2024.06.17 13:35
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TF Securities: Apple WWDC releases Apple Intelligence, optimistic about the landing of edge AI

Apple announced Apple Intelligence at the WWDC, defining a new era of edge AI. Computex 2024 concluded successfully, with global tech giants leading the way, accelerating computing power iteration, and implementing AI applications on PC edges

According to the information from CBN Weekly APP, TF Securities released a research report stating that Apple launched Apple Intelligence at WWDC, defining a new edge AI. Computex 2024 ended perfectly, with global tech giants leading the way, accelerating computing power iteration, and landing AI PC edge applications. The firm recommends focusing on connector and wire harness manufacturers such as Luxshare Precision (002475.SZ); consumer electronics components & assembly such as GoerTek (601138.SH); consumer electronics automation equipment such as Coreray Technology (002957.SZ); brand consumer electronics such as Transsion Holdings (688036.SH); consumer electronics materials such as China National Software & Service (300684.SZ); CCL & copper foil & PCB such as Boardtek Electronics (01888); automotive electronics such as Delian Technology (300679.SZ); panels such as BOE Technology (000725.SZ).

Key points from TF Securities:

Apple launched Apple Intelligence at WWDC, defining a new edge AI. Apple integrated OpenAI's ChatGPT into Siri, significantly enhancing its conversational intelligence. Through AI and machine learning, Apple can better provide powerful personal products for users, simplify people's lives, and focus on privacy protection. IOS 18 offers users more customization options, such as customized home screens and control centers, new Privacy apps and Messages, satellite function upgrades, etc.; iPadOS 18 brings more new experiences based on IOS updates, such as tab bar updates, new shared features, added math note functions, etc.; macOS Sequoia's updates further enhance user productivity and creativity, such as iPhone Mirroring, intelligent window layout, new video conferencing features, and Safari browser new experiences. The release of VisionOS 2 brings stronger spatial image capabilities, enhanced control gestures, stronger Mac virtual displays, added train mode, expanded third-party support, and on June 28, Vision Pro will officially go on sale in China, Japan, and Singapore.

Computex 2024 ended perfectly, with global tech giants leading the way, accelerating computing power iteration, and landing AI PC edge applications: Nvidia: Nvidia CEO Jensen Huang showcased the new product RoadMap iterating annually, unveiling the next-generation platform Rubin under Blackwell. The importance of system-level solutions in future data centers will further increase, with optimism for system-level suppliers like GoerTek with prominent vertical integration advantages; the next wave of AI is physical AI, where all factories will be robotic, coordinating robots to manufacture robotic products. NVIDIA is leading the $50 trillion industrial digital transformation, with Hon Hai as a core integrator deeply involved in robotic factories; AMD: AMD detailed its expanded multi-generation accelerator roadmap, demonstrating how it plans to provide performance and memory leadership for generative AI on an annual cadence. The expanded roadmap includes the AMD Instinct MI325X accelerator, planned for launch in 24Q4, with the next-generation AMD CDNA 4 architecture expected to debut in 2025 to power the AMD Instinct MI350 series. Zen 5, AMD XDNA 2, and AMD RDNA 3.5 graphics cards will collectively provide next-generation AI experiences for laptops equipped with the AMD Ryzen AI 300 series processors.

Intel: Intel showcased the architecture details of its upcoming Lunar Lake client computing processor, which has been redesigned to set a new standard for x86 efficiency and deliver leading core and graphics performance through unparalleled AI capabilities. Intel introduced the Intel Xeon 6 series processors, including E and P core options, to meet various use cases and workloads ranging from AI and other high-performance computing needs to scalable cloud-native applications.

Qualcomm: Qualcomm President and CEO Cristiano Amon took the stage with industry leaders from Acer, ASUS, Dell, HP, Lenovo, Microsoft, and Samsung to highlight the industry transformation driven by Copilot+ PC powered by the Snapdragon X series in the PC space.

MediaTek: MediaTek launched two powerful new chipsets expected to power the next generation of Chromebooks and smart TVs. The Kompanio 838 system-on-chip (SoC) for premium Chromebooks and the Pentonic 800 SoC for 4K smart TVs and monitors.

Electronics Companies Going Global: Major players in the Chinese electronics industry are actively expanding their businesses in Mexico. These companies can be categorized based on their main product categories: server and network communication product manufacturers such as Foxconn and Unisoc; new energy vehicle manufacturers such as Luxshare Precision, Lens Technology, Dongshan Precision, Anjie Technology, and Lens Technology; panel manufacturers such as BOE, TCL, and Truly Semiconductors; and LED manufacturers such as MLS and AOTO. Some companies like Foxconn and Luxshare Precision have already established mature production capacity and R&D centers in Mexico. Since 2016, Goertek has been investing in Mexico, with revenue reaching 110 million RMB in 2023. Other companies like Changying Precision, Yingqu Technology, Anjie Technology, and Yigao are actively expanding into the Mexican market, either through factory construction or preliminary work. GoerTek plans to survey a new base in Mexico in 2024 and intends to commence construction in 2025 Smartphones: TrendForce predicts that by June 2024, Samsung will dominate the foldable screen market with a 50.4% share, followed closely by Huawei with a market share of 30.8%. In terms of new devices, the Honor Magic V Flip has been launched, equipped with the Snapdragon 8+ flagship processor, with both inner and outer screens exclusively supplied by BOE. The vivo X100 Ultra is officially on sale, featuring the Snapdragon 8 Gen 3 processor and the BluePrint Imaging Chip V3+ for enhanced photography capabilities. Vivo has released the S19 series smartphones, which are the first to feature Vivo's self-developed AI facial correction technology, providing an improved camera experience. In June 2024, according to Jibang Consulting's forecast for the foldable screen market, Samsung remains in the lead with a market share of nearly 50%, followed by Huawei with a market share of 30.8%.

PC: Qualcomm collaborates with multiple OEM manufacturers to launch over 20 Snapdragon X series AI PCs on June 18th, expecting an increase in AIPC penetration to stimulate replacement demand. 1) According to Counterpoint Research, PC shipments in 2024 Q1 increased by 3% year-on-year, achieving positive growth for the first time after 8 consecutive quarters of decline. With support from new processor platforms by chip suppliers, the shipment and deployment of generative AI laptops will accelerate in 2025-2026, along with the acceleration of emerging generative AI features and use cases. 2) Microsoft, ASUS, Lenovo, and other Copilot+PC ecosystem brands will officially launch products featuring the Qualcomm Snapdragon X Elite processor on June 18th, currently in pre-sale, optimistic about the increase in AIPC penetration. Several models of Copilot+PC are equipped with Microsoft Copilot service and various AI features including Recall and Cocreator.

Panels: The cyclical nature of LCD TV panel attributes has weakened, dulling the market's sensitivity to short-term price fluctuations. Optimistic about the industry's price & valuation stage-wise uplift, with 2024 as a turning point, manufacturers are entering a period of performance release. 1) Positive outlook on panel equipment investment, DSCC expects global display equipment investment to rebound by 54% to 55.78 billion RMB this year, with Samsung Display, Tianma, and BOE collectively accounting for 75%. Market research firm DSCC recently forecasted a 54% rebound in global display equipment investment this year, reaching $7.7 billion. Looking at various panel manufacturers, Samsung Display is expected to account for 31% ($2.4 billion), taking the lead. Next is Tianma with 28% ($2.2 billion). Following that is BOE with 16% ($1.2 billion). Optimistic about the capacity expansion and profit growth of upstream material and component suppliers. Liti Optoelectronics expects a year-on-year net profit growth of 85.32% to 136.8% in the first half of 2024, benefiting from the growth in OLED market demand, and plans to increase the annual production capacity of OLED terminal materials to 15 tons. Dai Nippon Printing is investing 20 billion yen in Kitakyushu City to establish an 8th generation OLED fine metal mask production line, doubling its capacity, and plans to collaborate with Samsung Display 2) Global TV OEM shipments: The market shipped approximately 9.8 million units in May, maintaining an overall upward trend, with a year-on-year increase of 4%, and strong performance from top OEM factories. DISCIEN released the global TV OEM shipment data for May, with MTK and Changhong shipping over 1 million units this month, ranking top two. Kangguan saw a 30% year-on-year growth in May, growing rapidly. Rising shipping costs and increased inventory pressure have led to a slowdown in the overseas shipment pace of some OEM factories, bringing certain short-term pressure to the growth of shipments in the coming months, resulting in a change in the annual shipment pace.

3) Price aspect: Demand for small to medium-sized TV panels below 50 inches has weakened significantly, and the overall panel price increase is beginning to converge. TrendForce released panel prices in late May, showing signs of a slight weakening in the momentum of TV panel stocking, with a significant weakening in demand for small to medium-sized TV panels below 50 inches. Brand customers are still focusing more on demand for large-sized products in the near term. Due to changes in demand, the space for overall panel price increases is beginning to converge.

Recommendations to watch:

Connector and cable manufacturers: Connectors and related: Luxshare Precision, Hua Feng Technology, Avic Optoelectronics (jointly covering military groups), Ding Tong Technology, Poway Alloy; Cables: Walsin Lihwa, Shenzhen Kaifa Technology, Molex Interconnect, Kinwong Electronic, E-lead Electronics;

Consumer electronics components & assembly: Foxconn, Luxshare Precision, Wingtech Technology, Goertek, Borqs Technologies, Peng Ding Holdings, Lens Technology, GoerTek, BOE Technology, Nationstar, Changxin Technology, Sunny Optical Technology (HK), GoerTek (HK), Dongshan Precision, Desay Battery, Xinwangda, Sunway Communication, Cosonic Technology, Huanxu Electronics, ZWJ Machinery and Electrical (mechanical group coverage), BYD Electronics (HK), ZhiDi Technology, Rapoo Technology;

Consumer electronics automation equipment: Coreray Technology (jointly covering mechanical groups), Smart Cube (jointly covering mechanical groups), Silink Technology, Jasic Laser, Saiteng, Jepu, Huaxing Yuanchuang, Bojie, Rongqi Technology, Tianzhun Technology (jointly covering electrical and mechanical groups), Lingyun Optics, JCE Electronics (jointly covering mechanical groups), Bozhong Precision (mechanical group coverage);

Branded consumer electronics: Transsion Holdings, Walkers, Anker Innovation;

Consumer electronics materials: China Stone Technology, Sihua Technology;

CCL & Copper Foil & PCB: Jianteo Multilayer Board, Shengyi Technology, Jinan Guoji, Nanya New Materials, Huazheng New Materials, Sino-English Technology, Jiayuan Technology, Nordson, Defu Technology, Fangbang Technology, Peng Ding Holdings, Dongshan Precision, Shennan Circuits, Xingsen Technology, Hudian (jointly covering communication groups), Jingwang Electronics, Shenghong Technology;

Automotive electronics: E-lead Electronics, Crystal Optoelectronics, Sunway Communication, Lianchuang Electronics, Yutai Micro, Heertai, Keboda, Desay SV, Ling Electric Control, Xiang Oil Pump (jointly covering automotive groups);

Panel: BOE Technology, TCL Technology, Shentianma A, Liande Equipment (jointly covering mechanical groups), JCE Electronics (jointly covering mechanical groups), Aolande, Dinglong Shares (jointly covering basic chemical groups), Lite Opto, Qingyi Optoelectronics, Feilihua, Shenkeda, Qizhong Technology, Huicheng Shares, New Phase Micro, Tiande Yu, Weier Shares, Zhongying Electronics, Yitian Shares Risk Warning: Consumer electronics demand falls short of expectations, insufficient innovation in new product development, geopolitical conflicts, impact of the relocation of the consumer electronics industry chain on domestic manufacturers