Guosen: Demand surge coupled with supply optimization, infrared leaders welcome prosperity resonance.

Guosen released a research report stating that Chinese manufacturers are reshaping the global infrared landscape with advantages in cost, performance, and delivery. Emerging scenarios are continuously opening up incremental space for civilian infrared, with applications penetrating in a tiered manner along the path from "professional civilian" to "mass consumer." As price bands move downward, infrared products are transitioning from professional equipment to mass consumer goods. Leading enterprises with core chip self-development capabilities and large-scale production capacity will be the first to benefit in this upcycle, and their market share and profitability are expected to further improve. Guosen's main viewpoints are as follows: The supply-demand landscape of the infrared industry is undergoing a structural transformation Demand is shifting from a military single pole to dual-driven resonance between military and civilian, while supply is shifting from import dependence to domestic substitution and global output. China has now formed full-chain domestic capabilities from materials, chips, and devices to complete systems, and production capacity has entered a period of concentrated release; pixel shrinkage and wafer-level packaging are driving costs continuously downward, military trade and civilian product exports are advancing in parallel, and Chinese manufacturers are reshaping the global infrared landscape with advantages in cost, performance, and delivery. Technology routes are maturing, cost declines and application expansion are reinforcing each other, and the industry has entered an upcycle. Military infrared demand is upgrading from auxiliary support to consumable equipment and core components of precision guidance Growth in defense spending lays a long-term foundation, the Russia-Ukraine and Middle East conflicts are driving volume growth in drones and counter-drone equipment, and the supporting value of infrared in the "detect-identify-intercept" chain continues to rise; traditional equipment such as precision-guided weapons, individual night vision, and optoelectronic pods is being upgraded, providing stable incremental demand for military infrared. Civilian infrared demand is accelerating toward scale driven by improved standards and falling costs The implementation of standards in power, firefighting, security, and other industries is moving infrared equipment from "optional" to "standard"; emerging scenarios such as automotive night vision, the low-altitude economy, consumer outdoor, and Siasun Robot&Automation are continuously opening up incremental space, with applications penetrating in a tiered manner along the path from "professional civilian" to "mass consumer." As price bands move downward, infrared products are transitioning from professional equipment to mass consumer goods. On the supply side, capacity release and technological iteration are resonating, and the cost curve continues to move downward Pixel pitch is evolving toward 8m and 6m, and wafer-level packaging is promoting large-scale manufacturing; domestic manufacturers are accelerating capacity expansion, and supply capabilities are extending from meeting domestic demand to global delivery, providing support for demand volume growth. Leading enterprises with core chip self-development capabilities and large-scale production capacity will be the first to benefit in this upcycle, and their market share and profitability are expected to further improve. Risk warnings 1. Risk of downstream demand falling short of expectations; 2. Risk of intensifying prices and competition; 3. Risk of fluctuations in the supply and prices of raw materials and core devices; 4. Risk of technological iteration and R&D falling short of expectations.