• News
• 2024-07-25

Huawei's Auto System: Worth $300B Amid $10T Global Valuation?

Abstract: The faster the crisis market contracts, the more the leaders benefit, and the growth leaders are the future main line. Valuation of 3 trillion dollars? How much is Huawei's automotive system worth? The global valuation of smart cars and smart planes may exceed 10 trillion dollars. How many are there in the big A?

Main Text:

Huawei's valuation may exceed 3 trillion dollars

Under the explosion of artificial intelligence, the stock price of NVIDIA, the leader in artificial intelligence, has nearly increased by 12 times in just a year and a half, and its market value has also risen from less than 300 billion dollars to 3 trillion dollars.

NVIDIA has increased by 500 times in 10 years and by 10 times in 1 year. Such a space is truly astonishing. At this time, many people will ask, where is our country's artificial intelligence giant? Of course, it is Huawei.

Google's former CEO, Eric Schmidt, said that every open-source large model will be immediately replicated by Chinese companies, but he also said that Chinese companies cannot train models at the same level.

Regardless of whether he is right or wrong, only China can replicate. The world is the same, starting with replication, and then waiting for you to stumble and achieve transcendence.

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For NVIDIA's GPU and computing platform CUDA, Huawei also has its own products. Huawei has its own GPU and AI chips, which are the Ascend chips. The company's products are benchmarked against NVIDIA's mainstream A100 chips. Although there is still some gap with NVIDIA's most advanced chips, it has already been able to hold a place in the market.

Unlike NVIDIA, Huawei's ecosystem is more extensive, even covering the downstream market comprehensively. Therefore, it is expected that Huawei's valuation can be higher than NVIDIA's. Because the next China is still China. The competition in high-end technology is actually only between China and the United States, two major markets, so there will not be a big difference in valuation.

On October 26, 2019, at the high-quality development forum of Chinese enterprises, Academician Ni Guangnan of the Chinese Academy of Engineering made a keynote speech. When introducing the ranking of global information and communication industry enterprise market values, Ni Guangnan said that in the table he held, there were 6 American companies in the top 10, and China had Huawei, Alibaba, and Tencent, with the last one being Samsung.Ni Guangnan said that Huawei has not gone public, but its estimated market value is $1.3 trillion, ranking first in the world. This ranking is based on market value and leading enterprise status, and I think it's probably correct. Looking at Huawei's business and innovation, it is indeed number one.

Now in 2024, Huawei has built upon its foundation from 2019 and ventured into the automotive and artificial intelligence industries, actively advancing in all major areas.

One issue to note is that technology has bottlenecks; once they appear, they are quickly replicated and achieve the advantages of both. Look at smartphones; previously, there were noticeable differences between Xiaomi, Huawei, and Apple, but now, aside from the camera design on the back, the front is almost identical.

The automotive industry is the same; initially, there was a gap in autonomous driving, but with the same roads and people, once replication is complete, it comes down to the control behind the scenes, which is a matter of national territory size. Therefore, Huawei's market coverage is larger than that of NVIDIA, and after replication and surpassing, it is expected that Huawei's valuation should not and will not be less than NVIDIA's.

Among the top 10 U.S. stocks, there are leaders in various technology fields. Huawei covers all of them and is actively advancing to lead expectations. What Microsoft is doing, Huawei has. What NVIDIA is doing, Huawei also has. Tesla has fallen, but it is expected to rise in the future, and Huawei has that too. Facing a hundred with one, the valuation expectation will not be small.

I personally give a conservative valuation, expecting that Huawei's overall valuation now may exceed $3 trillion. It's a pity it's not listed, but fortunately, it didn't go public abroad. Otherwise, this $3 trillion would be nearly 28 trillion yuan, almost the total market value of the entire Shenzhen Stock Exchange.

Under marketization, growth leaders are most anticipated. In A-shares, there are genuinely few industries that can lead the world. I often say that in the internet era, internet companies are not in A-shares. Now entering the era of smart cars, fortunately, Huawei's automotive system is in A-shares. Therefore, this is fortunate. However, there is regret because they are all Huawei's cooperative enterprises; although it is deep cooperation, there is always a gap compared to being entirely one's own. But never mind, not being greedy, having a giant listed in A-shares is already very good.

Is the trillion gap also a trillion space?

The overall valuation of global smart cars and smart aircraft may exceed $10 trillion.

Compared with international automotive leaders, the market value of our country's new car-making forces listed overseas is only a fraction of theirs for the time being, but looking at domestic competition and popularity, there is already a momentum to eclipse Japan and challenge Tesla.Common sense dictates that if in the future, our country's automobile companies can surpass their competitors, then their market capitalization should also exceed theirs to be reasonable. This would imply that the current gap could very well be the growth potential for the future.

The latest rankings of new car manufacturers this week are as follows:

- Li Auto's total market capitalization is $18.971 billion

- NIO's total market capitalization is $8.683 billion

- XPeng's total market capitalization is $6.925 billion

- Tesla's total market capitalization is $631.078 billion

- Toyota's total market capitalization is $276.18 billion

Elon Musk said that without trade barriers, nine out of the top ten automobile companies in the future will be Chinese. This would suggest that 90% of the world's automobile market valuation would be attributed to China. If we take a more conservative approach and acknowledge a gap with the industry leader Tesla, even capturing 70% of the global market capitalization would amount to approximately $21 trillion.

I personally estimate that in the traditional automobile era, the total market capitalization of global automobile companies was around $1 trillion. Entering the era of smart cars, due to continuous payments for intelligence and rapid industry product iteration, it won't be like fuel cars that are still in use a hundred years later. Of course, I expect smart cars to follow a similar trajectory to smartphones. After becoming intelligent, market valuations are expected to grow nearly tenfold. Based on this calculation, the entire smart car industry will reach $10 trillion. Note that this can include smart aircraft, which is also a very crazy pillar industry. Whoever gains the automobile industry essentially wins the world. Therefore, Huawei will desperately push forward in these areas. Although Huawei's smart aircraft have not arrived yet, expectations are that they are coming soon.Huawei's automotive portfolio has a total market value of approximately 217.22 billion yuan.

Under the category of transportation tools, Huawei Technologies Co., Ltd. has applied for registration of many "Jie" trademarks. Since 2024, Huawei has applied for 20 Chinese trademarks related to the character "Jie," including "Zhen Jie," "Yue Jie," "Jiang Jie," "Guan Jie," "Yu Jie," "Dao Jie," "Han Jie," "Wei Jie," and so on. Overall, Huawei has applied for more than 50 trademarks containing the character "Jie."

In the automotive sector, Huawei CEO Richard Yu stated that, due to factors such as manpower, Huawei will initially focus on developing four "Jie" realms as examples, with potential for increased cooperation in the future. However, I believe that the registration of so many "Jie" trademarks may also be intended to cover products like intelligent aircraft, which seems excessive for automotive applications. It's as if they are transcending the three realms. Of course, the automotive companies that Huawei collaborates with are essentially state-owned enterprises (SOEs), possibly to facilitate smoother cooperation. Jack Ma once mentioned that some companies collaborate not to grow well but to control and undermine you. Therefore, Huawei's current strategy is to prioritize cooperation with SOEs, all of which are small-scale, as these companies, struggling for their own survival, would greatly benefit from a partnership with Huawei and are unlikely to be disobedient. There were previous rumors of conflicts with BAIC, possibly due to its larger size and temperament, but these were later clarified as mere rumors. The cooperation is going well. Regardless of what they say, the future belongs to Huawei.

The four major automotive companies currently cooperating with Huawei are as follows:

Wenjie series, Seres Automobile with the latest market value of 137.6 billion yuan.

Xiangjie series, BAIC BluePark with the latest market value of 45.03 billion yuan.

Zhiji series, Chery, which is not yet listed.

Aojie series, JAC Motors with the latest market value of 34.59 billion yuan.

From a market value perspective, they are still comparable to the market value of new automotive forces and have not yet made a significant breakthrough. However, in terms of sales volume and order growth, Huawei's momentum has rapidly surpassed the new forces. Especially starting from the second half of 2023, the significant surge in Wenjie has driven the stock price of Seres to triple, recovering from a previous continuous decline of 70% that was alarming.Looking at the development pattern of Huawei's automotive industry, it is consistent with what I said earlier, similar to Huawei's smartphones. Initially, they were somewhat behind, or rather, the momentum was not that strong. However, once the market started to heat up, Huawei was able to quickly achieve a leapfrog. Later on, it essentially continued to surpass and lead by a significant margin, which can be described as "far ahead."

For the related cooperative enterprises, this is a positive development. However, due to the cooperative model, no one knows how many more "boundaries" there will be in the future. These numerous boundaries will divide the valuation and market value, affecting the future valuation of the current several cooperative enterprises. This is a pity. A-shares, oh A-shares, why can't there be a clean and complete listing? This directly leads to the A-share index not being able to rise cleanly and cleanly. The bull market of the index also depends on the growth of the constituent stocks. If the constituent stocks are too diverse, the index will be slow to heat up. This is the current shortcoming of the A-share index, and I am also powerless. The slow-heating A-share index will continue to be slow-heating.