HSBC highlighted MediaTek as the best way to play the burgeoning smartphone market in China due to its huge potential for growth. The analysts expect MediaTek's smartphone integrated circuit (IC) - or electronic chips - shipments to double to 228 million on year in 2013, and then by another 70 percent to 388 million in 2014.
Another favored stock was Lenovo, the world's fourth largest smartphone maker, and second largest in China, based on its fast market share gain in the Chinese smartphone market. HSBC expects Lenovo's smartphone shipments to grow 28.5 percent on year to 59.6 million units in 2014, giving its operating margin a boost to 1.9 percent, from 0.9 percent in 2013.
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Third and finally, HSBC highlighted SMIC as an optimal way to play rising smartphone demand in the emerging world. HSBC likes the stock because it derives 40 percent of its revenue from Chinese chipmakers such as Spreadtrum, RDA and All Winner, for example, while 15 percent of its revenue comes from Qualcomm, the world's largest supplier smartphone chips.
HSBC said a number of factors were set to drive keep emerging-market demand for smartphones next year. One example was that third generation mobiles - or 3G as they are commonly known- are still less than 20 percent penetrated in China, showing just how much potential there is for growth there. China's smartphone market is already bigger than the U.S. market, HSBC pointed out, underscoring the potential for growth.
—By CNBC's Katie Holliday: Follow her on Twitter