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Navigating China’s AI Investment Themes in 2H24
Join Johnny Yum in this webinar to gain valuable insights on the Greater China's AI Sector, where he will delve into the following topics:
1) China’s AI Infrastructure plays are all about global exposure – In China, service providers and component suppliers with high exposure to the NVIDIA supply chain will remain key investment targets, especially in subsegment with relatively lower geopolitical risks.
2) In 2H24, the market will continue to revise up global AI infrastructure investment for next few years. In AI Infrastructure supply chain, market is still underestimating the demand and ASP hikes driven by an accelerated replacement cycle from 2025 onwards. Drivers of the replacement cycle includes accelerated GPU upgrades, and rapidly surging demand for more energy efficient setups.
3) Supply-demand landscape – sustained GPU shortage in the newest high-end chips, but more balanced at older chips. This is positive the enterprise infrastructure solutions provider, due to more ample GPU allocation.
4) Chinese companies to take more initiatives in Edge AI – Investment focus will be led by brand owners such as Xiaomi and Lenovo, followed by their suppliers. Apple supply chain plays in China is also a key focus.
5) Edge AI applications are rapidly expanding. AI PCs and smartphones will start to see an AI-driven replacement cycle from end-24 onwards, thanks to a richer ecosystem and more capable hardware.
6) Replacement cycle for both PCs and smartphones are picking up. After 2 years of downcycle, growth of both PCs and smartphones will recover more meaningfully from 2025 onwards as consumers replace their older devices. The addition of GenAI capabilities, and an enlarged user based in the post-COVID era will bolster the scale of this upcycle.
7) Stock picks:
• Foxconn Industrial Internet (601138 CH) – Biggest proxy to NVIDIA in A/H share; beneficiary of iPhone’s upcoming AI driven replacement cycle.
• ASMPT (522 HK) – Advanced packaging tools seeing accelerated growth driven by rising HPC and GenAI applications. Mainstream packaging also benefits from recovery in PC/smartphone demand.
• Lenovo (992 HK) – Biggest AI PC player, and catching up in Enterprise AI infrastructure business.
• AAC (2018 HK) – Beneficiary of iPhone’s upcoming AI driven replacement cycle; higher correlation to AI smartphone related components.
• Sunny Optical (2382 HK) – Beneficiary of smartphone market’s recovery. Also has strategic investments in GenAI plays such as XR and robotic vision.
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