Zhongjin: DeepSeek activates the new era of edge AI, domestic SoC may usher in a golden moment.

Guosen Securities released a research report stating that DeepSeek has emerged and activated a new cycle of edge AI, with the potential to quickly promote the popularization of AI applications. Its large model open source model and low cost characteristics reduce the threshold for AI hardware startups, while optimized distillation technology allows more models to be deployed at the edge. The improved inference performance under established computing power reduces enterprise costs and enhances user experience. In the surging wave of AI, it is optimistic that AI SoC chips will fully benefit from the explosive growth of edge AI hardware brought about by algorithmic leveling, the upgrade of edge computing power demand driving SoC ASP growth, and leading domestic SoC companies achieving breakthroughs in the model - strengthening the terminal discourse power - and chip pattern breakthrough on the growth path. Guosen Securities' main points are as follows: AI + automotive chips: Currently, major automakers mainly integrate DeepSeek into intelligent cabins to enhance the human-vehicle interaction experience, and the deep integration of intelligent driving is being explored. The outlook is positive: 1) DeepSeek promotes the popularization of intelligent driving/intelligent cabins, and pre-embedded hardware brings rapid growth in automotive chips. 2) DeepSeek enhances the performance of large models from end to end in vehicles, enabling more mid- to low-end models to deploy edge models, benefiting domestic cost-effective chips. 3) Latecomers in the automotive industry are expected to leverage DeepSeek to catch up in algorithms, with the increasing importance of data advantages, and it is optimistic about the industrial chain of leading automakers such as BYD Company Limited. BYD Company Limited's "Eye of the Gods" aims to penetrate over 60% of vehicle models, and domestic automakers are expected to follow suit by the end of this year. It is optimistic that automotive chips will maintain a high level of prosperity for at least the next 3 years. It is recommended to focus on the leading companies in automatic driving SoC, benefiting from industry upgrading and customer growth. AI + consumer electronics chips: AI smartphones/glasses/earphones/household appliances/toys, etc., are all connecting to DeepSeek. In the edge, mainstream domestic SoC chips already support the deployment of DeepSeek 1.5B distillation models. With the trend of model edge deployment, it has become a consensus that edge computing power needs to be improved. In terms of SoC chip upgrades: 1) The next generation flagship chips show a multiple increase in AI computing power, often accompanied by process evolution; 2) Near-memory computing is emerging, and innovative architecture is expected to solve the low latency problem. It is optimistic that domestic SoC chips, leveraging local industrial chain advantages, segment industry first-mover advantages, and vertical depth, will benefit from AI hardware innovation dividends and increase the market share of domestic chips in a relatively loose competition environment in the long-tail market. It is recommended to focus on niche AI SoC computing power leading companies such as Rockchip Electronics and Bestechnic (Shanghai) Co., Ltd. in ultra-low power AI SoC. Risk factors: AI computing power hardware technology iteration, AI application landing progress is not as expected, trade frictions affecting supply chain stability, intensified competition from overseas giants.