Kaiyuan Securities released a research report saying that in 2025, the "two new" expansion, and the inclusion of 3C digital such as mobile phones in the national subsidy, are expected to drive domestic demand. From the perspectives of computing power, battery life, and usage scenarios, new consumer electronics products such as AI glasses are still difficult to replace the dominant position of AI mobile phones in the AI terminal ecosystem in the medium term, and the continuous improvement of the AI ecosystem will continue to improve consumer experience and promote the growth of demand for AI mobile phone replacement. The demand for AI mobile phone replacement is superimposed with national subsidy incentives, and the sales volume of the domestic mobile phone market is expected to grow significantly in 2025, and upstream component and IC manufacturers are expected to show greater performance elasticity under the superposition of factors such as utilization rate.

The main views of Kaiyuan Securities are as follows:

In 2025, the expansion of the "two new" and the inclusion of 3C digital such as mobile phones in the national subsidy are expected to drive domestic demand

On January 3, the National Development and Reform Commission pointed out at a press conference that since the implementation of the "two new" in 2024, the trade-in sales of automobiles and home appliances have increased significantly, and the comprehensive effect of the "two new" work on expanding effective investment, boosting residents' consumption and accelerating green transformation will continue to appear, and in 2025, the scale of ultra-long-term special treasury bond funds will be greatly increased, and the implementation of the "two new" work will be strengthened, and subsidies will be given to individual consumers to purchase three types of digital products such as mobile phones, tablets, and smart watch bracelets, and the specific plan will be announced as soon as possible.

Review the "two new" policies in 2024: On March 7, the State Council issued the "Action Plan for Promoting Large-scale Equipment Renewal and Consumer Goods Trade-in", proposing to implement the trade-in action of consumer goods, carry out the trade-in of automobiles and home appliances, and promote the replacement of home improvement consumer goods; On July 24, the National Development and Reform Commission and the Ministry of Finance issued a notice on several measures to support large-scale equipment renewal and consumer goods trade-in, proposing to make overall arrangements for about 300 billion yuan of ultra-long-term special treasury bond funds, strengthen support for large-scale equipment renewal and consumer goods trade-in, and refine the subsidy policy for household appliances and automobiles; As of December 12, the "two new" drove the renewal of more than 5.2 million cars with sales of more than 690 billion yuan, the replacement of more than 49 million home appliances with sales of more than 210 billion yuan, and the renewal of more than 2 million sets of old equipment, with remarkable results.

The

stars of the Spring Festival Gala of Science and Technology CES2025 shine, and AI terminals will continue to penetrate and AI applications will be deeply implemented in 2025

From January 7th to 11th, the CES2025 (International Consumer Electronics Show), known as the "Spring Festival Gala of the Science and Technology Industry", will be held in Las Vegas, USA. According to Wind and other media information, the theme of this exhibition is "DiveIn", and it is expected that many exhibitors such as NVIDIA, AMD, Intel, Lenovo, and Samsung will display their latest applications and innovations in the field of AI. 2024 is the first year of AI terminal exploration, and 2025 will be a year of accelerated innovation of AI underlying technologies, continuous penetration of AI terminals, and in-depth implementation of AI application scenarios, and the global AI industry is expected to continue to develop rapidly.

Mobile phones will still dominate the AI terminal ecology, and the mobile phone chain is expected to usher in a rise in volume and price in 2025

In terms of subsidies for the replacement of the state, according to the official "25-year substantial increase in the scale of ultra-long-term special treasury bond funds", the budget scale of 3C digital products such as mobile phones is expected to reach the level of 100 billion. According to IDC data, the smartphone market in Chinese mainland will ship about 271 million units in 2023, with a market size of about $127.8 billion.

Beneficiary target:

(1) Brand machine: Xiaomi Group-W (01810), Longcheer Technology (603341.SH), Huaqin Technology (603296.SH), Guanghong Technology (300735.SZ);

(2) Mobile phone components: Lingyi Intelligent Manufacturing (002600.SZ), Lens Technology (300433.SZ), Luxshare Precision (002475.SZ), Pengding Holdings (002938.SZ), BYD Electronics (00285), AAC Technology (02018), Sunny Optical Technology (02382), Qiu Ti Technology (01478), ECT Technology (300679.SZ), O-film (002456.SZ);

(3) ICs and components: Aiwei Electronics (688798.SH), Geke Micro (688728.SH), Smartway-W (688213.SH), Goodix Technology (603160.SH), Shunluo Electronics (002138.SZ), Weijie Chuangxin (688153.SH), Maxic (688458.SH).

Risk warning: the risk that the policy is not as good as expected; the risk that downstream demand is less than expected; the risk of intensifying competition in the industry.