Event: Nike Technology announced its 2018 earnings report, with revenue of 714 million yuan in 2018, an increase of 18.87% over the previous year; net profit of 99 million yuan, an increase of 104.15% over the previous year. It's basically in line with our previous expectations. The core driver of the company's growth in 2018 was the MEMS foundry business. First, production line transformation of the Swedish subsidiary began at the end of 2016, expanding production capacity by about 50%; at the same time, global MEMS production capacity grew rapidly, customers nurtured earlier were gradually introduced, and the capacity utilization rate was sufficient. While the MEMS OEM business achieved rapid growth in revenue, gross margin also increased significantly, which in turn led to an increase in the company's overall gross margin.

The MEMS industry has great potential for growth, and the OEM model is gradually becoming an industry trend. Since the company acquired Silex, a leading global OEM company, in 2016, it has vigorously developed the MEMS business, and its performance contribution has increased year by year, and it has become the company's pillar industry. The pure contract manufacturing model is becoming a trend in the MEMS industry. With the advantages of the OEM model in terms of efficiency improvement, cost savings, intellectual property protection, and the continuous refinement of the manufacturing process of foundry manufacturers and the increasing degree of device standardization, MEMS pure foundry companies are latecomers, encroaching on the IDM market, and the trend of division of labor in the industrial chain is gradually revealed. According to Yole Development data, the MEMS OEM market size (output value) was only 337 million US dollars in 2014, but it will maintain a rapid growth trend in the next few years. The market size is expected to expand to 1.11 billion US dollars in 2019, with a compound growth rate of 26.92%, faster than the 20.5% growth rate of the MEMS manufacturing market during the same period, and far higher than the 11.5% growth rate of the entire market.

Risk warning: In 2019, the yield rate of the new MEMS plant in Beijing increased slowly, and depreciation increased slowly, which dragged down the release of the company's performance; the navigation and avionics business fluctuated greatly, causing a drag on performance.