Under the wave of shifting the focus of the global integrated circuit industry, China's integrated circuit industry chain is gradually maturing, and a large number of wafer manufacturing and packaging testing enterprises are put into operation, providing guarantees for the development of the domestic integrated circuit design industry. Since 2019, there has been an increasing demand from domestic enterprises for the localization of chip supply chains, especially as projects related to the information and innovation industry have entered the stage of large-scale implementation. According to data from Haibi Research Institute, it is expected to reach a scale of 800 billion yuan by 2025.
01 | Clock chip and industry background Clock chip is a core component mainly used in electronic products such as computers, electronic devices, communication devices, and home appliances. The chip can generate a stable clock signal and provide accurate time reference by synchronizing with the system, ensuring the normal operation of electronic devices. The clock signal is the metronome of integrated circuit operation, playing an important role as the "pulse" in electronic systems. A clock signal is a pulse signal that is continuously emitted at a certain time interval. The time interval between two pulse signals is called a clock cycle, and the number of pulses generated per unit time is called the frequency of the clock signal. Clock signal is the basic condition for integrated circuit operation. Under the control of the "clock", various circuits inside the chip cooperate with each other according to the beat of the clock signal and the specified timing, thereby completing the functions undertaken by the chip in the electronic system. The quality of clock signals affects the efficiency and accuracy of electronic system data processing. However, due to factors such as fluctuations in quartz crystal performance, noise interference, semiconductor material purity and uniformity, information transmission medium and distance, there are inevitably various interferences in every step of clock signal generation, transmission, and reading, leading to a decrease in clock signal quality. The decrease in clock signal quality mainly manifests as a decrease in frequency accuracy (frequency drift) and an increase in clock cycle jitter (phase drift). The clock chip system modules and product types of electronic devices mainly require clock signals, including "generating clock signals", "clock signal synchronization", and "clock signal jitter reduction". Under various requirements, different types of clock products have been derived based on the different subdivision functions. The clock source clock source is used to provide a square wave clock pulse signal with stable frequency and level matching for the ring pulse generator. It is usually composed of a quartz crystal oscillator and a positive feedback oscillation circuit composed of a NAND gate, and its output is sent to the ring pulse generator. Other clock sources are rarely used or only used under special requirements. According to the international telecommunications industry network synchronization clock standard GR-1244-CORE, the clock source is defined as four levels of accuracy, commonly referred to as level one, level two, level three, and level four clocks. Its accuracy decreases as the level increases.
02 | Industrial Pattern: The quartz crystal oscillator industry is highly competitive globally, with a clear trend of industry concentration. The top five manufacturers account for nearly half of the global market share. According to QYR Research cited in the Crystal Technology Annual Report, in 2021, the top three quartz crystal oscillator companies globally were TXC, Epson, and NDK, with TXC Crystal Technology accounting for 11.7% and the top ten accounting for 64.1% in total. In terms of segmentation, high stability clocks are monopolized by overseas oligopolies, while low stability clocks are fully competitive both domestically and internationally, with clear and stable levels of competition. The competition pattern in the clock chip industry is that the localization rate of clock chips is lower, and all chips of low-end crystal oscillators are still dominated by Japan, Europe and America. Domestic manufacturers are gradually starting to break through in various fields. Autonomous and controllable IC is the fundamental path to cost reduction. Active crystal oscillators are limited by the shortage of IC materials, making it difficult for market supply to significantly increase in a short period of time. The delivery time still needs 8 to 12 weeks. In addition, the precise temperature compensation algorithm of TC-IC has become the focus of high-performance crystal oscillator research. With the arrival of the 5G and 6G era, the next generation of communication equipment requires clock synchronization products with higher accuracy, lower power consumption, smaller size, and greater demand. However, traditional constant temperature crystal oscillators (OCXOs) have higher costs and cannot meet the development and demand of the future market. With the upgrading of communication systems, various fields such as communication equipment, mobile terminals, IoT, navigation and positioning, as well as instruments and meters, there is a demand for temperature compensated crystal oscillator (TCXO) products with smaller volume, lower phase noise, and more accurate temperature stability requirements. TCXO chip (TC-IC) is a chip used for temperature compensation in temperature compensated crystal oscillators (TCXO), combined with crystals to produce a highly stable clock signal source. Therefore, achieving a precise temperature compensation algorithm for TC-IC will be a key research focus to meet the above field applications.
03 | Driving factors: Downstream application changes are driving demand for high-end products, with the potential for both quantity and price to rise. From a market application perspective, crystal oscillators provide stable clock frequencies for electronic products, and their accuracy and stability have a crucial impact on the quality and performance of downstream products. They play an important role in fields such as base stations, mobile terminals, and network devices. Meanwhile, low-power devices have become a common trend in electronic products under the dual carbon policy in recent years. The overall energy-saving development trend in the downstream application market inevitably requires lower power consumption for various functional components of downstream products, and applications such as base stations and automobiles also require crystal oscillators to develop towards high-precision and low-power. In 2022, base stations/mobile communication/other consumer electronics/automobiles accounted for 40%/31%/16%/13% respectively in the application structure of Taiwan's crystal technology products. 5G communication: High stability clock is an inevitable trend. Clock frequency signals are used in wireless communication to achieve inter system synchronization. Specifically, its role in communication mainly includes: frequency generator, generating clock signals to data processing equipment, providing reference signals, etc. The requirement of 5G for clock punctuality reaches ± 1.5uS/24H, which means that the local clock drift needs to be better than ± 1.74E-11/24H. This puts higher requirements on the stability, wide temperature, and low phase noise indicators of local crystal oscillators. Automotive electronics: Benefiting from electrification and intelligence in the field of automotive electronics, clock products are mainly used in entertainment and remote communication systems, safety electronic systems, tire pressure monitoring systems, safety electronic systems, body systems, advanced driver assistance systems, and battery management systems. With the establishment of the trend of electrification, intelligence, and networking in automobiles, the types and applications of internal electronic components in automobiles are also constantly increasing. According to Crystal Technology statistics, traditional fuel vehicles require about 60-100 crystal oscillators, while electric vehicles require 100-180 crystal oscillators. Different fields have put forward higher requirements for products. Internet of Things: High precision and ultra-low power clock solutions are required. IoT applications have strict requirements for device power consumption and time retention capabilities, and excellent clock products will help IoT devices reduce power consumption. IoT devices rely on high-precision, ultra-low power real-time clock (RTC) chip products to meet the requirements of low power consumption, wide coverage, and large capacity required for networking. For example, to extend battery life, the power consumption of the RTC chip needs to be as low as 1uA (a 100mAh battery can support 100000 hours of standby); The accuracy of the Real Time Clock (RTC) chip determines the time retention ability and timing accuracy of IoT devices, which is closely related to the size of the time window required for terminals in the entire network. High precision performance parameter indicators can shorten the size of the reserved time window, directly affecting the terminal capacity supported by the entire network. Military industry: Time frequency products are an important foundation for collaborative operations in information technology and national defense. Accurate guidance, intelligent operations, and the implementation of data links all require precise time parameters and extremely high synchronization rates. Taking air defense missiles as an example, consistency in time between systems is the foundation for improving the overall system response speed and achieving target strikes. The high-precision and stable time frequency source and time synchronization system, as the core equipment, will be implanted into various weapon equipment terminals and connected to the overall weapon system. At present, Tianao Electronics is the core supplier of military video products in China. Breaking foreign monopolies in high-precision primary and secondary clocks such as rubidium atomic clocks, CPT atomic clocks, and cesium atomic clocks. The company's time-frequency products ship 50% of the supporting military aircraft, and it is expected that the market space for airborne time-frequency products will be close to 15 billion yuan in the next decade, with an average annual market space of nearly 1.5 billion yuan. It is expected that the market space for missile borne time-frequency products will be approximately 3.9 billion yuan in the next five years.
04 Jingtai Investment Suggestions | Clock servers in China are mainly low-end, with mid to high end domestic substitutes for upstream chips: both quantity and price increase+high-end breakthroughs in domestic substitution logic. The localization rate of upstream clock chips is extremely low, and high-end products still need to break through. They are in the initial stage of domestic substitution, and there are currently no independent listed companies. There are many early to mid stage entrepreneurial opportunities. Leading enterprises such as Dapu Technology (Science and Technology Innovation Board News Conference) and Ola Electronics (Science and Technology Innovation Board News Conference), with mid-term projects including Xingang Coast (Series C), Saisi Electronics (Series C), Yourong Micro (Series B), Core Interconnection (Series B), Shanghai Ruixing Micro, etc. Early projects include Nanjing Jijing Micro (Pre A), Dianke Xingtuo (Series A), Huashi Jiaku (Angel Wheel), etc. There are few companies that exclusively produce clock chips, and most of them are used as a type of analog or digital analog hybrid chip. Midstream Crystal Oscillator: Verticalization of the industrial chain and replacement logic for mid to high-end domestic products. At present, the market is still dominated by passive crystal oscillators, with a shipment volume of over 90% and a market share of over 60%. In the future, with changes in application demand and optimization of product costs, the proportion of active crystal oscillators will continue to increase, and the market for high-precision and high stability clock products will continue to expand. In addition, the supply of low-end crystal oscillators in China has exceeded demand, and there is a strong demand for mid to high end crystal oscillators and clock products with a low localization rate, indicating a broad demand for domestic substitution. IC autonomy is the fundamental path for cost reduction and competition, and the trend of vertical integration in the upstream and midstream is determined. Multiple companies have been listed in the secondary market of Jingzhen, including representative companies such as Taijing Technology and Huilun Crystal, while unlisted projects such as Yangxing Technology and Jingbao Time Frequency mainly focus on quartz industry chain and business integration, and are not a focus of attention.
