Investment Rating - The report maintains an "Overweight" rating for the communication industry [1][9]. Core Insights - The establishment of China Fusion Energy Co., Ltd. marks a new phase in the development of controllable nuclear fusion, with significant investment from state-owned enterprises totaling 11.492 billion yuan [5][18]. - The investment cycle for controllable nuclear fusion is on the rise, driven by intensified US-China competition and supportive domestic policies [5][18]. - The AI infrastructure expansion and model transition are expected to drive opportunities across the computing and application stack, highlighting the synergy between hardware and software [6][19]. Summary by Sections Market Review - In the past week (July 21-27, 2025), the Shanghai Composite Index and Shenzhen Component Index rose by 1.67% and 2.33%, respectively, while the CITIC Communication Index fell by 0.47%, ranking 28th among 30 primary industries [4][14]. - The top five performing stocks in the communication sector included Dongxin Peace (34.10%), Cheng Tian Wei Ye (17.14%), and Si Nan Navigation (16.54%) [4][15]. Weekly Topic - The focus is on the significant investment in the fusion energy sector by state-owned enterprises, indicating a strategic shift towards large-scale development [5][18]. - The report suggests monitoring related industry chain stocks due to the ongoing investment cycle in controllable nuclear fusion [5][18]. Industry News - China Mobile's centralized procurement for data center switches is expected to involve approximately 33,300 units, with a total budget of about 2.0294 billion yuan [7][21]. - Huawei has the highest share in this procurement, with several other established domestic manufacturers also participating [7][21][23]. Investment Recommendations - The report recommends focusing on key beneficiaries across various sectors, including controllable nuclear fusion and AI-related hardware and software [6][19].

Core Insights - In Q2 2025, China's smartphone shipments declined by 2.4% year-on-year, attributed to seasonal factors and demand front-loading due to subsidies [1] - Huawei maintained its leading position for the second consecutive quarter, increasing its market share from 15% to 18.1% year-on-year, driven by strong sales of the mid-range nova 14 series and significant price reductions on high-end models [1] - Vivo ranked second in shipments, supported by its strong offline channel network and the successful performance of its Y series in lower-tier cities, along with a surge in demand for the newly launched S30 series during back-to-school promotions [4] - OPPO successfully launched the Reno 14 series before the 618 shopping festival, continuing the strong sales momentum of the Reno 13 series, while its sub-brand OnePlus achieved notable growth by focusing on the gaming experience [4] - Xiaomi recorded the second-fastest growth rate in Q2 2025 with a market share of 15.7%, maintaining growth through price reductions on popular models like Redmi K80 and Xiaomi 15, despite not launching new mid-range products during promotions [5] - Apple performed strongly during the 618 shopping festival due to unprecedented price cuts on the iPhone 16 series, particularly the Pro models, although this may pressure sales of the iPhone 17 base model in the second half of the year [5] - Honor is responding to intense market competition by expanding its product lineup, with the mid-range HONOR 400 series launched at the end of May showing promising initial results [5] Industry Outlook - The demand for smartphones in China remains weak, aligning with previous expectations from Counterpoint, although promotions and subsidies have provided some support for stable sales [6] - Counterpoint anticipates a year-on-year growth in the Chinese market for 2025, albeit at a slower pace, with summer promotions and the early release of flagship products in Q3 expected to boost sales and lay a solid foundation for Q4 performance [6] - The industry will continue to monitor the evolving global market landscape, particularly regarding tariff policies, rising component costs, and changes in consumer demand [6]

Core Viewpoint - The Chinese smartphone market experienced a year-on-year decline of 2.4% in Q2 2025, influenced by seasonal factors and demand front-loading due to subsidies [2][3]. Market Performance - Huawei maintained its leading position with a market share increase from 15% to 18.1% year-on-year, driven by strong sales of the mid-range nova 14 series and significant price reductions on high-end models [2]. - Vivo ranked second in shipments, supported by its strong offline channel network and the successful performance of its Y series in lower-tier cities [6]. - OPPO's Reno 14 series launched before the 618 shopping festival, continuing the strong sales momentum from the previous series, appealing particularly to young female consumers [6]. - Xiaomi achieved a market share of 15.7%, with growth driven by price reductions on popular models like Redmi K80 and Xiaomi 15, despite not launching new mid-range products during the promotional period [6]. - Apple saw strong performance from the iPhone 16 series, particularly the Pro models, due to unprecedented price cuts, although this may pressure sales of the iPhone 17 in the latter half of the year [7]. Future Outlook - The demand for smartphones in China is expected to remain weak, consistent with previous forecasts, but sales stability is supported by promotions and subsidies [8]. - Counterpoint anticipates a slowdown in growth for the Chinese market in 2025, with summer promotions and early flagship releases in Q3 expected to boost sales and lay a solid foundation for Q4 performance [8]. - The company will continue to monitor the evolving global market landscape, particularly regarding tariff policies, rising component costs, and changes in consumer demand [8].