Group 1 - ZTE Corporation (000063)(00763) saw its stock price rise over 8% in early trading, currently up 5.45% at HKD 37.12, with a trading volume of HKD 1.292 billion [1] - ZTE is set to release its semi-annual report for 2025 on August 28 [1] - There are market rumors that ByteDance is developing an AI phone called "Doubao Phone," which ByteDance has denied, stating there are no plans to launch its own phone products [1] Group 2 - Huachuang Securities indicated that ByteDance is indeed developing an AI phone, with ZTE potentially acting as an ODM manufacturer [1] - ZTE has accumulated substantial technical expertise in hardware design, research, and production, which positions it well for this potential collaboration [1] - The application of AI technologies, such as Doubao's large model, in mobile phones could significantly expand the boundaries of AI model applications, creating new opportunities for ZTE and its partners [1]

Core Insights - DeepSeek's download volume has plummeted by 72.2%, highlighting a rapid decline from a peak popularity within just six months [1] - ByteDance's AI assistant, Doubao, has gained significant traction, achieving 147 million monthly active users by June this year, establishing itself as a leader in the domestic AI assistant market [3] - There are rumors about ByteDance developing its own AI smartphone, but the company has denied any plans for such a product, focusing instead on providing AI capabilities to various hardware manufacturers [3][5] Company Strategy - ByteDance is exploring AI hardware opportunities, evidenced by its existing products like Ola Friend smart headphones and the development of AI glasses, but entering the smartphone market is deemed unlikely due to the competitive landscape [5][9] - The consumer market shows a lack of interest in AI smartphones, with only 19% of surveyed U.S. consumers willing to pay a premium for AI capabilities in phones, indicating a disconnect between manufacturer offerings and consumer needs [5][7] - ByteDance's previous attempt to enter the smartphone market through the acquisition of Smartisan's team did not yield significant results, as the market was already saturated and lacked compelling selling points [9] Market Dynamics - The current smartphone market is characterized by low margins, with manufacturers relying on software services for profitability, making hardware ventures less appealing for a company like ByteDance, which excels in internet services [9][12] - The competitive landscape is fierce, with established players like Huawei, Xiaomi, and others having the resources to develop their own AI capabilities, making it challenging for ByteDance to position itself as a hardware competitor [12][14] - ByteDance is better positioned as an AI capability provider, offering APIs to hardware manufacturers, which could enhance its competitive edge in the AI model pricing war [14]

Investment Rating - The report rates the communication industry as "Recommended," expecting the industry index to rise more than 5% over the next 3-6 months compared to the benchmark index [29]. Core Insights - The communication sector has shown strong performance, with a weekly increase of 10.84%, outperforming the CSI 300 index by 6.66 percentage points and the ChiNext index by 4.99 percentage points [9][10]. - Year-to-date, the communication industry has risen by 44.91%, significantly surpassing the CSI 300 index's increase of 11.26% by 33.65 percentage points [9][10]. - The report highlights the launch of DeepSeek V3.1, which is designed for the next generation of domestic chips, showcasing improved reasoning speed and capabilities compared to previous versions [16][17]. - ByteDance is developing an AI phone named "Doubao," with ZTE as the ODM manufacturer, expected to be tested internally by the end of this year or early next year [21][22]. Summary by Sections Industry Basic Data - The communication industry consists of 123 listed companies with a total market value of approximately 49,248.97 billion and a circulating market value of about 23,006.93 billion [2]. Relative Index Performance - The absolute performance of the communication sector over 1 month, 6 months, and 12 months is 8.7%, 18.6%, and 30.5%, respectively [3]. Stock Performance - The top five gainers in the communication sector this week include Shengke Communication-U (+43.95%), ZTE (+32.21%), and Ruijie Networks (+32.17%) [12][13]. - The top five decliners include Gaohong Shares (-22.67%) and Beiwai Technology (-11.16%) [12][13]. Key Recommendations - The report recommends focusing on major operators such as China Mobile, China Telecom, and China Unicom, as well as companies in various segments like optical modules and satellite communications [23].

Core Insights - ByteDance is reportedly planning to launch an AI phone, tentatively named "Doubao Phone," by the end of this year or early next year, with ZTE as the ODM manufacturer for initial internal testing [2] - Despite these rumors, ByteDance has denied any plans to release its own phone or collaborate on AI chip development with companies like Chipone and Broadcom [2][3] - The company has previously ventured into hardware, including the acquisition of Pico for VR products, but has faced challenges in the market leading to a focus on long-term exploration of core technologies [3][4] Group 1: AI Hardware Developments - ByteDance has made significant moves in the AI hardware space, including the acquisition of the headphone brand Oladance and the development of AI smart headphones [3] - The company is also reportedly working on a lightweight mixed reality (XR) headset to compete with similar products from Meta [3][4] - ByteDance's Ocean team is exploring multiple AI devices, indicating a structured approach to AI hardware development [3][4] Group 2: AI Ecosystem and Applications - ByteDance has established a comprehensive ecosystem in AI, covering models, platforms, applications, and cloud services, creating a closed-loop experience from model to application [4][6] - The company has released several AI applications, such as Gauth and Cici, which have gained rapid adoption both domestically and internationally, with Gauth serving 300 million users globally [6] - The integration of hardware with AI capabilities is seen as a strategic move to enhance ByteDance's competitive position, similar to strategies employed by companies like Apple and Meta [6]

Core Viewpoint - ByteDance is exploring a "trinity" of terminal AI layout by integrating large model capabilities, super apps, and hardware terminals [1][5]. Group 1: Product Development - ByteDance is developing an AI phone named "Doubao," manufactured by ZTE as an ODM, set to launch for internal testing by the end of this year or early next year [2][3]. - The main team behind Doubao is the Ocean team, which focuses on AI hardware and is part of the larger AI product team, Flow [2]. - Ocean is also working on various AI devices, including the Ola Friend smart headphones and AI glasses, among others [2]. Group 2: Market Strategy - ByteDance initially aimed to collaborate with existing phone manufacturers to integrate its AI technology but faced resistance as manufacturers preferred to develop their own large models [3]. - After unsuccessful partnerships, ByteDance decided to self-develop the Doubao phone, integrating its large model capabilities while ZTE handles hardware design and production [3][4]. Group 3: Strategic Goals - ByteDance's CEO outlined three major AI goals for 2025: exploring intelligent limits, new UI interaction forms, and enhancing scale effects, with hardware like phones being a key focus [4]. - The company has previously attempted hardware ventures, such as educational products and the acquisition of VR brand PICO, but has scaled back on these initiatives [4]. Group 4: Competitive Landscape - The integration of large model capabilities, super apps, and hardware is seen as a significant move for ByteDance, similar to Google's existing model with its Gemini series, Android, and Pixel phones [5]. - This strategy allows for deeper integration of AI functionalities into the phone's physical design and user interactions [5].

Group 1 - ByteDance has denied rumors regarding the development of its own smartphone, "Doubao," stating that there are no plans to launch a proprietary mobile product [1][3] - The company is focused on opening its AI capabilities to various hardware manufacturers, including smartphone makers, and will collaborate on complete solutions without developing its own mobile devices [1][3] - In 2019, ByteDance acquired partial patent rights from Smartisan Technology, which led to speculation about entering the smartphone market; however, the internal team responsible for hardware has since shifted focus to educational hardware [3] Group 2 - In 2021, the "New Stone Laboratory," which was exploring smartphone development, was merged into an education hardware team, ceasing the development of unrelated products like the Smartisan phone [3] - Similar rumors have surfaced multiple times in 2023, including claims of partnerships with Nubia for AI phones and the recruitment of former Honor CEO Zhao Ming, both of which were denied by ByteDance [3] - The Doubao large model, an important AI product of ByteDance, has over 160 million cumulative users as of 2024, with an average of 800,000 new downloads daily in November and nearly 9 million daily active users [3]

Core Viewpoint - ByteDance is reportedly developing an AI phone named "Doubao Phone," with ZTE as the ODM manufacturer, expected to launch by the end of this year or early next year for internal testing only, with no plans for external sales [1] Group 1 - ByteDance's Doubao Phone is currently in development and is intended for internal team testing [1] - The phone is not planned for external sales at this time [1] - A representative from Doubao stated that the information regarding the phone's launch is inaccurate and that there are no plans to release a proprietary mobile product [1] Group 2 - Doubao is exploring ways to open its AI capabilities to various hardware manufacturers, including mobile devices [1] - The company is collaborating with partners to develop complete solution attempts, but these collaborations do not involve the development or launch of its own mobile products [1]

Core Viewpoint - ByteDance is reportedly developing an AI phone named "Doubao," which is being manufactured by ZTE as an ODM. The phone is expected to be tested internally by ByteDance teams by the end of 2025 or early 2026, with no plans for external sales at this time. However, ByteDance has denied these claims, stating that there are no plans to launch a proprietary phone product [1]. Group 1 - ByteDance is working on an AI phone called "Doubao," with ZTE as the ODM manufacturer [1] - The phone is set for internal testing by ByteDance teams by late 2025 or early 2026 [1] - ByteDance has refuted claims of launching its own phone, emphasizing ongoing exploration of AI capabilities with various hardware partners [1]

Core Viewpoint - ByteDance is exploring the integration of AI capabilities, super apps, and hardware terminals through its upcoming AI phone, "Doubao," which is set to be produced by ZTE and primarily tested internally before any external sales [3][4][6]. Group 1: AI Phone Development - ByteDance is developing an AI phone named "Doubao," with ZTE as the ODM manufacturer, expected to launch by the end of this year or early next year [4]. - The Ocean team, responsible for AI hardware at ByteDance, is exploring various AI devices, including the recently launched Ola Friend smart headphones and upcoming AI glasses [4][6]. - The decision to self-develop the Doubao phone came after difficulties in partnering with existing phone manufacturers, who preferred to maintain control over AI model integration [6][7]. Group 2: Strategic Goals and Historical Context - ByteDance's CEO outlined three major AI goals for 2025: exploring intelligent limits, new UI interaction forms, and enhancing scale effects, with hardware like phones being a key focus [7]. - Previous hardware attempts by ByteDance, such as the Dali smart lamp and the acquisition of VR brand PICO, faced challenges, leading to significant resource allocation shifts [7][8]. - The integration of AI capabilities into hardware is seen as crucial for the deployment of large models, particularly in the smartphone sector [8]. Group 3: Competitive Landscape - ByteDance's move into the smartphone market aims to achieve a "trinity" of AI capabilities, super apps, and hardware, similar to Google's ecosystem with its Gemini models and Pixel phones [8]. - The upcoming Google Pixel 10 series is expected to feature several AI enhancements, highlighting the competitive nature of AI integration in smartphones [8].