The Zhitong Finance App learned that Bank of China Securities released a research report saying that after experiencing a long period of decline in sales of consumer electronics products such as smartphones and PCs, inventory removal in the industrial chain is nearing its end. In the future, under the dual stimulation of “passive switching” demand and “active switching” demand stimulated by new products such as AI PCs, the consumer electronics industry boom is expected to continue to pick up, and related 3C equipment is expected to fully benefit. Furthermore, the rapid introduction of new materials, new products, and new technologies such as titanium alloys, XR devices, and folding screens has also brought new opportunities for related equipment manufacturers to develop and strengthen the industry Daichi Review grade.

The views of Bank of China Securities are as follows:

Whether demand for consumer electronics terminals is strong, multi-dimensional demand is driving the industry to recover.

After experiencing a long period of decline in sales of consumer electronics products such as smartphones and PCs, inventory removal in the industrial chain is nearing its end, and the growth rate of shipments has bottomed out and rebounded, showing signs of marginal improvement. Looking forward to the future, first, smartphones and PCs are close to the tipping point of the switching cycle, and demand for “passive switching” is expected to recover; secondly, the launch of smartphones and AI PCs with stronger AI capabilities may stimulate demand for “active switching”; finally, XR devices, driven by hardware iteration and mature content, are expected to open up the consumer market and usher in new development opportunities. Therefore, under the influence of multiple factors, it is expected to drive the consumer electronics industry to continue to recover

There are many types of 3C equipment involved, and demand is affected by the downstream product cycle and has a certain periodicity.

3C products have complex production processes, many processes, and strong customization properties. Therefore, there are many special equipment. According to statistics from Intelligent Research Consulting, the global 3C automation equipment market size as of 2022 is about US$50.379 billion, of which China, as the world's largest manufacturer of 3C products, accounts for more than 60%. At present, the main technologies for intelligent manufacturing equipment have matured. The main factors driving the growth in equipment procurement demand from downstream customers are the expansion of production capacity brought about by strong market demand for new products, and the demand for equipment upgrading brought about by drastic process changes for new products. With the recovery of the consumer electronics industry, 3C devices are expected to usher in a new round of rising demand.

Titanium alloys are being introduced at an accelerated pace, bringing new molding and processing technology requirements.

Due to the lightweight and high strength characteristics of titanium alloy, it can meet the multiple needs of consumer electronics products such as weight reduction, strength, and wear resistance. Since 2023, mobile phone manufacturers, including Apple, Samsung, and Xiaomi, have released titanium alloy-related products. In the future, as technology advances and costs drop, the penetration rate of titanium alloy in the consumer electronics field is expected to increase rapidly. Due to the characteristics of titanium metal's low thermal conductivity, high chemical activity, low deformation coefficient, and high elastic recovery, titanium alloy is difficult to shape and process. Currently, titanium alloy mainly has two main processing and molding methods, CNC processing and 3D printing. With the promotion of titanium alloy applications, demand for related cutting equipment, tool consumables, polishing equipment, and 3D printing equipment will increase.

XR equipment is developing rapidly, and related equipment has ushered in new opportunities.

After experiencing several booms, the XR equipment industry is limited by the number of content developers and application scenarios, and has yet to really become popular. The sale of Apple's MR products has proposed many innovations in software and hardware. In particular, through investment in mergers and acquisitions and the Patent Research and Development Bureau content ecosystem, it is expected to break industry bottlenecks and drive the XR industry into a new stage of development. Displays and optical modules are the focus of XR equipment innovation, and the continuous iteration of micro-LED and Pancake optical film sets may spawn new opportunities for related machinery and equipment.

Investment advice: It is recommended to focus on the recovery of the consumer electronics industry and related equipment investment opportunities brought about by new products and technologies:

1) The consumer electronics industry is recovering. It is recommended to focus on Oatmeal Technology (688312.SH), Saiten (603283.SH), Jintuo (300400.SZ), etc.;

2) Increased demand brought about by new products such as AI PC and XR. We recommend JPT (688025.SH), Chunqiu Electronics (603890.SH), SmartCube (301312.SZ), etc.;

3) Genesis (300083.SZ), Dingtai Hi-Tech (301377.SZ), etc. are recommended for molding and processing equipment and consumables brought about by the increase in the permeability of titanium alloys.

Risk warning: macroeconomic recovery falls short of expectations; market acceptance of new products or technologies falls short of expectations; risk of technological iteration; risk of increased market competition.