Investment Rating - The investment rating for Xiaomi Group-W (01810.HK) is "Outperform the Market" [6][29]. Core Views - In Q1 2025, the company achieved record high revenue and profit, with total revenue reaching 111.3 billion yuan (YoY +47%) and adjusted net profit of 10.7 billion yuan (YoY +65%), marking a historical high for a single quarter [1]. - The company continues to see strong growth across its business segments, with smartphone, IoT and lifestyle products, internet services, and smart electric vehicles contributing 46%, 29%, 8%, and 17% to revenue, respectively [1]. - The smart electric vehicle and AI innovation business saw revenue of 18.6 billion yuan, with a narrowing loss of 500 million yuan [3]. - The company is focused on cost reduction and efficiency improvement, achieving an operating expense ratio of 13.9% (YoY -2.2pct) [1]. Summary by Sections Revenue and Profit Performance - Q1 2025 total revenue was 111.3 billion yuan, with a gross margin of 22.8% (YoY +0.5pct) [1]. - The smartphone business generated 50.6 billion yuan (YoY +8.9%) with a gross margin of 12.4% [2]. - IoT business revenue reached 32.3 billion yuan (YoY +59%) with a gross margin of 25.2% [2]. - Internet services revenue was 9.1 billion yuan (YoY +13%) with a gross margin of 76.9% [2]. Smart Electric Vehicle and AI Business - Revenue from smart electric vehicles was 18.1 billion yuan, with an average selling price (ASP) of 238,000 yuan [3]. - The company delivered 76,000 units of the Xiaomi SU7 series in Q1 2025, with cumulative deliveries exceeding 258,000 units [3]. - The company is expanding its sales service network, with 235 automotive sales stores opened by March 31 [3]. Financial Forecasts - The profit forecast for 2025-2027 has been raised, with expected net profits of 36.2 billion yuan, 46.4 billion yuan, and 66 billion yuan, representing YoY growth rates of 53%, 28%, and 42% respectively [4]. - Revenue projections for 2025-2027 are 484.2 billion yuan, 611 billion yuan, and 721.9 billion yuan, with growth rates of 32.3%, 26.2%, and 18.2% [5].

Recent Key Events - The U.S. International Trade Court ruled that Trump's tariff policy was illegal, leading to a significant reduction in tariffs between China and the U.S. [1][8] - Tesla plans to launch its fully autonomous taxi service, Robotaxi, in Austin, Texas, on June 12, 2025, with an initial fleet of about 10 vehicles [2][9] - The 2025 Lujiazui Forum will be held from June 18 to 19, focusing on financial cooperation and high-quality development amid global economic changes [2][9] Market Situation - The Hang Seng Index rose from 22,119 points at the end of April to 23,290 points at the end of May, marking a 5.3% increase [11] - The Hang Seng Technology Index increased from 5,087 points to 5,170 points, a rise of 1.6% [11] - In May, net inflows from southbound funds amounted to 45.6 billion HKD, with a decrease in net inflows over the past 30 trading days [12] Current Investment Recommendations - **Pop Mart (9992.HK)**: Achieved a 165%-170% year-on-year revenue growth in Q1 2025, with overseas revenue increasing by 475%-480% [22][24] - **China Qinfa (0866.HK)**: Improved balance sheet with a net profit increase of 150.5% year-on-year in 2024, primarily due to loan restructuring [27][30] - **Jingtai Holdings (2228.HK)**: Positioned as a leader in AI for Science, with significant growth potential in the trillion-dollar market [33][34] - **Xiaomi Group-W (1810.HK)**: Reported a 47.4% year-on-year revenue growth in Q1 2025, reaching a record high of 111.3 billion CNY [37][39] - **Li Auto-W (2015.HK)**: Anticipates the launch of its first pure electric SUV, i8, in July 2025, with a projected delivery of 12.3-12.8 million vehicles in Q2 [41][42] - **Leap Motor (9863.HK)**: Achieved a 187.1% year-on-year revenue growth in Q1 2025, with a focus on expanding its product lineup and international presence [46][48]

Investment Rating - The report maintains an "Accumulate" rating for the electronic industry [1] Core Insights - The report compares the self-developed SoC chips of OPPO and Xiaomi, highlighting the challenges faced by OPPO's Zheku team and the successes of Xiaomi's Xuanjie team in the competitive smartphone market [6][11] - OPPO's Zheku team faced sustainability issues due to high R&D costs and low market demand, leading to the shutdown of the project [6][12] - Xiaomi's Xuanjie team has shown promising results with the launch of the Xuanjie O1 chip, which outperformed market expectations and is supported by a long-term investment strategy [6][25] Summary by Sections 1. Comparison of Zheku and Xuanjie - The report emphasizes the intense competition in the smartphone market, where self-developed SoC chips are a common goal among major brands [11] - Xiaomi's recent launch of the Xuanjie O1 chip has been positively received, indicating a potential shift in market dynamics [6][11] 2. OPPO Zheku - Zheku was established in August 2019 and aimed to build a competitive edge in high-end chip design, expanding to 3,300 employees by May 2023 [12][14] - The team faced significant challenges, including a 28.2% decline in OPPO's smartphone shipments in 2022, which limited the commercial viability of its chips [18][19] - Zheku's total R&D investment reached approximately 10 billion yuan over three years, with a significant portion allocated to personnel costs [17][18] 3. Xiaomi Xuanjie - Xiaomi's Xuanjie team was established in 2014 and has committed to a long-term investment of 50 billion yuan over ten years, with over 13.5 billion yuan invested by Q1 2025 [23][25] - The Xuanjie O1 chip, launched in May 2025, utilizes a 3nm process and has achieved performance metrics that place it among the top-tier chips globally [25][29] - The report notes that Xiaomi's strategy of independent AP and BP chip development allows for flexibility and potential cost reductions in the future [33][34]

Investment Rating - The report maintains an "Accumulate" rating for the electronic industry [1] Core Insights - The report compares the self-developed SoC chips of OPPO and Xiaomi, highlighting the competitive landscape and the challenges faced by both companies in their chip development efforts [11][12] - OPPO's Zheku team faced significant challenges, including high R&D costs and limited market demand, leading to the project's eventual shutdown [18][19] - Xiaomi's Xuanjie team has shown promising results with its 3nm SoC, indicating a more sustainable path forward due to strategic long-term investments and a growing market presence [25][36] Summary by Sections 1. Introduction: Comparison of Zheku and Xuanjie - The report emphasizes the intense competition among major smartphone brands in developing self-made SoC chips, with OPPO and Xiaomi as focal points [11] 2. OPPO Zheku: Ambitions and Challenges - Zheku was established in August 2019, rapidly expanding to 3,300 employees by May 2023, with a focus on high-end chip design [12][14] - The team faced a significant setback with the 4nm flagship chip, which failed to progress due to low market demand and declining sales [18][19] 3. Xiaomi Xuanjie: Steady Progress - Xiaomi's self-developed team was founded in 2014, with a commitment to invest 500 billion yuan over ten years, leading to the successful launch of the 3nm SoC Xuanjie O1 [23][25] - The Xuanjie O1 chip has outperformed expectations in performance benchmarks, indicating a strong competitive position [25][29] 4. Economic Analysis of R&D Investments - Zheku's R&D expenditures totaled approximately 10 billion yuan over three years, with high personnel costs contributing to financial strain [17][18] - Xiaomi's Xuanjie team has invested over 135 billion yuan in R&D, with a focus on achieving economies of scale to reduce chip costs [33][34]

Core Viewpoint - Xiaomi has successfully developed its self-designed mobile SoC chip "Xuanjie O1" after years of setbacks, marking a significant step in its ambition to enhance its technological capabilities and compete in the high-end smartphone market [2][5][19]. Group 1: Development and Challenges - Xiaomi's "Xuanjie O1" chip utilizes second-generation 3nm technology and is currently featured in the Xiaomi 15S Pro and Xiaomi Pad 7 Ultra [2]. - The development of SoC chips is complex, involving multiple critical components such as CPU, GPU, and ISP, which directly impact the overall performance of mobile devices [4]. - Xiaomi's previous attempts at chip development faced significant challenges, leading to the shutdown of its chip division in 2017 after the underwhelming performance of its second-generation chip [9][10]. Group 2: Investment and Strategy - As of April 2023, Xiaomi has invested over 13.5 billion yuan in the "Xuanjie" project, with a projected investment of over 6 billion yuan for the year [6]. - The company plans to invest an additional 200 billion yuan in core technology research over the next five years to solidify its position in the semiconductor industry [7]. - Xiaomi's strategic decision to restart its chip development was influenced by its high-end market ambitions and the need to control its technology stack, similar to competitors like Apple and Huawei [15][16]. Group 3: Market Reception and Future Plans - The release of the "Xuanjie O1" has elicited mixed reactions, with some praising its potential while others question its originality and performance [7][19]. - Xiaomi aims to focus on flagship chips initially, with plans to tackle 5G modem development next [8]. - The company is also exploring opportunities in automotive chips, indicating a broader vision for its semiconductor capabilities [21]. Group 4: Talent Acquisition and Industry Context - Xiaomi's chip development team has grown to over 2,500 members, bolstered by talent from the recent wave of chip startups in China [17][18]. - The competitive landscape for chip development in China has seen a surge in new companies, but challenges remain as some firms, like OPPO's Zheku, have ceased operations [19][21].

Group 1 - Xiaomi officially launched its self-developed chip "Xuanjie O1" on May 22, utilizing TSMC's second-generation 3nm process with 19 billion transistors and a ten-core CPU architecture [4][5] - Xiaomi emphasized that "Xuanjie O1" is not a custom chip from Arm, refuting rumors and stating that the chip was independently designed by the Xiaomi team over four years [5][6] - The CPU's super-large core (Cortex-X925) has a maximum frequency of 3.9GHz, surpassing Arm's previously announced specifications [5][6] Group 2 - Elon Musk stated that AI will replace traditional search engines, highlighting a report showing Google's market share dropping below 90% for the first time since 2015 [8] - The report indicates that users are growing tired of SEO and ad content in search results, with AI search encroaching on Google's market share [8] - Apple's Eddy Cue also expressed skepticism about traditional search engines, noting a decline in search volume on Safari attributed to AI search usage [8] Group 3 - Neta Auto's former CEO Zhang Yong has had 40.5 million yuan worth of equity frozen, with the freeze lasting from May 13, 2025, to May 12, 2028 [9][10] - Neta Auto's parent company, Hozon New Energy Vehicle Co., has also faced equity freezes and bankruptcy examination, indicating ongoing financial challenges [10] Group 4 - Sequoia China launched an AI Agent benchmark testing tool called "xbench," aimed at addressing the relationship between model capabilities and practical utility [13][14] - The xbench tool includes two evaluation tracks: "xbench-AGI Tracking" for basic application testing and "xbench-Profession Aligned" for advanced testing in real production scenarios [13][14] Group 5 - Builder.ai, a UK-based AI programming company, has declared bankruptcy, having raised over $500 million and once valued at $1.5 billion [15][16] - Reports revealed that Builder.ai exaggerated its AI capabilities, relying heavily on manual labor rather than AI, leading to its financial downfall [16] Group 6 - Former OpenAI VP Lilian Weng, now co-founder of Thinking Machines Lab, indicated the company's future direction may include hardware development [21][22] - Thinking Machines Lab, formed by a team largely from OpenAI, aims to create more practical and intelligent AI systems [21][22] Group 7 - Several universities in Hong Kong have expressed willingness to accept students affected by the recent cancellation of Harvard's international student program, offering support and scholarships [23][29] - The Hong Kong government and universities are actively working to facilitate the transfer process for impacted students [29] Group 8 - IBM's CTO predicts that 2025 will be a pivotal year for the widespread application of AI Agents, driven by breakthroughs in large language models [24][25][26] - The development of AI Agents requires advancements in autonomy, planning capabilities, and the ability to handle complex decision-making [26] Group 9 - Google Pixel 10 series is expected to maintain a similar design to the Pixel 9 series, featuring a horizontally aligned rear camera module and the first self-designed Tensor G5 SoC [27][32] - The new series is anticipated to be released in August, with specifications including a 3nm process and a triple-camera setup [32] Group 10 - Meituan's CEO responded to JD's significant subsidies in the food delivery market, asserting that Meituan will compete vigorously [48][49] - Meituan reported a revenue of approximately 86.557 billion yuan for Q1 2025, marking an 18.1% year-on-year increase [48][50]

Investment Rating - The report maintains a "Recommended" investment rating for the semiconductor and semiconductor equipment industry [7] Core Insights - The overseas AI chip index fell by 2.3% this week due to uncertainties in U.S. trade policy, including proposed tariffs on imported iPhones and a 50% tariff on the EU, leading to a decline in stock prices of international chip companies [1][10] - The domestic AI chip index also decreased by 2.5%, with all constituent stocks showing a downward trend [1][10] - The NVIDIA mapping index dropped by 2.8%, influenced by expectations of increased tariffs on European goods, affecting NVIDIA's stock and related industry stocks [1][10] - The server ODM index fell by 4.3%, as rising uncertainties regarding U.S. tariff policies began to impact shipment expectations for U.S. AI chip companies [1][10] - The storage chip index saw a significant decline of 4.5%, with all constituent stocks experiencing price drops [1][10] - The power semiconductor index remained stable, while the A-share fruit chain index fell by 2.8% and the Hong Kong fruit chain index dropped by 3.9% [1][10] Market Data - In Q1 2025, the global wearable wristband market grew by 13% year-on-year, with shipments reaching 46.6 million units. Xiaomi regained the top position with a 44% increase in shipments to 8.7 million units [2][25] - Apple's Apple Watch shipments grew by 5% to 7.6 million units, while Huawei maintained third place with a 36% increase to 7.1 million units [2][25][27] - The global TWS market rebounded strongly, with shipments increasing by 18% year-on-year to 78 million units, marking the highest growth rate since 2021 [2][30] - Apple's market share in the TWS market reached 23%, while Xiaomi rose to second place with a historical high market share of 11.5% [2][30] Major Events - The U.S. government announced plans to impose a 25% tariff on products from Apple and other smartphone manufacturers unless they relocate production back to the U.S., with the policy expected to take effect by the end of June [3][32] - Apple plans to launch smart glasses in 2026, with prototype production expected to begin in late 2025 [3][32] - NVIDIA released a new AI hardware and software suite, including the upcoming GB300 system and desktop-level DGX Spark AI workstation [3][35]

Investment Rating - The report does not explicitly state an investment rating for the industry [31]. Core Insights - The TMT sector experienced varied performance in the week of May 19-23, with declines in major segments such as electronics (-2.17%) and computing (-3.02%), while sub-sectors like other communication equipment (+1.81%) showed positive growth [3]. - The AI ecosystem is continuously improving globally, highlighted by Nvidia's introduction of NVlink Fusion, which allows partners to integrate their CPUs or ASICs into Nvidia's architecture, enhancing AI system customization [3]. - In China, Huawei's launch of PCs running on the Harmony OS marks a significant step in domestic operating system development, potentially challenging Windows and MacOS market shares [3]. - Xiaomi's release of self-developed chips, including the 3nm process-based Xuanjie O1, positions the company competitively in the global SoC market [3]. Weekly Market Review - The TMT sector's performance from May 19-23 showed declines across major industries, with the media sector down by 0.16%, electronics by 2.17%, communication by 2.31%, and computing by 3.02% [3]. - The top-performing sub-sectors included other communication equipment (+1.81%) and gaming III (+1.63%), while the worst performers were communication network devices and components (-3.87%) and integrated circuit packaging and testing (-3.50%) [3]. Industry News and Key Company Announcements - Significant events included Nvidia's announcement of new AI technologies at Computex 2025 and Google's I/O developer conference showcasing a 50-fold increase in AI usage [3][17]. - Huawei's launch of Harmony OS PCs and Xiaomi's introduction of self-developed chips are pivotal in advancing domestic technology and reducing reliance on foreign systems [3][19]. - The report highlights the rapid growth of AI applications, with companies like OpenAI and Google making strides in AI capabilities and market penetration [3][19].

Investment Rating - The industry investment rating is "Positive" [2] Core Viewpoints - The report highlights that the semiconductor industry is experiencing a downturn, with various segments showing negative year-to-date performance, particularly consumer electronics which has declined by 11.12% [2][8] - Xiaomi has launched its first self-developed flagship processor "Xuanjie O1," which utilizes a second-generation 3nm process, featuring a 10-core CPU and a 16-core GPU, with a transistor count of 19 billion and a chip area of 109mm² [2][29][30] - The report emphasizes Xiaomi's significant investment in chip development, with over 13.5 billion yuan invested to date and an expected investment of over 6 billion yuan this year, as part of a long-term plan to invest at least 50 billion yuan over the next decade [31] - The introduction of the Xuanjie O1 positions Xiaomi as the fourth company globally to mass-produce 3nm SoC chips, indicating a shift in the global mobile SoC chip landscape and enhancing the competitiveness of domestic SoC chips [31] Summary by Sections Industry Performance - The report notes a decline in the Shenwan Electronics Index, with specific segments like semiconductors down by 0.66% year-to-date and consumer electronics down by 11.12% [2][8] - In the past week, major North American tech stocks also saw declines, with Apple down by 7.57% and Tesla down by 3.04% [2][11] Xiaomi's Processor Launch - Xiaomi's Xuanjie O1 processor features advanced architecture with two Arm Cortex-X925 super-large cores, four A725 performance cores, and two A520 ultra-efficient cores [30][31] - The report suggests that Xiaomi's entry into the 3nm SoC market could disrupt the existing market dynamics and enhance the global competitiveness of Chinese semiconductor firms [31] Investment Opportunities - The report recommends monitoring companies involved in computing power chains such as Industrial Fulian, Shennan Circuit, and others, as well as domestic computing power firms like Cambrian and Haiguang Information [2]

Market Overview - A-shares and Hong Kong stocks collectively declined on Thursday, with the Shanghai Composite Index down 0.22% to 3,380 points, and the Hang Seng Index down 1.19%[16] - European markets closed lower due to concerns over the U.S. fiscal outlook, with the Stoxx 600 index down 0.64%[9] - U.S. stock indices showed mixed results, with the Dow Jones down slightly by 1 point, while the Nasdaq rose 0.28% to 18,925.7 points[9] Fixed Income - Long-term U.S. Treasury yields have risen sharply, with the 30-year yield reaching a 19-month high of 5.15%[9] - The U.S. House of Representatives narrowly passed a tax and spending bill, raising concerns about increasing fiscal deficits, which pressured long-term bonds[30] - Asian investment-grade bonds performed well, with spreads narrowing by 2-4 basis points, driven by strong demand for high-rated and sovereign bonds[30] Commodities and Forex - Oil prices fell to near two-week lows, with WTI crude down 0.6% to $61.2 per barrel, amid OPEC+ discussions to increase production significantly[27] - The U.S. dollar index rebounded, with G-10 currencies generally declining against the dollar, except for the Canadian dollar[27] - Gold prices retreated, with New York gold down 0.56% to $3,295.0 per ounce[27] Economic Indicators - Recent U.S. economic data showed mixed signals, with initial jobless claims rising and existing home sales unexpectedly dropping to a seven-month low[30] - The U.S. manufacturing PMI improved to 52.3 in May, indicating a slight expansion in the manufacturing sector[30] Corporate Highlights - Google announced significant upgrades to its AI models and plans to launch smart glasses in 2026, reflecting its ongoing innovation in AI infrastructure[8] - Xiaomi launched its self-developed SoC, showcasing advancements in technology and potential future growth in the smartphone and IoT sectors[14]