Investment Highlights

6nm set-top box chips received orders, and the market share of global operators continued to increase. With the rapid development of the Internet around the world and the increasing number of overseas operators introducing smart set-top boxes, the global OTT market size is expected to grow from US$70.08 billion in 2024 to US$229.97 billion in 2032. The company's series of products for the operator market have obtained multiple streaming media system certifications and multiple international mainstream conditional receiving system certifications; The series of products for domestic and foreign non-operators are rich in types, covering high, medium and low markets. In addition, the company's 6nm commercial chips based on the next-generation ARM V9 architecture and independent research and development of edge AI capabilities have been successfully taped out and have received the first batch of commercial orders. 8K chips performed well in the first commercial batch bidding of domestic operators.

The sales of TV chips continued to rise, and domestic and foreign customers continued to develop. Consumer entertainment preferences and AI technology are reshaping the smart TV market, with more than 85% of households in developed countries now owning at least one smart TV, and adoption in emerging markets growing by 30% per year. At present, the company's T series products mainly include full HD series chips and ultra-high-definition series chips, which support up to 8K video decoding, and have completed the full coverage of the international mainstream TV ecosystem, including Google Android TV, Amazon Fire TV, Roku TV, RDK TV, etc., and the T series products will further expand the international market share in the future.

AI chips benefit from the blue ocean market of artificial intelligence, and application fields such as camera display continue to expand. With the development of AI technology, technologies such as voice recognition, smart home assistants, and augmented reality home experience make family life more intelligent and convenient, and smart homes will develop in the direction of more intelligent, ecological, scenario-based, and sustainable development. The company's A series chips provide a general hardware and software platform, and customers can develop corresponding products and applications according to actual application scenarios. At present, the products have been widely used in many consumer electronics fields, such as smart speakers, smart doorbells, smart images, AR terminals, smart lamps, smart conference systems, learning machines, treadmills, spinning bikes, fitness mirrors, sweeping robots, refrigerators, agricultural drones, advertising machines, live broadcast machines, game consoles, etc. At the same time, the company is also continuing to expand ecological users and expand the end-to-end layout.

The business territory of W series chips has been further expanded, and automotive chips have been introduced into well-known car companies. After the launch of the company's first Wi-Fi 6 product, it quickly gained market recognition and rapid growth in orders, with nearly 14 million units sold in 2024. In addition, the company will further launch new three-mode combination products, and the business territory of W series chips will be further expanded, in addition to adapting and supporting sales with the company's main control SoC platform, it will also be sold independently to the open market. The company's automotive electronic chips currently mainly include in-vehicle infotainment system chips and intelligent cockpit chips, which have been successfully used in many models, such as BMW, Lincoln, Jeep, Volvo, Zeekr, Skyworth, etc., and will give full play to the advantages of system-level platform and intelligent SoC chips in the future, and continue to expand new technologies and launch new products.

Profit forecast: We expect the company's operating income from 2024 to 2026 to be 59.3/74.5/9.37 billion yuan, and the net profit attributable to the parent company to be 8.2/10.7/1.39 billion yuan respectively, maintaining a "buy" rating.

Risk Warning: Technology iteration risk; the risk that R&D does not meet expectations; the risk of loss of core technical talents; customer concentration risk; supplier concentration risk; the risk of declining inventories and declining turnover; the risk of a decline in gross margin; Macro environmental risks.