Chinese tech giant Xiaomi Corp (OTC:XIACY) (OTC:XIACY) reported its first-ever profit from its EV arm as it reported its third-quarter financial results that saw overall profits soar 80.9% to RMB11.3 billion (approximately $1.5 billion).Deliveries Surpassed 100,000 UnitsXiaomi reported a profit of RMB700 million (approximately $98.4 million) from its EV arm, according to a statement released by the company on Tuesday. Xiaomi's EV deliveries in Q3 exceeded 100,000 units, reaching 108,796 deliveries in the qu ...

Summary of Conference Call Notes Industry Overview - **Industry**: China Technology & Communications - **Key Focus**: Increasing interest in China tech from institutional investors in the US and EU, particularly in AI supply chain beneficiaries and related technologies [1][1] Core Insights and Arguments 1. Investor Sentiment - There is a growing interest among long-only (LO) investors in quality tech names listed on the H-share market, which is expected to attract more attention and fund flows [1][1] - Investors are cautious about the overly bullish market outlook on the US$2.5 trillion capex from OpenAI, indicating potential risks [1][1] 2. AI Supply Chain - Key discussion topics included: - Optical transceivers and their future scale-up potential - AI-PCB content upgrades and supply-demand dynamics - Foldable iPhone beneficiaries and potential volume impacts - Xiaomi's market entry and its recent effects - Visibility on China AI capex and AI chips support [1][1] 3. Stock Picks - The stock picks for the second half of 2025 remain unchanged, focusing on: - Optical transceivers (Innolight) - PCB with content upgrades (Victory Giant Tech) - ODM with rising demand in AI server/switch (FII) [1][1] 4. China AI Demand - Investors are interested in Alibaba's capex for a 10x capacity datacenter expansion and the availability of AI chips in China [1][1] - China is seen as a strong competitor to the US in AI development, although challenges remain in AI chipsets [1][1] 5. Company-Specific Insights - **GDS/VNET**: Viewed as disappointing by foreign investors due to share price volatility, despite potential benefits from China AI capex [1][1] - **Xiaomi**: Investors are concerned about the impact of smartphone memory prices and the company's ability to secure MP permits for its factories [5][5] - **Smart Glasses**: Increasing interest noted, with major beneficiaries being Goertek and Sunny Optical, as smart glasses are seen as key AI edge devices [6][6] 6. Semiconductor Localization - The 7nm-equivalent wafer capacity is expected to support local AI chip demand, but local lithography tools may only support up to 14nm [7][7] - Memory expansion is anticipated to accelerate in 2026 due to advancements in stacking etching tools [7][7] 7. AI Monetization - The monetization of AI in the consumer segment (ToC) is challenging, while the business segment (ToB) is more selective [8][8] - Kingdee remains a major interest for foreign investors, alongside cybersecurity and AI software companies like Iflytek and Sensetime [8][8] Additional Important Points - The potential for breakthroughs in AI chips in China remains uncertain, with existing capacities needing to be fully utilized first [1][1] - The foldable iPhone's BOM cost is projected to increase, with a potential retail price of over US$2500 [4][4] - Xiaomi's stock is expected to trade within the HK$45-50 range in the near term, with catalysts including increased EV delivery and new product launches [5][5] Companies Mentioned - **Alibaba Group Holding (BABA)** - **Apple, Inc.** - **Xiaomi Corp.** - **GDS Holdings** - **Sunny Optical Technology Group** - **Goertek** - **Iflytek** - **Innolight** - **Victory Giant Tech** - **Meta Platforms Inc.** - **NVIDIA Corp.** [10][10]

Investment Rating - The investment rating for the Greater China Technology Hardware industry is "In-Line" [2]. Core Insights - The technology hardware sector has outperformed major market indexes year-to-date (YTD), with smartphone-related stocks showing significant gains [5][6]. - YTD share price performance for tech hardware stocks indicates an increase of 66% for top performers and a decrease of 38% for bottom performers, compared to HSI's increase of 19% [9]. - Demand forecasts suggest limited shipment volume growth across various segments, including servers, PCs, and smartphones, with specific projections for 2025 indicating a slight increase in server shipments to 14.5 million units [11]. Summary by Sections Performance Overview - Greater China tech hardware stocks have outperformed major market indexes YTD, except for the Hang Seng Index (HSI) [5][6]. - The share price performance of tech hardware stocks shows a range of increases from 66% for top performers to declines of 38% for the bottom performers [9]. Demand Forecasts - Limited shipment volume growth is expected across various categories, including servers, PCs, and smartphones, with specific figures indicating a forecast of 14.5 million server units for 2025 [11]. - Smartphone shipments are projected to show a cyclical recovery starting in 2024, with significant growth anticipated in 5G smartphone sales [28]. Valuation Insights - The report highlights a justified valuation premium for companies involved in the AI hardware supply chain, with specific companies showing significant AI revenue contributions [12]. - The analysis includes a detailed breakdown of AI revenue and profit mixes for various companies, indicating a strong focus on AI-related hardware [12]. Production and Cost Analysis - The report discusses the cost implications of producing Apple products in different regions, noting that iPhones produced in the US have a 75% higher FOB price compared to those made in China [15]. - A detailed cost analysis shows that the bill of materials (BoM) for iPhones varies significantly by production location, impacting overall pricing strategies [15]. Market Trends - The report identifies Xiaomi as a key player with a rich product portfolio and rapid growth in electric vehicle (EV) deliveries, indicating a diversification strategy beyond traditional tech hardware [34][36]. - The smartphone market is experiencing a cyclical recovery, with expectations for increased shipments and demand in the coming years [28].