Effective immediately, nationwide subsidies for purchasing digital products such as mobile phones, tablets, and smartwatches (bracelets) will be implemented.

JD.com and Taobao are fully prepared. JD.com revealed that over 90% of rural consumers nationwide have traded in old products for new ones through their platform. Taobao has also introduced a "Government Subsidy" section.

Previously, Alipay encountered a P0-level incident where all orders were discounted by 20% due to a misapplication of government subsidies between 14:40 and 14:45 on January 16. Alipay later clarified that the error was caused by a misconfigured marketing template in the backend and assured users that no reimbursement would be sought.

For five minutes, all orders were discounted by 20%. This incident inadvertently served as a publicity stunt for the national subsidy program.

01

"Revitalizing" the Consumer Electronics Market

The strategy of using trade-ins to stimulate consumption is not new in 2025.

In 2024, the country rolled out a series of consumption-boosting policies, including trade-ins, which yielded remarkable results.

In 2024, over 36 million consumers utilized subsidy funds to purchase over 60 million units across eight categories of household appliances, driving sales exceeding RMB 260 billion. From January to November 2024, retail sales of household appliances and audio-visual equipment from designated size enterprises reached RMB 918.9 billion, surpassing the annual level of 2023.

Furthermore, during the implementation of trade-in subsidies last year, green and smart products were highly favored. Among the eight categories of household appliances traded in, sales of products with first-level energy efficiency accounted for over 90%.

Semiconductors are integral to various electronic control systems in household appliances, with MCU, IGBT/MOS, and IPM being particularly crucial. It is estimated that the market demand for MCU, IPM, and IGBT single tubes/MOS tubes in household appliance semiconductors will reach 1.482 billion units, 394 million units, and 585 million units, respectively, in 2024, representing year-on-year growth of 6.7%, 5.9%, and 6.8%.

In 2024, with the implementation of national subsidies, production schedules for major household appliances were robust, leading to a short-term supply shortage for some semiconductor manufacturers.

From a financial perspective, Sino Wealth Electronics, a leading stock for single-chip MCUs used in household appliance control, reported a 10.28% year-on-year increase in revenue to RMB 324 million for the third quarter of 2024, with a gross profit of RMB 106 million and a gross margin of 32.57%. Its non-net profit increased by 40.88% year-on-year. Sino Wealth Electronics ranks first in the domestic market for household appliance control chips, with revenue accounting for about 50%.

Silan Microelectronics' IPM modules are utilized in white goods such as variable-frequency air conditioners by multiple mainstream domestic manufacturers. In the first half of 2024, over 83 million Silan IPM modules were used, with an expected total of over 160 million for the year. Silan Microelectronics achieved revenue of RMB 8.163 billion in the first three quarters of 2024, an increase of 18.32% year-on-year.

02

Further Expansion of National Subsidies

On January 15, the Ministry of Commerce issued two documents: the "Notice on Implementing the Household Appliance Trade-in Program in 2025" and the "Implementation Plan for Subsidies on the Purchase of New Mobile Phones, Tablets, and Smartwatches (Bracelets)."

On January 16, multiple related stocks closed with gains, including a 10% increase in Konka's share price, with Stone Tech leading small appliance companies with a nearly 6% increase. In the 3C digital sector, Xiaomi, listed in Hong Kong, saw an increase of over 2%, and Lenovo Group rose by 1.2%.

Household Appliances

For household appliances, the notice clearly stipulates that subsidies will be provided to individual consumers purchasing 12 categories of household appliances, including refrigerators, washing machines, TVs, air conditioners, computers, water heaters, household stoves, range hoods, water purifiers, dishwashers, rice cookers, and microwaves, that meet second-level or higher energy efficiency or water efficiency standards.

The subsidy standard is 15% of the final sales price of the aforementioned products, with an additional 5% subsidy for products that meet first-level or higher energy efficiency or water efficiency standards. Each consumer can receive a subsidy for one product per category (up to three for air conditioners), with a subsidy limit of RMB 2,000 per product.

Recently, the central government has also pre-allocated the first batch of funds for the trade-in of consumer goods in 2025, amounting to RMB 81 billion.

Compared to the national subsidy policy for household appliances implemented in 2024, the new policy in 2025 features two significant changes. Firstly, there is an expansion of categories. In addition to the original eight categories of air conditioners, refrigerators, washing machines, televisions, computers, water heaters, household stoves, and range hoods, four new categories have been added: microwaves, water purifiers, dishwashers, and rice cookers. Secondly, there is an expansion of air conditioners. Among the 12 categories determined at the national level, each consumer can receive a financial subsidy for one product per category, with a subsidy limit of RMB 2,000 per product. However, under the 2025 policy, consumers can receive subsidies for up to three air conditioners, with a maximum subsidy of RMB 6,000.

The 2025 national subsidy policy for household appliances will offer new support to leading enterprises in the air conditioning, household appliances, and kitchen appliances sectors, such as Midea Group, Haier Smart Home, Gree Electric Appliances, Sichuan Changhong, Hisense Home Appliances, and Xiaomi Group.

Mobile Phones

Purchases of household appliances are mostly family-oriented, while consumer electronics are primarily individual consumer products, catering to a broader user base, particularly mobile phones.

Although the subsidy strength is not as significant as that for household appliances, this year marks the inaugural entry of mobile phones into the era of national subsidies.

The "Implementation Plan" clearly outlines that individual consumers purchasing mobile phones, tablets, and smartwatches (bracelets) with a single sales price not exceeding RMB 6,000 can enjoy subsidies for new product purchases. Each person can receive a subsidy for one product per category, with a subsidy rate of 15% of the final sales price after deducting all discounts in production, distribution, and mobile operator channels, up to a maximum of RMB 500.

To meet the national subsidy standard, multiple mobile phones have collectively dropped below RMB 6,000, with the iPhone 16 Plus 128GB version witnessing a direct price reduction of RMB 1,000.

How affordable can an iPhone become with the "national subsidy"?

Taking the 128GB iPhone 16 as an example, the JD.com price is RMB 4,999. With a 15% discount from the "national subsidy" and an additional RMB 500 off, the final price is RMB 4,499.

In response to this wave of national subsidies, Honor has also announced that it will provide factory subsidies to consumers. Honor's mobile phones, tablets, smartwatches (bracelets), etc., will receive a subsidy of 15% of the product sales price (for single items priced within RMB 6,000, with a subsidy limit of RMB 500 per item), and computers will receive a subsidy of up to 20% (with a subsidy limit of RMB 2,000 per item).

Hu Boshan, Executive Vice President of vivo, also expressed optimism about the impact of national subsidies. However, he noted that they have "controlled expectations" internally. On the one hand, relevant subsidy policies have already been implemented in various regions nationwide. On the other hand, during the two major e-commerce promotions each year, platform operators and mobile phone manufacturers jointly offer subsidy promotions, with subsidy amounts reaching tens of billions of yuan, which may be comparable to the subsidy amounts brought by national subsidies.

"Therefore, we believe that the sales curve of smartphones will experience certain changes in the coming year, and the total volume may increase slightly. However, overall, the increase in the sales curve may only bring forward purchase plans and pull forward demand in the supply chain. The long-term market performance still hinges on comprehensive factors such as the overall replacement cycle and technological change trends," said Hu Boshan.

Canalys analysts believe that from a manufacturer's perspective, those with a higher proportion of mid-to-high-end products will gain more advantages. From an overall market perspective, even with the support of national subsidies, it is anticipated that the domestic smartphone market will continue to maintain low growth in 2025, with sales potentially exceeding 290 million units.

Judging from current performance, Luxshare Precision's earnings forecast indicates that the company expects to achieve a net profit attributable to shareholders of listed companies of approximately RMB 13.143 billion to RMB 13.691 billion for the full year of 2024, representing an increase of 20% to 25% year-on-year. Luxshare Precision's main business includes consumer electronics (smartphones, smart wearable devices, etc.), automotive products, and providing integrated intelligent manufacturing solutions from core components, modules to system assembly for enterprise communication products.

GoerTek has simultaneously entered the supply chains of Huawei, Apple, Xiaomi, and other companies, with leading technology and products in acoustics, optics, microelectronics, and other fields. The growth in demand for consumer electronics markets stimulated by the national subsidy policy will bring more order opportunities to GoerTek, especially in the fields of smart wearable devices and headphones, which is expected to further enhance its performance. Last year, GoerTek implemented two special dividends, making it the only listed company in the consumer electronics industry to do so.

Faced with this surge of enthusiasm, related manufacturers have also voiced their opinions. O-Film Tech stated that the company actively seizes the favorable opportunities for industry development, leverages its years of technological accumulation, adheres to guiding technological industrialization and upgrading through independent innovation, continuously invests in research and development, strengthens internal management, and steadily improves product quality.

03

Consumer Electronics Embracing AI

Apart from subsidies, AI is also fueling the growth of consumer electronics.

With the accelerated application of new technologies such as AI large models in products, AI mobile phones, AI PCs, and AI wearable products are expected to prompt users to accelerate device replacements.

From the latest CES, NVIDIA unveiled the "mini" AI supercomputer Project DIGITS; Lenovo introduced the first rollable screen AI computer ThinkBook Plus Gen 6; Samsung proposed a "home AI" solution; and Google collaborated with TCL to incorporate its "Gemini" AI model into smart TVs.

IDC predicts that in the Chinese market, with the rapid iteration of new chips and user scenarios, the share of new-generation AI mobile phones in the Chinese market will rapidly increase after 2024 – over 50% of mobile phones are expected to become new-generation AI mobile phones by 2027. This transformation will only take 4 years, whereas traditional smartphones took 8 years to achieve the same level of penetration.

A relevant executive from Edifier stated that in terms of cutting-edge technology research and development and application, the company closely follows the development of AI technology and continuously strengthens relevant research and development reserves. Various new products equipped with AI-related functions are under development.

04

Conclusion

After enduring a prolonged industrial downturn, the global mobile phone and PC markets are now welcoming recovery.

In 2024, global smartphone market sales increased by 4% year-on-year, recovering after two consecutive years of decline. 2024 marked a year of slight recovery in the PC market, with annual shipments increasing by 3.8% to 255 million units, the first increase in three years.

With the opportunities presented by AI and the wave of national subsidies, consumer electronics are gradually regaining momentum.