The Zhitong Finance App learned that Huachuang Securities released a research report saying that new folding screen phones are frequently innovating interactive experiences, and shipments have grown rapidly in recent years. At the same time, folding screens are becoming lighter and lower in price, which is expected to further drive the penetration rate of folding screen phones. The continued penetration of folding screen phones is expected to bring about three major incremental links in the industrial chain. It is recommended to focus on: Dongmu Co., Ltd. (600114.SH), Tonglian Precision (688210.SH), etc.

▍ The main views of Huacheng Securities are as follows:

Folding screens lead smartphone innovation, and product strength continues to increase, and shipments are growing rapidly.

Since the first folding screen phone was introduced in 2019, major mainstream manufacturers have entered the folding screen phone circuit one after another, and new folding screen phones have continued to come out. Consumer acceptance of folding screen phones is also increasing, and shipments of folding screen phones have increased rapidly in recent years. The lightness and thinness of folding screen phones is the core concern of users when purchasing phones. Advances in technology are driving the lightweight development of folding screen phones. The thickness and average weight of the fuselage continue to decrease. The lightness and thinness of the new models is close to that of straight panel phones, and a huge breakthrough has been made in terms of lightness and thinness.

In terms of price, due to technological progress and scale expansion and cost optimization, the price of folding screen phones is gradually falling. In terms of software ecological adaptation, several organizations recently jointly issued software design industry standards, which is expected to greatly improve the ecological adaptation experience. The optimization of the user experience of folding screen phones and the decline in prices are expected to further catalyze the penetration of folding screen phones.

Flexible OLEDs are the core components of folding screen phones, and domestic panel manufacturers are expected to catalyze the localization process of upstream equipment and materials.

According to EN data, new flexible OLED production lines have all come from China in recent years, and domestic manufacturers are expected to account for a major share of future flexible OLED supply. Currently, the domestic OLED industry continues to develop, and the sharp increase in the share of domestic panel manufacturers has also promoted the development of upstream OLED materials, equipment and related technology in a certain way, and promoted the localization process of the OLED supporting industry. As the penetration rate of folding screen phones increases and the production capacity of superimposed OLED panels is transferred domestically, the localization process of domestic OLED materials and equipment is expected to further increase.

Flexible covers are the core elements of folding, and cover manufacturers have increased UTG technology reserves and layout.

In the early days, plastic CPI became a flexible cover material for first-generation folding screens. Currently, the CPI industry chain is relatively complete, and mass production is strong. In 2020, Samsung's folding screen phone Galaxy Z Flip introduced a UTG cover. UTG has technical advantages such as good light transmission, high hardness, and slight creases, but due to low yield and high production costs, it is not very mass-producible. As domestic and foreign cover manufacturers gradually increase their technical reserves and supply chain layout, the size of the UTG cover market will continue to increase.

Hinges are a key component supporting folding functions, and the penetration rate of MIM and 3D printing is expected to gradually increase.

The hinge supports the folding function and is a key component of folding screen phones. The hinge assembly process is complicated, and the barriers to design and manufacturing are high. Currently, MIM is the key process. The core iterative direction of folding screen phones is to reduce weight. Titanium alloy is lightweight and strong, and is suitable for use in lightweight consumer electronics products. The use of titanium alloy hinges is expected to become a new trend in the industry. However, titanium alloy is difficult to process, and 3D printing technology can greatly reduce its manufacturing difficulty, and 3D printing technology is expected to further penetrate the consumer electronics industry.

Risk warning:

The launch and popularization of new products fell short of expectations, the recovery in smartphone market demand fell short of expectations, and competition in the industry intensified.