Longcheer Technology, a mobile phone ODM giant, has seized the new outlet of AI PC, automotive electronics, and XR

As an ODM manufacturer standing behind major mobile phone manufacturers, Longcheer Technology is not like brand manufacturers that are active in the public eye all year round. However, in the global smartphone ODM/IDH industry, it is a giant that cannot be ignored and has a pivotal position.

According to Counterpoint data, Longcheer Technology shipped 138 million smartphones in 2022, accounting for 28% of global smartphone ODM/IDH shipments, ranking first in the world. On March 1, 2024, Longcheer Technology was officially listed on the Shanghai Stock Exchange. On the first day of trading, the stock price increased by 99.69% from the issue price.

On April 29, 2024, Longcheer Technology disclosed its 2023 annual report and 2024 first quarter report for the first time after listing. According to the financial report, in 2023, Longcheer Technology's net profit attributable to the parent company will increase by 7.84% year-on-year to 605 million yuan, and the non-net profit will increase by 4.74% year-on-year to 526 million yuan. In the first quarter of 2024, the company's performance ushered in a significant increase, with an operating income of 10.337 billion yuan, a year-on-year increase of 146.95%, and a net profit of 128 million yuan, a year-on-year increase of 50.24%.

Especially in 2023, in the context of the overall sluggishness of global consumer electronics, Longcheer Technology has achieved such steady growth under the premise of stabilizing the basic market of smartphones and continuing to develop new businesses, which can be said to be quite difficult.

After entering the fourth quarter of 2023, as the global mobile phone industry continues to recover, it has achieved double-digit growth in the first quarter of 2024, which has also helped Longcheer Technology further consolidate its fundamentals.

At the same time, with the continuous development of new tracks and new outlets, Longcheer Technology continues to implement the "1+Y" product development strategy - that is, with smart phone products as the core, expand smart products with great market potential such as tablet computers, smart watches/bracelets, AI PCs, automotive electronics, TWS earphones and XR products.

This year, with the popularity of AI PC, automotive electronics, and XR products, Longcheer Technology's multiple business layouts are expected to usher in the harvest season and drive the company's value in the capital market.

01、 ODM巨头抓住新风口

According to a report by Counterpoint Research, the contribution of ODM/IDH to total shipments in the global smartphone industry will reach an all-time high in 2023, and many brands have chosen to outsource the design and manufacturing of mobile phones to ODM manufacturers.

In this industry, Longcheer Technology is currently at the top. In 2023, Longcheer Technology will have a market share of 27.3% in the global smartphone ODM/IDH industry.

However, in the past few years, the growth rate of the smartphone industry has slowed down, and Longcheer has been promoting the diversification of its business. It has not only laid out new businesses such as AI PCs and automotive electronics, but also continuously expanded the AIoT category on the basis of smartphones, and achieved efficient growth in smart watches, smart bracelets, TWS earphones, XR business and other aspects.

Taking AI PC as an example, since 2024, the global PC industry has ushered in a recovery opportunity. According to Counterpoint, global PC shipments grew by about 3% year-on-year in the first quarter of this year and are expected to grow by 3% for the full year. In the Chinese market, Canalys predicts that the Chinese PC market will rebound in 2024, with a year-on-year increase of 3% and a 10% increase in 2025.

As a key customer of Longcheer Technology, Lenovo, Huawei and other companies are leading the new growth brought by this round of AI opportunities. Among them, Lenovo achieved an 8% increase in shipments this quarter, ranking first in the world. Huawei will become the only PC manufacturer in China with positive growth in 2023, bucking the trend and achieving a year-on-year growth of 11%.

A year ago, Longcheer Technology laid out the AI PC production line and related technologies in advance. According to the financial report of Longcheer Technology, the company has won large orders from first-tier customers in terms of AI PCs, and is expected to start shipping this year. According to Canalys, global AI PC shipments will reach 48 million units in 2024, accounting for 18% of total PC shipments. AI PC shipments are expected to exceed 100 million units by 2025, accounting for 40% of total PC shipments. The AI PC industry will grow at a compound annual growth rate (CAGR) of 44% from 2024 to 2028.

02. Expand the track of automobiles and consumer electronics

In addition to AI PC, Longcheer Technology also focuses on the layout of new business areas of consumer electronics, focusing on intelligent cockpit products, setting up related production lines, and promoting the shipment of related products.

According to the financial report, Longcheer Technology's current layout of automotive electronics-related categories include domain controllers, central control screens, armrest screens, mobile phone wireless charging, etc., and has established an automotive electronics production line in the Huizhou factory, and has passed the factory audit requirements of some customers, and began to ship related products in small batches.

In 2024, with the continuous penetration of intelligent and electrified vehicles, the intelligent automotive industry has become the hottest track in China.

A few days ago, according to official information, the output value of the automobile industry has surpassed real estate and become China's largest economic industry. Recently, the opening of the Beijing International Auto Show was unprecedentedly hot, attracting the attention of the global market and showing the potential for further explosion of smart cars.

Specific to the current layout of Longcheer Technology's automotive electronics industry, according to the "2023-2028 China Automotive Electronics Industry Development and Investment Strategy Research Report" released by the China Business Industry Research Institute, the scale of China's automotive electronics market will reach 978.3 billion yuan in 2022, a year-on-year increase of 12%.

With the new trend of automotive intelligence, Longcheer Technology relies on the software and hardware R&D and manufacturing experience accumulated in the consumer electronics industry for many years, and many of its product groups are necessary components of smart cars, which is expected to achieve synchronous growth with the industry.

In addition to these two new businesses, Longcheer continues to expand its categories in the field of AIoT to achieve continuous market growth.

According to the financial report, in 2023, the revenue of Longcheer Technology's AIoT business will be 2.511 billion yuan, an increase of 33.04% over the same period last year, ranking among the top in the market in terms of shipments in the fields of smart watches, smart bracelets, TWS earphones, and XR products. In terms of smart watches, in 2023, Longcheer Technology's smart watch business shipped more than 10 million units throughout the year, and its business revenue increased by 21.17% year-on-year.

The XR business is also the key area of Longcheer Technology in the field of AIoT, which is considered to be an incremental market under the trend of AI popularization in the next few years, and many institutions expect the XR industry to achieve double-digit high growth in 2024.

Especially under the wave of accelerated popularization of AI, manufacturers' actions to deploy XR business are obviously more aggressive. At the beginning of 2024, Apple's Vision Pro began to ship, and Meizu also launched its lightweight smart glasses products before. According to Counterpoint's forecast, XR headset shipments will increase by 3.9 million units in 2024, achieving double-digit year-over-year growth, and augmented reality (AR) is expected to increase by 54% year-over-year.

Longcheer Technology said that the company has cooperated with global technology manufacturers in the field of XR equipment for two generations of smart glasses. With the blessing of AI technology, the second-generation products are selling well in the market, and the company is cooperating with domestic AR head brands for related products, and is also actively expanding the overseas AR market.

With the continuous breakthrough of many new businesses and the continuous expansion of consumer electronics categories, Longcheer Technology is now transforming from a smartphone ODM giant to a full-scene multi-category smart product giant. With the recovery of the entire consumer electronics industry chain and the delivery of new businesses, the window period for the outbreak of corporate performance is also coming.

03. Firmly hold the basic disk of the mobile phone

Although the layout of Longcheer Technology in new industries such as automobiles and XR has accelerated significantly in recent years, the smartphone industry is still the largest foundation of the company's business. According to the financial report data, in 2023, Longcheer Technology's smartphone business will achieve revenue of 21.822 billion yuan, accounting for more than 80% of the total revenue. Continuing to grasp the fundamentals and stabilize the advantages of the industry is also the basic premise for the future performance growth of Longcheer Technology.

After continuous perseverance, starting from the second half of 2023, the global smartphone industry has finally waited for a recovery. According to IDC data, in the fourth quarter of 2023, the global smartphone industry shipments increased by 8.5% year-on-year to 326 million units.

Just past the first quarter, the market continued to maintain its upward momentum. According to IDC, global smartphone shipments rose 7.8% to 289.4 million units in the first quarter of 2024, while Canalys, another organization, showed that the global smartphone market achieved double-digit growth of 11% in the quarter.

Driven by the incremental market of AI mobile phones and folding screen mobile phones, many institutions expect the global smartphone industry to achieve year-on-year growth in 2024, of which IDC expects global smartphone shipments to increase by 2.8% year-on-year, and Canalys expects the market to increase by 4% year-on-year.

In the process of this round of market growth, Longcheer Technology's main customers such as Xiaomi and Huawei have become key manufacturers that have eaten market dividends. Taking Xiaomi, the largest customer of Longcheer Technology, as an example, Xiaomi's shipments soared by 33% in the first quarter of 2024, becoming one of the fastest-growing giants among the leading manufacturers.

As the leading ODM giant in the smartphone industry, Longcheer has established good cooperation with the top smartphone manufacturers in the market. According to the financial report, the current key manufacturers of Longcheer Technology include Xiaomi, Huawei, Samsung, Lenovo, Honor, OPPO and vivo.

In the future, with the continuous recovery of the market, Longcheer Technology is also expected to continue to expand industry dividends and drive the growth of corporate performance, and at the same time further stabilize the basic market of mobile phone ODM business, providing a solid backing for the exploration of new businesses such as PC, automotive electronics and XR.

Written by Zeng Guang

Edited by Li Yuan