Company Highlights - Xiaomi reported a Q2 net profit increase of 75.4% year-on-year, with major appliances revenue up 66.2%, marking a historical high, while smartphone business declined by 2.1% [13][22] - XPeng Motors achieved a record high Q2 revenue of 18.27 billion yuan, a 125.3% year-on-year increase, with net loss narrowing by 63% to 480 million yuan [14] - Pop Mart's net profit surged nearly 400% in the first half of the year, with revenue from the Americas skyrocketing 11 times and plush product revenue increasing by 1276.2% [4][14] - SoftBank is reportedly in talks with Intel regarding the acquisition of its chip foundry business, which aligns with SoftBank's strategy to build a comprehensive AI infrastructure [15] Industry Insights - The U.S. Department of Commerce has expanded tariffs to include 407 categories of steel and aluminum derivative products, impacting U.S. importers unexpectedly [12] - Meta is considering a significant reduction in its AI department, restructuring its AI team to focus on enhancing its superintelligence division [13] - The Chinese electric vehicle supply chain saw overseas investment exceed domestic investment for the first time, with approximately $16 billion invested abroad compared to $15 billion domestically [18] - The PCB demand is being driven by the surge in AI data center construction, with Dazhu CNC reporting a 84% year-on-year increase in Q2 net profit [20]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][28][31] Core Views - The company is experiencing a short-term revenue decline due to storage price impacts, with a revenue of 1Q25 at 1.543 billion yuan, down 10.62% YoY and 7.58% QoQ. However, a gradual recovery in storage prices is expected in 2Q25, which may lead to performance improvement [1][20][28] - Embedded storage revenue for 2024 reached 4.241 billion yuan, a significant increase of 151.68% YoY, with products entering major client supply chains. AI-related products are also seeing rapid revenue growth, particularly in AI glasses, which are expected to grow over 500% YoY in 2025 [2][28] - The company is making steady progress in wafer-level advanced packaging, which is anticipated to drive long-term growth. The enterprise-level and automotive-grade storage segments are also expanding successfully [3][28] Summary by Sections Financial Performance - 1Q25 revenue was 1.543 billion yuan, with a net profit of -216 million yuan, reflecting a significant decline in profitability due to increased R&D expenses and inventory write-downs [1][28] - The company forecasts a gradual recovery in revenue, with expected net profits of 178 million yuan, 200 million yuan, and 382 million yuan for 2025, 2026, and 2027 respectively [28][29] Revenue Breakdown - Embedded storage is projected to generate revenues of 5.439 billion yuan, 6.459 billion yuan, and 7.363 billion yuan from 2025 to 2027 [28] - PC storage revenue is expected to be 2.206 billion yuan, 2.283 billion yuan, and 2.363 billion yuan for the same period [28] - Automotive-grade storage revenue is anticipated to grow to 155 million yuan, 294 million yuan, and 418 million yuan from 2025 to 2027 [28] Market Trends - The global storage market is experiencing a cyclical downturn, with NAND Flash prices expected to stabilize in 2Q25 after a decline in 1Q25. The company is well-positioned to benefit from this recovery [20][24] - The demand for AI-related storage products is increasing, particularly in the context of AI glasses and high-performance PC storage solutions [2][3][28]