Goldman Sachs Transsion (688036): Mgmt. visits: AI smartphones in expansion; rising memory costs to add to challenges in 1H26
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Key Views
The Infinix Hot 60i (USD 115) now integrates DeepSeek R1 and a Folax AI button, signaling AI capability expansion into budget segments. Transsion is also collaborating with Google on AI agent functionality. However, memory costs rose rapidly in 4Q25 and 1Q26, creating headwinds. Management plans to offset this through product mix upgrades, consumer price pass-through, and sourcing from local memory suppliers, though gross margins may still face pressure. Management expects 2H26 to outperform 1H26 and does not anticipate intensified competition, given already thin brand margins.
Outlook
Transsion's smartphone shipment growth has decelerated materially, from a 35% CAGR (2015–21) to 9% (2021–24), falling out of the global top five in 2025. Goldman Sachs sees AI-driven product upgrades supporting ASP gains but notes the valuation appears reasonable.
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- Transsion Holdings (688036.SS): Neutral; 12-month target price RMB 91 (15.0x 2026E P/E, in line with peers, below its 6-year average). Current price RMB 66.20, implying 37.5% upside.