Guotai Junan: Apple defines system-level AI products to drive the wave of upgrades

According to the information from Zhitong Finance and Economics APP, Guotai Junan Securities released a research report stating that Apple (AAPL.US) announced Apple Intelligence, which is expected to become the definer of edge-side AI in the future. The optimization of AI functions on phones, computers, and other devices will further drive the trend of upgrading devices, benefiting deeply the Apple supply chain.

Guotai Junan Securities' main points are as follows:

Apple released Apple Intelligence, and AI terminals officially transitioned from the APP level to the OS level.

Apple's WWDC was held in the early morning of June 11th Beijing time, where Apple further expressed its design concept for on-device AI, including product definition, technical implementation, pain point solutions, display effects, and cooperation with cloud-side AI. The five key features required for personalized AI on the edge are Powerful, Intuitive, Integrated, Personal, and Private.

The conference emphasized the daily use of users, third-party software invocation, cross-APP execution, understanding of individual situations, and clearly demonstrated the development direction of system-level AI (AI OS). Apple Intelligence can simplify the cross-APP usage experience, deepen personal situational understanding through analyzing application data and excellent screen information perception, provide highly personalized service experience, marking the formal transition of AI terminals from the APP level to the OS system level. At the same time, Apple's attitude towards cooperation with large models such as OpenAI is open. In the generative field, ChatGPT is available for free access as an option, and consideration will be given to accessing other large models in the future.

Apple is focusing on strengthening privacy and security in the AI era, which is expected to increase user acceptance of AI terminals.

Apple focuses on edge computing as the main approach, with cloud computing as a supplement, and traceable use of privacy data. It hopes to dispel users' concerns about privacy with its technical strength and brand image. Phones are the product form that generates the most data for users and are naturally the most suitable product form for developing personal assistant terminals. "Privacy" is the core driving force for the development of edge-side AI and the core obstacle for users not using AI technology. Apple's description of privacy runs through the entire conference, providing guarantees from company commitments, technical architecture implementation methods, to the traceability of post-code, and setting a new standard for AI privacy. Apple Intelligence achieves AI system privacy protection through private cloud compute functionality.

Apple Intelligence supports the upgrade of the iPhone 15 Pro series and above models, which is expected to significantly increase the demand for device upgrades, driving up Apple's sales.

Apple Intelligence will be available on the iPhone 15 Pro series (including the new iPhone16 series in 2024), iPad/Mac equipped with M1, and future models. The American English version will be available for trial in the summer of 2024 The official version will be gradually upgraded in 2025. The AI user experience is expected to further drive users to upgrade their devices, and the domestic Apple supply chain is expected to benefit significantly.

Risk Warning:

Uncertainty in the China-US trade friction; Subsequent new AI features iteration may not meet expectations