Ping An Securities: AI development focus gradually shifting to the edge side, Apple is expected to kick off the wave of AI phone upgrades
Ping An Securities released a research report stating that AI technology is driving the intelligence of smartphones. Apple introduced AppleIntelligence at the WWDC conference, and the iPhone 16 series will be the first to be recognized by the market as an AI phone. It is expected that 2024 will become the first year of AI phones, with a global shipment volume reaching 234 million units, increasing to 827 million units by 2027. In China, the shipment volume of AI phones will reach 40 million units, with an expected increase to 150 million units by 2027, with a compound annual growth rate of 96.8%
According to the financial news app Zhitong Finance, Ping An Securities released a research report stating that large-scale model technology has sparked a revolution in smartphone interaction. Natural language processing and multimodal information intelligent perception are jointly driving AI smartphones to new heights of intelligence. Apple introduced AppleIntelligence at the WWDC conference, combining Apple's self-developed chips and a strong closed-loop ecosystem. The iPhone 16 series is expected to be the first AI smartphone recognized by the market and consumers. In addition to Apple, Qualcomm Snapdragon 8Gen4 and other SoCs are expected to be launched in Q4 2024. Android smartphone manufacturers are expected to follow Apple's footsteps and accelerate the pace of smartphone upgrades.
Key Points from Ping An Securities:
Hybrid AI is the main trend of future AI development
With the rapid development of generative AI technology and the increasing demand for computing power, AI must rely on the collaboration of cloud and terminal to achieve scalable expansion and maximize its technological potential. Looking ahead, AI inference scale will far exceed AI training, highlighting the cost disadvantage of cloud-side inference. By diverting AI computing workloads through cloud-side and terminal collaboration, it will bring cost, energy consumption, performance, and other advantages. The development focus of AI processing is shifting towards terminal devices such as smartphones and PCs.
2024 is expected to be the year of AI smartphones, with shipments showing exponential growth
According to IDC's forecast data, with the rapid iteration of new chips and user scenarios, coupled with the accelerated development of large models on mobile terminals, the shipment volume of the new generation of AI smartphones is expected to enter a rapid growth phase starting from 2024. It is estimated that the global shipment volume of AI smartphones will reach 234 million units in 2024 and is expected to grow to 827 million units by 2027, with a compound annual growth rate of 100.7% from 2023 to 2027. In the domestic market, it is estimated that the shipment volume of AI smartphones in China will reach 40 million units in 2024 and is expected to grow to 150 million units by 2027, accounting for 51.9% of the overall smartphone market in China. The compound annual growth rate from 2023 to 2027 is expected to be 96.8%.
The core hardware upgrades of AI smartphones are mainly focused on SoC and storage
Compared to traditional smartphones, SoC and storage are the main hardware upgrade directions for AI smartphones to run AI applications smoothly. On the one hand, the computing power of SoC plays a decisive role in the scale of large model parameters deployed locally and directly affects the generative AI functions of AI smartphones. On the other hand, accessing and loading large models require storage with higher capacity and performance. According to MediaTek data, a terminal-side 13 billion parameter large model requires a processor chip with 70 TOPS computing power and 13GB of memory. In addition, the high-frequency and high-density characteristics of AI tasks also set higher standards for components such as smartphone cooling, batteries, cameras, PCBs, etc.
Investment Recommendation: AI smartphones are expected to become the next wave of smartphone upgrades after 5G. Companies in the related industry chain are expected to continue to benefit. It is recommended to pay attention to Luxshare Precision Industry (002475.SZ), Jiangbolong (301308.SZ), Pengding Holdings (002938.SZ), Dongshan Precision (002384.SZ), Lansitech (300433.SZ), Linyi Intelligent Manufacturing (002600.SZ), GoerTek (002241.SZ), Shunluo Electronics (002138.SZ), Huanxu Electronics (601231.SH), Delixi (001309.SZ).
Risk Warning: Risks include slower-than-expected recovery in downstream demand; delays in domestic manufacturers' R&D progress on advanced technologies; and increasing supply chain risks