Rockchip recently said in an agency survey that almost all of the RK3588's eight major product directions are being developed by domestic leading customers, and some of them have reached the stage of small-batch production. Some well-known brands in Europe and South Korea are also in the process of research and development.
Rockchip said that RK3588 has eight application directions, including high-performance tablet, ARM PC, smart cockpit, multi-camera, smart NVR, smart large-screen/multi-screen application, cloud service, and edge computing, VR/AR, and other application fields. In the first half of the year, it is expected that products in four major directions, including multi-eye cameras, will gradually increase in volume. Different application products have different R&D and import cycles, and it is expected that customer prototypes will be released from April to May.
RK3588 has many customer projects being imported in AR, VR products, in-vehicle, edge computing, and many other application scenarios. AR, VR, and vehicle R&D cycles are relatively long, and mass production is expected in the second half of the year. RK3588 is mainly used in smart cockpits and surround-view cameras in vehicles. RK3588M is already in the process of vehicle certification, and the current development progress of vehicle customers is faster than expected.
Regarding the production capacity, Rockchip said that the production capacity is still tight this year, and different wafer foundries have structural capacity constraints, especially for mature processes such as 28nm, 40nm, and 180nm. Capacity availability from one major supplier in 2021 is problematic, but several other suppliers have provided a lot of support. The company has signed some contracts with major suppliers last year, and the original production capacity will be greatly improved. At the same time, this year will solve production capacity problems through product upgrades and product structure adjustments. Overall, our company's production capacity will be higher than that in 2021. Greatly relieved, but the production capacity is still quite tight in the industry.
Regarding the price increase of the wafer factory, the wafer foundry has different price increases in different batches and at different times. We maintain a gross profit margin of about 40% according to the company's ability to bear, and at the same time, the price of some products has increased.
In 2022, the mature process itself has not added much capacity at the manufacturing end, and it is expected that it will not be relieved until the second half of 2023.
Regarding the current competitive landscape, Rockchip pointed out that ICs are competing in security, consumer electronics, and various application markets. We believe that the next ten years will be the decade of new hardware. New hardware requires IC to combine hardware, data, algorithms, cloud, etc., to do a good job in various scenarios, reflecting the value of products, rather than just relying on low prices to compete.
During the 20-year development process, Rockchip has continuously developed core technologies around big audio, big video, big perception, and big software highlighting the technical advantages of core IP in products, and continued to optimize and iterate products to improve product performance. Competitiveness. At the same time, Rockchip has also accumulated industry-leading, rich customers, scenarios, and ecology. These are our unique advantages in the market competition.
In terms of automotive electronics, Rockchip pointed out that the company has accumulated many years of experience in the field of automotive electronics, and has product layouts in the front and rear of the car. Before, it did not dare to officially talk about entering automotive electronics because entering this field requires sufficient Supported from many engineering resources. This year is the first year for the company to enter the pre-installation of cars. At present, domestic well-known electric vehicle manufacturers have begun to introduce RK3588. This year's goal, we just want to land.
According to Rockchip, RK3588 adopts high-performance CPU and GPU cores, adds a 6T NPU processing unit, has powerful multimedia processing capabilities, and many peripheral interfaces, which can adapt to the needs of many complex scenarios and applications, and can run a variety of operating systems, is the company's new generation flagship product. This year is the first year of mass production of the RK3588 series, and it is expected to account for a high proportion. With the launch of product applications in various directions and continuous mass production, the sales proportion will increase year by year.
Regarding the application of RK3588 in security, Rockchip said that the product development and introduction cycle for different applications is fast or slow. In the first half of the year, it is expected that products in four major directions, including multi-camera products, will be launched; in the second half of the year, the volume will continue to increase in the other four directions.
Taking the 8K decoder of RK3588 as an example, if we only focus on the current situation, this performance is excessive in some scenarios; however, the 8K broadcast of the Winter Olympics and 32-channel video access and other scenarios already require 8K performance.
Looking at the future, the development speed of AIoT products' demand for computing power will even be faster than the iteration speed described by Moore's Law.
Our products should focus on the long-term, not just the short-term. AIoT chips are different from mobile phone chips. Mobile phones are a flagship product a year, while AIoT products are used in industry, robotics, and all walks of life. Customers require a long product life cycle, and even ask us to promise that the chip will not be produced for 7-10 years. . We already have several AIoT chips that have been released for more than 5 years, and customer demand is increasing year by year.
Regarding the adoption of RISC-V cores, Rockchip said that the promotion of a new instruction set or core mainly lies in the software ecology, and ecology takes time, and RISC-V-related processors have developed in recent years. speedy. The main processor cores of Rockchip products RK3588 or other SoC chips are still ARM. In closed small systems, we will use a little RISC-V for simple internal control and do some things without interrupting the main processor. Parallel control to improve efficiency.
It is understood that the company adopts a sales model of main distribution and supplemented by direct sales, which is the practice of the industry more than ten years ago. But in actual operation, including most technical support, market development, business negotiation, etc., we are directly facing end customers.
Rockchip said that in 2021, most companies in the semiconductor industry will encounter a very serious structural shortage problem. From the original large-volume preferential price reversed to the greater the demand, the higher the price. The new crown pneumonia epidemic, natural disasters, and tensions in international relations all have an impact on the supply chain. Under such circumstances, the company actively reserves reasonable inventory to cope with the uncertainty of the future supply chain, which is an effort made under the situation of lack of production capacity result. Earlier we also mentioned that the life cycle of the company's products is long. In 2021, the entire industry chain will be very tight from wafers, substrates, packaging, materials, and equipment. In order to reduce the uncertainty of supply, the company took the initiative to increase the safety stock.
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