Focus on MEMS inertial sensor technology and focus on the field of high reliability. Chipcom is a leading domestic chip design company that develops, tests and sells high-performance silicon-based MEMS inertial sensors. Established in 2012, it is a domestic high-tech enterprise with independent intellectual property rights for high-performance MEMS inertial sensor product systems and mass production and application. The company's main products include MEMS gyroscopes and MEMS accelerometers, which all include a micromechanical (MEMS) chip and a special control circuit (ASIC) chip to achieve functions such as navigation and positioning, condition monitoring, attitude sensing, and platform stabilization. The company's products have been widely used in high-end industries, unmanned systems, high reliability, etc., and are gradually expanding into fields such as autonomous driving, robotics, civil aviation, and commercial aerospace. In 2019-2023, the company achieved operating income of 0.80/1.09/0.166/0.227/0.317 billion yuan, with an average compound annual growth rate of 41%, and net profit attributable to mother of 0.38/0.52/0.083/0.117/0.165 billion yuan, respectively, with an average compound annual growth rate of 45%.

MEMS inertial non-standard processes have high technical barriers and are developing into high-precision/integration/low/multi-fields. MEMS products include sensors and actuators. Compared with traditional electromechanical sensors, MEMS sensors have the characteristics of miniaturization, low power consumption, integration, intelligence, etc., and are widely used in consumer electronics, automobiles, industrial control, medical care, etc., to sense motion, sound, temperature, pressure, etc. According to Yole Intelligence data, the global MEMS market is expected to grow from 14.75 billion US dollars to 22.253 billion US dollars in 2027, with a compound annual growth rate of 8.57%; inertial sensors and MEMS pressure sensors are the main product categories of MEMS and MEMS sensors. An inertial sensor is a device that converts the acceleration, position, and attitude of an object's motion into electrical signals, including an accelerometer, gyroscope, magnetometer, and inertial measurement unit (IMU), which can effectively achieve the functions of navigation and positioning, attitude perception, and platform stability; zero-bias stability is a core indicator for measuring the performance of gyroscopes and accelerometer products. In 2021, MEMS accelerometers, MEMS gyroscopes, IMUs, and MEMS pressure sensors together accounted for 39.92% of the MEMS industry and 62.66% of the MEMS sensor industry; in downstream applications, consumer electronics, automotive electronics, and industrial control accounted for a relatively high proportion, 53%/19%/17% in 2022, respectively.

The core technology is highly autonomous, controllable, and highly sustainable, and deeply bound upstream and downstream of the industrial chain. Chipcom is the earliest domestic chip design company engaged in the development of high-performance MEMS inertial sensors. It has mastered the core technology of high-performance MEMS inertial sensors. The company operates under the Fabless business model and focuses on the R&D, testing and sales of MEMS inertial sensor chips. As of December 31, 2023, Chipset has obtained 23 invention patents, 22 utility model patents, and 3 integrated circuit layout designs, mainly involving gyroscope ASIC chip closed-loop inspection, MEMS accelerometer design and process scheme development, gyroscope MEMS chip process technology, gyroscope closed-loop multi-mode control algorithm, FM FM accelerometer coupling cancellation technology, FM FM accelerometer low flickering noise technology, etc., which are technologically advanced in ASIC circuit design and MEMS chip sensitive structure design. The core performance indicators of high-performance MEMS gyroscopes have reached the international advanced level, and can also reach the accuracy level of traditional gyroscopes such as some fiber-optic gyroscopes and laser gyroscopes. The high-reliability sector accounted for more than 75% of revenue in 2020-2022, and the company's comprehensive gross margin reached more than 80%. Downstream users were mainly large central enterprise groups and research institutes, with stable cooperative relationships and strong user stickiness. The business development layout is a high-precision resonant MEMS pressure sensor. The performance accuracy of high-performance resonant pressure sensors can reach 1/10,000 to 2/10,000, which is expected to open up new growth space for the company.

Profit prediction and investment rating: With the rapid advancement of sensing, 5G communication connections, computing technology, and the continuous growth of networked nodes, the requirements for the number and degree of intelligence of smart sensors will further increase, and the accuracy and reliability requirements of sensors will continue to increase. In the future, new industries such as autonomous vehicles, the industrial Internet of Things, the Internet of Vehicles, smart cities, and smart homes are expected to create broad application space for the development of the MEMS sensor industry and lead the wave of MEMS sensor applications. We expect the company's revenue in 2024-2026 to be 0.451/0.652/0.943 billion yuan, respectively, +42%/+44%/+45%, and the net profit to mother is 0.235/0.34/0.487 billion yuan, respectively, +42%/+45%/+43% year-on-year, respectively, and corresponding PE is 68/47/33 times, respectively. First coverage, giving a “buy” rating.

Risk warning: Risk of a gap between the company's industry experience and influence, market share, business scale, etc. and industry leaders; risk of customer concentration; risk of declining gross margin; risk of seasonal operating margin; risk of a high share of related transactions; risk of changes in the macro environment.