Editor’s note: This article is from the micro-channel public number “100 million European Network” (ID: i-yiou), Author: Ding Shu-yin, edit: Always, krypton 36 authorized release more and more like a mobile phone camera.Mobile phone manufacturers are racing to do their best on cameras: the number of cameras is increasing, and Apple and Huawei ’s “Yuba cameras” have attracted countless spits.The driving force behind the increase in the number of smartphone cameras is actually fierce competition in the AI vision industry.ArcSoft Technology (688088) is an important player in the AI visual track.ArcSoft Technology is committed to the development and application of visual artificial intelligence technology, providing one-stop visual artificial intelligence solutions for smart phones and other devices. Its main customers include Samsung, Huawei, Xiaomi, OPPO, vivo, LG, Sony,Bias and so on.At present, ArcSoft is gradually expanding its business to smart cars, the Internet of Things (IoT) and other fields.In the future, ArcSoft will compete directly with the “AI Four Little Dragons” such as Shangtang Technology and Internet giants represented by Baidu.Can Arcsoft Technology make the leap from mobile phone business to ubiquitous Internet of Things business?In the fierce competition of the AI market, what is the chance of ArcSoft’s winning?Android mobile phone face recognition oligopoly prospectus shows that among the top five mobile phone brands in global shipments in 2018, in addition to Apple’s completely self-developed visual artificial intelligence algorithm, the remaining mobile phone manufacturers using Android systems, such as Samsung, Xiaomi, OPPOBoth are equipped with Arcsoft’s visual artificial intelligence solutions.At present, the smart phone business has become the core source of revenue for ArcSoft Technology.From 2016 to 2018, Arcsoft’s smart phone solutions achieved revenues of 261 million yuan, 346 million yuan and 458 million yuan, respectively, and their proportion of total revenue increased from 67.93% to 96.57%.The semi-annual report for 2019 shows that this proportion has risen to 99.05%.The rapid growth of business income is due to the breakthrough of ArcSoft technology and the rapid landing of visual AI algorithms on smart phone terminals.In 2003, ArcSoft implemented face feature point detection, face detection, and facial expression monitoring on mobile devices with limited performance. In 2004, ArcSoft completed image enhancement algorithms on mobile terminal devices and realizedBlur, de-noise and Anguang shooting; by 2015, ArcSoft assisted mobile phone manufacturers in releasing the industry’s first dual-camera phone with RGB + Mono solution … The reason why these breakthroughs can be achieved is because of ArcSoftAlways insist on high R & D investment.According to the Prospectus of SoftSoft Technology, from 2016 to 2018, its R & D investment was 90.268 million yuan, 109 million yuan, and 149 million yuan, accounting for 34.59%, 31.43%, and 32.42% respectively, exceeding 30% for three consecutive years.In terms of the proportion of R & D personnel, as of the end of 2018, Arcsoft Technology had a total of 374 R & D personnel, accounting for 65.73% of all employees.At the same time, the successful commercial implementation of technology has also enabled ArcSoft to quickly realize profitability.It is reported that from 2016 to 2018, ArcSoft’s net profit reached 80.36 million yuan, 86.33 million yuan and 158 million yuan, respectively. The net profit growth rates of 2017 and 2018 were 7.34% and 82.49% respectively.In addition, relying on technological advantages, ArcSoft has been recognized by top enterprises in the upstream and downstream of the industry chain.In addition to smart phone terminal manufacturers, ArcSoft has long-term and in-depth cooperation with top sensor manufacturers, chip platform vendors, and module manufacturers such as Qualcomm, MediaTek, Sony Sensors, and Samsung Semiconductor.Benefiting from the wave of 5G multi-camera changers focusing on the smart phone business, it is not only the reason for Arcsoft’s rapid growth, but also its fundamental foothold in competing with other companies on the AI visual track.In China, the main competitors of ArcSoft Technology are Shangtang Technology and Guangguang Technology.Both Shangtang Technology and Guangku Technology entered the market from face recognition technology.According to the official website, Shangtang Technology and Kuangshi Technology each have 2,000 and 1400 employees, most of which are R & D personnel. Compared with ArcSoft, it has certain talent advantages.However, from the perspective of technology landing, Shangtang Technology mainly focuses on the fields of security, finance and mobile phones. In the field of mobile phones, Shangtang Technology mainly focuses on the field of in-depth entertainment, such as facial expression simulation, etc. Desperate Technology focuses on finance, urban brainIn face recognition, and user portrait construction in offline retail, there is less cooperation with mobile phone manufacturers.ArcSoft Technology focuses on the landing scene of camera technology and has obvious C-side differentiation advantage.In foreign countries, ArcSoft’s competitors mainly include Israel’s CorePhotonics Ltd and Japan’s Morpho: CorePhotonics Ltd mainly provides camera design solutions and vision solutions; Morpho’s main business is to provide picture processing frameworks, embedded in mobile phones, cameras, etc.The equipment is very close to the main business of ArcSoft Technology.However, CorePhotonics Ltd has a small team with only about 50 R & D personnel. It was acquired by Samsung for USD 155 million in January 2019 to provide Samsung with technical support for smart cameras. Morpho was listed on the Tokyo Stock Exchange in 2011, 2018Fiscal year revenue was only about 161 million yuan.From the perspective of volume and revenue, there is a big gap between the two companies and ArcSoft.From this, it can be said that ArcSoft has achieved an oligopoly position in the smart phone business.With the advancement of 5G commercialization, smart phones will usher in a wave of replacement.At the same time, according to IDC data, from 2015 to 2018, Apple’s market share dropped from 16.20% to 14.90%, while the market share of the top five mobile phone manufacturers except Apple rose from 40.20% to 52.30%.This means that the smartphone market share is being concentrated on the leading Android vendors, and these vendors are ArcSoft’s main customers, which is a huge market opportunity for ArcSoft.The latest features of this trend are: multi-camera and depth camera.This is also a great opportunity for ArcSoft to provide intelligent single, dual (multi) camera and depth camera solutions.But it cannot be ignored that the smartphone industry is transitioning from an incremental market to a stock market.According to statistics from IDC, from 2016 to 2018, global smartphone shipments were 1.469 billion units, 1.465 billion units and 1.405 billion units, respectively, which decreased by 0.27% and 4.10% year-on-year in 2017 and 2018.For ArcSoft, although there is no direct positive correlation between smartphone shipments and its business, the continued decline in shipments will definitely have a significant negative impact on the growth of its main business.In order to deal with future risks, ArcSoft is expanding its business into the pan-Internet of Things industry, such as smart cars, smart finance, smart retail, and smart home.ArcSoft’s founder and CEO Deng Hui once said that in the future there will be more than 10 cameras in the car, and the intelligent cockpit will become a key application scenario of intelligent driving vision AI.But in the smart car track, ArcSoft is an absolute latecomer.In recent years, Baidu, Siwei Tuxin and other listed companies, Xiaoma Zhixing, Weilai Automobile and other startups have been developing autonomous driving technology.From the perspective of Arcsoft’s main automotive AI products, ADAS (Intelligent Driving Assistance System), the key is whether it can be used in vehicles.From the prospectus, as of the end of 2018, ArcSoft’s “auto and other loT products” business revenue was only over 3 million, accounting for less than 1%.And domestic ADAS manufacturers have developed rapidly. For example, Horizon has reached a cooperation with Furytec, and it is expected that the products will be installed in mass production models as early as mid-2020.In other pan-IoT areas such as smart finance, ArcSoft will compete directly with Shangtang Technology.From the perspective of technical strength, ArcSoft does not have an advantage.As of December 31, 2018, ArcSoft has obtained a total of 129 patents (including 126 invention patents) and 73 software copyrights.As of press time, the Patent Bulletin Platform of the State Intellectual Property Office showed that 929 patents had been examined under the name of “Shangtang Technology”.In addition, whether Arcsoft’s underlying technology can be successfully extended from the smartphone scene to other scenes remains to be verified.ArcSoft disclosed 30 core technologies in the prospectus, most of which cannot be directly applied to financial, retail and other scenarios, and need to be further improved.For pure technology companies such as ArcSoft and Shangtang Technology, the richness of technology landing scenes determines the size of the growth space.If there is no breakthrough in the generality and extensibility of the technology, Arcsoft Technology will inevitably enter a development dilemma..
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