Zhitong Finance App learned that China Merchants Securities released a research report saying, based on the consumer electronics research framework and industry data tracking proposed by the bank, the bank believes that the consumer electronics industry chain boom has bottomed out, and industry innovation is also accelerating. The rise of AI is empowering various terminals to bring long-term development opportunities. New XR products and technologies continue to emerge, and automotive intelligence is clearly accelerating. The bank remains optimistic about investment opportunities in the consumer electronics industry. It is recommended to focus on the Apple chain, Android chain, AI applications, XR, Smart EVs, and major consumer downgrades line.

Event: CES is the world's largest and most far-reaching consumer electronics show. CES 2024 was held in the US as scheduled from January 9 to January 12, attracting more than 4,000 manufacturers from over 150 countries and regions around the world to participate in the exhibition. According to comprehensive exhibition information, the bank has compiled core products and technologies in various fields. The bank believes that AI empowerment of this year's CES will be the main theme, and the focus of innovation is XR, PC, and smart cars.

China Merchants Securities reviews are as follows:

PC: A variety of AI PCs were unveiled, equipped with exclusive buttons for AI functions, and upgraded AI processing performance.

Many terminal brands are intensively releasing new AI PC products, equipped with exclusive AI function keys, and upgraded AI processing performance. 1) Terminals: Various AI PCs are on the market intensively, such as Lenovo showcased more than 10 new AI PCs, equipped with Intel Core Ultra processors, with AI functions including CoPilot; Acer showcased the AI PC ExtraGo, equipped with Acer Sense keys, which can open the AI experience with one click; Samsung showcased the Galaxy Book 4 AI PC, which will be linked to its AI phone. In addition, HP, Dell, and Asus are also launching new AI PC products. 2) Chips: Nvidia launches RTX 40 SUPER series gaming GPUs to accelerate AI video and image generation; AMD launches Ryzen APU 8000 G series processor with independent AI engine.

XR: VRMR silicon-based OLED, AR new products, technological innovation, and AI technology integration are the main highlights.

The XR field is still one of the main lines, with VRMR silicon-based OLEDs, new AR products, technological innovation, and the integration of AI technology as the main highlights. 1) Silicon-based OLED: Unlike previous new VRMR products that mainly use Fast-LCD screens, most of the new MR products at this conference are equipped with silicon-based OLEDs. For example, Sony showcased its first 4K silicon-based OLED screen MR headphone, and Samsung showcased a silicon-based OLED display with an RGB sub-pixel structure. 2) New AR products and technological innovation: Terminal brands such as Thunderbird and XREAL launched new AR glasses. Component manufacturers also showcased AR technologies such as optical waveguides and microLED, such as Goertek showcased a variety of upgraded full-color diffractive optical waveguide display modules, Ruisheng showcased single-layer color optical waveguide lenses, and Stein displayed up to 11400 PPI microLED screens. 3) AI technology integration: Many new XR products incorporate AI technology. For example, the Thunderbird X2 is equipped with a large AI model, which can achieve multiple functions such as multi-round conversations, itinerary planning, convenient question-and-answer, and brainstorming.

Automotive electronics: Focus on automotive intelligence, AI applications and smart driving/cockpit hardware and software technology are the focus.

Focusing on practical technology in the field of smart driving/cockpit software and hardware, leading OEMs are actively promoting the launch of large AI models. 1) AI applications: Mercedes-Benz and BMW each launched the large AI model MBUX human-computer interaction system/BMW voice assistant; Volkswagen showcased the first batch of models incorporating ChatGPT. 2) Chips: Nvidia has reached cooperation with Ideal/Great Wall/Extreme Krypton/Xiaomi; Qualcomm's digital cockpit and autonomous driving applications are being accelerated; in addition, traditional chip makers Intel and AMD have entered automotive SoCs. 3) Lidar: Hesai and Suteng each launched a new ultra-long-range lidar, the AT512/M3. In addition, Yigong Technology unveiled the new SPAD lidar ZVISION EZ6, breaking the 2,000 yuan price boundary. 4) Display: Display giants such as LG and BOE focus on cutting-edge display technology and launch various solutions such as P2P display solutions/oversized Oxide smart cockpit screens.

Innovative products and concepts: A variety of robots, wearables and home creative products incorporate AI technology.

Innovative products and concepts are constantly emerging. A variety of robots, wearables and new home ideas incorporate AI technology, such as innovative AI interactive hardware R1, Kepler humanoid robots, smart pillows that use AI technology to prevent snoring, AI smart mirrors that recognize user emotions and relieve stress, smart cat doors incorporating AI technology, smart carpets that detect pet conditions, AI smart belts that care for people with visual impairment, smart lip balm for lip diagnosis and care, mobile walking devices integrating AI technology, Moonwalkers, AI detection smart toothbrushes, etc.

Investment advice: The boom in the consumer electronics industry chain has bottomed out and rebounded. Focus on the investment opportunities brought by continuous innovation in AI terminals, XR, and automotive electronics.

Based on the information from this CES exhibition, and based on the consumer electronics research framework and industry data tracking proposed by the bank, the bank believes that the consumer electronics industry chain has bottomed out and industry innovation is also accelerating. The rise of AI empowers various terminals to bring long-term development opportunities, new XR products and technologies continue to emerge, and automotive intelligence is clearly accelerating. The bank remains optimistic about investment opportunities in the consumer electronics industry. It is recommended to focus on Apple Chain, Android Chain, AI applications, XR, Smart EVs, and major consumer downgrades.

Risk warning: Increased macroeconomic fluctuations, downstream consumer demand falling short of expectations, increased competition in the electronics industry, geopolitical and exchange rate risks.