Smart Finance News APP learned that, Pu Yin International released a research report stating that looking ahead to the second half of 2024, AI will continue to drive incremental growth of the technology industry and boost the recovery growth of the stock business. The large AI model is continuing to drive high-speed growth in the incremental market of the technology industry, bringing growth momentum to the technology industry. It is expected that this trend will continue in the second half of 2024. On the other hand, as AI develops from the cloud side to the end side, it is expected to drive demand for consumer electronics terminals such as smart phones and computers, thereby promoting growth in the mature consumer electronics stock market. In addition, the incremental demand for AI computing power and the recovery demand for smart phones will both become important driving forces for the upward trend of the global semiconductor industry. The main growth theme of the technology industry in the first half of 2024 is expected to continue into the second half of the year.

The major points of Pu Yin International are as follows:

Consumer electronics terminals such as smart phones are expected to continue to grow in the second half of the year, providing supply chain profit incremental growth.

Pu Yin International expects global smartphone shipments to grow by 2% year-on-year in the second half of 2024, maintaining growth momentum. AI end-side devices are expected to boost the replacement demand of technology enthusiasts in the short term, and drive the replacement demand of other consumers in the medium to long term. Furthermore, the leading players in the smartphone supply chain have returned to a relatively stable profit range. Against the background of upstream and downstream vertical integration, steady business expansion is expected to provide continuous profit growth momentum for these players in the second half of the year. Consumer electronics industry Beta is on the rise, with opportunities greater than risks.

Recommended stocks to watch: BYD Electronics (00285), Luxshare Precision Industry (002475.SZ), Lens Technology (300433.SZ).

The continuous growth of AI increment and the stock recovery of consumer electronics such as smartphones jointly promote the sustained upward trend of the semiconductor cycle.

Looking ahead to the second half of 2024, the large AI model demand will continue to grow rapidly, while the demand for consumer electronics such as smartphones and laptops will continue to warm up, driving the upward trend of the semiconductor cycle. As the late-cycle track of the semiconductor cycle, it is expected that the fundamentals of China's wafer foundry will continue to improve in the second half of the year. Among them, CIS, power management chips, NOR Flash and other production capacity are full, providing momentum for price increases. Furthermore, the current price-to-book ratio valuation of China's wafer foundry is less than 1x, with ample room for growth. For power semiconductors, it is expected that low-voltage devices will continue to rise in the second half of the year, with upward price adjustment potential, while high-voltage devices are expected to hit a bottom. At the current stage, the fundamentals of China's semiconductor wafer foundry industry are more robust, while China's high-voltage power semiconductor industry is expected to follow the cycle of overseas power manufacturers.

Recommended focusing on late-cycle semiconductor manufacturers without AI, such as Hua Hong Semiconductor (01347), Semiconductor Manufacturing International Corporation (688981.SH), Wuxi NCE Power (605111.SH), Yangzhou Yangjie Electronic Technology (300373.SZ), etc.

Technology hardware valuation is reasonable, and it is recommended to increase positions.

Currently, the P/E ratio of the A-share electronic industry and the A-share semiconductor industry are 57.2x and 122.4x, respectively, which are at the 76% and 82% percentile of their historical range. Pu Yin International estimates that the P/E ratios of China's wafer foundry and China's power semiconductor industry are 27.2x and 47.0x, respectively, which are at the 66% and 22.7% percentile of their historical range. Considering the recovery of the industry fundamentals, the current TTM valuation will be digested. It is expected that there will be large opportunities and room for upward movement.

Risks: Global smartphone recovery is weaker than expected; smartphone configuration upgrades are not as expected; the semiconductor industry has a longer bottoming out and weaker upward momentum and amplitude; industry competition intensifies and profit growth is significantly lower than revenue growth rate; AI development on the cloud or end side is slower than expected.