Sinolink: Focus on the industry chain of AI glasses waveguides and consumer electronics benefiting from national subsidies.

Sinolink released a research report stating that, with the driving force of AI empowerment and national subsidies, the mobile phone market is expected to see an increase in replacement demand, with a focus on benefiting industries. At the CES exhibition in 2025, it is predicted that AI smart glasses using waveguide technology will be one of the important highlights. The Apple SE4 is expected to be released in March next year, and core Apple chain companies are expected to see high growth in Q1 next year. Strong demand for NVIDIA Blackwell and GB200 servers, significant growth in CSP's self-developed ASIC chips, continuous large orders for copper clad laminates/PCB supply chain, and high growth in performance expected in the fourth quarter and the first quarter of next year. Additionally, the value of the GB300 PCB solution is also expected to increase. On the other hand, AI edge applications are accelerating, bringing innovation and new opportunities to hardware products such as smart glasses, TWS headphones, wearables, smartphones, and PCs. The potential benefits of the Apple chain, AI smart glasses, AI-driven technologies, and industries with autonomous control are being observed. Sinolink's key points are as follows: Focus on the industry chain benefiting from AI glasses with waveguide technology and consumer electronics subsidies. CES 2025 will be held in Las Vegas from January 7th to 10th, where AI glasses will shine with various manufacturers showcasing the latest AI glasses. With continuous technological breakthroughs, AI glasses display technology is expected to gradually apply, and waveguide technology, as the core optical solution for AR glasses, is considered the best solution for consumer-grade AR glasses with advantages such as high transmittance, lightweight, large field of view, and small volume. Vuzix will showcase full-color 1.0mm thin waveguides and 0.7mm ultra-thin waveguides, which will be combined with various advanced display engines, from LEDs to the latest full-color micro LCoS (silicon-based liquid crystal) projectors. Moze Technology will showcase core technology achievements and new product applications in the consumer-grade AR field; Himax will showcase its next-generation autonomously developed ultra-bright 400K nits color sequential front-illuminated LCoS micro-display solution with proprietary technology, which further enhances the ability to present clear visual effects by integrating 2D waveguides; Sunway Technology will publicly showcase a new AI smart glasses solution for the first time, as well as various XR solutions and core optical modules; LeBird Innovation will showcase the shooting glasses V3 and waveguides with black technology; Rokid will showcase its lightweight AR+AI concept glasses Rokid Glasses, weighing only 49g. On January 3rd, the National Development and Reform Commission stated that in 2025, subsidies will be provided for the purchase of new digital products such as mobile phones, tablets, smart watches, and wristbands. Sinolink believes that with the driving force of AI empowerment and national subsidies, the mobile phone market is expected to see an increase in replacement demand, and it is optimistic about the core benefiting industry chain. In terms of AI cloud computing power, there is strong demand for NVIDIA Blackwell and GB200 servers, significant growth in CSP's self-developed ASIC chips, continuous large orders for copper clad laminates/PCB supply chain, and strong demand is expected to continue in the first quarter, with the potential for the value of the GB300 solution to increase. Continued optimism for the Apple chain, AI smart glasses, AI-driven technologies, and industries with autonomous control. Sub-segment Tracks 1) Semiconductor manufacturing: Global CoWoS capacity demand is expected to grow by 113% next year, and TSMC's monthly capacity will increase to 65,000 wafers. 2) Industrial, automotive, security, consumer electronics: According to Canalys, global PC shipments reached 66.4 million units in Q3 2024, an increase of 1%, and it is expected that AI PC sales will reach 50 million units in 2024. Global smartphone shipments in Q3 2024 increased by 5%, with the expected penetration rate of AI smartphones reaching 16% in 2024. Global smart audio shipments reached 110 million units in Q2 2024, an increase of 11%. Consumer electronics demand continues to recover. On September 9th, Apple released the iPhone 16 series, all equipped with the A18 chip, and the Apple Intelligence system gradually upgraded, helping to drive a new wave of replacement cycles. According to the China Association of Automobile Manufacturers, in December, sales of new energy passenger vehicles reached 1.5 million units, an increase of 35% year-on-year. 3) PCB: According to the latest data from the PCB industry chain in November, the overall industry's prosperity has slowed down, with a decrease in month-on-month growth rates from upstream to downstream. According to traditional peak and off-peak season analysis, Q3 should be the peak season, and Q2 should have higher prosperity than Q3, but currently, the entire third quarter shows a pressured state of prosperity, mainly due to the slowdown in demand growth for home appliances and consumer products, high inventory levels, the industry entering a slow adjustment phase in Q3, which is expected to continue in Q4, and further changes will need to be continuously tracked. 4) Components: Accelerated domestic substitution, AI driving passive component product upgrades. 5) IC design: The most obvious increase in AI application in the chip field will be in computing power and storage on the edge side. In the future, edge-side computing will increase functionality, which will also increase data storage on the edge side, corresponding to the upgrading of storage chip capacity. Risk Warning Risks of demand recovery falling short of expectations; risks of AIGC progress falling short of expectations; risks of further escalation of external sanctions.