According to the Zhito Finance APP, Open Source Securities has released a research report stating that the expansion of "two new" in 2025, with national subsidies including Smart Phones and other 3C digital products, is expected to drive domestic demand. From the perspectives of computing power, battery life, and usage scenarios, new Consumer Electronics products like AI glasses will still find it difficult to replace the dominant position of AI Smart Phones in the AI terminal ecosystem in the medium term. The continuous improvement of the AI ecosystem will enhance consumer experience and drive demand for upgrading AI Smart Phones. The demand for upgrading AI Smart Phones, combined with national subsidy incentives, is expected to significantly increase sales in the domestic Smart Phone market in 2025, while upstream component and IC manufacturers are likely to demonstrate greater performance elasticity under the combined influence of capacity utilization and other factors.

KYG Securities' main points are as follows:

The expansion of "two new" in 2025, with national subsidies including Smart Phones and other 3C digital products, is expected to drive domestic demand.

On January 3, the National Development and Reform Commission pointed out at a press conference that since the implementation of "two new" in 2024, the sales of autos and home appliances for trade-ins have significantly increased. The comprehensive effects of the "two new" initiatives on expanding effective investment, enhancing household consumption, and accelerating green transformation continue to emerge. In 2025, the scale of special national bonds for the ultra-long term will be significantly increased, supporting the expansion of the "two new" initiatives, and subsidies will be provided to individual consumers purchasing Smart Phones, tablets, smart watches, and wristbands among three categories of digital products, with specific plans to be announced soon.

Looking back at the "two new" policy in 2024: On March 7, the State Council released the "Action Plan for Promoting Large-Scale Equipment Updates and Trade-Ins of Consumer Goods", proposing the implementation of trade-in actions for consumer goods to promote the replacement of autos and home appliances. On July 24, the Development and Reform Commission and the Ministry of Finance issued a notice titled "Several Measures to Strengthen Support for Large-Scale Equipment Updates and Trade-Ins of Consumer Goods", proposing to allocate approximately 300 billion yuan of special national bonds for the ultra-long term to support large-scale equipment updates and trade-ins of consumer goods and to refine subsidy policies for home appliances and autos. As of December 12, the "two new" policy has led to the update of over 5.2 million autos, with sales exceeding 690 billion yuan, the replacement of over 49 million home appliances, with sales of over 210 billion yuan, and the updating of over 2 million old equipment sets, achieving significant results.

The technology spring festival CES 2025 shines with stars, as AI terminals continue to penetrate and AI applications deepen and land in 2025.

From January 7 to 11, CES 2025, known as the "Spring Festival Gala of the Technology Industry," will be held in Las Vegas, USA. According to media reports like Wind, the theme of this exhibition is "Dive In," and many participating companies including NVIDIA, AMD, Intel, Lenovo, and Samsung are expected to showcase their latest applications and innovations in the AI field. AI Smart Phones, AI wearable devices, and AI Smart Home products are anticipated to be the highlights, and areas like Virtual Reality, Smart Automobile, and consumer robots are also worth paying attention to. The year 2024 will be the initial year for exploring AI terminals, while 2025 is expected to be a year of accelerated innovation in underlying AI technology, continuous penetration of AI terminals, and deep landing of AI application scenarios, with the Global AI industry likely to maintain rapid development.

Smart Phones will continue to dominate the AI terminal ecosystem, and with the addition of national subsidies, the mobile phone supply chain is expected to experience both volume and price increases in 2025.

Regarding national replacement subsidies, based on the official statement of "significantly increasing the scale of long-term special treasury bonds for 2025," the funding budget for 3C digital products like Smart Phones is expected to reach a scale of one hundred billion. According to IDC data, the shipment volume of the smart phone market in mainland China in 2023 is approximately 0.271 billion units, with a market size of about 127.8 billion USD.

Beneficial symbols:

(1) Brand manufacturers: XIAOMI-W (01810), Longflag Technology (603341.SH), Huaqin Technology (603296.SH), DBG Technology (300735.SZ);

(2) Mobile phone components: Lingyi Itech (002600.SZ), Lens Technology (300433.SZ), Luxshare Precision Industry (002475.SZ), Avary Holding (002938.SZ), BYD Electronics (00285), AAC TECH (02018), SUNNY OPTICAL (02382), Q TECH (01478), Electric Connector Technology (300679.SZ), OFILM Group Co., Ltd (002456.SZ);

(3) ICs and components: Aiwei Electronics (688798.SH), Gekewei (688728.SH), SITW-W (688213.SH), Shenzhen Goodix Technology (603160.SH), Shenzhen Sunlord Electronics (002138.SZ), Weijie Chuangxin (688153.SH), Meixin Sheng (688458.SH).

Risk warning: Risks of policies not being implemented as expected; risks of downstream demand not meeting expectations; risks of intensified industry competition, etc.