Recently, Depp CNC (Shenzhen) Co., Ltd. (hereinafter referred to as "Depp CNC"), which focuses on the research and development, production, and sales of high-end five axis CNC machine tools and their key components, has completed a Pre-A super round financing of 10 million yuan. Zijingang Capital has led the investment in this round of financing, and Zhonghe Capital has followed suit.

At present, Depp CNC has obtained investment from well-known institutions such as Southern Industrial Technology Research Institute, Sharing Investment, and Zhonghu Capital, and has been highly recognized by the capital market. This round of financing funds will mainly be used for research and development investment, operation management, team building, etc.

Depp CNC was established in July 2021. Depp CNC (Shenzhen) Co., Ltd. focuses on the research and development, production, and sales of five axis main control machine tools and their components. The core R&D team of the company comes from well-known domestic and foreign machine tool enterprises, all of whom have been deeply involved in machine tool research and manufacturing for many years, and have rich experience in machine tool product development. The company has the R&D capability for core components of five axis CNC machining centers, including research and development of turntables, swing heads, position detection modules, tool libraries, optical measuring heads, etc. According to downstream customer needs, the company has designed and developed G series, V series, and U series machine tools, which have been successfully exported to the European market. Currently, orders from the Fortune 500 are being delivered.

The company has long focused on the research and development and manufacturing of high-end machine tools (five axis CNC machine tools) and their components. Currently, it has cooperated with the internationally renowned company Bosch Rexroth to achieve common development goals. High end five axis linkage machine tools have been mass-produced, and sales networks are spread throughout the Yangtze River Delta, Pearl River Delta, and overseas fields.

High end CNC machine tools are the key to advanced manufacturing, and there is huge room for domestic substitution

The birth of five axis CNC machine tools can be traced back to the 1950s, when CNC machine tools only had the control function of three coordinate axes linkage. In the 1980s, four axis CNC machine tools gradually emerged, adding rotary axis control functions. The five axis linkage CNC machine tool gradually developed in the early 21st century.

With the continuous progress of technology and the continuous development of manufacturing, five axis linkage CNC machine tools have become an indispensable key equipment in the manufacturing industry.

The five axis machining center has strong comprehensive processing ability, and can complete a lot of processing content after one clamping of the workpiece. The processing accuracy is high, and for batch parts with medium processing difficulty, its efficiency is 5 to 10 times that of ordinary machine tools (three-axis). Especially, it can complete many processing tasks that ordinary machine tools cannot complete, which is more suitable for complex shapes, high precision requirements, unit prices, or small batch multi variety production.

The five axis linkage CNC machine tool system is the only means to solve the machining of impellers, blades, marine propellers, heavy-duty generator rotors, turbine rotors, large diesel engine crankshafts, and so on. It is a machine tool with high technological content and precision, specifically designed for processing complex surfaces. This machine tool system has a significant impact on a country's aviation, aerospace, military, scientific research, precision instruments, high-precision medical equipment, and other industries.

Five axis CNC machine tools are the "golden key" for the transformation and upgrading of the manufacturing industry

According to QY Research data, the global market size of five axis CNC machine tools reached 7.48 billion US dollars in 2021, and it is expected that the industry size will reach 13.8 billion US dollars in 2027, with a compound annual growth rate of 10.05% during this period;

By 2027, the domestic high-end five axis CNC machine tool market space will reach 20.216 billion yuan, with a CAGR of 16.09% from 2022 to 2027.

Source: QY Research, Anxin Securities Research Center.

The transformation and upgrading of the manufacturing industry continues to expand the demand for high-end machine tools. High end CNC machine tools are mainly used in key fields such as aviation, aerospace, nuclear, electronics, ships, weapons, energy, automobiles, molds, cutting tools, especially in military industries such as aerospace. There is a strong demand for localization, a huge stock market size, and promising market growth.

Taking the aviation industry as an example, the main markets for high-end CNC machine tools are military and civilian aircraft. High end five axis CNC machine tools are the only means to solve the cutting and machining of key industrial products such as aerospace and aviation engine impellers, bladed discs, blades, and marine propellers.

According to the prospectus of Kodak CNC, aircraft manufacturing has an industrial chain driving effect, which is an important opportunity for the transformation and upgrading of the domestic manufacturing industry. During this period, the demand for high-end manufacturing equipment such as five axis CNC machine tools will further increase. At the same time, the industrial cluster effect will accelerate the migration of the global aviation manufacturing industry to China. In the future, the aviation aftermarket, such as maintenance and engineering services, with a market space of over 2.7 trillion yuan, will also be opened to domestic enterprises, bringing new markets and opportunities.

For a long time, developed Western industrial countries led by the United States have regarded the five axis linkage CNC machine tool system as an important strategic material and implemented an export license system. The domestic substitution of high-end industrial aircraft is an important prerequisite for China to successfully complete the transformation of its manufacturing industry independently, and for the full independent development of high-precision national defense and aviation manufacturing.

Five axis CNC machine tools are the "golden key" for the transformation and upgrading of China's manufacturing industry, with huge import substitution space

From a policy perspective, the government is increasing its support for high-end CNC machine tools.

In August 2023, the Ministry of Finance and the State Administration of Taxation issued a notice on the policy of value-added tax deduction for industrial mother machine enterprises. From 2023 to 2027, enterprises that produce and sell advanced industrial mother machine hosts, key functional components, and CNC systems will be subject to an additional 15% deduction of their value-added tax payable.

According to the relevant public disclosure information of Kede CNC, the number of imported machining centers in China in 2021 was about 27000, of which 30% were five axis machine tools. Therefore, it can be estimated that the annual import of five axis machine tools is about 8000. Based on the unit price of 1.25 to 1.5 million yuan per unit, the import substitution space for domestic five axis CNC machine tools is 10 to 12 billion yuan.

According to the customs statistical data platform, the import amount of processing centers in China reached 2.67 billion US dollars in 2021, equivalent to RMB 19.1706 billion. Considering that the unit price of five axis machine tools is significantly higher than that of ordinary processing centers, assuming that 60-70% of the import amount comes from five axis machine tools, the domestic substitution space for five axis machine tools imports is 11.5-13.4 billion yuan.

From the perspective of competitive landscape:

In 2020, the share of major manufacturers exceeded 95%, with the top five companies accounting for 62.44% of the market share and the top ten companies accounting for 81.61% of the market share.

According to MIR Rui Industrial data, over half of China's import share of CNC metal cutting machine tools is monopolized by Japan and Germany. In 2021, the proportion of CNC metal cutting machine tools imported from China to Japan reached 38.6%. From the graph, it can be seen that the domestic market for five axis CNC machine tools is relatively scattered, and there is no major oligopoly pattern, which indirectly indicates that there are still good market opportunities in this field.

Precise positioning and commercial layout of Depp CNC
Positioning! Developing High Cost Performance Products for Global High end CNC Machine Tools

Depp CNC defines its industry strategy as: high cost-effectiveness in high-end products+high-quality service.
At present, Depp CNC has polished the product performance to world-class level, successfully developed and mass-produced the G series G500 \ G600, V series V866U \ V1160U, and this year will create a new U-series machine tool product for processing in the automotive field.

G500

Among them, G500 is a high-performance and high-efficiency 5-axis machining center, mainly aimed at the production of precision molds and high-precision parts in the fields of automobiles, mechanical engineering, aerospace, etc. Adopting a gantry type machine tool structure, equipped with a high rigidity and precision feed shaft and spindle, a dual end supported cradle turntable, and a standard electric spindle with a maximum speed of 20000rpm and a maximum torque of 89.5N. m. The G600 has achieved a comprehensive improvement in overall performance on the basis of the G500 product, and can process the pointed parts of inclined workpieces further away. At present, the company has successfully exported G500 products to the German market, and G600 products have also been recognized by overseas customers, with orders continuing to expand.

V866U

V866U is a small to medium-sized, high-precision, and highly rigid five axis machine tool, mainly aimed at processing small parts in the 3C, automotive, and aerospace fields. After one clamping, the workpiece can automatically and continuously complete various processes such as milling, cobalt, boring, expansion, hinge, spot facing, and tapping. It has good dynamic responsiveness, can achieve high-speed cutting, low-speed non crawling, and further manufacture high-precision and high smoothness machined parts for customers. The development of V1160 mainly increases the cutting rigidity of the machine tool, which can process larger and heavier components, while improving the overall machining accuracy. At present, V866U has received official orders from domestic customers and has been verified on the customer side, successfully replacing imported machine tools. V1160 products have also been mass-produced and sold.

The U-series machine tools in the development stage are particularly suitable for machining box parts in the automotive field, and can complete vertical and horizontal composite clamping and machining of the front and all sides of the shell, as well as curved surface linkage machining. In addition, the C-axis turntable can be equipped with turning functions to meet the diverse processing needs of customers. The workpieces that can be carried can be medium to large parts, and the machine tool can complete milling and turning processing in one clamping.

Based on this correct positioning, Depp CNC completed tens of millions of orders in 2023, with customers and partners all over the world.

Layout! Build your own core component advantages

Depp CNC prioritizes the layout of turntables and swing heads, which account for a large proportion of the overall cost structure of machine tools and determine the accuracy level of the entire machine. This increases the cost reduction space for the development of five axis CNC machine tools, and is expected to save about 20% of machine tool development costs.

The company has established a joint research center with the State Key Laboratory of Mechanical Transmission of Chongqing University to jointly research and develop the turntable and swing head of roller cam structure. At present, its roller cam turntable and single arm swing head have been mass-produced and sold to domestic and foreign markets, and the product accuracy and performance can meet market demand.
The top 10 international giants in the industry all adopt an open research and development system, utilizing advanced industry experience and combining their own characteristics to develop their technological advantages. Depp CNC self-developed key precision component: Time grating encoder - a measurement device that can replace grating technology solutions and determine the key machining accuracy of machine tools. The continuous optimization and cooperation with South University of Science and Technology in the algorithm of time grating encoders is currently in the testing and optimization stage and has applied for European patent protection. After the testing is completed, it can be put into the market and meet the actual needs of the market.
In addition, Depp CNC has also self-developed a tool changing device and developed a secondary CNC system, with an overall localization rate of 70%.
Zijingang Capital believes that five axis CNC machine tools are the key to advanced manufacturing, and there is huge room for domestic substitution. Benefiting from the development of downstream high-end manufacturing industries and the overall upgrading trend of the world's manufacturing industry, there are significant market opportunities both domestically and internationally in the future. Depp CNC will become a dark horse in the industry by gathering high-end technical talents at home and abroad, introducing advanced production experience from Taiwan, China, China, mastering core technology, and building an internationally leading high-end CNC machine tool.

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