China Galaxy Securities: AI Empowers Consumer Electronics Market, Wearable Smartwatches Trend Towards High-End.

China Galaxy Securities released a research report stating that by 2025, the global consumer electronics market will continue to advance amidst the "structural differentiation" between the slowing growth of traditional categories and the rise of new dynamics represented by AI. New forms of devices such as AI smartphones, AIPC, and AI glasses are accelerating their deployment, and industry competition is transitioning from a focus on individual products to ecosystem construction centered around full-scene experiences. In the short to medium term, the industry may continue to face a combination of opportunities and challenges. The deepening of AI innovation and the accelerated landing of new AI products at the edge will bring more certainty and industry opportunities to enterprises, but the cost increase caused by storage chips will also pose significant challenges. Key points from China Galaxy Securities: Industry data tracking: 1) Mobile phones: In Q3 2025, global smartphone shipments were approximately 323 million units, a year-on-year increase of 2.6%. In Q3 2025, the Chinese smartphone market shipped around 69 million units, a slight decrease of 0.5% year-on-year. Overall, the global market saw some recovery in the third quarter of 2025, but the Chinese market made slight adjustments, with AI and foldable screens still driving the core of high-end upgrades. 2) PC: In Q3 2025, global PC shipments increased by 9.4% year-on-year to reach 76 million units. Microsoft's discontinuation of support for Windows 10 continues to be a key factor in market growth. Looking ahead, the wave of upgrades caused by the transition from Windows 10 to AIPC will continue. 3) Tablets: In Q3 2025, global tablet shipments reached 40.41 million units, a year-on-year increase of 5.1%, achieving seven consecutive quarters of shipment growth. 4) Wearable wristbands: In Q3 2025, global wearable wristband shipments remained relatively stable, with a 3% year-on-year increase to 54.6 million units. However, from a price perspective, the market showed a significant trend of "stable volume and rising price" this quarter, with an average selling price increase of 9%, indicating an accelerating shift towards higher-end products. Industry news: 1) Foldable screens: On December 2, 2025, Samsung Electronics held a global launch event in Seoul, South Korea, officially launching the first three-foldable screen smartphone Galaxy Z TriFold. On December 11, Huawei released the new generation of foldable screen flagship Huawei Mate X7. 2) AI/AR glasses: On October 24, Quark AI Glasses S1 under Alibaba officially opened pre-sale on major e-commerce platforms, with products set to be shipped in early December. On December 3, at the "Ideal Technology Day" event, Ideal Motors officially launched its most breakthrough intelligent terminal product, Ideal AI Glasses Livis. On December 9, Google's AI glasses prototype used Google NanoBanana image editing capabilities for the first time. Sector tracking: 1) Consumer electronics index performance in the past month: In terms of percentage change, the consumer electronics industry index outperformed the Shanghai and Shenzhen 300 Index by 0.74 percentage points but underperformed the electronic index by 1.60 percentage points. Looking at specific data, the consumer electronics industry index had a percentage change of -2.08%, the electronic industry index had a percentage change of -0.48%, and the Shanghai and Shenzhen 300 Index had a percentage change of -2.82%. 2) Consumer electronics index performance in the past year: In terms of percentage change, the consumer electronics industry index outperformed the Shanghai and Shenzhen 300 Index by 20.93 percentage points but underperformed the electronic index by 3.09 percentage points. Looking at specific data, the consumer electronics industry index had a percentage change of 35.28%, the electronic industry index had a percentage change of 38.37%, and the Shanghai and Shenzhen 300 Index had a percentage change of 14.35%. Risk warning: Risks of AI development falling short of expectations; Risks of AI penetration falling short of expectations; Risks of technology iteration and product certification falling short of expectations.