Discussion on the Conditions for Launching AI Applications

Core Viewpoints

"No industry, no bull market." Historically, the rise of leading industries is key to driving market increases. Specifically, from 2002 to 2007, heavy industry dominated; from 2009 to 2015, smartphones dominated; from 2016 to 2021, new energy and consumer goods dominated; and since 2023, the rise of AI has become the key theme.

From 2023 to 2024, upstream computing power in AI is leading the main theme. Currently, regarding when AI downstream applications will start, we will analyze it by referencing the development patterns of smartphones and electric vehicles.

1. Smartphone Industry Chain Patterns

The rise of the smartphone industry opened up in phases, starting with the first phase led by upstream electronic components, from November 2008 to April 2011, followed by the second phase led by downstream applications, from December 2012 to June 2015. There was approximately a year of calm in between, accompanied by the release of the blockbuster product iPhone 4 and the rapid increase in global smartphone penetration.

1. New Energy Vehicle Industry Chain Patterns

The rise of the new energy vehicle industry also opened up in phases, starting with the first phase led by upstream lithium and cobalt, from January 2016 to January 2018, followed by the second phase led by downstream batteries and complete vehicles, from January 2019 to December 2021. There was approximately a year of calm in between, during which the Tesla Model 3 was released.

1. Conditions for AI Application Launch

The current round of AI development shows patterns similar to those of smartphones and electric vehicles. Specifically, from 2023 to 2024, upstream computing power has led the first phase of the market, with the Nvidia supply chain and domestic computing power chain both experiencing explosive growth. Currently, we believe that the core condition for the start of the second phase is the emergence and release of blockbuster products similar to the iPhone 4 and Model 3, with potential areas including AI intelligences, robots, and AI glasses.

Main Text

1. Introduction: Conditions for Application Launch

"No industry, no bull market." Historically, the rise of leading industries is key to driving market increases. Specifically, from 2002 to 2007, heavy industry dominated; from 2009 to 2015, smartphones dominated; from 2016 to 2021, new energy and consumer goods dominated; and since 2023, the rise of AI has become the key theme.

From 2023 to 2024, upstream computing power in AI is leading the main theme. Currently, regarding when AI downstream applications will start, we will analyze it by referencing the development patterns of smartphones and electric vehicles

1. The Rules of the Smartphone Industry Chain

The rise of the smartphone industry has successively opened up the first phase led by upstream electronic components, from November 2008 to April 2011, and the second phase led by downstream applications, from December 2012 to June 2015. There was a calm period of about one year in between, accompanied by the release of the blockbuster product iPhone 4 and the rapid increase in global smartphone penetration.

2.1 First Phase: Electronic Components Lead

In terms of the industrial background of the first phase, in 2007, Apple released the first-generation iPhone, marking an important turning point in the development of the smartphone industry, with global smartphone penetration exceeding 10% that year; in 2010, Apple's iPhone 4 marked the birth of a blockbuster product, with global smartphone penetration surpassing 20% that year; in 2011, Lei Jun released the Xiaomi phone, thus initiating a low-price model, with global smartphone penetration approaching 30% that year.

Regarding the performance of the sector in the first phase, upstream electronic components were the leading line. From November 4, 2008, to April 18, 2011, the electronic industry rose by a cumulative 313%, higher than the 79% increase of the Shanghai Composite Index, while the computer sector rose about 208%, telecommunications about 97%, and media about 117%.

Further observing the performance of individual stocks in the electronic sector during the first phase, from November 4, 2008, to April 18, 2011, the companies with the highest gains in the electronic industry included Sanan Optoelectronics, Lai Bao High-tech, Huaying Technology, GoerTek，沃尔核材， Ziguang Guowei, Silan Microelectronics, Tiantong Co., Ltd., Shunluo Electronics, and Kaisheng Technology, concentrated in the electronic components field.

2.2 Key Trigger: iPhone 4 Blockbuster Release

Apple brought a singularity to the smartphone industry, with the iPhone 4 being a key blockbuster product. The development of global smartphones can be traced back to 1993, when IBM released the Simon, the world's first smartphone. However, for more than a decade thereafter, the development of smartphones remained stagnant until Apple released the first-generation iPhone in 2007, creating a new model of "touchscreen + applications," which led to a breakthrough in the smartphone industry. In 2010, Apple launched the "phenomenal" product iPhone 4, driving the rapid popularization and penetration of smartphones globally, with a year-on-year shipment growth rate soaring to 75%

The emergence of the iPhone 4 as a blockbuster product allowed Apple Inc. to successfully enter the Chinese market and indirectly promoted the rise of Chinese smartphone brands. On June 7, 2010, Steve Jobs announced the iPhone 4 at Apple's Worldwide Developers Conference. On September 25, 2010, the iPhone 4 was officially launched in mainland China, with shipments gradually increasing, driving the development of the Chinese smartphone market. On one hand, Apple successfully opened the Chinese market, and the blockbuster product iPhone 4 was followed by the iPhone 4S and iPhone 5s, which received a good response in China, leading to a steady increase in Apple's shipments, peaking in 2015; on the other hand, the emergence of the iPhone 4 blockbuster made many people sense business opportunities, leading to a surge of domestic smartphone brands, and the overall shipment volume of Chinese smartphones saw a significant increase in 2013.

2.3 Phase Two: Internet Applications Lead

From December 2012 to June 2015, the penetration rate of smartphones had reached a high level, and downstream internet applications experienced a concentrated explosion, with internet application companies leading the way, marking a larger increase in the second phase of the industry chain.

Regarding the industrial background of the second phase, according to the "Green Paper on Trends in the Chinese Mobile Application Industry 2015" released by 360, on one hand, in Q3 2014, the proportion of mobile application downloads on mobile devices exceeded that on PCs for the first time, reaching 51%, indicating a clear trend of user download behavior shifting to mobile devices; on the other hand, the mobile internet gradually formed a complete industry of "hardware → network → applications," with blockbuster applications such as QQ, WeChat, mobile Taobao, Alipay Wallet, Tencent Video, Kugou Music, and Baofeng Video being launched between 2012 and 2015.

In terms of the performance of sectors in the second phase, downstream applications led the main line. Statistics from December 3, 2012, to June 12, 2015, show that the industry increases were 719% for computers and 625% for media, ranking first and second among all industries, significantly outperforming the Shanghai Composite Index.

Further observing the performance of TMT stocks in the second phase, from December 3, 2012, to June 12, 2015, the top ten companies with the highest increases in TMT were concentrated in the application segment, including Yinzhijie, Tonghuashun, Jinzhen Co., Ltd., Changliang Technology, Shanghai Steel Union, Wanda Information, Electric Science Network Security, Xinyada, Weining Health, and Feilixin, with businesses involving internet finance, Internet healthcare, cybersecurity, urban informationization, etc.

1. New Energy Vehicle Industry Chain Patterns

The rise of the new energy vehicle industry has successively opened up the first phase led by upstream lithium and cobalt, from January 2016 to January 2018, and the second phase led by midstream and downstream battery and complete vehicle segments, from January 2019 to December 2021. There was a calm period of about one year in between, during which the production of Tesla Model 3 increased.

3.1 First Phase: Upstream Lithium and Cobalt Resources Lead

In terms of the industrial background of the first phase, as the trend of electric vehicles continues to develop, the increase in industrial capital expenditure drives the upstream resource segment to rise first. In terms of product prices, cobalt prices doubled from 2016 to 2017, with market prices rising from nearly 200,000 yuan/ton to nearly 530,000 yuan/ton.

Regarding the performance of the sector in the first phase, due to the concurrent consumption upgrade theme, the overall increase in non-ferrous metals was relatively prominent. However, from the perspective of the electric vehicle industry chain, the cumulative increase in the non-ferrous metal index in the first phase was significantly higher than that of the midstream and downstream segments.

Further observing the performance of individual stocks in the lithium and cobalt sector during the first phase, from January 28, 2016, to January 24, 2018, companies such as Huayou Cobalt, Hanrui Cobalt, and Ganfeng Lithium saw significant increases, concentrated in the upstream lithium and cobalt segments of the industry chain.

3.2 Key Trigger: Model 3 Becomes a Hit

During the period from 2018 to 2019, Tesla Model 3 gradually became a hit, driving the penetration rate of new energy vehicles, and subsequently initiating the second wave of increases led by the midstream and downstream industry chain.

Specifically, in 2018, Tesla Model 3 began large-scale deliveries, becoming a phenomenal product in the global new energy vehicle market. With its performance advantages, such as a 0-100 km/h acceleration of about 6 seconds and a range of 346 kilometers, as well as its level of intelligence, such as a centralized electronic and electrical architecture, it became a blockbuster product From the financial report data disclosed by Tesla, in 2018, Tesla's global sales reached 245,000 units, with Model 3 accounting for nearly 60%.

In the Chinese market, Tesla Model 3 also drove the penetration rate of new energy vehicles. In January 2019, the construction of Tesla's Shanghai Gigafactory officially began, and in December 2019, the first Model 3 rolled off the production line at the Shanghai factory, with the domestic Model 3 price dropping to below 300,000 yuan, further opening up the Chinese market. According to Tesla's financial report, in the fourth quarter of 2019, the global delivery volume of Model 3 reached a record high of 92,620 units, accounting for about 83% of Tesla's total deliveries in the fourth quarter.

Entering 2020, Tesla's domestic Model 3 continued production at the Shanghai factory, driving the penetration rate of domestic new energy vehicles and monthly sales into an upward phase, accompanied by the initiation of the second wave of increases led by the mid and downstream industrial chains.

3.3 Second Stage: Lithium Batteries and Complete Vehicles Lead

Regarding the industry performance in the second stage, the explosive demand for new energy vehicles also began to activate the mid and downstream sectors. Specifically, during the second stage, the power equipment sector saw the highest increase, with a rise of 284% from January 3, 2019, to December 13, 2021. Meanwhile, upstream lithium supply was constrained, and downstream terminal demand remained strong, leading to price increases in upstream lithium and cobalt. In the second stage, the electric vehicle industry chain saw a resonant increase across the mid and downstream sectors.

Further observing the performance of individual stocks in the new energy vehicle industry chain during the second stage, in the midstream power equipment sector, leading stocks such as Tianhua New Energy, Yiwei Lithium Energy, and Tianci Materials, which focus on lithium batteries for new energy vehicles, emerged; in the downstream automotive sector, benefiting from the new energy vehicle boom, Great Wall Motors performed well, while BYD, as a leading representative of new energy complete vehicles, also saw significant gains. Sailun Tire and Huayang Group, as companies related to tires and automotive parts, also performed well; in the upstream resource sector, leading stocks closely related to new energy battery materials such as Yongxing Materials, Shengxin Lithium Energy, Tibet Mining, Rongjie Co., and Ganfeng Lithium emerged.

1. Conditions for the Launch of AI Applications

Referring to past cases, this round of AI development also shows patterns similar to those of smartphones and electric vehicles. Specifically, from 2023 to 2024, upstream computing power led the first phase of the market, with the Nvidia industry chain and domestic computing power chain experiencing successive explosions From the current standpoint, we believe that the core condition for the initiation of the second phase lies in the emergence and mass production of blockbuster products similar to the iPhone 4 and Model 3, with potential areas including AI intelligent entities, robotics, AI glasses, and other directions.

4.1 Phase One: Upstream Computing Power Takes the Lead

From 2023 to 2024, we successively released reports titled "Bullish Window: Winning in AI Upstream," "AI Investment Era: Finding Current Bull Stock Clues," "Grasping the Main Line: This Round of AI Market May Exceed Last Year," and "Revisiting the Fermentation of Computing Power Main Line: Leaders First, Dark Horses Follow," highlighting the opportunities led by upstream computing power in the first phase of AI.

Looking back from 2023 to the present, the NVIDIA industrial chain and domestic computing power chain have successively exploded, leading the first phase of the market. In terms of data, statistics from October 2022 to March 2025 show that the telecommunications sector, benefiting from computing power, has the highest increase, followed by media, computer, and electronics sectors in the top four. Further statistics on listed companies with a market value of over 5 billion yuan show that from 2023 to the present, companies like Cambrian-U, Keta Power, NewEase, Zhongji Xuchuang, Tuowei Information, Tianfu Communication, Changshan Beiming, and Haiguang Information have seen significant increases, mainly concentrated in the NVIDIA industrial chain and domestic computing power and other upstream AI segments.

4.2 Initiation Conditions: The Birth and Mass Production of Blockbuster Applications

From the current standpoint, drawing on the development patterns of the smartphone and electric vehicle industries, the birth and mass production of blockbuster products are key conditions for initiating the second phase.

For smartphones, the period from 2009 to 2010 was dominated by upstream electronic components in the first phase, while the period from 2013 to 2015 was dominated by downstream applications in the second phase. Among them, the birth and mass production of the blockbuster product iPhone 4 were crucial. Specifically, the launch of the iPhone 4 was an important turning point for Apple. Before the release of the iPhone 4, Apple's global smartphone shipments in 2009 were about 25 million units, exceeding 90 million units in 2011, and over 130 million units in 2012. During this period, China's smartphone industry also experienced rapid development, with smartphone companies represented by Xiaomi being established one after another, jointly promoting the popularization of smartphones with Apple. It was only after smartphones penetrated to a certain level that the application-led phase began.

For electric vehicles, the first phase dominated by upstream lithium and cobalt was from 2016 to 2017, while the second phase dominated by midstream and downstream batteries and complete vehicles was from 2020 to 2021. Among them, the volume increase of the blockbuster product Model 3 is key. Specifically, Tesla released Model 3 in March 2016, the Shanghai Tesla factory was established in July 2018, and the actual delivery began in December 2019, which is also the critical point for volume increase. Therefore, the key to the start of the second phase market is after the continuous volume increase of Model 3 in 2020.

From the current perspective, we believe that the key to the second phase of AI's launch is the birth and volume increase of blockbuster products. Considering the current development of AI, potential areas include AI intelligent entities, robots, AI glasses, and other directions.

Author of this article: Wang Yang, Source: Wang Yang Strategy Research, Original title: "Gradually Exploring: Discussion on the Conditions for the Launch of AI Applications"

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