New urbanization will drive the development of consumer electronics

We believe that China's mobile phone demand, computer demand and television demand will benefit from the new demand brought by new urbanization in the long run. Judging from the situation in the past ten years, due to the slow growth rate of income and the absolute difference between urban and rural incomes, rural residents have lower mobile phone, computer and television penetration and penetration than urban residents. In the process of new urbanization, as incomes increase, the effective cultural and entertainment needs of migrant workers living in cities in China have increased, creating demand for mobile phones, computers, and televisions. We estimate that the demand for 150 million migrant workers will account for China's mobile phone and computer shipments in the coming years will increase from 6% in 2012 and 11.62% in 2012 to 8.24% and 13.79% in 2016, but from the perspective of output value, Demand impact will be lower than the proportion of shipments. We believe that the demand for consumer electronic products driven by the new urbanization will indirectly pull demand for electronic components.

Traditional urbanization has not led to large-scale consumption of consumer electronics products. Judging from the history of the past ten years, the proportion of urban residents in China has increased from 36.22% in 2000 to 49.95% in 2010, and the degree of urbanization has further increased. However, traditional urbanization has not brought about a simultaneous increase in income. Judging from the situation in 2010, the gap between rural per capita net income and urban per capita disposable income is 69.03%. In 2011, the gap between migrant workers and workers was 41.2%. One of the direct results of the large income gap is the difference in the penetration of consumer electronics.

New urbanization will drive demand for consumer electronics products. One of the key points of the new type of urbanization in the future is to enable 150 million migrant workers in urban areas to live in urban areas and solve their income and consumption problems. We believe that with the increase in income, migrant workers are beginning to have the ability to consume in cities, which will amplify the cultural and recreational needs of migrant workers, and will bring demand for consumer electronics such as computers, mobile phones and televisions. We estimate that the demand for computers from 150 million migrant workers will increase from 8.08 million units in 2012 to 22.78 million units in 2020. In the next five years, the demand for computer shipments of migrant workers will be the overall demand for computer shipments in China. The proportion of demand increased from 11.62% in 2012 to 13.79% in 2016; the demand for mobile phones from migrant workers' groups will increase from 2,222 units in 2012 to 51.27 million units in 2020; in the next five years The demand for mobile phone shipments of migrant workers in China’s overall handset shipments increased from 6% in 2012 to 8.24% in 2016. However, from the perspective of output value, we believe that because the overall cultural level is still low and there is still a gap in income levels, the pulling effect on the overall output value will be less than the pulling effect on the shipment volume.

The demand for consumer electronic products brought by new urbanization will drive demand for electronic components. We believe that the demand for consumer electronics products brought about by new urbanization will indirectly drive the demand for electronic components. As the consumption of mobile phones, computers and televisions increases, the demand for related touch screens, structural components, and backlight devices will be driven to a certain extent by long-term.