Guotai Junan Securities: Multiple chip design companies have released performance pre-increase announcements, optimistic about downstream companies in the Apple supply chain, etc

According to the report released by Guotai Junan Securities on the Zhitong Finance and Economics APP, several domestic chip design companies have announced performance forecasts, with the global semiconductor industry recovering, high growth in the Chinese market continuing, and storage recovery momentum significantly stronger than logic products. Benefiting from the AI and AI edge replacement cycle drive, storage and AI downstream are leading the recovery, with the recovery pace of mobile phones, PCs, AIoT, and general servers continuing, and expected to remain positive in Q3. Considering that Q3 is the peak season for consumer electronics, the performance of downstream companies in the Apple industrial chain, digital SoC companies, storage downstream companies, and server downstream companies is optimistic.

Key points from Guotai Junan Securities:

Global semiconductor recovery, high growth in the Chinese market, and storage recovery momentum significantly stronger than logic products. The recovery in the Americas and China is stronger than the overall trend. According to SIA, in May 2024, the global semiconductor industry's sales reached USD 49.1 billion, a year-on-year increase of 19.3% and a month-on-month increase of 3%. The year-on-year growth rates in the Americas (43.6%), China (24.2%), and other Asia-Pacific regions (13.8%) have increased, while Japan (-5.8%) and Europe (-9.6%) have declined. By sector, logic and storage chips are leading the recovery. The AI wave and storage recovery are driving industry growth, with logic and storage expected to drive the overall growth in 2024, with logic growing by 10.7% and storage by 76.8%. In 2025, the scale of storage and logic is expected to exceed USD 200 billion, with storage growing by over 25% compared to 2024 and logic growing by 10%.

The recovery momentum of storage and AI downstream is stronger, while the traditional consumer electronics recovery is slower. It is expected that the Q3 peak season for consumer electronics will comprehensively drive demand, including mobile phones, PCs, and general servers.

(1) Mobile phones: According to Canalys, in Q1 2024, global smartphone shipments reached 296.2 million units, a year-on-year increase of 10%, marking the first double-digit growth in 10 quarters.

(2) PCs: According to Counterpoint, in Q1 2024, global PC shipments reached 57.3 million units, a year-on-year increase of 3%. Driven by AI PCs and the new replacement cycle, it is expected that shipments will increase month-on-month in the following quarters of 2024, with a potential 3% increase for the whole year.

(3) Servers: According to TrendForce, the demand for storage servers driven by AI will continue to boost performance from Q2 to Q3, with an estimated growth of 4%-5% in Q3.

(4) Storage: Storage prices continue to improve, driven by AI-related segment demand. According to TrendForce, the recovery in general server demand and the further increase in the proportion of HBM production by DRAM suppliers will continue to drive the trend of storage price increases. The average price of DRAM in Q3 is expected to continue to rise, with HBM prices increasing by 8%-13% and general DRAM prices increasing by 5%-10%, slightly lower than the increase in the second quarter Several domestic chip design companies have released performance pre-increase announcements, with performance exceeding expectations. The main companies with performance exceeding expectations are storage company Zhaoyi Innovation, server company Lanqi Technology, digital SoC company Rockchip, and Ruixin Micro. As of the evening of July 12th, Zhaoyi Innovation, Lanqi Technology, and 7 other semiconductor chip design companies have released performance pre-increase announcements. The companies' main focus areas are in storage, SoC, AIoT, etc. Zhaoyi Innovation's net profit in the first half of 2024 increased by approximately 54.2%, mainly due to the recovery of demand in the consumer and network communication markets in the first half of the year, driving the sales volume of the company's storage products. Lanqi Technology's revenue in Q2 2024 was 928 million yuan, an 82.6% year-on-year increase, with interconnect chip sales revenue reaching 833 million yuan, setting a new quarterly high. The main reasons are the increase in DDR5 penetration rate and the increase in company AI product shipments. Considering that Q3 is the peak season for consumer electronics, the performance of downstream companies in the Apple industrial chain, digital SoC companies, downstream storage companies, and downstream server companies is promising.

Risk Warning: Downstream demand recovery may fall short of expectations; product progress may fall short of expectations