Guotai Junan Securities: AI Leads Electronic Acceleration, Promoting High-Quality Development of Chinese Economy.

China Galaxy Securities released a research report stating that the "15th Five-Year Plan" period is a crucial stage for China to address the acceleration of the technological revolution, the great power competition in AI, and the strategy to expand domestic demand. As the intersection of technological innovation and end consumer consumption, the consumer electronics industry's development path and policy direction are deeply integrated in many ways. Coupled with government subsidy policies, AI is expected to stimulate consumer demand for upgrading devices; technological integration will drive innovation in scenarios, and wearable devices have great potential. Edge AI will usher in a period of rapid development, and it is recommended to pay attention to Luxshare Precision, Goertek, BlueThink Technology, and LianYi Intelligent Manufacturing. Semiconductor equipment, as a crucial support link in the semiconductor industry, is of utmost importance in the technology war. The demand for domestic substitutes is strong, and breakthroughs in high-end materials are urgently needed. Currently, the localization rate of high-end semiconductor materials is low. With the support of the national system, semiconductor materials will also embark on the path of localization similar to semiconductor manufacturing and equipment. The downstream demand of the IC sector is becoming more diversified, with rapid growth in computing power and storage demand. The manufacturing sector is bottoming out, and the outsourcing industry is entering a new growth cycle. It is recommended to pay attention to SMIC International, Cambricon Technologies, North Huachuang, SMIC Corporation, and Beijing Applied Science and Technology. Domestic PCB companies have entered the overseas industry chain, and performance is expected to continue to grow rapidly. It is recommended to pay attention to Shanghai Electric, ShengHong Technology, ShengYi Electronics, ShenNan Circuit, and ShengYi Technology. China's LCD industry continues to maintain a leading position globally, and the proportion of OLED products is expected to increase year by year. It is recommended to pay attention to BOE Technology Group. The rapid penetration of intelligent driving is expected to drive demand for CIS, and it is recommended to pay attention to HuaWei Group. The proportion of domestic high-capacity products is expected to increase, and it is recommended to pay attention to SanHuan Group.