Entering September, the consumer electronics industry is witnessing its most densely packed flagship launch cycle in history, with 2nm chips, foldable screens, and on-device AI standing out as the core highlights of this year's new products. Yet what deserves more attention than this wave of releases is the profound shift in the investment logic of the consumer electronics sector—moving from a past reliance solely on replacement cycles toward a new growth logic driven by both diversified business expansion and the AI wave.

Previously, the consumer electronics sector relied heavily on the replacement cycle as an invisible "metronome." As smartphones enter an era of saturated inventory, user replacement cycles lengthen, orders for most companies shrink, profits contract, and the entire supply chain enters a period of deep adjustment. Today, the "metronome" still exists, but it is no longer the sole driving logic: a growing number of companies are ramping up their second growth curves, with new growth primarily emerging from two main lines.

The first line is diversified breakout. Outstanding companies are continuously optimizing their business layouts to build a multi-tiered, diversified sustainable growth structure: on one hand, extending vertically across the full supply chain; on the other hand—and more importantly—expanding horizontally into new products and categories, even crossing into high-growth fields such as automotive electronics, computing power, and optical communications. Take computing power as an example: AI model training has generated massive demand for servers, and the core components required for servers, such as high-density PCBs and high-speed connectors, are highly compatible with the technical capabilities of the consumer electronics supply chain. Factories that originally supplied smartphones are now pivoting to supply data centers, driving rapid business growth.

The results have already been validated in earnings: interim reports show that companies which have continuously invested in second growth curves through R&D, production line construction, and M&A are performing significantly better than those relying solely on traditional terminal businesses.

The second line is AI innovation, which is bringing entirely new increments to the industry and building momentum for a new innovation cycle. AI technology is profoundly reshaping the form and business models of consumer electronics products, becoming the core driver of long-term industry growth. The local operation of on-device large models places higher demands on computing power, storage, and power consumption. Upgrades in chip heterogeneous architecture and increased storage configurations directly push up supply chain value; innovative terminals such as foldable screens and smart glasses are iterating continuously, driving simultaneous expansion in supporting segments like optics, sensing, and acoustics, thereby unleashing the industry chain's high elasticity.

When these two lines are combined, a key result is emerging: the pricing of some companies should no longer be simply evaluated by cyclical stock logic, but should be given growth stock valuations. The traditional main business provides stable operating performance, while the new growth curve provides upward elasticity.

However, this round of the consumer electronics industry may not see a broad rally, and short-term pressure remains significant: the explosive investment in AI computing hardware creates a crowding-out effect, while shortages and price increases in components such as storage, PCB, and passive components put heavy pressure on supply costs. At the same time, innovation has not yet been fully converted into purchasing power, and the ability of the demand side to absorb remains to be tested. Under dual supply-demand pressure, industry sales, prosperity levels, and valuations are all at historical lows. This also means that the sector is entering a stage of structural upgrading, so it is very important to choose the right sub-segments and companies.

Taken together, the current consumer electronics sector is on the left side of the curve. It is recommended to prioritize two types of opportunities: first, high-quality companies with strong alpha in their core consumer electronics business that have already laid out a second growth curve in high-prosperity tracks such as computing power and automotive; second, companies that have made substantial arrangements in technology upgrades and product innovation ahead of the new product launch season, including 3D printing manufacturing processes, as well as product innovation directions deeply integrated with AI large models such as smart glasses, desktop robots, AI phones, and AI PCs. Looking ahead, if the crowding-out effect of AI computing power on supply chain resources eases and cost pressures gradually release, combined with major technology upgrades and product innovation landing, the consumer electronics sector is expected to open up medium-to-long-term upside space.

Note: The above views may change without notice due to market conditions and other factors. Funds carry risks, and investment requires caution.