1、 Industry Overview 

1.1 Industry Definition and Scope 

The electronic components industry is the core support of modern technology industry, covering multiple sub sectors such as semiconductors, optical optoelectronics, printed circuit boards, and electronic component manufacturing. These sub sectors together form the upstream foundation of the electronic information manufacturing industry, providing key components and technical support for multiple downstream application areas such as communication equipment, consumer electronics, automotive electronics, smart homes, industrial control, military security, etc. Specifically, semiconductors are the core of electronic components, including integrated circuits, discrete devices, etc. They are the brain and nerve of modern electronic devices; Optics and optoelectronics cover modules, semiconductor displays, and LEDs, providing technical support for fields such as display and lighting; Printed circuit board is the physical carrier of electronic devices, connecting and supporting various electronic components; The manufacturing of electronic components includes various stages such as packaging and testing of electronic components, ensuring the reliability and performance of the product. 

1.2 Industry Importance 

The electronic components industry occupies a crucial position in the modern technology industry. With the continuous advancement of technology, the application scope of electronic components is becoming increasingly widespread, from smartphones and personal computers to new energy vehicles and industrial automation equipment, all of which rely on high-performance and high reliability electronic components. Especially driven by emerging technologies such as artificial intelligence, 5G communication, and the Internet of Things, the demand for electronic components continues to grow, becoming a key force driving the development of the global technology industry. In addition, the development level of the electronic components industry directly affects the country's technological competitiveness and industrial security, especially in key areas such as high-end chips and advanced display technology. The independent and controllable electronic components industry is of great significance for ensuring national information security and economic development. 

1.3 Industry Chain Analysis 

The industrial chain of the electronic components industry is complex and lengthy, with upstream covering chemical raw materials, electronic components and assemblies, midstream assembling different components into complete machines through manufacturing and processing, and downstream involving multiple fields such as communication equipment, consumer electronics, automotive electronics, smart homes, industrial control, military security, etc. Specifically, upstream raw material suppliers provide basic materials for electronic component manufacturers, such as silicon wafers, metal materials, chemical raw materials, etc; Midstream manufacturing and processing enterprises are responsible for processing these raw materials into various electronic components and assemblies, such as integrated circuit manufacturing, PCB production, etc; Downstream application areas integrate electronic components into various end products according to different needs, such as smartphones, computers, automobiles, etc. The coordinated development of the entire industry chain plays an important role in improving the performance of electronic components, reducing costs, and enhancing market competitiveness. 

1.4 Industry Competition Pattern 

The competitive landscape of the electronic components industry presents characteristics of diversification and internationalization. On a global scale, countries and regions such as the United States, Japan, and South Korea hold leading positions in high-end fields such as semiconductors and optical optoelectronics, with international giants such as Intel, Samsung, and TSMC. These enterprises have significant advantages in technology, market share, brand influence, and other aspects, leading the development direction of the global electronic components industry. In recent years, with the rapid development of emerging economies such as China, domestic enterprises have gradually achieved technological breakthroughs in the mid to low end fields, formed a relatively complete industrial chain layout, and initially completed the independent and controllable development of the entire industrial chain. For example, in the chip production process, Chinese companies have achieved breakthroughs in mature processes in design, manufacturing, and packaging testing, and their self-sufficiency in the manufacturing process has gradually increased. However, compared with the international advanced level, Chinese enterprises still have a significant gap in high-end advanced processes, especially in key areas such as semiconductor materials and semiconductor equipment, where their competitiveness is relatively weak. 

1.5 Industry Development Trends 

The development trend of the electronic components industry is mainly reflected in the following aspects: 

Driven by technological innovation: With the continuous advancement of technology, the electronic components industry will constantly emerge with new technologies and products, such as quantum computing, artificial intelligence chips, MicroLED display technology, etc. These new technologies will bring new growth opportunities to the electronic components industry, while also placing higher demands on the technological innovation capabilities of enterprises. 

Accelerated localization substitution: Driven by policy support and market demand, the localization substitution process in the electronic components industry will accelerate. Domestic enterprises will further consolidate their market share in the mid to low end sector and gradually expand into the high-end sector to enhance their independent and controllable capabilities. 

Expansion of emerging application areas: AI、 The development of emerging application fields such as new energy vehicles and the Internet of Things will bring broad market space to the electronic components industry. For example, AI big model training has put forward higher requirements for computing infrastructure, and data centers, as important computing infrastructure, have become an important incremental direction for capital expenditures of technology-based enterprises, thereby driving the growth of IT computing equipment and related core components, mainly servers, storage, data center chips, etc. 

Industrial integration and collaboration: Effective integration of resources within the industry and increased concentration of industries will become the future development trend. The collaborative cooperation between upstream and downstream enterprises in the industrial chain will become closer, enhancing their competitiveness and market influence through resource sharing, technological cooperation, and other means. 

2、 Industry Review in 2024 

2.1 Downstream demand recovery 

In 2024, the overall downstream demand for electronic components shows a moderate recovery trend, but there is significant differentiation in the degree of recovery among different application fields. Specifically, let's take a look: 

In the field of communication, China's 5G infrastructure construction will be orderly promoted in 2023, and the construction of 5G networks and user penetration rates will be at the forefront of the world. As of the end of November 2024, China has built a total of 4.191 million 5G base stations, a net increase of 815000 from the end of the previous year. The proportion of 5G base stations has increased from 29.1% at the end of 2023 to 33.2%. The 5G network layout has begun to take shape, promoting the development of the Internet of Things, autonomous driving, artificial intelligence, digital transformation of government and enterprises, and cloud computing industry, bringing huge market growth space to the industry. Especially in emerging fields such as artificial intelligence, AI big model training has put forward greater demands on computing infrastructure. As an important computing infrastructure, data centers have become an important incremental direction for capital expenditures of technology-based enterprises, thereby driving the growth of IT computing equipment and related core components, mainly servers, storage, data center chips, etc. From the perspective of global data center capital expenditure, after experiencing a slowdown in capital expenditure growth in 2023, driven by AI big model training, technology companies have increased their investment in data centers, resulting in a significant increase in global data center capital expenditure growth. According to Dell'Oro Group data, global data center capital expenditure increased by 38% year-on-year in the first half of 2024, and the growth rate is expected to remain above 30% Meta、 Tech giants such as Google and Amazon have increased their investments in data centers, with a total investment of over $100 billion from January to August 2024. Looking ahead to 2025, the computing power demand for new AI applications and AI big model training remains a key driving force for global data center capital expenditures, and it is expected that data center capital expenditures will continue to grow significantly. From the perspective of the Chinese market, in 2023, the "East Data West Computing" project will be launched and implemented for one year, and the size of China's IDC market will continue to grow. According to data from Kezhi Consulting, the overall IDC business market size in China will reach 507.83 billion yuan in 2023, an increase of 25.6% compared to the previous year. The total IT load of the intelligent computing center will reach 1205.5MW, an increase of 41.6% year-on-year; With the great attention and support of relevant policies from the government, we estimate that the market size of IDC business will maintain a significant growth in 2024, especially for intelligent computing centers with higher relevance to artificial intelligence. Cloud related businesses are another major capital expenditure for data centers, in addition to servers and physical infrastructure. From the perspective of global and Chinese cloud capital expenditures, the rapidly growing demand for AI related services brings opportunities for cloud services. With the continuous expansion of AI technology applications, the demand for high-performance computing and storage is growing rapidly, leading to the need for advanced and highly scalable cloud infrastructure, prompting cloud service providers to increase investment in the AI field. According to Canalys data, global cloud infrastructure service spending in the third quarter of 2024 increased by 21% year-on-year to $82 billion; The cloud infrastructure service expenditure in Chinese Mainland increased by 11% year-on-year to US $10.2 billion in the third quarter, accounting for about 12% of the global cloud expenditure. The long-term demand for enterprise digital transformation continues, while the wide application of AI brings new demand. Cloud capital expenditure is expected to enter a new rapid development stage after a phased slowdown. 

In the field of consumer electronics: Since 2024, the slow recovery of the global economy has shown some resilience, consumer confidence has increased, and the overall demand in the consumer electronics market has shown a recovery, but the degree of recovery in different categories of market demand has differentiated. In terms of smartphones, starting from the second half of 2021, after experiencing six consecutive quarters of year-on-year decline, driven by factors such as high cost-effective new product combinations, update cycles, and increased consumer confidence, global smartphone shipments resumed their growth trend in the second half of 2023 and continued into 2024. After four consecutive quarters of growth, according to IDC quarterly data, global smartphone shipments increased by 6.34% year-on-year to 891 million units in the first three quarters of 2024. From a regional market perspective, the African and Latin American markets, which are dominated by mid to low end products, have continued their recovery trend since the second half of 2023. According to Canalys data, in the third quarter of 2024, smartphones in Africa and Latin America have achieved recovery for multiple consecutive quarters, but the growth rate has slowed down under macroeconomic pressure. Smartphone shipments in Africa increased by 3% year-on-year to 18.4 million units, while those in Latin America increased by 10% year-on-year to 35.1 million units; Benefiting from the improvement of inventory levels and channel activities by smartphone manufacturers, the ASP of smartphones in Southeast Asia has decreased, driving continuous growth in shipments. In the third quarter of 2024, the smartphone market in Southeast Asia increased by 15% year-on-year to 25 million units, and the growth rate reached the highest point in multiple quarters; The Chinese smartphone market began to rebound in 2024, with shipments increasing for two consecutive quarters. In the third quarter of 2024, the year-on-year growth rate was 4% to 69.1 million units, continuing the rebound trend. From the performance of different mobile phone brands and models in the market, the top five global smartphone manufacturers showed stable performance in the first three quarters of 2024, but competition became more intense. Samsung streamlined its product line, resulting in a slight decline in shipments in the third quarter, but still ranking first with 57.5 million units shipped and 19% market share; The iPhone 16 series with AI capabilities has performed strongly, with a historical record of 54.5 million units shipped, ranking second, and a market share of 18%, further narrowing the gap with Samsung; Thanks to the launch of new products, Xiaomi ranked third with a shipment volume of 42.8 million units and a market share of 14%; By streamlining product lines and increasing market expansion efforts, OPPO and Vivo ranked fourth and fifth with shipments of 28.6 million and 27.2 million units, respectively. Due to factors such as product positioning and durability, after multiple quarters of rapid growth, the growth rate of the foldable screen mobile phone market has reached a bottleneck. At the same time, some manufacturers have begun to reduce their investment in foldable screen products. According to Canalys' forecast, the shipment volume of foldable screen mobile phones for the whole year of 2024 can only achieve a 13% growth. With the development of mobile AI applications and services, smartphones with AI capabilities are expected to replace foldable screen phones as a new growth point in the high-end smartphone market. According to Canalys, the penetration rate of AI smartphones is expected to reach 17% by 2024. Overall, as one of the most important application terminals in the consumer electronics field, smartphones have experienced consecutive quarterly declines before reaching a turning point in the fourth quarter of 2023 and continuing into 2024. Looking ahead to 2025, the gradual replacement cycle of mobile phones purchased during the pandemic and the penetration of AI phones will drive demand to gradually recover. However, under the expectation of low-speed global economic growth, there is uncertainty about the strength of demand recovery, and it is expected that the shipment volume of the smartphone market will maintain a slight increase. Wearable devices mainly include audible wearables and smart wristbands. Since 2011, it has entered the consumer's field of vision. After years of rapid market penetration, with the maturity of large markets such as China, the United States, Europe, and India, global wearable device shipments have entered a moderate growth stage. The speed of technological innovation and consumer interest in new products have slowed down, putting pressure on the growth of wearable devices. With the moderate recovery of consumer demand and the gradual arrival of the replacement cycle, according to IDC's forecast, global wearable shipments will increase by 6.1% to 538 million units in 2024. Although the growth is relatively mild, shipments will return to 2021 levels. From a product perspective, wearable wristband devices include three major categories: basic wristbands, basic watches, and smartwatches. Basic wristbands have experienced multiple quarters of decline due to limited functionality, and the rise of basic watches is the main driving force for growth in 2023. In the first three quarters of 2024, the global wearable wristband device market grew by 3% year-on-year to 52.9 million units. Driven by strong demand for multiple series of new products, basic wristbands experienced their first recovery in growth after multiple quarters of decline, with shipments increasing by 7% year-on-year to 10.4 million units; The basic watch market has stabilized as demand from emerging markets led by India slows down, with shipments increasing by 3% year-on-year to 23.9 million units; The speed of technological innovation and consumer interest have decreased, resulting in a slight increase of 0.1% in smart watch shipments to 18.5 million units. In terms of personal audio, the global personal audio device market will experience a comprehensive recovery in 2024. According to Canalys data, the global shipment of personal intelligent audio devices in the first three quarters of 2024 was about 126 million pieces, a year-on-year increase of 15%, showing a growth trend for three consecutive quarters. The growth mainly comes from TWS devices, wireless neck hanging and open headphones. Driven by the popularization of sound quality improvement and active noise reduction functions, TWS device shipments increased by 15%, especially in the Indian market, which saw a significant growth of about 47%; With the increasing attention of consumers to health, driven by the health and fitness industry, the demand for wireless neck hanging headphones and open headphones has significantly increased, accounting for 6% of the overall market in terms of shipment volume and growth rate. Looking ahead to 2025, the wearable wristband device market is expected to mature, and the speed of technological innovation and consumer interest in new products are slowing down, which will put pressure on the growth of wearable devices. With the moderate recovery of consumer demand and the gradual arrival of the replacement cycle, it is expected that the wearable wristband device market will grow moderately; In terms of audio equipment, the improvement of sound quality and functionality brings opportunities to the market. There is still a large penetration space for new products such as open headphones. It is expected that the audio equipment market will maintain good growth, and regional markets with different maturity and consumer characteristics will bring differentiated opportunities for the development of wearable devices. In addition, the embedding of AI functions may bring certain new demands to the wearable market. In the field of computer science, since the fourth quarter of 2023, the global PC market has shown positive signals. With the slow economic recovery, Windows software updates, and the launch of AI PCs, consumer and enterprise procurement demand has recovered, especially enterprise demand has recovered significantly. Global PC shipments have achieved growth for four consecutive quarters. According to Canalys data, in the third quarter of 2024, the global shipment of PCs (including desktops, laptops, and workstations) reached 66.4 million units, a year-on-year increase of 1.3%. Among them, the shipment of laptops (including mobile workstations) reached 53.5 million units, a year-on-year increase of 2.8%, while the shipment of desktops (including desktop workstations) fell by 4.6% to 12.9 million units; In terms of AI PCs, the third quarter of 2024 maintained a strong pace, with Copilot+PCs equipped with Snapdragon X series chips entering their first full supply season. AMD also launched the Ryzen AI 300 series products, and Intel officially released its Lunar Lake series. AI PC shipments reached 13.3 million units, accounting for 20% of the total PC shipments in this quarter. Looking ahead to 2025, with the improvement of technological infrastructure, chip manufacturers and OEM manufacturers are expected to cover a wider customer base through more price range products. At the same time, the discontinuation of Windows 10 system service in October 2025 will also drive a certain demand for PC replacement, especially in terms of enterprise demand.

近年来全球智能手机出货量

In the field of automotive electronics, electric vehicles, autonomous driving, advanced driver assistance systems (ADAS), intelligent cockpits, etc. are still the mainstream directions of development in the automotive industry, driving rapid growth in demand for automotive electronics. From the perspective of the development of the global electric vehicle market, the Chinese market started earlier. In recent years, the production and sales of new energy vehicles have continued to grow rapidly, with sales and penetration rates ranking among the top in the world. According to data from the China Association of Automobile Manufacturers, from January to November 2024, the domestic production and sales of new energy vehicles reached 11.345 million and 11.262 million respectively, an increase of 34.6% and 35.6% year-on-year. The annual production of new energy vehicles exceeded 10 million for the first time, and the penetration rate of new energy vehicles exceeded 50%. In recent years, global new energy vehicles have maintained a high growth rate. At the same time, the value of electronic components based on electric vehicles will also increase. The development of electrification will be conducive to the stable growth of demand for key electronic components such as power devices and power semiconductors, microcontrollers, power management chips, and sensors, including automotive semiconductors, batteries, car panels, cameras, PCBs, and MLCCs. Looking ahead to 2025, after years of rapid development, the sales volume of new energy vehicles exceeds 10 million units, and the penetration rate exceeds 50%. It is expected that the development will slow down, but it will still maintain rapid growth. The sustained development of the new energy vehicle market provides support for the long-term demand growth of electronic components. 

2.2 Steady recovery of operating efficiency 

In 2024, the moderate recovery of domestic and international demand has driven the overall operational efficiency of the electronic components industry to stabilize and rebound. Specifically, let's take a look: 

Semiconductor industry: Due to the comprehensive impact of industry cycle changes and geopolitical factors, the global semiconductor industry has experienced a decline since the second half of 2022. With the recovery of storage market prices in the second half of 2023, the overall downward trend of the industry has stabilized and will resume growth in 2024. According to WSTS data, from January to October 2024, global semiconductor sales increased by 19.38% year-on-year to $510.099 billion. Based on the continuous correction of demand in major downstream markets, WSTS expects global semiconductor sales to be $611.231 billion and $687.38 billion in 2024 and 2025, respectively, returning to a growth trend. For enterprises in Chinese Mainland, after more than ten years of technology catching up, Chinese enterprises have successively achieved technological breakthroughs in the middle and low end fields, and have opened up the core links, formed a relatively complete layout of the semiconductor industry chain, and initially completed the autonomy and control of the whole industry chain. Especially in the chip production link, design, manufacturing, and seal testing, they have achieved breakthroughs in mature processes, and the self-sufficiency of the manufacturing link has gradually increased. However, compared with the domestic market demand, there is still a large capacity and technology gap, especially in advanced processes. Compared with chip production, semiconductor materials and semiconductor equipment, as the production support, are still the weak points of China's industrial chain, especially in high-end chip production. Manufacturers in Chinese Mainland are relatively weak in competitiveness, and future development still needs the cooperation of all links of the industrial ecology. In general, the supply and demand of semiconductors in Chinese Mainland has eased with the continuous breakthrough of enterprises in the middle and low-end fields. The dependence on imports of core products has been declining, but the contradiction between supply and demand in high-end advanced manufacturing processes is still prominent. From the data point of view, at present, China's semiconductor market demand accounts for about 30% of the world's total, and the wafer manufacturing capacity in Chinese Mainland has increased to about 19.1%. Compared with the broad market demand, the semiconductor manufacturing capacity gap in Chinese Mainland has narrowed, but it is still large. In recent years, the overall trade deficit has shrunk, but semiconductor is still China's largest import commodity. According to the data of the General Administration of Customs, from January to November 2024, China's integrated circuit import amount and trade balance are respectively US $349.237 billion and US $-20.4493 billion. In addition, based on the development status of China's semiconductor industry and the rising export restrictions of the United States on China's high-end semiconductor technologies and talents, the breakthrough and capacity expansion of Chinese Mainland enterprises in mainstream high-end semiconductor technologies and products will face greater difficulties. New devices, new materials, new processes, micro/nano system integration, and chip architecture innovation may become the three major innovation directions in the future. At the same time, the integration of domestic resources and the improvement of industrial concentration will help enhance the global competitiveness of Chinese enterprises. The huge domestic market space can also provide support for the development of China's semiconductor industry.

近年来全球和中国半导体销售情况

• The optical and optoelectronic industry: The most representative sub sectors include panels, modules, and LEDs, all of which have faced varying degrees of overcapacity in recent years. Specifically, in terms of LED, the overall LED industry chain is still under pressure and downward. According to data from the China Lighting Electrical Appliances Association, in recent years, China's lighting products have accounted for about 60% of global exports. From January to November 2024, China's total export value of lighting products was about 50.4 billion US dollars, a year-on-year decrease of about 0.7%. Overseas demand is still weak, and the product structure continues to change. The export proportion of LED electric light sources has increased by about 72%, accounting for 90% of China's export volume of ordinary lighting electric light sources. The export volume of LED modules has increased by about 517% year-on-year, and the export proportion of traditional ordinary lighting products continues to decline. LED manufacturers' business performance is differentiated, and those who master advanced LED technology have taken the lead in stabilizing their business performance. In terms of modules, with the gradual recovery of consumer electronics terminal demand, the operating pressure of module manufacturers has eased since 2024. The overall business scale growth has driven the increase of production line capacity utilization rate, and the industry has rebounded as a whole. The top manufacturers have benefited first, with good operating performance. Although other module manufacturers have seen business growth, the magnitude is relatively small, and there is still some operating pressure. The technical barriers in the module sector are relatively low, the industry competition is fierce, and the squeezing effect of the upstream and downstream of the industry chain on the profit space of the module end is significant. The overall operational efficiency of module enterprises is low. At the same time, the gradual maturity of panel and other industry technologies and changes in processing methods put higher demands on the module industry. Module enterprises lacking core competitive advantages may still face certain operational pressures. In terms of panels, LCD TVs, PCs, and smartphones are the main downstream application directions of panels. Since the second half of 2023, with top panel manufacturers adjusting their operating rates and accelerating the clearance of some inefficient production capacity, coupled with inventory digestion, the prices of large-sized panels have shown a trend of stabilizing after rebounding in 2024, while the prices of small-sized panels have remained basically stable. At present, the competition in the industry is relatively stable, with technologies such as LCD, OLED, and MicroLED coexisting. LCD is still the mainstream and widely used in large-size applications, while OLED is gradually penetrating from the mobile phone field to the laptop, car, and TV fields. The proportion of global shipments is increasing year by year, and major manufacturers are increasing their MicroLED layout. After the Korean manufacturers Samsung and LGD closed their factories, Shuanghu Group Innovation and Youda in Taiwan, China also closed some LCD production lines one after another, and LGD Guangzhou factory also plans to sell. At the same time, with the release of production capacity of advanced generation production lines in Chinese Mainland, the global panel capacity is further concentrated in Chinese Mainland. At present, the scale of China's display panel industry ranks first in the world. BOE and TCL Huaxing have established significant competitive advantages in the field of large size LCD. In the field of small and medium size panels, Samsung, BOE and Shenzhen Tianma rank among the top three in the world in terms of market share. The market position of Chinese Mainland manufacturers in the field of panel display is at the forefront of the world and their technical strength is growing step by step. 

• Printed circuit board industry: Since 2024, due to the gradual recovery of demand and improvement of inventory, the industry has shown signs of recovery. According to Prismark's estimation, the PCB market as a whole will achieve positive growth in 2024, with an expected total output value of $73.026 billion, a year-on-year increase of about 5.0%. The markets of AI servers, data storage, communication, new energy, intelligent driving, and consumer electronics will continue to be important long-term growth drivers for the industry. Among them, the demand for high computing power and high-speed network communication from AI and new generation information technology is showing a high growth trend, driving the rapid growth of downstream market demand for PCB products with large size, high number of layers, high frequency and high speed, high-order HDI, high heat dissipation, etc. The significant growth in demand for high-end chips and advanced packaging has driven the recovery and growth of the global packaging substrate industry, but still faces structural differences. The demand for AI related high-end computing power chips and storage chips is strong, and the demand for packaging substrate products in related fields is increasing year-on-year; The recovery of demand in other sub sectors such as discrete devices, optoelectronic devices, sensors, and analog chips is relatively weak, indirectly affecting the growth of the corresponding packaging substrate product market.

近年中小尺寸面板价格走势

Electronic component manufacturing and other electronic component industries: Driven by a slow recovery in demand, the industry's growth rate has recovered to some extent. However, manufacturers with high manufacturing and technology research and development capabilities and higher customer satisfaction are able to compete for more product supply categories and larger market share from core customers. On this basis, the industry concentration is showing an upward trend, and with some manufacturers expanding into new product application areas, the industry space is further expanded, providing a good foundation for the stable growth of related manufacturers' performance. 

2.3 Policy impact 

Since 2024, the international environment faced by the industry remains severe, and some developed countries, led by the United States, have further increased the scope and intensity of restrictions on China's related industries, continuing the high-pressure situation in China's high-tech field, especially the semiconductor industry, since the Trump administration. However, the policies of "two new" and "two dual" have provided impetus for the construction of downstream projects and demand recovery in the electronic components industry, and sustained strong industrial policies and financial support have provided strong support for key technological breakthroughs and accelerated localization substitution processes. 

"Two new" and "double" policies: Since 2024, China has continued to increase counter cyclical adjustment, taking "two new" and "double" as the main driving force to carry out economic work, raising funds to support project construction in related industries through ultra long term special treasury bond and other means, and supporting consumer goods such as automobiles and household appliances to trade in old for new in the form of subsidies to boost consumption and expand domestic demand. In terms of effectiveness, the "dual" policy has invested 700 billion yuan to support over 1000 projects, with an average support of around 400 million yuan per project, effectively promoting the construction of key projects; In terms of "two new" initiatives, an investment of 300 billion yuan has been made in equipment updates, car and home appliance trade ins, and other areas. Over 3.1 million cars have been replaced and updated nationwide, and more than 33.3 million consumers have purchased over 52.1 million related home appliance trade in products. Over 53 million subsidized products for home decoration, kitchen and bathroom "revitalization" have been purchased, and over 1 million electric bicycles have been exchanged, all of which have driven sales growth of over 100 billion yuan. Overall, since 2024, China's economic policies focusing on "two new" and "two double" have not only supported enterprise development from the perspective of project investment, but also boosted consumption and expanded domestic demand, which has to some extent provided impetus for the recovery of demand in the electronic components industry. Looking ahead to 2025, the "two new" and "two dual" policies will continue to be implemented, and the support scope for equipment updates is expected to expand to fields such as electronic information, safety production, and facility agriculture. In terms of exchanging old for new consumer goods, not only will the support for home decoration consumer goods be increased, but also subsidies for purchasing new digital products such as mobile phones will be implemented, providing subsidies for individual consumers to purchase three types of digital products including mobile phones, tablets, and smart watches and bracelets, and continuing to provide impetus for the recovery of demand in the electronic components industry. 

International policy impact: Some developed countries, led by the United States, continue to suppress and restrict China's so-called sensitive high-tech fields, including semiconductors, quantum computing, and artificial intelligence. In March 2024, the Biden administration revised the semiconductor export control order to China in the third round, and in December 2024, the Bureau of Industry and Security (BIS) of the US Department of Commerce revised the Export Administration Regulations again, further increasing the scope and intensity of restrictions on China's related industries, continuing the high-pressure situation on China's high-tech fields, especially the semiconductor industry, since the Trump administration. Faced with the severe test brought by the blockade of the high-tech industry in the United States, the Chinese government continues to introduce policies including top-level design, finance and taxation to promote the development of related industries. In May 2024, China established the third phase of the National Integrated Circuit Industry Investment Fund, with a registered capital of 344 billion yuan, far exceeding the scale of the first and second phases; Four major associations, including the China Automobile Industry Association, the China Semiconductor Industry Association, the China Internet Association, and the China Communications Enterprise Association, made a joint statement, clearly saying that they would resolutely resist the export restrictions imposed by the United States on China, and remind Chinese enterprises to purchase American chips carefully to ensure the security of the supply chain; The launch of the "Action Plan for Stable Growth of Electronic Information Manufacturing Industry in 2023-2024" and the "Regulations on Rare Earth Management" aims to counteract external industrial restrictions and vigorously support domestic enterprises in China. Continuous and strong industrial policy support will accelerate the gradual breakthrough of the "bottleneck" link in the electronics industry, accelerate the process of domestic substitution, and enhance the security of China's electronics industry chain. 

3、 Industry Outlook for 2025 

3.1 Driving Forces for Demand Growth 

In 2025, the demand growth of the electronic components industry will be driven by various factors, and although there is some uncertainty, the overall demand outlook remains optimistic. Specifically, let's take a look: 

Uncertainty in the strength of consumer electronics demand recovery: In 2024, the overall consumer electronics market shows a moderate recovery trend, but there is uncertainty in the strength of the recovery. In 2025, with the gradual replacement cycle of mobile phones purchased during the epidemic and the penetration of AI phones, the shipment volume of the smartphone market is expected to maintain a slight growth. However, the expectation of slow global economic growth may have a certain impact on the strength of consumer electronics demand recovery, especially in the mid to low end market, where the speed of consumer confidence and purchasing power recovery will directly affect market demand. 

The computing power demand related to AI: The rapid development of AI technology has put forward higher requirements for computing infrastructure, and data centers, as an important computing infrastructure, will continue to be an important direction for capital expenditure of technology-based enterprises. In 2024, the growth rate of global data center capital expenditure is expected to increase significantly, and this trend is expected to continue in 2025. The demand for IT computing equipment and related core components such as servers, storage, and data center chips for AI big model training will continue to grow, bringing new market opportunities to the electronic components industry. 

The demand for industrial and IoT applications driven by digital transformation: With the acceleration of enterprise digital transformation, the demand for electronic components in fields such as industrial automation and intelligent manufacturing will steadily increase. The popularization of IoT applications will also drive the market demand for components such as sensors and communication modules. In 2025, with the further popularization of 5G networks and the in-depth development of industrial Internet, the demand for electronic components in related fields will continue to grow. 

The continuous development of the new energy vehicle market provides long-term support for the electronic components industry. In 2024, China's production and sales of new energy vehicles will continue to maintain rapid growth, with sales and penetration rates consistently ranking among the top in the world. In 2025, although the development of the new energy vehicle market is expected to slow down, it will still maintain rapid growth. The development of electrification will be conducive to the stable growth of demand for key electronic components such as power devices and power semiconductors, microcontrollers, power management chips, and sensors, including automotive semiconductors, batteries, car panels, cameras, PCBs, and MLCCs. 

3.2 Improvement of Business Efficiency 

In 2025, the operating efficiency of the electronic components industry is expected to further improve, and various sub sectors will present different development trends. Specifically, let's take a look: 

The semiconductor industry as a whole has bottomed out and rebounded: In 2024, the overall downward trend of the global semiconductor industry has stabilized and will resume growth in 2024. In 2025, with the continuous growth of downstream market demand, especially driven by the demand for AI related computing power, the semiconductor industry is expected to continue its growth trend. The price increase combined with the recovery of downstream demand will drive the performance of various links in the industrial chain to improve, investment to become more rational, and accelerate the recovery of the industry. 

The performance pressure of the optical and optoelectronic industry has eased: In 2024, the performance pressure of the optical and optoelectronic industry has been alleviated due to the obvious reduction in supply side production and the recovery of demand in the consumer sector. In 2025, with the stabilization of panel prices and further recovery of market demand, the operating conditions of the optical optoelectronic industry are expected to continue to improve, but overall they are still operating at a low level, and it is still necessary to pay attention to the credit level changes of module enterprises with high liquidity pressure. 

Performance improvement driven by diversification of PCB product application areas: In 2024, the PCB industry shows signs of recovery and is expected to continue its growth trend in 2025. The demand for PCB products in markets such as AI servers, data storage, communication, new energy, intelligent driving, and consumer electronics will continue to grow, especially for high-end PCB products such as large size, high number of layers, high frequency and high speed, advanced HDI, and high heat dissipation, which will drive further improvement in the performance of the PCB industry. 

The electronic components industry is operating steadily: In 2024, driven by a slow recovery in demand, the industry's growth rate has recovered and its operations are stable. In 2025, with the further growth of market demand, especially the increasing demand for electronic components in fields such as new energy vehicles and industrial automation, the operating conditions of the electronic components industry will remain stable, and overall revenue is expected to maintain a slight increase. 

3.3 Continuous Policy Support 

In 2025, the country will continue to introduce a series of policies to support the development of the electronic components industry and provide impetus for the recovery of industry demand. Specifically, let's take a look: 

The "two new" and "two double" policies continue to exert force: In 2024, China's economic policies mainly based on "two new" and "two double" have brought impetus to the construction of downstream projects and demand recovery in the electronic components industry. In 2025, these policies will continue to be implemented, and the scope of equipment update support is expected to expand to fields such as electronic information, safety production, and facility agriculture, further promoting the development of related industries. 

The policy of exchanging old for new consumer goods: In 2025, the policy of exchanging old for new consumer goods will increase support for home decoration consumer goods and implement subsidies for purchasing new digital products such as mobile phones. Subsidies will be given to individual consumers for purchasing three types of digital products, including mobile phones, tablets, smart watches, and wristbands. These policies will directly stimulate demand in the consumer electronics market and bring new market opportunities to the electronic components industry. 

Industrial policy support: Faced with the severe test brought by the international high-tech industry blockade, the Chinese government will continue to introduce policies including top-level design, finance and taxation to promote the development of related industries. In 2025, the country will continue to increase support for key areas such as semiconductors and new energy vehicles, accelerate the gradual breakthrough of the "bottleneck" link in the electronics industry, accelerate the process of domestic substitution, and enhance the security of China's electronics industry chain. 

4、 Industry Financial Performance Analysis 

4.1 Profitability 

In 2024, the overall revenue and profit levels of sample companies in the electronic components industry showed a recovery growth, indicating a gradual improvement in the industry's operating efficiency. Specifically, let's take a look: 

Total operating revenue: In 2024, the total operating revenue of sample enterprises in the electronic components industry increased by 11.16% year-on-year, reaching 1106.263 billion yuan. This growth is mainly due to the mild recovery of downstream demand, especially the outstanding performance of sub sectors such as semiconductors and printed circuit boards (PCBs). Among them, the operating revenue of semiconductor sample enterprises increased by 25.32%, PCB sample enterprises increased by 19.09%, and other electronic component sample enterprises increased by 15.86%. Although the optical and optoelectronic industry has recovered after years of continuous decline, the growth rate is relatively low. 

Gross profit margin: In the first three quarters of 2024, the average operating gross profit margin of the sample companies increased by 0.7 percentage points year-on-year to 19.84%. However, there are differences in performance among different segmented industries. The gross profit margins of the printed circuit board, electronic components, other electronic components, and semiconductor industries have all decreased, reflecting a certain compression of profit margins in these industries. Driven by the rebound in panel and module prices, the average operating gross profit margin of the optical and optoelectronic industry has recovered and grown to 14.73%, but it is still the lowest value among segmented industries. 

Net profit: In the first three quarters of 2024, the net profit of the sample enterprises increased by 24.60% year-on-year, reaching 37.95 billion yuan, with a profit level exceeding that of the entire year of 2023. The net profit of each segmented industry has maintained growth, but the magnitude varies. The optical and optoelectronic industry has shown the most significant improvement, with a significant year-on-year decrease of 76.66% in net profit, although overall it still remains in a loss making state. The net profits of PCB and electronic component sample enterprises increased by 25.71% and 25.31% respectively, demonstrating strong profitability recovery ability. The year-on-year increase in net profit of semiconductor and other electronic component sample enterprises was relatively small, at 1.28% and 3.82% respectively, mainly due to the increase in depreciation and amortization of new production lines. 

4.2 Cash Acquisition Ability 

In 2024, the net cash flow from operating activities of sample companies in the electronic components industry showed a slight overall increase, but the growth rate was lower than the increase in net profit, indicating that companies are facing certain pressure in terms of cash flow from operations. Specifically, let's take a look: 

Net cash flow from operating activities: In the first three quarters of 2024, the total net cash flow from operating activities of the sample enterprises was 127.32 billion yuan, a year-on-year increase of 10.09%. Despite maintaining a positive endogenous funding source overall, except for the optical and optoelectronic industry, the net cash flow from operating activities in other sub sectors has decreased. The net cash flow from operating activities of sample enterprises in the optical and optoelectronic industry increased by 45.59% year-on-year, mainly due to strict credit management and revenue growth in the panel industry. Driven by the recovery of demand, module enterprises have shifted their net cash flow from outflows to inflows from operating activities. Although the operating performance of the LED industry remains stable, the current situation has declined year-on-year, and the financial pressure has increased. 

Segmented industry performance: PCB sample companies increased stocking in response to the recovery of downstream demand, resulting in a year-on-year decline of 22.30% in net cash flow from operating activities. The net cash flow from operating activities of sample companies in the semiconductor industry decreased by 12.06% year-on-year, mainly due to some companies increasing their operating cash outflows due to capacity ramp up or sharing inventory pressure with upstream companies. The net cash flow from operating activities of electronic components and other electronic component sample enterprises decreased by 5.30% and 54.47% year-on-year, respectively, reflecting the compression of cash flow from other links in the industry chain by brand manufacturers in the overall weak economic recovery environment, as well as the impact of enterprises moderately increasing stocking to maintain demand response speed. 

4.3 Debt paying ability 

In 2024, the overall capital expenditure of sample companies in the electronic components industry will decrease, resulting in a slowdown in the growth rate of total debt. However, financial leverage will slightly increase, and debt repayment indicators will generally weaken, but still remain at a good level. Specifically, let's take a look: 

Capital expenditure: In the first three quarters of 2024, the capital expenditure of sample enterprises in the entire industry increased by 8.76% year-on-year, reaching 162.971 billion yuan. Among them, the capital expenditure of sample companies in the semiconductor industry increased by 20.38%, mainly concentrated in the manufacturing process, in response to the accelerated promotion of localization substitution and the background of the China US semiconductor industry game. The capital expenditure of optical optoelectronic sample enterprises increased slightly by 11.19%, mainly driven by a year-on-year increase of RMB 8.421 billion in capital expenditure of BOE A. PCB、 The capital expenditure scale of the electronic components and other electronic components industry has decreased to varying degrees year-on-year, reflecting the cautious investment pace of enterprises in the current situation of relatively sufficient production capacity. 

Debt situation: As of the end of September 2024, the total debt of electronic component sample enterprises increased by 6.96% year-on-year, reaching 846.479 billion yuan. Among them, the absolute value of debt of optical optoelectronic sample enterprises is the largest, accounting for 54.08% of the total industry debt, but their debt growth rate is only 1.09%, reflecting the lengthening of investment pace. Sample companies in the semiconductor industry continue to experience positive growth in capital expenditures such as project construction, with a total debt growth rate of 19.71% at the end of the period, higher than other segmented industries. The debt scale of sample enterprises in the electronic components and other electronic components industry increased slightly, with year-on-year growth rates of 15.66% and 10.68%, respectively. 

Debt repayment index: In the first three quarters of 2024, the average ratio of short-term debt coverage to net cash flow from operating activities of sample enterprises was 2.40 times, which has decreased compared to the end of 2023. During the same period, the average coverage ratio of short-term debt by monetary funds of sample enterprises was 8.23 times, with a slight decrease in coverage ratio but still performing well. Although the operating performance of semiconductor sample enterprises has declined, they have benefited from favorable policies and financing environment in China, with high financial flexibility and low debt risk. The debt repayment indicators of PCB sample enterprises have improved, indicating a high level of operational stability. The average coverage of short-term debt by net cash flow from operating activities of electronic component sample enterprises has decreased to 0.54 times, lower than other sub industries, but their debt repayment ability is still within a controllable range. The debt repayment indicators of module based sample enterprises in the optical and optoelectronic industry have improved, but are still at a weak level. Their net cash flow from operating activities and average coverage of short-term debt by monetary funds are 0.59 times and 0.97 times, respectively. 

5、 Industry development trends and opportunities 

5.1 Localization substitution acceleration 

Driven by both policy support and market demand, the localization and substitution process of the electronic components industry is accelerating. In 2024, Chinese enterprises achieved significant technological breakthroughs in the mid to low end fields and gradually improved their industrial chain layout. Specifically, let's take a look: 

Policy support: The Chinese government continues to introduce a series of policies aimed at promoting the independent and controllable development of the electronic components industry. In May 2024, the third phase of the National Integrated Circuit Industry Investment Fund was established with a registered capital of 344 billion yuan, far ahead of the scale of the two phases, providing strong financial support for the localization and substitution of the semiconductor industry. In addition, the government encourages enterprises to increase research and development investment and improve their technological level through subsidies, tax incentives, and other means. 

Technological breakthroughs: Chinese enterprises have achieved multiple technological breakthroughs in the mid to low end fields, especially in the chip production process, design, manufacturing, and packaging testing, where mature process breakthroughs have been achieved. For example, the proportion of wafer manufacturing capacity in Chinese Mainland has increased to about 19.1%. Compared with the broad market demand, the capacity gap has narrowed, but it is still large. In the field of panel display, BOE and TCL Huaxing have established significant competitive advantages in the large-size LCD field. In the small and medium-sized panel field, Samsung, BOE, and Shentianma rank among the top three in the global market share. 

Improved industrial chain layout: The technological breakthroughs of Chinese enterprises in the mid to low end fields have promoted the improvement of industrial chain layout. From semiconductor materials to semiconductor equipment, from chip design to packaging testing, China has gradually formed a relatively complete industrial chain. Although there is still a technological gap in high-end advanced processes, the breakthroughs of domestic enterprises in the mid to low end fields have laid a solid foundation for domestic substitution. 

5.2 Expansion of Emerging Application Fields 

AI、 The development of emerging application fields such as new energy vehicles and the Internet of Things has brought new opportunities and market space to the electronic components industry. Specifically, let's take a look: 

In the field of AI, the rapid development of AI technology has put forward higher requirements for computing infrastructure. As an important computing infrastructure, data centers have become an important direction for capital expenditures of technology-based enterprises. In 2024, the growth rate of global data center capital expenditure is expected to increase significantly, and this trend is expected to continue in 2025. The demand for IT computing equipment and related core components such as servers, storage, and data center chips for AI big model training will continue to grow, bringing new market opportunities to the electronic components industry. 

The continuous development of the new energy vehicle market provides long-term support for the electronic components industry in the field of new energy vehicles. In 2024, China's production and sales of new energy vehicles will continue to maintain rapid growth, with sales and penetration rates consistently ranking among the top in the world. In 2025, although the development of the new energy vehicle market is expected to slow down, it will still maintain rapid growth. The development of electrification will benefit the stable growth of demand for key electronic components such as automotive semiconductors, batteries, car panels, cameras, PCBs, and MLCCs, represented by power devices and power semiconductors, microcontrollers, power management chips, and sensors. 

In the field of Internet of Things: With the acceleration of enterprise digital transformation, the demand for electronic components in industrial automation, intelligent manufacturing and other fields will steadily increase. The popularization of IoT applications will also drive the market demand for components such as sensors and communication modules. In 2025, with the further popularization of 5G networks and the in-depth development of industrial Internet, the demand for electronic components in related fields will continue to grow. 

5.3 Industrial Integration and Collaboration 

The effective integration of resources within the industry and the improvement of industry concentration, as well as the collaborative cooperation between upstream and downstream enterprises in the industrial chain, play an important role in enhancing the competitiveness of enterprises. Specifically, let's take a look: 

Resource integration and increased industrial concentration: In 2024, the electronic components industry is showing a trend of resource integration and increased industrial concentration. Manufacturers with high manufacturing and technological research and development capabilities, as well as higher customer satisfaction, can compete for more product supply categories and larger market share from core customers. The increase in industry concentration helps enterprises optimize resource allocation, improve production efficiency, reduce costs, and enhance market competitiveness. 

Collaborative cooperation in the industrial chain: The collaborative cooperation between upstream and downstream enterprises in the industrial chain is becoming increasingly close. For example, the cooperation between semiconductor companies, equipment manufacturers, and material suppliers continues to strengthen, enhancing the competitiveness of the entire industry chain through resource sharing, technology cooperation, and other means. This collaborative cooperation not only helps companies reduce costs, but also accelerates technological innovation and product upgrades, enhancing the company's market response speed and customer satisfaction. 

Collaborative innovation in emerging application areas: In emerging application areas such as AI, new energy vehicles, and the Internet of Things, collaborative innovation between upstream and downstream enterprises in the industrial chain is particularly important. For example, in the field of automotive electronics, the cooperation between semiconductor companies, automobile manufacturers, and battery suppliers continues to deepen, jointly promoting the development of new energy vehicles. This collaborative innovation model helps companies quickly respond to market demand, enhance product competitiveness, and bring new growth opportunities to the electronic components industry. 

6、 Conclusion and Suggestions 

6.1 The overall credit quality of the industry is stable 

Taking into account factors such as the stabilization and recovery of operating efficiency in the electronic components industry in 2024, continued policy support, and a moderate recovery in market demand, it is expected that the overall credit quality of the electronic components industry will remain stable in the next 12-18 months. Although the expectation of slow global economic growth and uncertainty in the international trade environment may pose certain challenges to the industry, domestic policy support and the recovery of market demand will provide strong support for the industry's development. 

6.2 Performance differentiation in the fine molecule industry 

Semiconductor industry: The semiconductor industry as a whole has bottomed out and rebounded, with price increases coupled with downstream demand recovery driving performance improvements in various links of the industry chain. Investment is becoming more rational, accelerating the industry's recovery. In the foreseeable future, the credit quality of the semiconductor sub industry will shift from negative improvement to 'stability'. 

Optical and Optoelectronic Industry: After years of continuous decline in market conditions, the pressure on the performance of the optical and optoelectronic industry has eased due to the obvious reduction in supply side production and the recovery of consumer demand. However, the overall performance is still running at a low level. In the future, the credit quality of the optical and optoelectronic sub industry will maintain a "negative improvement" state, and it is still necessary to pay attention to the credit level changes of module enterprises with high liquidity pressure. 

Electronic component manufacturing and printed circuit board industry: The credit risk of the electronic component manufacturing and printed circuit board industry is generally controllable, the operation is stable, the overall revenue maintains a slight growth, and the debt repayment ability is maintained at a good level. 

7.3 Investment and Development Suggestions 

Focus on the localization substitution process: Driven by policy support and market demand, the localization substitution process in the electronic components industry is accelerating. Investors are advised to pay attention to companies that have achieved technological breakthroughs in the mid to low end field and gradually expanded into the high-end field, especially leading companies in key areas such as semiconductors and panel displays. 

Expansion of emerging application areas: AI、 The development of emerging application fields such as new energy vehicles and the Internet of Things has brought new market space to the electronic components industry. It is recommended that enterprises increase their research and development investment in these fields, expand the scope of product applications, and increase market share. 

Industrial integration and collaboration: There is a clear trend towards effective integration of resources and increased industrial concentration within the industry. It is recommended that companies optimize resource allocation through mergers and acquisitions, strategic partnerships, and other means to enhance production efficiency and market competitiveness. At the same time, strengthen the collaborative cooperation between upstream and downstream enterprises in the industrial chain, and jointly promote technological innovation and product upgrading. 

Policy and market dynamics: It is recommended that enterprises closely monitor national policy developments, make full use of policy support and subsidies, and enhance their competitiveness. At the same time, pay attention to changes in the international trade environment, plan the supply chain layout reasonably, and reduce risks caused by external uncertainty. 

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