Zitong Financial APP learned that China Merchants released a research report saying that Huawei's new aircraft led to technological innovation and domestic substitution, focusing on three types of industrial chain opportunities. 1) Huawei's new machine brings technological innovations such as Kirin chip return, satellite communications and star flash, which is expected to drive the growth of the entire industry chain; 2) Huawei drives domestic substitution of key links in the industrial chain, such as RF front-end, analog chip, high-end CIS, etc.; 3) many links, such as structure / charging / passive components / panels, will also benefit from increased sales of Huawei handsets.

China Merchants's main points are as follows:

Huawei Mate 60 series / X5 release, with Kirin chip king and many innovations back.

Since the beginning of the year, the market has paid close attention to the return of Huawei mobile phones. Huawei was once the first mobile phone brand in China and the second largest mobile phone brand in the world. According to IDC, Huawei shipped 240 million mobile phones in 2019, of which nearly 75 million in Mate+P series and nearly 30 million in Nova series. The Mate 60 Pro went on sale on August 29th, and the Mate 60 base model went on sale the next day, ahead of market expectations. The Mate 60 Pro+, Mate 60 and X5 also started pre-sale on September 8. The new phone brings many bright spots, including the return of Kirin processor, download speed comparable to high-end 5G mobile phones, satellite calls, star flash, Pangu model and so on.

Sales of the new phones are booming online and offline, and supply chain stock is expected to exceed expectations.

According to online mall statistics, the current Mate 60 Pro expected delivery time to early October, according to Shenzhen, Wuhan and other cities offline stores grass-roots survey, most of the scheduled Mate 60 models also need October-November to arrive, X5 queue time even up to 4 months, supply exceeds demand leading to offline price increase is very common. Based on supply chain tracking, the stock expectation of core components of Mate 60 series in 23 years has been revised up to more than 8 million. We judge that terminal shipments of Huawei Mate 60 series are expected to reach 6 million within 23 years, and overall Huawei mobile phone sales are expected to reach 40 million (including Nova and other series). Based on the market demand trend and supply chain capacity, we judge that 24-year Mate/P series shipments are expected to be close to 20 million, and overall Huawei mobile phone sales are expected to reach 5000-60 million in 24 years.

Huawei's new machine drives technological innovation and domestic substitution, and pays attention to three types of industrial chain opportunities.

① Huawei new machine brings Kirin chip return, satellite communications, star flash and other technological innovation, which is expected to drive the growth of the entire industry chain. Mate 60 is equipped with Kirin 9000s chip, the download speed is generally higher than that of 500Mbps, which is equivalent to iPhone14 Pro, while Mate X3 is 100Mbps, Kirin returns or represents a further breakthrough in domestic Fab manufacturing capacity. It is recommended to pay attention to equipment companies with increasing coverage of advanced process processes, materials companies with large domestic space / continuous breakthroughs in product categories, such as large silicon wafers, photoresist, gas, mask, etc., as well as supporting EDA and closed testing companies. Driven by Huawei, the satellite communications industry chain is expected to usher in a growth space from 0 to 1 at the civilian end. It is recommended to pay attention to the domestic Tiantong terminal transceiver chip manufacturer Huali Chuangtong and Beidou chip manufacturer Dianke chips; Huawei mobile phone support Starflash technology is expected to promote large-scale application, it is recommended to pay attention to Huawei Starflash ecological chain layout progress and Starflash Alliance member companies.

② Huawei drives the domestic substitution of key links in the industrial chain, such as RF front-end, analog chips, high-end CIS and so on. In terms of RF front-end, the domestic Sub 3GHz main module L-PAMiD and high-end filters still rely on US and Japanese suppliers. It is recommended to pay attention to the manufacturers with the production capacity or potential of L-PAMiD modules, such as 300782.SZ, 688153.SH, 688512.SH and so on. In terms of analog chips, wireless charging function is expected to be gradually devolved from high-end mobile phones to more models. It is recommended to pay attention to the rapidly increasing share of wireless charging receiver management chip 688458.SH, charge pump charging management chip 688484.SH, and Saints Bond (300661.SZ), Ai Wei Electronics (688798.SH) and Power Core Micro (688601.SH), which have increased the localization rate of the mobile phone industry chain. In terms of optics, Huawei high-end phones lead the Android optical upgrade. Huawei's leading CIS suppliers have all been overseas leaders Sony Group Corp, focusing on the breakthroughs made by domestic manufacturers such as 688213.SH and 603501.SH in high-end CIS. In addition, domestic camera modules and lens manufacturers have previously suffered from weak demand for Android phones and inventory adjustment. The rise of Huawei high-end phones is expected to lead to recovery. It is recommended to pay attention to camera module manufacturer 002456.SZ, Lijing innovation, lens manufacturer Sunny Optical Technology (02382) and so on.

Many links, such as ③ structure / charging / passive components / panels, will also benefit from the increase in Huawei mobile phone sales. Mate 60 and X5 sales are booming, follow-up Nova and P-series new phones are also expected to continue innovation, Huawei mobile phone sales recovery will drive the relevant performance growth of industry chain parts companies, such as wired and wireless fast charging modules, panels, structural components, 3C equipment, etc., it is recommended to pay attention to Huawei's high revenue share and high stand-alone value related companies, including Lixun Precision (002475.SZ), BYD Electronic (00285), Shunluo Electronics (002138.SZ) and so on.

Risk Tips:Global macroeconomic and political risks, the risk of Huawei's mobile phone sales falling short of expectations, and the risk of domestic semiconductor technology upgrading falling short of expectations.