**Introduction**: Multi-factors drive the recovery of the electronics industry's prosperity, and the investment value continues to increase.
In the first half of this year, thanks to the successful completion of inventory reduction, the continuous advancement of self-controllability, and the demand growth driven by AI innovation, the performance of listed companies in the electronics industry has significantly improved, with revenue growth year-on-year ranking first in the entire industry.
Industry insiders have indicated that under the support of policy dividends, with the continuous advancement of artificial intelligence technology and the ongoing promotion of domestic semiconductor substitution, the electronics industry will usher in a new round of development opportunities, and the investment value of the sector will continue to increase.
Revenue growth year-on-year ranks first in the entire industry, with a clear recovery in sub-sectors.
According to statistics from Huachuang Securities, in the first half of 2024, the overall revenue of the electronics industry grew by 15% year-on-year, ranking first in the entire industry, and the net profit attributable to the parent company grew by 54% year-on-year, ranking third in the entire industry. Looking at it on a quarterly basis, in the second quarter of 2024, the overall revenue of the electronics industry grew by 17% year-on-year, and increased by 12% sequentially; the net profit attributable to the parent company grew by 42% year-on-year, and increased by 36% sequentially.
Geng Chen, Deputy Director of the Research Institute and Chief Analyst of the Electronics Industry at Huachuang Securities, believes that the overall performance of the electronics industry improved in the first half of the year, mainly driven by the successful completion of inventory reduction, the continuous advancement of self-controllability, and the demand growth driven by AI innovation.
"The main drivers of the electronics industry's performance in 2024 include inventory cycles, AI innovation, and self-controllability," said Shu Di, Chief Analyst of the Electronics Industry at Guotai Junan Securities. He added that 2024 is a year of performance reversal for the electronics industry, with significant year-on-year improvements in the performance of various sub-sectors within the industry, leading to high overall growth.
The recovery trend in various sub-industries is also quite evident. Among them, the profitability of the consumer electronics segment continues to rebound. In terms of revenue, the revenue of the consumer electronics segment grew by 11% year-on-year in the second quarter, and increased by 6% sequentially. In the first half of the year, the revenue of the consumer electronics segment grew by 12% year-on-year. In terms of profit, the net profit attributable to the parent company of the consumer electronics segment grew by 24% year-on-year in the second quarter, and increased by 5% sequentially, with a year-on-year growth of 49% in the first half of the year.
In the semiconductor segment, the overall revenue and net profit attributable to the parent company grew by 12% and 33% year-on-year in the first half of the year, respectively. In the second quarter, the revenue grew by 26% year-on-year, and increased by 17% sequentially, achieving year-on-year growth for six consecutive quarters; the net profit attributable to the parent company grew by 20.2% year-on-year, and increased by 64.3% sequentially.
Geng Zheng, Chief Analyst of the Electronics Industry at GF Securities, stated that in the first half of the year, the consumer electronics segment's revenue and profits rebounded significantly, driven by the recovery of terminal prosperity; in the second half of the year, as the industry enters its traditional peak season, AI PCs and AI phones are expected to initiate a replacement cycle, driving an overall回暖 in industry demand. At the same time, the recovery trend in the semiconductor segment continues, with strong downstream AI-related demand, a continuous rebound in consumer electronics, gradual inventory reduction in industries and automobiles, and ongoing domestic substitution, overall showing a positive trend.Artificial Intelligence and Others Bring New Development Opportunities and Continuously Enhance Investment Value
At the current juncture, industry insiders believe that with policy support, the continuous advancement of artificial intelligence technology, and the ongoing progress of domestic replacement of semiconductors, there will be a new round of development opportunities for the electronics industry.
The Third Plenary Session of the 20th Central Committee of the Communist Party proposed to improve the system and mechanism for developing new quality production forces according to local conditions, and to perfect the policies and governance systems for promoting the development of strategic emerging industries such as new generation information technology and artificial intelligence. This will guide the healthy and orderly development of emerging industries, providing a solid foundation for the long-term company value and sustainable development of China's electronics industry.
Geng Chen from Hua Chuang Securities believes that the electronics industry has both cyclical and growth characteristics. In the short to medium cycle of about 3 years, it is mainly determined by factors such as supply and demand, inventory, etc. From a long-term perspective of more than 5 years, the growth driven by technological innovation is more critical. "From a medium to long-term perspective, the combination of technological catch-up and policy support makes the domestic artificial intelligence industry very promising."
Geng Chen further pointed out that as a representative of new quality production forces, the artificial intelligence industry will undoubtedly become a focus of the country's strategic science and technology layout. Enterprises with a competitive edge in computing power are expected to lead industrial transformation in the new round of AI innovation cycle under the support of policy dividends, and gain excessive dividends. Relevant companies also have long-term investment value, and the sector is expected to see a long bull market.
Geng Zheng from Guangfa Securities said that AI computing hardware mainly includes three parts: computing, connection, and storage. In terms of computing power, with the continuous drive of domestic downstream AI demand, domestic AI chip manufacturers are accelerating to catch up, and there is a broad space for future growth. In terms of connection, domestic manufacturers have been deeply involved in the PCB industry for many years, and with the advantages of production capacity and management, they are expected to grow together with the industry. Large models have a stronger demand for distributed parallel training, driving the scale of GPU clusters to grow exponentially, and switches will usher in an opportunity period for both quantity and price to rise. In terms of storage, domestic related manufacturers are expected to accelerate technological breakthroughs in various links of the industry chain with the existing industrial development foundation, and increase their share in the HBM market.
In addition, from consumer electronics to industrial control automotive standard products, from chips to manufacturing and equipment, domestic manufacturers continue to increase R&D investment, continuously achieve technological breakthroughs, expand product categories, and expand the boundaries of growth.
Geng Zheng believes that the space for domestic replacement in the future is still broad, and domestic semiconductor companies are expected to continue to benefit from the deepening of the domestic replacement process. It is recommended to pay attention to key links in the industry chain such as domestic semiconductor design, manufacturing, equipment, etc.
"Looking forward, the inventory cycle is approaching the end, AI innovation continues to resonate both domestically and abroad, semiconductor autonomy and control are entering the advanced process field, and relevant supporting policies continue to support, the industry is expected to develop steadily and upward." Shu Di from Guotai Junan Securities said.