Special Connectors: High-growth Core Components for the Military Industry

Special connectors are key components in weapons and equipment. The core components of various tactical missiles, such as the guidance heads, engines, and autopilots, all require the help of thousands of connectors to integrate the cable network into a complete weapon system. At present, the information level of the military is constantly improving, and the amount of data that needs to be processed and transmitted in the field of special equipment has increased dramatically. The market demand for high-speed electrical connectors and optical connectors will usher in a broad market space. In addition, the continued growth in demand for new energy vehicles and 5G communications is expected to jointly open up a second growth curve for the special connector industry. According to Bishop & Associates, in recent years, thanks to the continuous expansion of high-speed infrastructure, the global connector market as a whole has shown a steady growth trend.

Overview of Special Connector Industry

Connectors are common electronic components in various weapon systems, and their usage ranks first among all kinds of components.

Special connectors need to work stably in a wide operating temperature range, and have the characteristics of corrosion resistance, high impact resistance, and high and low temperature alternation resistance.

In modern aircraft, the number of connectors and their supporting cable harnesses is often proportional to the size of the aircraft. For example, the total length of cables for large passenger aircraft is as high as 250km, and the number of electrical connectors required is also about 4,500.

The special connector industry faces the dual barriers of technology and qualifications, requiring enterprises to have the guarantee of cutting-edge technology and reliable process design, and also need to meet special standards and pass strict qualification certification.

Specialty Connector Competition Landscape and Leading Manufacturers

At present, my country's special connector industry has gradually entered the independent research and development stage from the imitation stage. The leading companies in the industry have high R&D investment and can quickly respond to the production and iterative update needs in special fields. At the same time, the merger and acquisition activities in the industry in recent years have also accelerated the improvement of industry concentration.

The concentration of my country's special connector industry has increased significantly, and the competition pattern is relatively stable.

AVIC Optoelectronics, Aerospace Electric, Huafeng Technology, Yonggui Electric, Shaanxi Huada, Hangzhou Aerospace Electronics, Zhengzhou Aerospace Electronics and other companies are the main suppliers of special connectors in my country.

Major manufacturers focus on the corresponding sub-sectors and occupy a certain share in the market.

Among them, AVIC Optoelectronics has the largest share in the special connector market, and its products cover optical, electrical, fluid connectors and related equipment, which are widely used in many fields such as aerospace, communications, and rail transportation.

Aerospace Electric's market share follows closely behind, with a leading advantage in aerospace, missile-borne and other fields. More than 70% of its products are sold to high-end customers in aerospace, aviation, electronics, ships, weapons and other fields.

Yonggui Electric's special connector products are mainly used in various special equipment of China's 11 major special groups.

Old state-owned enterprises such as Shaanxi Huada and Huafeng Technology have successively landed in the capital market in 2023, further strengthening the strength of my country's special connector industry.

From the perspective of domestic policies, as a core segment of the connector industry, the policy environment of special connectors is often closely linked to the policy environment of the entire connector industry.

In recent years, the Ministry of Industry and Information Technology, the Ministry of Finance and other departments have issued a series of policy measures to support the development of the electronic components industry. Documents such as the "14th Five-Year Plan for the Development of China's Electronic Components Industry" have put forward clear development goals and plans for the connector industry.

In December 2023, the "Guidelines for Industrial Structure Adjustment (2024 Edition)" issued by the National Development and Reform Commission encouraged the development of "new electronic components manufacturing" and "special materials for electronic components production" industries, which also provided more specific policy guidance for the development of the special connector industry.