Article source: Industry research report (if there is any infringement, please contact to delete)

1. Industry scale: Steady growth in the world, my country is slightly higher than the global growth rate

       In recent years, the stepper motor market has maintained steady growth throughout the year. In terms of breakdown, according to statistics from Japan's EMJ and Japan's Yano Institute of Economics, the global shipments of HB stepper motors reached 77.8 million units, 79 million units (yoy 1.54%), and 80 million units (yoy 1.27%) from 2013 to 2015. . The global PM stepper motor shipments from 2013 to 2015 were 1.288 billion units, 1.352 billion units (yoy 5.04%), and 1.421 billion units (yoy 5.11%).

Source: EMJ, Yano Economic Research Institute

       As far as my country is concerned, as it is in the process of industrial transformation and upgrading, stepper motors are playing an important role as a key component of mechatronics. According to the forecast of Shenzhen Institute of Foresight Industry, from 2017 to 2022, my country's stepper motor manufacturing market will maintain an annual growth rate of about 7%-13%. Among them, the average annual growth rate in the industrial automation field is more than 20%; in the office automation field, it is maintained between 0-10%; the printing equipment manufacturing field is maintained at 6%-10%; the growth rate of the household appliance field is slowing down .

Source: Shenzhen Qianzhan Industry Research Institute

2. Industry Trend: The rise of emerging industries will broaden the market space of stepper motors

       (1) Safe city and anti-terrorism promote security demand

       At present, the international anti-terrorism situation is severe. The Chinese government proposes to build a "national emergency system", "safe city", "safe construction", etc., to stimulate the development of the security industry. The stepper motor provides the degree of freedom for the surveillance camera, which can expand the rotation or movement range of the camera and increase the area of surveillance. Generally, barrel type (gun type) and dome type cameras have 0-1 degrees of freedom, and dome type cameras have 2-3 degrees of freedom. Take the Hikvision Deep Eye series 4 million dome camera water as an example. The camera has two degrees of freedom, namely 360° horizontal rotation and -20°-90° vertical rotation. Each degree of freedom needs 1 stepping motor to support.

       According to IHS's forecast for 2017, 98 million network cameras and 29 million high-definition cameras will be shipped this year. The overall growth rate is about 20%. We assume that the compound growth rate of shipments from 2018 to 2020 is about 25%, and that by 2020, the shipment of surveillance cameras will reach 250 million units. With the increasing demand for surveillance, surveillance cameras with higher degrees of freedom will be favored. At present, on average, each surveillance camera has about 0.8 degrees of freedom. Assume that the average number of degrees of freedom rises by 0.1 per year to an average of 1.1 degrees of freedom per surveillance camera in 2020. Based on this estimate of the number of stepper motors required, it is estimated that about 275 million stepper motors will be needed by 2020.

Source: IHS

(2) Broad market space for stepper motors for automobiles

       Micromotor is one of the key components of automobiles. DC motors and PM stepping motors are commonly used in automobiles. The applications of motors in automotive electric control mainly include:

       (1) Basic transmission control: control of engine temperature management, fan motor, engine management motor, gearbox and suspension system, gearbox and transmission system actuator, valve actuator, etc.

       (2) Equipped in mid-to-high-end vehicles to improve comfort and driving operability: electric power steering motors, electronic parking brake motors, headlight steering actuators, grid actuators, power window drivers, etc.

In general, economic cars are equipped with more than 20 motors, mid-range cars have 30-40 units, high-end cars have more than 50 units, and luxury cars have more than 70 units. With the continuous optimization of automobile safety, energy saving, and comfort, the demand for automobile motors will further expand.

Source: Haitong Securities Research Institute

       In 2016, global automobile production was approximately 90 million, of which China produced 28.11 million. At present, it is assumed that the global automobile production will remain at the current level in the future; with the improvement of comfort and operability, the demand for motors will gradually increase (see the following table for calculation).

       Because PM stepper motors have the characteristics of anti-electromagnetic interference, lightness, thinness, short size, low energy consumption, high performance, and high reliability, they are gradually replacing traditional DC brushed motors. The forecast of the demand for stepper motors for automobiles is as follows. Assuming that the proportion of PM stepper motors used in automobile motors is 20%, the corresponding annual demand is about 500 million.

Source: Haitong Securities Research Institute

Source: Haitong Securities Research Institute

       (3) 3D printing maintains rapid growth

       As a typical representative of professional printing equipment, 3D printing has a wide range of application scenarios and has maintained a rapid growth momentum in recent years. In 2016, global consumer/desktop 3D printer shipments were 578,200 units, an increase of 108% year-on-year; industrial-grade 3D printers shipped 25,800 units, an increase of 44% year-on-year. Wohlers predicts: Based on the status quo of the development of 3D printing technology, the market size in 2020 will reach 21.198 billion US dollars.

Source: Wohlers

       Stepping motors are widely used in printers, fax machines, inkjet printers, spraying equipment, etc. HB stepper motors are also used in 3D printing equipment to achieve control. According to the current equipment structure, a desktop-level 3D printer needs at least 4 HB stepper motors, and for industrial-level 3D printers, the number and accuracy of HB stepper motors will be higher. According to Gartner's forecast, by 2020, global 3D printer shipments will reach 6.7 million units. Desktop 3D printers will account for 97.5% of shipments. We assume that desktop-level 3D printers use an average of 4-5 stepper motors, and industrial-level 3D printers use an average of 5-6 stepper motors. It is estimated that by 2020, the number of stepping motors in the 3D printer field will be about 30 million.

Source: Gartmer

(4) Upgrading of communication technology to promote motor demand

       The antenna is the most important part of a mobile communication base station, and the antenna needs to be adjusted downward tilt to optimize signal quality. Antennas are divided into mechanical antennas (manual adjustment) and electrically adjustable antennas (electronic adjustment). The stepping motor is an important part of the electronically adjustable antenna on the base station and provides power support for the downward tilt angle adjustment of the antenna. Before the 3G era, mechanical antennas were often used. Starting from 4G, electronically adjustable antennas have basically been used.

       At the beginning of the "Twelfth Five-Year Plan" period, the country vigorously developed 4G mobile communications. In 2016, 926,000 new mobile base stations were added, bringing the total number to 5.59 million, of which 861,000 4G base stations were added, bringing the total number to 2.63 million.

Generally speaking, for a common base station with a three-sided antenna, at least 3 stepping motors are required. For 4G base stations, 4-6 antennas and 4-6 stepping motors are required. With the development of 5G technology, the use of Massive MIMO will require more stepper motors to adjust the angle of the antenna, and the number of stepper motors will further increase. We estimate that during the peak period of 5G base station construction worldwide, there will be 100, 200, 250, 2 and 1.8 million new 5G base stations in 2019-2023. We conservatively estimate that each base station is equipped with 16 antennas, corresponding to the demand for 1600, 3200, 4000, 3200, and 28.8 million stepper motors, totaling 150 million.

Source: China Industry Information Network

      (5) Gradual expansion of applications in the medical field

       With the increase of the aging of society and the increasing awareness of people's health care, the global medical device market demand continues to grow rapidly. Evaluate Med Tech predicts that the global medical device market will reach USD 529.8 billion in 2022, with a compound annual growth rate of approximately 5.2% from 2015 to 2022. The United States, Europe, and Japan jointly occupy the main market position in the global medical device market. The United States is the world's top medical device producer and consumer.

Source: EvaluateMedTech

Stepping motors are widely used in medical instruments and equipment and are showing an expanding trend, such as prism spectroscopy monochromators, automatic biochemical analyzers, automatic diluters, insulin pumps, respiratory equipment, blood testing equipment, ophthalmological testing equipment, syringe pumps, and artificial dialysis Equipment etc. In the future, medical equipment that replaces manual treatment tasks, action preparation, and high-quiet motor use will continue to increase in clinical applications. Stepper motors with higher accuracy, multiple positioning and easy control will find more applications in medical equipment.

(6) Important parts of industrial automation

       According to Oxford Economics research, as of 2016, China's labor cost has approached that of the United States, slightly lower than the United States by 4%. But China's labor productivity is only 1/7 of that of the United States. China's labor productivity is comparable to India, but labor costs are three times that of India. And China's labor costs far exceed those of Southeast Asian countries. Beginning in 2012, labor-intensive enterprises have successively begun to transfer to Southeast Asian countries.

       China's demographic dividend is gradually disappearing, and improving industrial production efficiency has become a top priority. According to the Markets and Markets research report, the global factory automation market reached US$108.8 billion in 2015 and is expected to reach US$153.3 billion in 2022, with a CAGR of approximately 4.88%. Among them, the Asia-Pacific region will be the first market, accounting for about 36% of the market share, while China will be the first incremental market for factory automation.

       In 2015, China proposed the Chinese version of the Industry 4.0 plan "Made in China 2025", which not only proposes a path to cultivate and develop emerging industries, but more importantly, transform and upgrade traditional industries. The level of development of China’s manufacturing industry is uneven. A considerable number of enterprises are still in the “Industry 2.0” stage. The plan proposes that the overall labor productivity growth rate of the manufacturing industry will be 7.5% during the “13th Five-Year Plan” period. It is 6.5%; the numerical control rate of key processes will reach 50% in 2020 and 64% in 2025.

       Stepping motors are widely used in the field of factory automation due to their fast response speed, high reliability, simple pulse open-loop control structure, etc., mainly including factory automation production equipment (industrial robots), flexible conveying equipment (mobile robot AGV), Intelligent monitoring system, digital management system, etc. The rapid development of the industrial automation industry will surely drive the continuous expansion of the demand for stepper motors.

3. Market space forecast

       We make the following assumptions and forecasts on the future market space of stepper motors:

       (1) Fields with stable demand: Stepper motor shipments account for about 60%-70% of the total market. It is assumed that the growth rate from 2017 to 2020 is the same as in recent years. The growth rate of HB stepper motor is about 1.2%, and that of PM stepper motor is 5%.

       (2) Fields with strong demand: Stepper motor shipments account for about 15%-25% of the total market, assuming a growth rate of about 20% from 2017 to 2020.

       (3) Emerging markets: Stepper motor shipments account for about 5%-10% of the total market, assuming a growth rate of about 20% or more in 2017-2020.

Source: EMJ

       Based on the above assumptions, we predict that by 2020:

       (1) The shipment volume of HB stepper motors is approximately 124 million units, with a compound growth rate of 10% from 2017 to 2020. Among them, strong demand and emerging market shipments will account for about 50% of total shipments, with a compound growth rate of about 22% from 2017 to 2020.

       (2) PM stepper motor shipments are about 2.4 billion units, with a compound growth rate of 11% from 2017 to 2020. Among them, strong demand and emerging market shipments will account for 47% of total shipments, with a compound growth rate of about 22% from 2017 to 2020.

4. Market competition pattern

       Most of the major companies in the stepper motor industry come from Japan. Related Japanese companies have decades or even nearly a hundred years of development accumulation, deep technical accumulation in related fields, and a large customer base.

Source: EMJ

       According to EMJ statistics, in 2015, Japanese manufacturers shipped about 65 million HB stepper motors. It accounts for about 80% of global shipments. The annual shipments of HB stepper motors such as Shinano Japan and Minebea are more than 20 million units.

Source: EMJ

       Japanese manufacturers account for 65% of the global PM stepper motor market. Nidec Sankyo and Minebea's PM stepper motors have an annual shipment of more than 20,000 units, which are dominant. MOONS’ is the only non-Japanese company among the world’s top stepper motor manufacturers. In 2016, the output of HB stepper motors was 10.04 million units, ranking fourth in the world.