Key points of investment:
Event: On May 21, 2024, at the Microsoft Build developer conference, Qualcomm and Microsoft collaborated to announce the launch of a Snapdragon development kit for Windows — a Snapdragon? X Elite's small PC is designed to enable developers to create or optimize apps and experiences for the next generation of AI PCs.
China Science and Technology Chuangda and Qualcomm have been cooperating for more than ten years in a wide range of fields. In 2010, a close cooperative relationship was formed through the establishment of joint laboratories; cooperation methods include joint establishment of laboratories, R&D centers, joint ventures, and participation in ecological cooperation programs and joint R&D and promotion of technology products; areas of cooperation range from smart terminals to AI, IoT, and intelligent connected vehicles.
China Science and Technology Chuangda has a number of major products based on Qualcomm chips. As the core software service provider of the Qualcomm Windows on Arm ecosystem, there may be an opportunity to participate in software and hardware development for this kit. The company's products based on Qualcomm chips include solutions, VR all-in-one reference designs, modules, development platforms, development kits, etc. The newly released development kit, as a manufacturer that has cooperated closely with Qualcomm for many years, is expected to have an opportunity to participate as an ODM to gain a certain share.
The excellent performance of the Copilot+ PC comes from the ARM architecture CPU. Qualcomm is the provider of this chip, and Zhongke Chuangda is an operating system developer in the Windows on ARM ecosystem, which is expected to benefit from the PC's core expansion. Microsoft's new Copilot+ PC achieves 40+ TOPS AI computing power and is connected to major mainstream models. The new keyboard is equipped with special Copilot keys to provide users with a more convenient operation experience. The Copilot+ PC uses an ARM architecture, which can support 22 hours of video playback or 15 hours of web browsing on a single charge, which allows users to use it for a long time without frequent charging.
In terms of continuous multi-threaded performance, it is 58% better than the Apple MacBook Air 15-inch. When dealing with complex tasks, the Copilot+ PC can allocate and utilize resources more efficiently and provide a smoother user experience.
The smart car “Dishui OS” continues to be launched on multiple platforms, and the AI card slot on the end side looks forward to future results. 1) The company released the vehicle operating system product “Dishui OS” to speed up deployment for the central computing era; the RazorDCX Pantanal, an integrated mobile and parking intelligent driving domain controller based on the Qualcomm Ride platform, has completed preliminary actual vehicle verification; 2) The company's mobile phone and IoT business revenue in 2023 was rhythmically disrupted, but with large-scale lightweight technology and the gradual maturity of the software and hardware ecosystem, end side devices such as mobile phones, computers, and IoT are expected to further integrate and develop with AI. The company has core capabilities such as development board reference design, system tuning and adaptation, and quantitative end side tailoring, which can quickly empower OEM manufacturers.
Maintain profit forecasts. We believe 2024 will be the first year of AIPC and AI phones, or a new wave of mobile phones, and the company's intelligent software business is expected to benefit from it. Revenue for 2024-2026 is estimated at $58.99, 66.66, and 7.787 billion yuan, and net profit for 2024-2026 is expected to be 605 million yuan, 801 million yuan, and 955 million yuan. Maintain an “Overweight” rating.
Risk warning: Qualcomm Snapdragon Ride partner change risk, smart driving chip pattern change, raw material price increase risk.