Smart Watch ODM Three Parts World

The smart watch market, which is growing against the trend, has become one of the few bright spots in the consumer electronics industry and also a must-have for ODM.

Based on years of tracking and analysis by Chaodian Think Tank in the field of smart watches, combined with the monthly ranking changes of shipment volume for three consecutive years, the current global ODM power of smart watches can be divided into three major camps: first, the Apple series with the most selling products, represented by Lixun Precision and Foxconn; second, the brand series with customers such as Huawei/Xiaomi/OPPO, represented by Huaqin and Longqi; and third, the overseas series that mainly focuses on overseas markets, Among them, representatives include Yawei Intelligence, Aidu, etc.

Long Ge, a senior executive from a top five domestic smartwatch ODM manufacturer, believes that "there are mainly two aspects to the competition between ODMs: first, research and development, design, and production quality control experience, and second, the level of mastery of high-quality supply chain resources

Smart watch supply chain expert Liang Liang stated that in the context of the weak trend of smartphones, the smart wearable business represented by smart watches is not only a terminal brand, but also a new growth curve for ODM.

Based on product sales, Apple, Huawei, Samsung, Xiaomi, and Jiaming are currently among the top five smartwatch brands, with the total market share of the first two exceeding 50%. Chaodian Think Tank estimates that the global smart watch market's shipment volume will increase by 20% year-on-year in 2022, reaching 228 million units; The cumulative total shipment volume will exceed 500 million units.

Apple Series: Lixun Precision, Foxconn

Lixun Precision

At the beginning of this year, Lixun Precision announced that it plans to raise 3.5 billion yuan to invest in the construction of intelligent wearable device production lines and technology upgrade projects.

Since entering the Apple supply chain in 2011, we have successively won the OEM business of AirPods, Apple Watch, and iPhone. It is reported that Li Xun Precision has strengthened its production line for new products including the iPhone 14 and Apple Watch Series 8. According to authoritative sources, in the product series of Apple Watch, the version of Apple Watch Ultra is exclusively provided by Li Xun Precision.

It is worth mentioning that there are rumors that Apple's Chinese suppliers are negotiating to produce Apple Watch and MacBook in Vietnam. Moreover, the Apple Watch 7 is already in the shipping stage in Vietnam, and it is estimated that the proportion of Apple Watch 8 shipments from Vietnam will significantly increase to 60-70%.

Foxconn

Foxconn is a high-tech enterprise of Hon Hai Precision Group in Taiwan, China, China. Since the production of the first generation Apple iPhone in the 2007's, the two sides have cooperated so far.

In 2019, Foxconn and Compal Electronics received orders to assemble and produce the Apple Watch. Foxconn has gradually replaced Quanta and entered the list of Apple smartwatch foundries since the Apple Watch Series 6. Subsequently, Renbao withdrew, and the Apple Watch series OEM orders were mainly divided between Lexus Precision and Foxconn.

In the "Top 10 Smart Watch ODM Shipping Volume Rankings for July 2022" by Chaodian Think Tank, Foxconn is second only to Lexus Precision in terms of 1.39KK shipping volume.

Huawei/Xiaomi And Other Brand Families: Longqi, Huaqin, Goethe, Huami, Liesheng

Longqi Technology

At present, Longqi Technology's product line covers smart phones, wearable devices, tablets, smart homes, AR/VR and other intelligent terminals. In terms of intelligent wearable products, customers mainly include well-known domestic brands such as Huawei, OPPO, and Yijia.

The industry generally believes that in the production of smart watch machines, the mobile ODM camp represented by Longqi has obvious advantages in various aspects such as research and development design capabilities, product application understanding, and structural component assembly.

With medical and health as the breakthrough point, the prospects of smart watches are fully optimistic. In the future, they will not only exist independently of mobile phone dependence, but also become important terminal access points for AIoT and the metaverse.

It is worth noting that Longqi Technology's $100 million B-round financing and RMB 1 billion C-round financing are both invested in the research and development of 5G emerging technologies (including 5G intelligent terminal new product development, 5G basic technology research and application) and technical reserves.

Huaqin Technology

If Lixun Precision and Foxconn have "embraced Apple's thigh", then Huaqin has "gained Huawei's glory" in the intelligent wearable ODM business.

According to industry chain news, many of Huawei's smartwatches, which currently have the second largest market share in the world, are produced by Huaqin.

On July 5th of this year, Huaqin submitted the application draft for its initial public offering prospectus, intending to sprint for an IPO on the main board of the Shanghai Stock Exchange. According to the prospectus, the company achieved revenue of 35.3 billion yuan, 59.866 billion yuan, and 83.759 billion yuan from 2019 to 2021, with net profits of 505 million yuan, 2.191 billion yuan, and 1.893 billion yuan, respectively. The performance in 2021 belongs to a typical 'increase in income without increasing profits'.

During the reporting period, Huaqin's intelligent wearable revenue was 856 million yuan, 2.68 billion yuan, and 3.282 billion yuan, respectively, with an annual compound growth rate of nearly 100%. Its smartphone accounts for 61.7%, 52.68%, and 46.92% of its main business revenue, showing a decreasing trend year by year.

Goethe Corporation

On November 8th, with the release of a document by Goethe Holdings, the company's suspension of TWS earphone production by Apple quickly fermented, causing a huge industry uproar.

But Goethe's intelligent wearable products seem to have not been much affected. According to industry chain news, the main major customers of Geer's smart watch ODM are Huawei and Samsung.

From its financial report information, it can be clearly seen that the smart wearable product line, including smartwatches and bracelets, has become a new growth point for Goethe Group, along with AR/VR smart home electronic game consoles and accessories, smart home products, etc.

However, from the perspective of business products, the main direction of the company's efforts is the intelligent wearable products linked to the metaverse by Goethe Corporation. Ge Er Group stated that VR/MR/AR, intelligent wearable and other products are expected to become the most core and deterministic opportunities in the consumer electronics industry in the next 5 to 10 years and even 20 years.

Huami Technology

In addition to producing and selling smart hardware such as Amazfit series smartwatches, a significant portion of Huami Technology's business comes from OEM and distribution of Xiaomi bracelet products.

In October 2020, Huami announced that its strategic cooperation agreement with Xiaomi would be extended for another three years.

As an independent listed company, Huami has always hoped to break away from its dependence on Xiaomi and launch its own brands, Amazfit and Zepp.

Although Huang Wang, CEO of Huami, stated that "Huami is an independent startup rather than becoming an ODM company," based on its specific revenue in 2021, revenue from OEM distribution business accounted for more than half. In the third quarter of this year, the revenue of Huami's independent brands significantly slowed down, increasing by 4.2% year-on-year, far below the growth rate of 84.4% in the second quarter.

Hunting Sound Technology

According to the official website of Liesheng Technology, the company was established in 2015 and currently covers more than 100 countries and regions worldwide.

Liesheng Technology is one of Xiaomi's ecological chain enterprises. As a young internet hardware product enterprise with flattened management, the company has become a global independent brand and ODM solution provider for consumer grade intelligent sports products. Its own brand Haylou has gained widespread market recognition in the fields of wireless audio and intelligent wearables.

In January of this year, the news of Liesheng Technology acquiring the old smart sports watch brand Suunto Songtuo made it famous.

Overseas departments: Yawei, Aidu, Qiwo

Yawei Intelligence

Since its establishment in 2016, Yawei Intelligent has maintained a compound growth rate of over 70% annually. After rapidly rising from the local market in China, the company has developed an expansion strategy of "first India, then Europe and America" based on high-quality supply chains and customer resources, which has become the key to its sustained high growth.

According to the Chaodian Think Tank, after years of sedimentation and accumulation, Yawei Intelligent now has 13 production lines with a monthly production capacity of 1.3KK, and the actual shipment volume has reached the KK level.

Yawei Intelligent currently has cooperative relationships with leading local smartwatch brands in India and is the core ODM partner of boAt, taking over 70% of its orders and becoming the largest ODM manufacturer of smartwatches in India.

Qiwo Intelligence

Qiwo was founded in 2012 and is an innovative high-tech enterprise that integrates the design, research and development, and production of intelligent wearable devices. The KING-WEAR smartwatch products under its umbrella have obtained certifications such as 3C, CE, RoHS, Reach, UN38.3, FCC, UKCA, etc., meeting a series of export standards. The products are sold well in more than 30 countries and regions such as Europe, America, Australia, Asia Pacific, and Africa.

According to public information, Qiwo Intelligent has 12 production lines and can produce 20 million smart watches annually.

Calculated in December each year, the average monthly production capacity of Qiwo Intelligent is close to 1.7KK. However, according to the "Top 10 Smart Watch ODM Shipping Volume Rankings for July 2022" by Chaodian Think Tank, Qiwo Intelligent's monthly shipment volume was only 0.5KK, indicating that its capacity utilization rate was less than 40%.

Aidu Technology

In the field of smart watches, Aidu was once recognized as the leader of Huaqiangbei and the "big brother" of the white card market. However, there have been various unfavorable news such as shareholders seizing power and seizing medals, company layoffs and cutting orders.

Even now, many watch ODM manufacturers highly recognize the R&D and production capabilities of Aidu, especially its self-developed core algorithms. A friend told Chaodian Think Tank that the current situation in Aidu is mainly due to the collapse of cash flow.

The highlight moments of love are enviable. In 2020, the shipment volume of Aidu Technology exceeded 10 million units, and its annual revenue also exceeded the 1 billion yuan mark, far exceeding the industry average growth rate of 10%. It is the only player in the ODM camp of white label and overseas smart watches.

To achieve greater success and progress, Love must first resolve the current internal contradictions.

Summary

For ODM, large-scale production is a direct manifestation of hard power and the core of creating cost advantages.

Unlike smartphones and TWS, smartwatches still have many advancements in form and functionality, such as medical grade applications such as ECG, blood pressure, and blood sugar, as well as the popularization of new technologies such as dual-mode communication and Bluetooth. More possibilities in the terminal market mean that the overall situation of ODM is uncertain and new variables will emerge in the future.


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