Konka focuses on electronic technology and solidifies its strategic focus with one body and two wings, making it lush with determination

Shenzhen Konka (000016.SZ, hereinafter referred to as Konka) recently released annual and quarterly reports, showing that it achieved revenue of 17.85 billion yuan in 2023 and 2.46 billion yuan in the first quarter of 2024; Under the new strategy of “one axis, two wheels, and three drives”, focusing on the electronic technology industry, the white battery business grew rapidly last year, and innovative businesses such as semiconductor optoelectronics are waiting to bloom.

New strategies stimulate new vitality

Last year, in Konka’s clear new strategy, “One Axis” refers to the development axis centered around the electronic technology industry; “Two rounds” refer to the development of consumer electronics and semiconductors as the main line; The “three drivers” refer to the main engines of product business, manufacturing business, and international business. It is obvious that Konka continues to focus on the “backbone” of electronic technology, shrinking low gross profit and less empowering businesses such as industrial parks, industry and trade, and environmental protection, integrating resources, revitalizing assets, and focusing on and making efforts in the main business of electronic technology.

Under the new strategic guidance, Konka’s white electricity business maintains rapid growth. In 2023, Konka’s white power business led various links in research, production, supply, sales, and service with innovative products. New products such as 500-liter double door refrigerators, Zhencai series washing machines, and Zhiyin series air conditioners were successively launched. The new 509-liter free embedded five fold sterilization refrigerator was mass-produced, and the gross profit of the white power business increased by 15% year-on-year in 2023. In terms of international business, utilizing the China Europe freight train to explore the European market, cultivating tens of millions of regional major customers in Germany, West Africa and other regions, and significantly increasing overseas revenue. In terms of manufacturing business, we have initially established dishwasher manufacturing capabilities, orderly promoted the new intelligent factory of Xinfei refrigerators and freezers, and built a full category manufacturing capability of “ice, wash, cold, air, and kitchen”, and introduced multiple strategic customers.

Konka’s color TV business was actively adjusted under new strategic guidance last year, stimulating new vitality. In 2023, domestic products will be updated and iterated, with all 12 models of the four new product series being mass-produced according to plan; Export products have improved their intelligence level, and Google’s Android system has completed platform certification. In 2023, the gross profit of the color TV business increased by 17.72% year-on-year.

Looking ahead to 2024, Konka’s consumer electronics business will take another step forward. The white electricity business aims to achieve economies of scale, increase sales of new categories of dishwashers, and timely lay out new production bases for product lines with insufficient production capacity such as air conditioners and washing machines. New Fly’s refrigeration technology will achieve productization; Our export business focuses on the European, Asia Pacific, and African markets. The color TV business is profit oriented, with domestic sales focusing on high-quality products such as high brushes, Mini LEDs, and 65 inch and above boards. In terms of export sales, it promotes manufacturing and brand expansion overseas.

In addition to color TVs and white TVs, Konka’s consumer electronics business also expands its PCB (printed circuit board) business upstream. In 2023, the gross profit of Konka PCB business increased by 54.46% year-on-year. In 2024, Konka PCB business will utilize high-end intelligent factories and new technologies to develop high-quality products, grasp the pace of production, explore strategic customers, and gradually form a scale advantage.

Innovative business drives high-quality development

If electronic technology is the backbone of Konka, then consumer electronics is one wing, and semiconductors are the other wing. In Konka’s semiconductor sector, there are two businesses that have attracted much attention from the outside world in recent years. One is the semiconductor optoelectronic business mainly focused on Micro LEDs, and the other is the storage business. Among them, especially the optoelectronic business is highly anticipated.

Micro LED is considered as the next generation of new display technology, which has advantages such as self illumination, long lifespan, low power consumption, transparency, deformability, and free splicing. Konka has made advanced deep layout in this field and achieved breakthroughs in key process links such as massive transfer. At the 2024 Shenzhen International Display Industry Development Summit, Xiao Junlong, General Manager of Chongqing Konka Optoelectronic Technology Co., Ltd.’s Giant Transfer Center, introduced Konka’s innovative practices in the Micro LED field. Chongqing Konka Optoelectronics ranks 12th in the world and 7th in China in terms of the overall number of patents in the Micro LED field, with a huge number of transferred patents ranking 4th in the world and 1st in China.

At present, Chongqing Kangjia Optoelectronics is actively developing the application of Micro LED in the field of augmented reality, hoping to use its advantages of high transparency and high brightness to provide users with a better visual experience. It is reported that Chongqing Kangjia Optoelectronics has invested 2 billion yuan, covering the production of epitaxial wafers, chips, massive transfer, and small pitch modules. It has developed products such as Micro LED watches and AR displays, and has now built a complete process of large-scale transfer pilot lines.

In terms of storage business, Kangying Semiconductor Company, which specializes in storage chips, was awarded the “Most Valuable Investment Award” in the 5th “Core Power” competition held by China Semiconductor Investment Alliance and others in June 2023.

Only by being specialized can we become stronger. Konka has made it clear that in 2024, it will continue to use the new strategy of “one axle, two wheels, and three drives” as the driving force, adhere to long-term principles, adhere to the business strategy of first receiving and then increasing, and first specializing and then strengthening, implement lean management, and promote high-quality development. A new transformation cycle has begun, and on the way forward, there will be wind and rain as the norm. I believe Konka will face difficulties and eventually see a rainbow after the wind and rain.