Due to changes in product structure and other factors, in the first half of the year, Apple's supply chain company, LianYiZhiZao (002600), saw its gross margin decrease by about 5 percentage points year-on-year to 15%, which in turn dragged down its performance in the first half of the year.

On the evening of August 29, LianYiZhiZao disclosed its financial report, showing that in 2024, the company achieved a total revenue of 19.12 billion yuan, a year-on-year increase of 25.06%, and a net profit of 692 million yuan, a year-on-year decrease of 44.53%. The net inflow of operating cash was 1.767 billion yuan, a year-on-year decrease of 52%. The company stated that this was mainly due to the increased cash payments for purchasing goods and accepting labor services.

LianYiZhiZao is mainly engaged in the business of precision functional components, structural components, modules, and chargers, with products mainly applied to AI terminal devices and industries such as communication, automotive, and photovoltaic energy storage.

In the first half of the year, LianYiZhiZao's AI terminal and communication business grew rapidly, achieving revenue of 17.64 billion yuan, a year-on-year increase of 29.80%. The company stated that this was mainly due to its leading lean manufacturing capabilities and early deployment in the manufacturing field of AI terminals.

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It is worth mentioning that due to factors such as changes in product structure, the AI terminal and communication business, which accounted for 92% of LianYiZhiZao's revenue in the first half of the year, had a gross margin of 16.53%, a year-on-year decrease of 5.21 percentage points.

LianYiZhiZao stated that in the first half of the year, the company's AI smartphones, PCs, tablets, MR (Mixed Reality), and robot-related product revenues grew rapidly, and the revenue scale of some new product businesses increased significantly. However, the profitability still has a certain gap compared to the original business. Nevertheless, the company's B. carbon fiber products, thermal modules, battery modules, and other terminal-related components maintained a high gross margin level while their revenue increased rapidly.

In terms of automotive business, with the continuous growth of the global new energy vehicle market and the continuous improvement of market share, LianYiZhiZao's automotive-related business revenue increased significantly. In the first half of 2024, the automotive business achieved revenue of 1.018 billion yuan, a year-on-year increase of 42.90%.

In addition, in the field of photovoltaic energy storage, the financial report shows that due to factors such as a phased decline in customer orders, the company's photovoltaic energy storage business revenue was 399 million yuan in the first half of 2024, a year-on-year decrease of 56.35%.

It is worth mentioning that LianYiZhiZao is one of the important suppliers of Apple Inc. The company has been a supplier since 2009, supplying Mac components to Apple. Today, it provides thousands of modules, components, and parts for all of Apple's products, including Mac, iPhone, iPad, Apple Watch, Apple Vision Pro, AirPods, etc.

At the end of July this year, Apple's COO Jeff Williams visited China and inspected several intelligent manufacturing lines and R&D centers at LianYiZhiZao's functional component and module production factory in Dongguan, Guangdong.Lingyi Smart Manufacturing has incorporated a significant amount of automation, intelligent technology, and green environmental processes in various stages such as die-cutting and stamping continuous flow workshops, CNC numerical control machining workshops, and anodizing production workshops.

In its semi-annual report, Lingyi Smart Manufacturing stated that in the first half of 2024, global artificial intelligence (AI) technology has been rapidly implemented across various fields. The "AI+Hardware" model may drive a wave of consumer electronics replacement. As an important entry point for generative AI on the device side, more and more mobile phone and computer manufacturers are integrating cloud or local large models into their products. The industry is witnessing "AI+Hardware" innovation, with the acceleration of the integration of various ecosystems in smart terminals across all scenarios.

"After years of effort, the company has actively positioned itself in the AI terminal hardware field. It has now transformed and upgraded from a consumer electronics manufacturer to an AI terminal hardware manufacturing platform, providing services such as R&D, design, production, sales, and solutions for core components in the upstream of the AI terminal hardware industry chain," said Lingyi Smart Manufacturing.

Lingyi Smart Manufacturing believes that the demand for consumer electronics such as global smartphones, tablet computers, smart wearables, and XR still faces certain challenges. However, the enrichment of future AI terminal application scenarios and the innovative upgrades of AI large model interaction forms will drive the demand for various AI terminal products in the industry, as well as the upgrade of hardware such as heat dissipation, chargers, storage, and screens. The industry is expected to usher in new opportunities for development.