Core Insights - Huawei's HarmonyOS 5 has surpassed 20 million terminal devices, showcasing rapid growth in user adoption and ecosystem expansion [1][6][10] - The transition from 10 million to 20 million devices occurred in just two months, indicating a significant acceleration in user acquisition [1][6] - HarmonyOS is expected to expand beyond smartphones and tablets to various sectors, including automotive, healthcare, and aerospace, with a potential scale of billions of devices [3][4] Ecosystem Acceleration - 2025 is identified as a pivotal year for HarmonyOS 5, marking the transition from initial breakthroughs to large-scale expansion [4] - The launch of multiple devices, including the Huawei Pura X and nova 14 series, has enriched the HarmonyOS 5 ecosystem, with over 40 products now utilizing the system [4][6] - The ecosystem has seen a surge in applications, with over 9,000 HarmonyOS applications participating in system-level innovations, and more than 30,000 applications and services in development [6][7] Differentiated User Experience - HarmonyOS 5 focuses on innovative, scenario-based experiences to retain users and create a unique competitive advantage [8][10] - The system enhances everyday activities, such as dining and travel planning, by streamlining processes and integrating AI for smarter decision-making [9][10] - The rapid iteration of HarmonyOS applications has led to improved user experiences, exemplified by the HarmonyOS version of popular apps like WeChat and Douyin [7][10]

Core Viewpoint - Huawei has initiated price reductions on several smartphone models, indicating a strategic move to enhance market competitiveness and consumer appeal amid a challenging market environment [1][3]. Pricing Strategy - Huawei Mate X6 has a maximum price reduction of 2000 yuan - Pura 80 series has a maximum price reduction of 1500 yuan - Mate 70 series has a maximum price reduction of 1000 yuan - nova 14 series has a maximum price reduction of 500 yuan [3]. Product Launch - On September 4, Huawei launched the Mate XTs Extraordinary Master series, featuring a new generation of foldable smartphones - The starting price for Mate XTs is 17,999 yuan for the 16GB+256GB version, with higher configurations priced at 19,999 yuan for 512GB and 21,999 yuan for 1TB [4]. Technical Specifications - The Mate XTs features a 10.2-inch 3K display with a resolution of 3184×2232 and a 16:11 aspect ratio - It utilizes COE pixel ultra-transparency technology, reducing power consumption by 13% - The device has received a five-star certification from Germany's TÜV for display quality [4][5]. Material and Design - The device is constructed with aerospace-grade special steel, with hinge arm tensile strength reaching 2400MPa - Huawei emphasizes the complexity of design and mass production for foldable devices [5]. Communication and Performance - The Mate XTs is equipped with second-generation Lingxi communication technology, improving video upload speeds by 76% and download speeds by 105% - It also features Tiantong satellite communication for emergency connectivity [5]. Battery and Charging - The smartphone includes a 5600mAh ultra-thin silicon negative electrode battery, extending battery life by one hour - It supports dual super-fast charging for both wired and wireless options [5]. Financial Performance - In the first half of 2025, Huawei reported revenue of 427.04 billion yuan, a year-on-year increase of 3.95% - Net profit for the same period was 37.20 billion yuan, although it showed a decline compared to the previous year [6][8]. R&D Investment - Huawei's R&D expenses reached 96.95 billion yuan in the first half of 2025, an increase of over 8 billion yuan compared to the same period in 2024 - The company is on track to achieve a record high in annual R&D investment [7].

Core Viewpoint - Huawei has made a significant comeback in the Chinese smartphone market, reclaiming the top position with a market share of 18.1% in Q2 2025, marking its return to the forefront after a challenging period due to sanctions and market competition [5][6][14]. Market Dynamics - The Chinese smartphone market has faced a decline, with Q2 2025 showing a 4% year-on-year decrease in shipments, totaling 68.96 million units, ending a six-quarter growth streak [11][12]. - Despite the introduction of national subsidies, the expected boost in consumer demand has been limited, leading manufacturers to control inventory levels and rely on promotional events to clear stock [10][11][12]. Competitive Landscape - In Q2 2025, Huawei's competitors, including Vivo, OPPO, Xiaomi, and Apple, experienced a decline in shipments, with only Xiaomi showing a slight growth of 3.4% [13][19]. - Honor, once a strong competitor benefiting from Huawei's challenges, has seen its market share drop to approximately 12.8%, failing to rank among the top five smartphone brands [19][20]. Historical Context - Huawei's market share peaked at 46% in Q2 2020 before sanctions led to a significant decline, forcing the sale of its sub-brand Honor [25][26]. - The company has been on a recovery path since 2023, driven by the successful launch of the Mate 60 series and a resurgence in its product lineup [27][28]. Product Strategy - Huawei's strategy includes a focus on high-end smartphones and the introduction of innovative products like foldable phones, where it holds a dominant market share of nearly 50% in China [30][31]. - The company has also been expanding its product offerings, including the launch of the HarmonyOS 6, which aims to enhance AI capabilities and user interaction [43][44]. Future Challenges - Despite regaining the top position, Huawei faces challenges in returning to international markets due to ongoing sanctions and a highly competitive domestic landscape [33][34]. - The smartphone market is entering a phase of saturation, with increased competition from domestic brands targeting the high-end segment [34][35]. - The industry is also experiencing pressure in the foldable smartphone segment, with a 14% year-on-year decline in shipments in Q2 2025 [40]. AI Integration - The rise of AI smartphones is seen as a critical area for future growth, with Huawei aiming to innovate in this space, although it has yet to establish a leading position [41][46]. - The development of AI capabilities within HarmonyOS is part of Huawei's strategy to redefine user interaction and enhance the smartphone ecosystem [44][45].

Market Overview - The domestic smartphone market in China is projected to decline year-on-year by 4% in Q2 2025, according to multiple third-party research institutions [1][2] - Counterpoint's preliminary data indicates a year-on-year decline of 2.4% in smartphone shipments for the same quarter [1] - Canalys reports a more significant decline of 4% year-on-year in smartphone shipments [1] Company Performance - Huawei leads the market with a shipment volume of 12.2 million units, capturing 18% of the market share, an increase from 15% in the same period last year [2] - Vivo follows closely with a shipment volume of 11.8 million units, holding 17% of the market share [2] - OPPO ranks third with a shipment volume of 10.7 million units, accounting for 16% of the market [2] - Xiaomi has achieved year-on-year growth for the eighth consecutive quarter, with a shipment volume of 10.4 million units, placing it fourth [2] - Apple ranks fifth with a shipment volume of 10.1 million units [2] Key Drivers - Huawei's growth is attributed to the strong sales of its mid-range nova 14 series and significant price reductions on high-end models [1] - The installation of the WeChat Harmony version on Huawei's app market has surpassed 10 million, marking a milestone for the Harmony operating system [1]

Investment Rating - The report indicates a positive outlook for the electronic industry, suggesting an "Overweight" rating for the sector, expecting it to outperform the market index by more than 10% in the next six months [32]. Core Insights - The electronic sector has shown a cumulative increase of 4.14% over the past two weeks, outperforming the CSI 300 index by 0.67 percentage points, ranking 17th among the Shenwan industries [2][9]. - Google's Q2 performance exceeded expectations with revenue of $96.43 billion, driven by strong demand in advertising, search, and cloud services, indicating a robust AI commercialization process [27]. - The report highlights a significant increase in AI-related activities, with Google's capital expenditure guidance raised from $75 billion to $85 billion for the year, reflecting strong cloud computing demand [27]. Market Review and Valuation - The SW electronic sector's PE TTM (excluding negative values) is at 47.64 times, placing it in the 94.90% percentile for the past five years and 80.20% for the past ten years, indicating high valuation levels [9][14]. - The electronic sector has seen a year-to-date increase of 8.04%, outperforming the CSI 300 index by 2.60 percentage points, ranking 19th among Shenwan industries [2][9]. Industry News - The report notes a 2.4% year-on-year decline in China's smartphone shipments in Q2 2025, attributed to seasonal factors and inventory adjustments by OEMs [18]. - Counterpoint's market tracking indicates that Huawei maintained its leading position in the Chinese smartphone market with an 18.1% share, up from 15% year-on-year, driven by strong sales of its mid-range nova 14 series [18]. Company Announcements - Notable announcements include a projected net profit increase for Huadian Technology and Shenghong Technology, with expected growth rates of 44.63%-53.40% and 50%-56% respectively for the first half of 2025 [18][25]. - The report also mentions plans for overseas listings by Lixun Precision and other companies, aiming to enhance their global strategic positioning [25][28]. Industry Data - Global smartphone shipments reached 295 million units in Q2 2025, reflecting a 1.03% year-on-year growth [19]. - The report provides pricing data for liquid crystal panels, showing a decline in prices for various sizes in July 2025, indicating potential cost pressures in the display segment [22].

Investment Rating - The report indicates a positive outlook for the electronic industry, suggesting an "Overweight" rating for the sector, expecting it to outperform the market index by more than 10% over the next six months [32]. Core Insights - The electronic sector has shown resilience, with a cumulative increase of 4.14% over the past two weeks, outperforming the CSI 300 index by 0.67 percentage points [2][9]. - Google's Q2 performance exceeded expectations, with revenue of $96.43 billion, driven by strong demand in advertising, search, and cloud services, indicating robust growth in AI commercialization [27]. - The report highlights a significant increase in AI-related activities, with Google's capital expenditure guidance raised from $75 billion to $85 billion for the year, reflecting strong cloud computing demand [27]. Summary by Sections Market Review and Valuation - The SW electronic sector's PE TTM (excluding negative values) is at 47.64 times, placing it in the 94.90% percentile for the past five years and 80.20% for the past ten years [9][14]. - The electronic sector has ranked 17th among all industries in the past two weeks and 19th year-to-date, indicating a competitive performance [2][9]. Industry News - The report notes a 2.4% year-on-year decline in China's smartphone shipments for Q2 2025, attributed to seasonal factors and inventory adjustments by OEMs [18]. - Significant advancements in AI capabilities were reported, with Google's AI Overviews reaching over 2 billion monthly active users, and the Gemini platform achieving 450 million monthly active users [27]. Company Announcements - Notable earnings forecasts include Huadian's expected net profit of 1.65 to 1.75 billion yuan for H1 2025, representing a year-on-year increase of 44.63% to 53.40% [18]. - Shenghong Technology anticipates a net profit increase of 50% to 56% for H1 2025, reflecting strong operational performance [18]. Industry Data - Global smartphone shipments reached 295 million units in Q2 2025, marking a 1.03% increase year-on-year [19]. - The report provides detailed pricing data for LCD panels, showing a decline in prices across various sizes, indicating potential cost pressures in the supply chain [22]. Weekly Perspective - The report emphasizes the importance of upcoming earnings disclosures in the tech sector, which could further influence the AI industry chain positively [27]. - Recommendations include focusing on companies within the server ODM and PCB/CCL supply chains, which are expected to benefit from the ongoing AI demand [27]. Key Stocks to Watch - The report highlights several companies for potential investment, including Luxshare Precision, which is well-positioned to benefit from AI strategies of major clients [28]. - Other notable mentions include Pengding Holdings and Shenghong Technology, both of which have strong market positions in PCB manufacturing [28].

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].

Group 1 - The 618 shopping festival has commenced, coinciding with the upcoming Dragon Boat Festival, leading to increased consumer spending [1] - HarmonyOS versions of major e-commerce applications such as JD, Taobao, Pinduoduo, Vipshop, and Dewu have launched promotions for the 618 event, achieving cross-platform consistency [1] - Features like "price drop alerts" and "bump to share" enhance the shopping experience on the nova 14 series, allowing users to easily share product links and receive timely notifications on price changes [4][6] Group 2 - The HarmonyOS e-commerce applications offer improved functionalities and a smoother user experience, making it easier for users of nova 14 and other HarmonyOS 5 devices to enjoy discounts [8] - Users can access exclusive benefits such as a JD PLUS membership and free shipping through the "Harmony Gift" package available on the nova 14 series [8]

Core Viewpoint - Huawei's MateBook Fold is the world's lightest and largest commercial foldable laptop, featuring an 18-inch display and a thickness of only 7.3mm when unfolded, weighing just 1.16kg, combining aesthetics, portability, and immersive viewing experience [1][2]. Design and Materials - The MateBook Fold is available in three colors: Forged Black, Sky White, and Cloud Water Blue, with Forged Black showcasing a unique dual-material and dual-texture design, enhancing both aesthetics and durability [3]. - The device utilizes a carbon fiber SMC (Sheet Molding Compound) process, which enhances impact resistance by three times compared to traditional materials [4]. - The carbon fiber SMC production involves a high-pressure molding process that creates unique textures, emphasizing the product's luxury and artistic attributes [6]. Manufacturing Process - The production of the unique cloud pattern on the device requires 63 processes, including high-temperature and high-pressure molding, as well as precision engraving and imprinting [8]. - Huawei invested 1-2 years in developing a custom high-impregnation carbon fiber material to achieve the desired aesthetic details and eliminate defects such as dry fiber and pinholes [8].