According to the Zhitong Finance APP, Ping An Securities released a Research Report stating that national and local subsidies range from 10% to 20%, which helps reduce Consumer purchasing costs and stimulate purchasing demand from sellers. As the Global AI Smart Phone penetration rate continues to rise, although there haven't yet been any truly heavyweight AI applications, Android manufacturers have already laid out AI applications around three commonly used functions: AI imaging, smart calls, and smart searches. Apple possesses a self-developed A series with leading performance, and the IOS ecosystem also lays a stronger foundation for AI applications. It is expected that in the future, based on the ecosystem, it will strengthen the integration of software and hardware to solidify the foundation of AI software and hardware in multiple dimensions.

Event: On January 8, the National Development and Reform Commission and the Ministry of Finance issued a notice regarding the implementation of a policy for large-scale equipment updates and replacement of Consumer goods with old for new by 2025, implementing subsidies for new purchases of digital products such as mobile phones.

The main points of Ping An Securities are as follows:

The new purchase subsidy for mobile phones and other products has been announced, with each subsidy not exceeding 500 yuan.

On January 8, the National Development and Reform Commission and the Ministry of Finance released a notice regarding the implementation of a policy for large-scale equipment updates and the replacement of Consumer goods with old for new by 2025, implementing subsidies for new purchases of digital products such as mobile phones. According to the notice, for individual consumers purchasing mobile phones, tablets, smart watches, and bracelets (with a single sales price not exceeding 6000 yuan), a subsidy of 15% of the product sales price will be granted, with each consumer eligible for one item per product type, and each subsidy not exceeding 500 yuan. Previously, Jiangsu, Guizhou, and other regions have also introduced some regional subsidies.

1) Jiangsu Province: The subsidy targets individual consumers. The subsidy scope includes mobile phones, tablet computers, digital cameras, and other 3C digital products. The subsidy standard is 15% of the product Fill Price, with a maximum discount of 1500 yuan. The event runs from November 27, 2024, to December 31, 2024, and will end early once the subsidy limit is reached.

2) Guizhou Province: The subsidy targets individual consumers. The subsidy scope includes mobile phones, tablet computers, and other 3C digital products. The subsidy standard is 20% of the product Fill Price, but only for domestically produced mobile phones and tablet computers priced below 3000 yuan. Each customer can purchase one mobile phone or one tablet with real-name purchase, and the maximum discount for each item is 600 yuan, while the maximum discount for laptops and home appliances is 2000 yuan. The event runs from December 1 to December 31, 2024.

3) Jiangxi Province: The subsidy targets individual consumers. For individual consumers who purchase mobile phones or tablet computers from participating merchants, a subsidy of 15% of the final Fill Price will be granted, with each subsidy not exceeding 1000 yuan. Each consumer can participate only once (can only choose 1 mobile phone or 1 tablet computer). Coupons will be available starting at 10 AM each day, valid for the same day, with limited quantities available on a first-come, first-served basis, until the provincial subsidy funds are exhausted.

In summary, the national and regional subsidy ranges from 10% to 20%, and these subsidies are beneficial in reducing consumer purchase costs, stimulating demand for purchases.

The mobile large model is expected to rise, with Global AI mobile penetration rates continuing to increase.

With the rapid development of generative AI technology and the continuous increase in computational power demand, AI must rely on the collaborative work of cloud and end devices to achieve large-scale expansion and maximize its technical application potential. Looking ahead, the scale of AI inference will far exceed AI training, highlighting the cost disadvantages of cloud inference. Distributing the AI computing workload between cloud and end devices will bring advantages in costs, energy consumption, and performance, with the focus of AI processing shifting to mobile phones, PCs, and other terminal carriers.

Currently, several Android flagship smart phones, including the Vivo X100 series and OPPO Find X7 series, have implemented the 7 billion parameter LLM. To meet the demand for deploying larger-scale LLM locally, flagship phone SoCs are focusing on AI computing capabilities as the main upgrade direction. Global AI mobile penetration rates continue to increase. According to IDC's forecast data, with the rapid iteration of new chips and user scenarios, combined with the accelerated development of mobile large models, the shipment volume of the new generation of AI mobile phones is expected to start growing rapidly from 2024, with an estimated global shipment volume of AI mobile phones reaching 0.234 billion units in 2024, and expected to grow to 0.827 billion units by 2027, with a compound annual growth rate of 100.7% from 2023 to 2027. In the domestic market, it is expected that China will have an AI mobile phone shipment volume of 0.04 billion units in 2024, and it is expected to grow to 0.15 billion units by 2027, accounting for 51.9% of the overall mobile phone market in China, with a compound annual growth rate of 96.8% from 2023 to 2027.

Investment advice: pay attention to the increase in AI mobile penetration.

It is recommended to pay attention to industry chain companies such as Luxshare Precision Industry (002475.SZ), Goertek Inc. (002241.SZ), Lens Technology (300433.SZ), Lingyi Itech (002600.SZ), Suzhou Dongshan Precision Manufacturing (002384.SZ), Avary Holding (002938.SZ), Zhuhai Cosmos (688772.SH), Shenzhen Sunway Communication (300136.SZ), and Tonglian Precision (688210.SH).

Risk Warning: 1) Product Technology Update Risk: The electronics industry experiences rapid product technology upgrades, with new technologies and processes emerging continuously. If the company cannot continuously update its competitively marketable products, it will weaken the company's competitive advantage; 2) Macroeconomic Fluctuation Risk: For example, due to the global economic slowdown, market demand is inevitably expected to slow down or even shrink, leading to a decline in global Consumer Electronics demand, and the recovery of the Semiconductors industry may not meet expectations; 3) Trade Friction Risk: If trade protection policies are implemented in various regions, it may impact the performance of related companies.