Core Viewpoint - The release of DeepSeek-V3.1 has heightened market interest in AI chips, contrasting with NVIDIA's announcement of the discontinuation of the H20 chip, indicating a growing domestic chip development capability and accelerated localization in China [1][2]. Industry Summary - The electronic sector is experiencing a mild recovery in demand, with a recommendation to focus on the AI server supply chain, AIoT, equipment materials, and automotive electronics localization [1][6]. - The global AI chip sales revenue is expected to reach $92 billion by 2025, representing a year-on-year growth of 29.58%, while China's AI chip market is projected to reach 141.2 billion yuan in 2024, accounting for approximately 28% of the global market [2]. - The share of foreign chips in China's AI server market is predicted to decline from 63% in 2024 to 42% in 2025, as domestic suppliers like Huawei and Cambricon are expected to increase their market share to 40% by 2025 [2]. Company Summary - Xiaomi Group reported a total revenue of 116 billion yuan for Q2 2025, a year-on-year increase of 30.5%, with adjusted net profit reaching 10.8 billion yuan [3][4]. - The smartphone and AIoT business contributed 94.7 billion yuan in revenue, growing by 14.8% and accounting for 92.8% of total revenue [3]. - Xiaomi's high-end smartphone sales have increased, with a market share of 27.6% in the high-end segment, up by 5.5 percentage points year-on-year [4]. - The smart electric vehicle and AI innovation business generated 21.3 billion yuan in revenue, with a significant reduction in operating losses, expected to achieve profitability in the second half of the year [4]. Market Performance - The electronic industry outperformed the broader market, with the Shenzhen and Shanghai 300 Index rising by 4.18% and the Shenwan Electronics Index increasing by 8.95%, outperforming the former by 4.77 percentage points [5]. - The semiconductor sector saw a notable increase of 12.26%, while other electronic sub-sectors also experienced positive growth [5].

Investment Rating - The report suggests a positive outlook for the electronic industry, indicating a gradual recovery in demand and price stabilization, with a recommendation to gradually accumulate positions in the market [4][5]. Core Insights - The electronic sector is experiencing a mild recovery, with significant growth in AI chip demand and domestic chip development, particularly highlighted by the launch of DeepSeek-V3.1 and the discontinuation of NVIDIA's H20 chip [4][10]. - Xiaomi's Q2 2025 performance is noteworthy, achieving record highs in total revenue and net profit, driven by the synergy between its smartphone and AIoT businesses, as well as its electric vehicle segment [4][11]. - The report emphasizes the importance of focusing on the AI server supply chain, AIOT, equipment materials, and the localization of automotive electronics as key areas for investment [4][5]. Summary by Sections Industry Overview - The electronic industry is in a phase of moderate recovery, with a focus on AI chip advancements and domestic production capabilities. The report highlights the expected growth in the AI chip market, projecting global sales to reach $92 billion in 2025, a 29.58% increase year-on-year [4][10]. Company Performance - Xiaomi Group reported a total revenue of RMB 116 billion in Q2 2025, a 30.5% year-on-year increase, with adjusted net profit reaching RMB 10.8 billion, marking a 75.4% increase [4][11]. - The company's smartphone and AIoT business contributed RMB 94.7 billion, accounting for 92.8% of total revenue, while its electric vehicle segment generated RMB 21.3 billion [4][11]. Market Trends - The report notes that the semiconductor sector has seen a significant increase, with the semiconductor sub-sector rising by 12.26% recently, outperforming the broader market indices [20][22]. - The report also indicates that the A-share market capitalization of the electronic industry has surpassed that of the banking sector, reaching RMB 11.54 trillion [14]. Investment Recommendations - The report recommends focusing on companies benefiting from strong domestic and international demand in the AIOT sector, as well as those involved in AI innovation and the localization of supply chains [5]. - Specific companies highlighted for potential investment include 乐鑫科技, 恒玄科技, 瑞芯微, and others in the semiconductor and automotive electronics sectors [5].