Cover outperform rating for the first time. Market may think, IC design industry high technical barriers, overseas giant first-mover advantage is obvious; Qi lu late start, weak foundation, poor foundation, under the condition of new terminal have sprung up in the Internet of things, to preserve the existing industry status is not easy, more difficult to close the gap. We think: the Internet of things era new characteristics is expected to reshape the industry competition pattern, land prices under the support of good external environment supply can keep up with the demand for security, is expected to corner.

Supply can keep up with: high-end chip stock m&a breakthrough, incremental mid-range chip gap is smaller.

(1) mobile phone, tablet, PC and other high-end chip market growth is slowing, industry booming, part of the corporate profits is difficult, m&a targets available; Land prices are expected to state, social capital and the capital market through mergers and acquisitions under the support of grafting global market resources, quickly swallow the high-end chip technology, the customer gap.

New terminal (2) the Internet of things, such as dressing equipment, intelligent household, industrial, medical, networking equipment in the field of education is mostly on the chip design technology and manufacturing process requirements is not high, compared with the overseas rivals qi lu and no obvious disadvantage

Guaranteed demand: ecology into the Internet giant, countries will push the import substitution.

(1) Internet companies lead, hard and soft depth cooperation is a new business model of Internet of things, in the context of Internet giant fought over the entrance to the hardware, service in place, responsive, flexible operation mode of the qi lu easier to quickly into the Internet giant filling, enjoy high-growth;

(2) China has become the world's largest Internet terminal of manufacture and consumption, land prices is expected to be won by local suppliers advantage the advantage on the one hand, on the one hand, is expected to fully benefit from special field when it comes to national security strategy for the national information security