The period surrounding the Lunar New Year marks a significant time in the financial calendar, particularly for publicly traded companies in the electronics sectorAs we enter 2024, a wave of optimistic earnings forecasts has emerged from several firms linked to the electronic supply chain, signaling a robust recovery in their respective markets.

This year has showcased an impressive range of business activities across various segments, including precision components, optical imaging, die-cut products, storage chips, and display panelsMany firms reporting strong anticipated growth have cited favorable market conditions, renewed consumer demand, and advancements in technological innovation as pivotal factorsHowever, it is essential to note that some upstream electronics companies report declines in performance despite an overall market recovery, illustrating the varied landscape of the electronics industry.

Looking closely at the recovery across the consumer electronics market, the demand for smartphones and PCs is witnessing a resurgenceAccording to Canalys, the global smartphone market is expected to see shipments reach approximately 1.22 billion units in 2024, marking a commendable increase of 7% compared to the previous yearConcurrently, the global PC market is also recovering steadily, with an anticipated year-on-year growth of 3.8%, culminating in around 255 million units shipped.

The restoration of shipping volumes in the consumer electronics segment not only bolsters sales for manufacturers but also positively impacts various upstream companies within the electronics supply chainFor instance, Chunqiu Electronics specializes in structural components for laptops and other consumer electronicsThe company recently announced that it anticipates its net profit for 2024 will soar between 175 million to 195 million yuan, a staggering increase of over 554% year-on-yearThis growth is attributed to the revitalization of the laptop market, the rapid advancement of AI computing platforms, and the successful rollout of orders related to magnesium alloy applications in the electric vehicle sector

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Similarly, Changying Precision, known for its manufacturing of precision structural parts, forecasts its profits to surge between 716.78% and 856.79% in 2024 as recovery continues in consumer electronics and new energy markets.

The ODM giants, such as Huaxin Technology, expect a revenue upsurge of 27.8% to 29.0% in 2024, while projected net profits are set to increase by 5.3% to 7.1%. Their optimism stems from rising compute demands, breakthroughs in generative AI technologies, and an overall upturn in their respective industries' performance, enabling growth across sectors like smart terminals, high-performance computing, automotive and industrial products, and AIoT applicationsAdditionally, leading PCB manufacturer Dazhu CNC expects net profits to grow by 99.19% to 136.08%, driven by the recovering consumer electronics market and the upgrade of electronic technologies in electric vehicles alongside robust demand for AI servers.

Furthermore, specialized manufacturers such as Tianshu Technology are observing increased demand in the panel industry, which has bolstered the sales of light guide plates and subsequently driven up both revenue and net profitsConversely, East Tian Microelectronics, primarily engaged in thin-film components, has successfully turned a profit primarily due to the recovery of the smartphone market, advancements in spin-coating filter technology, and effective cost management strategies.

In the semiconductor space, companies like Zhaoyi Innovation project profits of nearly 1.09 billion yuan, marking a dramatic increase of around 5.76 timesThey attribute their success to recovering downstream market demands, resulting in a substantial uptick in sales across various sectors including consumer, internet communications, and computingMeanwhile, De Ming Li, whose core business lies in storage solutions, anticipates an astronomical 13-fold increase in net profits, bolstered by an aggressive approach to market expansion and successful customer validation of their offerings.

However, this overall narrative of growth takes a complex turn when we examine specific firms facing challenges despite the landscape's apparent recovery

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For example, Furi Electronics, primarily involved in semiconductor packaging, forecasts a staggering net loss of 330 million yuan for 2024. Though revenue is poised to increase owing to a rise in orders driven by partnerships with key customers, fierce industry competition and steep price increases in crucial components have pressured profit margins considerably.

Similarly, companies like Zhihua Power plan to announce net losses between 130 and 160 million yuan, primarily due to intensified market competition that has heavily compressed profit margins on their functional and structural offeringsFurthermore, Chan Rui Technology, which specializes in high-performance mixed-signal ICs, is predicting a net loss ranging from 48 million to 68 million yuan, triggered by declining product prices fueled by robust competition.

Amid these diverging fortunes, we also observe instances of companies like Venture Technology struggling under the weight of external policy implications, which have led to increased business uncertainties and risks of asset depreciation—compounding factors that have adversely affected profitsThey assert that while revenue in 2024 might display an upward trend, the impacts of being placed on the Entity List in December 2024 have cast uncertainty over future project acquisitions.

Looking forward, forecasts indicate that while the smartphone market will continue to grow through 2025, growth rates may not reach the remarkable heights witnessed in 2024. Canalys predicts the Chinese smartphone market might see shipments surpass 290 million units, reflecting slight year-on-year growth. “We don’t anticipate replicating the impressive growth rates of 2024 as much of last year's surge stemmed from manufacturers replenishing inventories and recovering macroeconomic conditionsDemand volatility and ongoing economic uncertainties will remain formidable challenges,” stated Canalys analyst Zhu Jiatao.

As we delve into the projections for 2025, there is a recognized structural shift on the horizon

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