Shulou(Shulou.com)11/24 Report--

On November 1, the consumer electronics sector pulled up, and many stocks in the industrial chain rose sharply. In fact, in the past month, the hot spot of market trading mainly focused on the consumer electronics industry chain, and the consumer electronics plate broke out. Data show that in the past month, the national card consumer electronics theme index rose 6.43%, outperforming the CSI 300 index by nearly 10 percentage points in the same period.

Behind the bright performance of the consumer electronics sector, consumer electronics recovery is expected to resonate with terminal AI innovation, driving consumer electronics or facing the inflection point. At present, the major investment banks and securities firms have focused on the recovery expectations of the consumer electronics industry, optimistic about the investment opportunities brought about by the general trend of AI innovation in electronic products.

AI PC stimulates the "catfish effect" and promotes the sustained rebound of consumer electronics.

There are many signs that consumer electronics demand is gradually picking up, and the recovery trend is obvious. First of all, from the third-quarter financial performance of the consumer electronics industry chain, the consumer electronics boom has rebounded significantly. According to the Guoxin Securities Research report, the 2023Q3 performance of a number of listed companies in the consumer electronics terminal and its upstream core has improved significantly, and the destocking of most manufacturers has entered the end, which proves that under the superposition of the intensive release of new machines and the peak promotion season, downstream demand has obviously picked up.

The most representative industries of the consumer electronics industry are PC and mobile phones. From the data performance, consumer electronics is in a strong recovery trend. Let's take a look at the PC market. According to Canalys data, global PC shipments totaled 65.6 million units in the third quarter of 2023, down 7 per cent from a year earlier, but the decline narrowed down and increased by 8 per cent month-on-month. This means that the global PC market has come out of the trough, showing a trend of recovery.

Among PC makers, Lenovo continues to perform well, with PC shipments of 16 million units in the third quarter of this year, a relatively small annual decline of 4 per cent. The market share still ranks first in the world, and its market share has increased by 0.7 percentage points compared with the same period last year.

In terms of the mobile phone market, according to IDC, global smartphone shipments in the third quarter of 2023 were 3.028 billion units, down only 0.1% from a year earlier. From the perspective of the Chinese market, IDC China mobile phone monthly sale out retail data show that the actual retail sales of smartphones in China increased by 0.4% in the third quarter of this year compared with the same period last year.

While consumer electronics demand picks up, AI enables consumer electronics terminals to upgrade iteratively, which will accelerate consumer electronics recovery and bring new opportunities for the industry. A number of securities companies have pointed out that the integration of innovation and subsequent growth of terminals such as PC and mobile phones with AI has injected a driving force into the continuous rebound of the consumer electronics industry chain.

Shenwan Hongyuan Securities is particularly optimistic about the opportunities that terminal AI innovation brings to consumer electronics. Historically, the innovation carriers of consumer electronics have always migrated from one to another, each with periodicity, combined to determine growth, according to the bank. At present, a new bright spot may be led by AI PC, which promotes AI to bring a new round of pull to the terminal.

Shen Wanhongyuan believes that the logic behind this is that AI PC is a "catfish" that stirs up the consumer electronics market. As an important innovation carrier of consumer electronics in the field of AI, it will drive the giants of the consumer electronics industry to innovate AI terminals one after another, forming a "catfish effect" and then renovating the market from the supply side.

At present, the leading manufacturers in the field of consumer electronics are accelerating the integration of AI and terminals. For example, domestic mobile phone manufacturers have built AI mobile phones by carrying chips with AI load; Lenovo Group, as a leader in the PC industry, has formally demonstrated to the outside world an AI PC compatible with AI functions, thus officially opening the curtain of a new era of AI PC and promoting the wave of innovation of AI hardware and terminals.

From the demand side, products such as AI PC and AI mobile phones provide a new scene for the application of AI, while based on the huge potential of AI, PC, mobile phones and other products will have stronger functions and better performance. Shen Wanhongyuan Securities also pointed out that the superposition of these factors in the dull period of the consumer electronics industry chain in the past two years will lead to the replacement and reversal of the terminal more violently, and transmission to the consumer electronics industry chain is a huge growth opportunity.

It is worth noting that in 2024, the first year of AI PC, Lenovo's AI PC will also be launched in September next year. Nomura Oriental International predicts that with the 2024 release of AI PC and the suspension of Windows10, the combination of dual factors, PC will usher in a wave of "replacement" in the next two years, leading to a further increase in demand. According to IDC forecasts, global PC shipments will grow 3.7 per cent year-on-year to 260 million units in 2024, while Gartner forecasts 4.9 per cent year-on-year growth in notebook shipments.

On the whole, the outlook of the consumer electronics industry is good under the pick-up in demand and AI enabling. Nomura Oriental International also pointed out that the trough of PC in the consumer electronics industry has passed and is expected to achieve growth again. It is recommended to pay attention to AI PC targets such as Lenovo Group.

Deepening AI Strategy, Lenovo Group builds barriers to AI PC era

Revolutionary breakthroughs in technology often bring about a new round of industrial opportunities. This round of technological change led by AI is accompanied by the application of AI technology, promoting the rise of a new industrial cycle represented by "AI+" integration, and AI PC is the most typical representative.

From the perspective of Lenovo's AI PC products, its AI PC can create a personalized local knowledge base compared with the traditional PC, and it can run a human model through model compression technology to realize the natural interaction of AI. AI PC is more intelligent and customized, which can further improve productivity, simplify workflow, and achieve personal privacy data security protection.

At present, Lenovo Group is accelerating the landing of AI PC, and join hands with Intel and iqiyi to carry out in-depth cooperation in the field of AI PC to accelerate the landing of AI changes on the application side. It is understood that with the cooperation of the three parties, Lenovo AI PC will be able to provide an immersive video experience and the best display and audio effects, achieving better performance while achieving excellent power consumption optimization.

The promotion of AI PC is not only a corner of Lenovo Group's AI strategic territory, but also the product of Lenovo Group AI strategic upgrading. As early as 2017, Lenovo Group looked ahead to the AI trend and put forward the "All in AI" strategy to promote service-oriented transformation and technology-driven innovation with 3s (Intelligent Internet of things, Intelligent Infrastructure and Industry Intelligence) as the core, and realize the intelligent transformation driven by AI.

With the development of AI technology, Lenovo Group has upgraded its AI strategy to promote the creation of panoramic AI and accelerate productivity change in the direction of "AI for All". Everbright Securities pointed out that Lenovo Group already has the ability of model self-research, compression, and optimization, and is expected to build AI PC-based competition barriers through deep integration with underlying chips and operating systems.

In terms of terminal products, Lenovo Group is not only AI PC, "AI + mobile phones", "AI + workstations" and other products are also Lenovo's goals. At present, in terms of mobile phones, Motorola, a mobile brand owned by Lenovo Group, has launched MotoAI, which has a large language model (LLM), which aims to create artificial intelligence "assistants" for users, so that users can interact with their personal MotoAI "assistants" to answer questions, draft messages, schedule tasks, and so on.

Driven by AI, terminal devices are expected to usher in a new iterative cycle of upgrading, and the consumer electronics market will take advantage of this to usher in an important inflection point upward. Lenovo Group, as an important participant in the consumer electronics industry, is playing a leading role in accelerating the landing of AI innovative products, and is expected to usher in new growth space by giving AI products and services "Puhui" to more customers.

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