Shanxi: Electronic manufacturing steadily growing, national subsidies continue to stimulate consumption.

Shanxi released a research report stating that the latest data shows that in November 24 years ago, China's electronic information manufacturing industry grew rapidly, exports continued to rise, and profitability remained stable and positive, indicating a good overall development trend in the industry. With the expansion of subsidies to include smartphones and other digital products in the new round of home appliance subsidies, personal consumers purchasing smartphones, tablets, smart watches, and other digital products will all receive subsidies, which will drive a wave of new purchases and boost electronic product consumption. At the same time, the CES Consumer Electronics Show will be held in Las Vegas, USA from January 7th to January 10th. With the exhibition of AI applications such as smart wearables, this will have a short-term catalytic effect on the consumer electronics sector. Shanxi long-term recommends focusing on domestic alternatives for equipment, materials, and components, the demand for high-performance chips and advanced packaging driven by AI technology, and the opportunities for hardware upgrades brought about by the first year of AI edge applications. Shanxi's main points are as follows: Market overview: This week (December 30, 2024 - January 3, 2025), the overall market saw a decline, with the Shanghai Composite Index falling by 5.55%, the Shenzhen Component Index falling by 7.16%, the ChiNext Index falling by 8.57%, the STAR 50 Index falling by 7.54%, the Shenwan Electronics Index falling by 9.60%, and the Wind Semiconductor Index falling by 10.06%. In the global market, the Philadelphia Semiconductor Index rose by 0.79%, and the Taiwan Semiconductor Index fell by 1.87%. Among the sub-sectors, the top three in terms of weekly gains and losses were optoelectronics (-7.07%), consumer electronics (-7.76%), and semiconductor equipment (-9.37%). Looking at individual stocks, the top five gainers were CHICHENG ELECTRIC (+26.35%), BOE HC Semiconductor Corporation (+18.48%), Foshan NationStar Optoelectronics (+16.61%), Shenzhen Success Electronics (+12.03%), and Jiangsu Rijiu Optoelectronics Jointstock (+11.70%); while the top five decliners were Shenzhen Deren Electronic (-30.91%), Shenzhen Sea Star Technology (-29.19%), Shenzhen Chuangyitong Technology (-28.45%), Dalian Dalicap Technology (-25.17%), and Infotmic Co.,Ltd (-24.97%). Industry news: From January to November, China's electronic information manufacturing industry saw rapid production growth, continuous export recovery, stable and positive profitability, significant investment growth momentum, and a good overall development trend. The value added of electronic information manufacturing enterprises above a certain scale increased by 12.2% year-on-year, with a 9.3% year-on-year increase in November. Mobile phone production reached 1.504 billion units, an 8.9% year-on-year increase, including 1.117 billion units of smartphones, a 9.3% year-on-year increase; integrated circuit production reached 395.3 billion units, a 23.1% year-on-year increase. The export delivery value increased by 1.3% year-on-year, with a 6.9% year-on-year increase in November. Laptop exports reached 130 million units, a 1.5% year-on-year increase; mobile phone exports reached 743 million units, a 2.7% year-on-year increase; integrated circuit exports reached 271.7 billion units, an 11.4% year-on-year increase. Revenue reached 14.45 trillion yuan, with a year-on-year growth of 7.2%; the operating income profit margin was 3.9%. Revenue in November reached 1.49 trillion yuan, with a year-on-year growth of 7.2%. On January 3, 2025, the US Department of Commerce's Bureau of Industry and Security (BIS) announced the revision of the Export Administration Regulations (EAR), adding 13 entities from China, Myanmar, and Pakistan to the Entity List, effective from January 6. This includes institutions such as Changchun Institute of Optics, Fine Mechanics and Physics of the Chinese Academy of Sciences, Shanghai Institute of Precision Mechanics and Optics, JiHua Laboratory, and Pengcheng Laboratory, mainly related to lithography machines and the defense industry. The National Development and Reform Commission stated that efforts will be made to expand the implementation of the "two new" initiatives. The scope of equipment renewal support will be expanded to include the fields of electronic information, safety production, and facility agriculture. Subsidies for the purchase of digital products such as smartphones will be implemented, providing subsidies to personal consumers purchasing smartphones, tablets, smart watches, and other 3 categories of digital products. Important announcements: Wingtech Technology has signed a "Sale Intent Agreement" with Luxshare Limited, intending to transfer the equity and operating assets of certain target companies owned by the company and its subsidiaries related to the integrated product business to Luxshare Limited or its designated party, involving 9 target company equity and operating assets, excluding the company's semiconductor business. Shenzhen Genvict Technologies intends to sign an "Investment Intent Agreement" with Cerlution, intending to invest through the subscription of additional registered capital of the target company and/or the purchase of the target company's existing shares held by the original shareholders, with the overall valuation of the target company tentatively estimated to be 80 million yuan. Founder Technology Group intends to increase the investment amount in its production base in Thailand, increasing the total investment from approximately 943 million yuan to approximately 1.223 billion yuan, with the source of funds being self-owned funds and self-raised funds. The additional investment of 280 million yuan this time mainly includes construction and installation fees, production equipment and supporting facilities, adjustments for smartization and administrative logistics at the Thailand production base. Investment advice The latest data shows that China's electronic information manufacturing industry grew rapidly in November 24 years ago, with exports continuing to rise and profitability stable and positive, indicating a good overall development trend in the industry. With the expansion of subsidies to include smartphones and other digital products in the new round of home appliance subsidies, personal consumers purchasing smartphones, tablets, smart watches, and other 3 categories of digital products will all receive subsidies, which will drive a wave of new purchases and boost electronic product consumption. Additionally, the CES Consumer Electronics Show will be held in the United States from January 7th to January 10th.CES Consumer Electronics Show held in Las Vegas, with the display of AI applications such as smart wearables, will catalyze the consumer electronics sector in the short term. In the long run, it is recommended to focus on domestic alternatives for equipment, materials, and components, as well as the demand for high-performance chips and advanced packaging driven by AI technology, and the wave of upgrades and hardware opportunities brought about by the first year of AI edge applications.Risk Warning The recovery of downstream demand is lower than expected, technological breakthroughs are not as expected, production capacity constraints, and industry upgrading due to external sanctions.