Summary of Key Points from the Conference Call Industry Overview: Global Smartphones Market Size and Growth Projections - The global smartphone Total Addressable Market (TAM) is projected to decline by 6% in 2026 and grow by 2% in 2027, with volume estimates reduced to 1.19 billion units in 2026 and 1.21 billion units in 2027, reflecting a saturated market and rising memory costs [1][9][13] - The market value is expected to grow by 2% in 2026 to US$581 billion and by 6% in 2027 to US$615 billion, driven by a shift towards premium smartphones priced above US$600 [2][11] Segment Analysis - **Premium Segment**: Expected to grow at a 2% CAGR from 2025 to 2027, reaching 379 million units by 2027, accounting for 31% of total volume. This segment is projected to contribute 70% of total revenues by 2027 [18] - **Mid-End Segment**: Anticipated to decline at a -3% CAGR, with volume dropping to 347 million units by 2027, contributing 20% of total revenues [20] - **Entry-Level Segment**: Expected to decline at a -4% CAGR to 485 million units by 2027, accounting for 40% of the total market, with a revenue contribution of 10% [21] Foldable Phones - Foldable phones are projected to see increased penetration, with estimates revised to 3.8% in 2026 and 6.1% in 2027, translating to 45 million and 74 million units respectively [1][16] - The innovative designs and new model launches, such as Huawei Mate X7 and Moto Razr Fold, are expected to drive consumer interest and adoption [16] Company-Specific Insights: Transsion - Transsion maintains a strong position in the budget and AI smartphone markets, but the target price has been reduced from Rmb91 to Rmb55 due to rising memory costs impacting global demand, particularly in emerging markets where consumers are more price-sensitive [3] Additional Insights - The smartphone market is categorized into three segments based on pricing: Premium (>US$600), Mid-End (US$200-600), and Entry Level (<US$200) [17] - The premium smartphone market is expected to outpace the overall market growth, supported by strong purchasing power and continuous technology upgrades [18] - The mid-end segment is shrinking due to a lack of significant technological advancements and changing consumer behavior [20] - The entry-level segment is facing challenges from rising memory prices, which disproportionately affect price-sensitive consumers [21] Conclusion - The global smartphone market is experiencing a shift towards premium models, while mid and entry-level segments face challenges. Foldable phones are emerging as a significant growth area, and companies like Transsion must navigate rising costs and changing consumer preferences to maintain market share.

Group 1: Business Outlook - AAC is expected to achieve revenue growth of 10-15% YoY in 2025, driven by multiple segments including optics, precision mechanics, electromagnetic drive, and automotive acoustics [1][2][3] - The optics segment is projected to grow by 20% YoY, supported by upgrades in plastic lens specifications and flagship order wins [1][3] - Precision mechanics is also anticipated to grow by 20% YoY, fueled by VC adoption in AI phones and hinge order wins from both overseas and Chinese clients [1][3] Group 2: Margin Expansion - Expected upgrades in acoustics and improving optics mix are likely to drive margin expansion into 2025/26E [2] - The management has maintained a revenue guidance of 10-15% YoY growth for 2025, indicating strong confidence in the business outlook [2] Group 3: Market Position and Growth Drivers - AAC holds a leading market position with significant shares in acoustics, haptics, and VC components for major US and Android clients [3] - Key growth drivers for 2025 include high-end optics upgrades, VC adoption by major US clients, expansion in automotive acoustics client base, and MEMs microphone upgrades for AI smartphones [3] Group 4: Strategic Expansion - AAC is expanding into new strategic markets such as robotics, AI glasses, and automotive acoustics, with a solid product roadmap [4] - The company has begun mass production for robotics and is the sole supplier of specific speakers for major Chinese brands in AI glasses [4] - AAC plans to acquire a 53.7% stake in a Chinese automotive microphone module company, which will enhance its automotive product offerings [4] Group 5: Valuation - AAC is trading at attractive P/E ratios of 15.8x and 13.3x for FY25/26E, with expected EPS growth of 39% and 18% respectively [4]