HSBC Global Research commented in a report that GPT-4o is driving the popularity of AI mobile phones, and voice assistants are likely to be the "killer app" among them. NPU, DRAM, sensors, batteries, chargers, RF, cooling and operating systems are the key areas for specification upgrades.
The broker's top pick in the industry is LUXSHARE PRECISION (002475.SZ) +0.990 (+3.106%) , while XIAOMI-W (01810.HK) +0.140 (+0.725%) Short selling $168.87M; Ratio 10.747% , AAC TECH (02018.HK) +0.250 (+1.006%) Short selling $38.13M; Ratio 27.360% and ANKER (300866.SZ) -1.080 (-1.137%) are also favoured.
The report mentioned that as Apple (AAPL.US) is likely to integrate ChatGPT into the upcoming iOS 18, there will be a synergistic effect based on the fact that the upcoming iPhone models will bring a better user experience, which in turn will trigger demand for future replacements.
HSBC believed LUXSHARE is a good proxy for the recovery of the iPhone supply chain, benefiting from its growing share of iPhone production and wider component supply. The broker saw the upcoming WWDC 2024 conference in June as a catalyst and is bullish on XIAOMI, which is at the forefront of specification upgrades, as it is well-positioned for the potential upcoming demand for AI handset replacements, supported by its HyperOS.
The broker is also positive on AAC, which is one of the main beneficiaries of the rising demand for microphones as the future demands for sophisticated voice assistants become more demanding. It is also bullish on ANKER, a supplier of Apple-certified chargers, as AI phones are likely to cause more users to worry about low battery power, and smartphone batteries are unlikely to get any bigger.
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