Wanlian Securities: Consumer terminal market continues to recover, DeepSeek is expected to accelerate AI end-side deployment

The Zhitong Finance App learned that Wanlian Securities released a research report stating that the mobile phone and PC markets showed a continuous recovery trend in 2024. At the same time, DeepSeek can be deployed at a low cost on the end side, and various terminal manufacturer brands actively connect to DeepSeek to integrate intelligent assistants and enhance AI functions. The AI wave continues to advance. As the hardware base is consolidated, model deployment costs decline, and the application ecosystem becomes more prosperous, AI end-side deployment is expected to accelerate, driving further growth in consumer terminal markets such as AI phones and AIPC. It is recommended to focus on new product launches by brand manufacturers in the AI consumer terminal industry, investment opportunities brought by speeding up the switching cycle, and leading manufacturers in the field of computing power chips, storage and components upstream in the industrial chain.

The main views of Wanlian Securities are as follows:

The consumer terminal market continues to recover, and the share of high-end models is rising:

According to IDC statistics, global smartphone shipments in 2024Q4 increased 2.4% year on year to reach 331.7 million units, and continued to grow for the sixth consecutive quarter. Smartphone shipments increased 6.4% year on year in 2024; global PC shipments increased 1.8% year on year to 68.9 million units in 2024. PC shipments increased 1.0% year on year in 2024, indicating that the world's major consumer terminal markets continued to recover. In addition, according to Counterpoint Research statistics, the share of global high-end smartphones (with a price greater than 600 US dollars) increased from 15% in 2020 to 25% in 2024. The bank believes that mainly consumers prefer to choose models with more powerful hardware configurations and more advanced AI functions to obtain a better user experience. As AI end-side deployment accelerates, demand for AI mobile phones and AIPC is expected to grow further in the market.

DeepSeek is rapidly rising due to its innovative architecture, low cost, and open source, and is expected to accelerate AI end-side deployment:

On January 20, 2025, DeepSeek-R1 was released. Through architectural innovation, it achieved more optimized performance and more efficient use of computing power, thereby achieving disruptive innovation in cost control, which attracted widespread attention in the global artificial intelligence industry. DeepSeek was released as an open source, and segmented inference service providers connected to the DeepSeek API are expected to rapidly emerge, thereby accelerating the prosperity and development of AI applications. In terms of local deployment, DeepSeek uses model knowledge distillation technology to migrate knowledge from large models to smaller models, reduce model weight, reduce calculation and storage costs, maintain high model performance, and improve inference speed; local deployment further enhances data privacy protection to meet the needs of customized application scenarios. The bank believes that the big open source model represented by DeepSeek is expected to accelerate the implementation of generative AI on end side devices such as mobile phones and PCs with its characteristics such as low-cost deployment and high-performance reasoning.

Brand manufacturers actively access DeepSeek to improve the AI product application ecosystem:

1) Huawei's Xiaoyi Assistant App, which is based on the native Hongmeng operating system, is connected to DeepSeek-R1 and supports the “Internet Search” function. 2) OPPO announced that ColorOS will be fully connected to DeepSeek at the end of February. Assistant Xiaobu will become a system intelligent assistant deeply integrated with DeepSeek, and can wake up DeepSeek through voice. 3) Vivo announced that it will deeply integrate the full-blood version of DeepSeek to achieve the Blue Heart large model and the DeepSeek dual engine driver. 4) Honor YOYO Smart Store has launched the DeepSeek-R1 Early Access Edition. 5) Meizu has completed access to the DeepSeek-R1 model, and AI ecosystem products such as StarV AR glasses will be added one after another. 6) Nubia has embedded DeepSeek into the system, and the Nubia Z70Ultra is under closed testing. 7) Lenovo Xiaotian Personal Intelligence, a subsidiary of the Lenovo Group, has fully integrated the DeepSEEK-R1 networked full-blood model and achieved full coverage of core terminals such as AIPC, AI phones, and AI tablets. As various brand manufacturers actively join DeepSeek, the AI product application ecosystem is expected to be further improved. The bank believes that in the future, an open source model may be formed to provide a foundation, and a cooperative model for brand manufacturers to design demand scenarios and expand the vertical capabilities of the model.

Risk factors: Technological friction between China and the US intensifies; AI application development falls short of expectations; demand for AI terminals falls short of expectations; market competition intensifies.