Major News from Huawei!

On July 29th, the ceremony for the 400,000th vehicle delivery of the AITO Wenjie brand and the 70,000th delivery of the M9 model was held in Chongqing. According to Yu Chengdong, Huawei's executive director, chairman of the consumer business group, and chairman of the intelligent automotive solutions BU, Huawei will launch the ADS 3.0 version of its advanced autonomous driving system in August. The Wenjie M7 and M9 models will be upgraded to the ADS 3.0 version in September.

On the afternoon of July 29th, Huawei's consumer business group announced that the first Huawei nova foldable phone, the nova Flip, will be officially launched at 7 PM on August 5th.

Rapid Growth in the Foldable Phone Market

The nova series is Huawei's mid-to-high-end flagship smartphone brand, focusing on fashion and style. According to the images released by Huawei, the external display of the new phone will feature a square design, unlike the round secondary screen commonly seen on Huawei's Pocket series of compact foldable phones. This will be Huawei's first compact foldable phone with a square external screen.

China Securities Journal reporters found that in the first quarter of 2024, Huawei released the Pocket2 foldable screen smartphone. Entering the second quarter, phones like the vivo X Fold3 and Honor Magic V Flip were successively launched. In the second half of the year, entering the consumer electronics peak season, major smartphone manufacturers will engage in a new round of competition in the foldable screen smartphone market. On July 12, Honor released the new foldable screen smartphones Magic V3 and Magic Vs3. On July 19, Xiaomi launched two foldable screen smartphones, the Xiaomi MIX Fold 4 and Xiaomi MIX Flip.

A Counterpoint report stated that in the first quarter of 2024, Huawei ranked first in the global foldable screen smartphone quarterly shipment ranking, surpassing the long-term market leader Samsung. Minsheng Securities believes that in 2024, Huawei and Samsung plan to launch more price-competitive foldable screen smartphones, and other Android phone manufacturers will also follow up, driving the rapid expansion of the foldable screen smartphone market.

Industry insiders believe that although the price of foldable screen smartphones has been declining due to cost reductions, their prices are still high. IDC data shows that the market share of foldable screen smartphones priced above $1,000 has decreased from 81.0% in 2022 to 66.5% in 2023.

Research firm Canalys believes that foldable screen smartphones have long-term market prospects. Counterpoint forecasts that global foldable screen smartphone shipments will reach 55 million units in 2025, and will exceed 100 million units globally in 2027.

Huawei's ADS 3.0 intelligent driving system will be launched

Wenjie is a car brand co-designed and marketed by Huawei and AITO. It is understood that since the start of deliveries on March 5, 2022, the AITO Wenjie has achieved "0 to 400,000 units" in just 28 months.

Yu Chengdong said: "Before the launch of the new Wenjie M7 last year, we went through a very difficult period, facing various criticisms, and everyone looked down on our cooperation mode. Last year, I told everyone that we would go from being looked down upon to being incomprehensible and then catching up, and we would run faster and faster."

According to Yu Chengdong, Huawei will launch the Huawei ADS 3.0 advanced intelligent driving system version in August. The Wenjie M7 and M9 will be upgraded to the ADS 3.0 version in September. The new version will have integrated end-to-end capabilities and with the assistance of lidar, it will bring enhanced intelligent driving capabilities.

Recently, there have been new developments in the cooperation between Huawei and AITO. On the evening of July 3, AITO issued a supplementary announcement on the acquisition of assets, stating that its controlling subsidiary AITO Automobile plans to purchase assets such as the Wenjie trademark from Huawei for 2.5 billion yuan. The appraised market value of the target assets is 10.233 billion yuan.

On July 28, AITO announced that it plans to invest in Shenzhen Yingniao Intelligent Technology Co., Ltd. The company has started negotiations with Yingniao and its shareholders to join the investment in Yingniao, jointly supporting Yingniao to become a world-class leader in automotive intelligent driving systems and components, and to become an open platform serving the automotive industry. Upon completion of the transaction, Yingniao will become a partially-owned subsidiary of the company, and the company's consolidated financial statements will not change. As of now, Huawei Technologies Co., Ltd. holds a 100% stake in Yingniao.

According to the information, Shenzhen Yingniao Intelligent Technology Co., Ltd. is a company established by Huawei's Automotive Business Unit this year.

Large market potential for intelligent driving

In April this year, Huawei released the Qiankun ADS 3.0 advanced intelligent driving system. A Huatai Securities research report stated that in terms of intelligent driving, the Huawei ADS 3.0 driving assistance system, which Huawei co-developed with BAIC, has progressed from simple "obstacle detection" to deep "understanding of driving scenarios" based on the GOD (General Object Detection) network.

A Guoxin Securities research report stated that by 2025, with the efforts of automakers such as GAC, Ideal, Xpeng, BYD, Wenjie, Xiaomi, Nio, Geely, and Tesla, the penetration rate of urban assisted driving autonomous driving in China is expected to reach 6%, with a market size of about 51 billion yuan.

Guoxin Securities stated that automotive intelligence has already achieved technical breakthroughs (end-to-end large model on-board), with blockbuster products like the Wenjie M7/M9 appearing, and domestic and overseas resonance (continuous iterative updates of Tesla's FSD V12 version overseas). The intelligent driving space is large, with a potential long-term domestic market size of nearly 300 billion yuan, and the inflection point is gradually approaching, with the prospect of accelerated technology iteration and product penetration.

Xinda Securities research report stated that under the progressive development path of intelligent driving, L3 functions are accelerating deployment, and scenarios are constantly expanding. Driven by the three core factors of policy, technology, and cost, the inflection point of intelligent driving is gradually emerging. At this stage, the focus should be on the whole vehicle companies with key intelligent layout and the core component companies in the intelligent industry chain.

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Source: China Securities Journal

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