Minsheng Securities: Huawei releases foldable screen at a discount of three. The penetration of foldable screens from 1 to N is accelerating.

Minsheng Securities released a research report stating that the Huawei Mate XT, as the world's first three-foldable phone, has led the continuous innovation of foldable screen phone form, accelerating the penetration of foldable screen phones. In the future, three-fold and even multi-fold screens will become a new terminal form. On the hardware side, it can satisfy larger screens, achieve PC and tablet productivity attributes, and fit tablets & PCs into pockets. On the software side, the ecosystem crossing PC and tablet terminals will become a trend, and if Huawei's foldable screen can run PC-level HarmonyOS applications in the future, productivity is expected to further increase. By 2024, Huawei Pocket2, vivo xfold3, and other new foldable phones will be released one after another, making foldable screens an industry innovation trend. Subsequently, major phone manufacturers will intensively release foldable screen phones, further catalyzing investment in related industry chains. Huawei's three-fold release, grasping the innovation with slope. Huawei released the new three-fold screen Mate XT, with a 10.2-inch screen when unfolded and a thickness of 3.6mm. Huawei Mate XT, as the world's first three-foldable phone, has led the continuous innovation of foldable screen phone form, accelerating the penetration of foldable screen phones. Minsheng Securities believes that in the future, three-fold and even multi-fold screens will become a new terminal form. On the hardware side, it can satisfy larger screens, achieve PC and tablet productivity attributes, and fit tablets & PCs into pockets. On the software side, the ecosystem crossing PC and tablet terminals will become a trend, and if Huawei's foldable screen can run PC-level HarmonyOS applications in the future, productivity is expected to further increase. Foldable screens are accelerating penetration from 1 to N. Currently, the global foldable screen phone market is experiencing rapid growth in penetration from 1 to N. According to Counterpoint's forecast, global shipments of foldable screen phones will increase from 13.1 million units in 2022 to 100 million units in 2027, with a CAGR of 50.6%. It is expected that by 2027, the penetration rate in the high-end market will reach 39%. Against the background of global competition in the smartphone market, China has become the world's largest foldable screen phone market. According to IDC data, the shipments of foldable screen phones in China in the second quarter of 2024 were approximately 2.57 million units, a year-on-year growth of 104.6%. Among them, Huawei ranked first with a market share of 41.7%. By 2024, Huawei Pocket2, vivo xfold3, and other new foldable phones will be successively released, making foldable screens an industry innovation trend. Subsequently, major phone manufacturers will intensively release foldable screen phones, further catalyzing investment in the related industry chain. Hinge: The important "joint" of foldable screens. Compared to traditional straight phones, the hinge is the main incremental cost of foldable screen phones. Traditional hinge technology solutions require various processes such as MIM, stamping, and CNC precision machining. Headquartered manufacturers such as American Amphenol and Taiwanese AVC have widely applied hinge components and assembly services to foldable screen terminals for customers such as HMOV+ and Samsung. With the maturation of the domestic foldable screen industry chain, companies in the domestic industry chain such as NBTM New Materials Group, Jiangsu Gian Technology, and Shenzhen Pacific Union Precision Manufacturing will continue to expand their MIM business. Cover plate: The key technology for "thinning" foldable screens. As a key component of foldable screen displays, cover plates need to simultaneously meet requirements for foldability, transparency, and protection. Currently, the main materials for the front cover of foldable screen phones are CPI and UTG. As domestic and international cover plate manufacturers gradually increase their technical reserves and supply chain layout, the market size of UTG cover plates will continue to grow. CINNO Research predicts that by 2025, the shipment volume of UTG front cover plates for domestic foldable phones will increase to nearly 5 million units, with a CAGR of 78% from 2021 to 2025. In the face of the broad prospects of the foldable screen phone market and the growing demand, upstream and downstream companies in the global UTG industry chain are actively positioning themselves to seize market share. Wuhu Token Sciences, Triumph Science & Technology, and Lens Technology are three important companies in China's UTG field, each playing a key role in the UTG industry chain. Investment recommendation: The foldable screen market is in a phase of rapid growth from 1 to N, and it is recommended to grasp innovative opportunities and continue to focus on incremental tracks: 1) MIM: NBTM New Materials Group (600114.SH), Jiangsu Gian Technology (300709.SZ), Shenzhen Pacific Union Precision Manufacturing (301210.SZ); 2) UTG: Wuhu Token Sciences (300088.SZ), Triumph Science & Technology (600552.SH), Lens Technology (300433.SZ); 3) Carbon fiber structural components, etc.: Lingyi Itech (002600.SZ). Risk warning: Risks of intensified industry competition; foldable screen sales falling short of expectations; technical upgrades failing to meet expectations.