The Zhitong Finance App learned that Guolian Securities released a research report saying that AI servers have increased transmission speed requirements and high demand for high-speed backplane connectors; demand for high-speed connectors in the communications and automotive industry is strong, and there is plenty of room for domestic alternatives. It is recommended to focus on leading domestic companies with early layouts and excellent product performance, such as Electric Connection Technology (300679.SZ), Huafeng Technology (688629.SH), and Dingtong Technology (688668.SH). Demand for connectors in the industrial control and military industry is growing steadily, and the localization rate is high. It is recommended to focus on leading companies, China Aviation Optoelectronics (002179.SZ) and aerospace appliances (002025.SZ).
The main views of Guolian Securities are as follows:
Communications: Demand for high-speed backboards is strong, and domestic leaders are expected to break through
The transmission rate requirements of AI servers have increased, and demand for high-speed backplane connectors has increased. Guolian Securities estimates that in 2024-2026, the market size of high-speed backplane connectors for AI servers in China will be 19.45/28.85/4.210 billion yuan, respectively, and CAGR-3 is 48.52%. In terms of pattern, foreign capital occupies a large share of the market, forming a patent barrier at a rate of 56G and below. Domestic manufacturers, represented by Huafeng Technology, have the capacity to mass-produce 56G products through continuous investment in R&D. At the same time, 112G products have been verified by customers. It is expected that domestic replacement will be accelerated as the 112G patent barrier is lowered.
Automobiles: The volume and price of high-speed connectors have risen sharply, and domestic substitution has begun to accelerate
Intelligent driving and smart cockpit resonance, and demand for in-vehicle high-speed connectors is increasing. Guolian Securities expects the domestic automotive high-speed connector market to reach 35.7 billion yuan by 2026, or 23% CAGR-3. In terms of pattern, according to Bishop & Associates data, the top three global automotive connector market shares are all foreign-funded, with CR3 exceeding 65%. The share is relatively concentrated. The high-speed connector barriers are higher, and the segmentation pattern is expected to be more concentrated. Domestic electronic connection technology has a forward-looking layout in 2014, with a perfect product matrix. It has entered the core independent supply chain. The first-mover advantage is obvious, and independent rise has helped the company accelerate domestic substitution.
Industrial control: automation drives demand growth, domestic enterprises gradually break through
Policies and enterprise demand are jointly driving the trend of automation, driving steady growth in demand for industrial control connectors. Guolian Securities expects the domestic industrial control connector market to reach 10.04 billion yuan in 2026, and the CAGR is about 13% in 2023-2026. In 2022, the global industrial control connector market is mainly dominated by international giants such as Amphenol (share about 29%), Tyco Electronics (share about 13%), and Morse. The top ten global manufacturers are all overseas manufacturers. Weifeng Electronics, a leader in the domestic industrial control field, has been deeply involved in the industrial control market for more than 20 years, leading the level of precision manufacturing, and has become a leading domestic replacement enterprise for industrial control connectors.
Military industry: demand is growing steadily, leading companies are strong
According to Yidu data forecast, in 2023-2026, China's military connector market will rise from 17.138 billion yuan to 23.648 billion yuan, with a 3-year CAGR of 11.33%. The military connector market is expected to continue to expand in the future, benefiting from factors such as military modernization. The concentration of China's military connector industry is high, and the CR5 market share level of the industry is on the rise; continuous acquisitions and mergers within the industry, rising raw material prices, and rising labor costs have led to an increase in industry concentration. The Matthew effect of stronger players is showing, and leading domestic producers, China Aviation Optoelectronics and Aerospace Electric are expected to continue to benefit.
Risk warning: Domestic manufacturer connector replacement falls short of expectations, and product development falls short of expectations.