple Watch wireless charging/straps, MacBook Type-C, and iPhone adapters.

With the support of Apple’s orders, from 2010 to 2016, the performance of the two companies soared year by year, the market value of Goertek has doubled dozens of times, and Luxshare has also increased by more than ten times.

In 2016, due to Apple’s dual-speaker solution, Goertek’s revenue and profit rose by 41% and 32%, respectively. The traditional component business is facing a bottleneck.

Also in 2016, the iPhone7 released by Apple canceled the 3.5mm headphone jack, and instead equipped with Lightning wired headphones with the same interface as charging, which made charging and using headphones contradictory.

The savvy Apple certainly has a solution, that is, true wireless earphones, namely TWS earphones AirPods, and the introduction of AirPods has unexpectedly changed the industry landscape and provided a battlefield for Luxshare to surpass Goertek.

At first, Taiwanese company Inventec was the first choice for Apple’s AirPods supply, but Inventec was cautious about the wireless headset market and did not dare to increase its production capacity. Later, it was defeated.

Luxshare has keenly sensed the huge business opportunities from the small AirPods.In July 2017, Luxshare won Apple’s favor with a yield rate of close to 100% and won 60%-70% of the foundry share of AirPods. With the opening of the hundreds of billions of AirPods market, Luxshare succeeded in becoming the foundry leader and surpassed Goertek in 2018.

Although Goertek has a hindsight, it still entered the AirPods supply chain in 2018 with acoustic algorithm technology and rich hardware integration experience, providing MEMS microphone parts, and winning 25%-30% of the foundry share, returning to rapid growth. track.

However, this year’s situation and the crushing of more than half of the market share, Goertek has not been able to catch up with Luxshare.

Apple’s AirPods almost monopolized the TWS industry from 16 to 18 years. This stems from its Snoop monitoring mode, which allows the smartphone to be connected and paired with a headset. The headset synchronizes the signal by sharing the key. For another headset, the transmission process is extremely accurate and the power consumption is low, and Apple has implemented a patent blockade on this technology. Android manufacturers can only adopt the forwarding mode, which has high latency, asymmetric power consumption, and performance. Compete with AirPods.

In 2019, the launch of the Bluetooth 5.0 solution solved the problem of binaural transmission. The sales volume of TWS headsets from Android manufacturers rose rapidly, and the AirPods market share fell to 30%. Goertek has also enjoyed a wave of dividends by cooperating with mobile phone manufacturers such as Huawei, Samsung, and Xiaomi.