Core Viewpoint - The China Securities Index for Communication Equipment has shown significant growth, with a 18.77% increase over the past month and a 38.19% increase over the past three months, indicating a strong performance in the communication equipment sector [1][2]. Group 1: Index Performance - The China Securities Index for Communication Equipment opened at 7873.26 points with a trading volume of 73.569 billion yuan [1]. - Year-to-date, the index has risen by 14.73% [1]. - The index is based on companies involved in the communication equipment sector, reflecting the overall performance of these listed companies [1]. Group 2: Index Composition - The top ten weighted companies in the index include: - Xinyi Technology (15.08%) - Zhongji Xuchuang (13.59%) - ZTE Corporation (9.59%) - Industrial Fulian (9.5%) - Tianfu Communication (3.77%) - Zhongtian Technology (3.42%) - Chuan Yin Holdings (3.02%) - Hengtong Optic-Electric (2.71%) - Wentai Technology (2.69%) - Haige Communication (2.22%) [1]. - The index is primarily composed of companies listed on the Shenzhen Stock Exchange (66.81%) and the Shanghai Stock Exchange (33.19%) [1]. Group 3: Industry Breakdown - The index sample shows that communication services account for 82.08% and information technology accounts for 17.92% [2]. - The index samples are adjusted biannually, with adjustments occurring on the second Friday of June and December [2]. - Public funds tracking the communication equipment index include various ETFs and index funds from Guotai, Bosera, and Tianhong [2].

Core Insights - The World Artificial Intelligence Conference (WAIC) 2025 will focus on the integration of AI in the cultural and entertainment industries, addressing challenges such as content homogenization, copyright issues, and ethical concerns surrounding virtual interactions [3][4][5]. Group 1: Event Overview - WAIC 2025 will take place from July 26 to July 28, 2025, at the Shanghai World Expo Center, featuring forums and exhibitions dedicated to AI's role in arts and entertainment [3]. - The event aims to explore solutions and future prospects for AI in various sectors, including art, tourism, gaming, and media [4]. Group 2: Key Topics - Discussions will include technical solutions and legal frameworks for AIGC content copyright, ethical boundaries and commercialization models for virtual human interactions, and the development path of AI machine vision aesthetics [5]. - The event will also address the collaborative growth model between artistic intelligence and AI, focusing on interactive audio therapy and the construction of world IP in the context of Chinese themes [6]. Group 3: Featured Sessions - A session on AI music therapy will showcase the integration of AI and acoustic technology, aiming to promote the industrial transformation of AI music therapy for healthcare and mental wellness [7]. - Another session will analyze the current state and trends of the "AI + cultural tourism" industry, exploring new paths and opportunities for intelligent and personalized development [8]. Group 4: Participating Organizations - The event will involve cultural institutions such as the Shanghai Municipal Bureau of Culture and Tourism and various media outlets, alongside renowned companies like Microsoft, Alibaba, and Tencent [9][10][11]. - International academic institutions and research organizations, including King's College London and the European Academy, will also participate [12]. Group 5: Notable Guests - The conference will feature prominent figures such as Joanna Zylinska from King's College London and other influential artists and scholars from various countries [14]. Group 6: Exhibition Highlights - WAIC 2025 will showcase over 40 companies and more than 100 innovative products in a 70,000 square meter exhibition area, highlighting the deep integration of AI with cultural and digital entertainment [16]. - Notable exhibits will include the Nuwaai digital human platform and various AI and AR glasses, showcasing advancements in user experience and technology [17][19][21][25]. Group 7: Publication Launch - The conference will also introduce the first issue of "WAIC UP!", a guide aimed at exploring the potential of AI and its impact on future civilization [29].

Investment Rating - The report maintains an "Outperform" rating for the telecommunications industry [1] Core Insights - The report highlights the acceleration of domestic substitution in computing power technology, driven by breakthroughs in hardware and software ecosystems, particularly represented by Huawei [5][13] - The introduction of standardized data circulation contracts by the National Data Bureau is expected to enhance transaction efficiency by 30% [4][17] - The establishment of a 6G industry policy in Beijing aims to foster key technology development and standardization efforts [8][18] - The report emphasizes the significant market demand for domestic AI chips and the commercial viability of the HarmonyOS ecosystem [14][15] Summary by Sections Investment Strategy - Domestic substitution in computing power is entering an accelerated phase, with Huawei's Matrix 384 super node providing 300 PFLOP computing power, significantly outperforming competitors [5][13] - The shipment of Ascend 910 series AI chips has begun, with initial orders for the 910C chip expected to exceed 70,000 units, valued at approximately $2 billion [14] - National funding and local government support are paving the way for opportunities in domestic semiconductor and operating system development [15] Industry News - The National Data Bureau's new contract templates for data circulation are expected to standardize agreements and enhance transaction efficiency [4][17] - Beijing's 6G industry policy focuses on key technology breakthroughs and aims to establish a robust 6G ecosystem by 2030 [8][18] - The Civil Aviation Administration of China has formed a leadership group to promote general aviation and low-altitude economy development [20] - China Telecom has launched a full-scenario application for satellite direct connection, marking a significant step in integrated network applications [21] Market Performance Review - The telecommunications sector saw a 2.19% increase this week, outperforming major indices [9][22] - Key sectors such as optical modules and industrial internet showed strong growth, with increases of 5.04% and 2.57% respectively [22][25] - The report suggests focusing on investment opportunities within the domestic AI computing chain [22][27]

Group 1: Market Overview - On July 14, the main funds in the Shanghai and Shenzhen markets experienced a net outflow of 26.576 billion yuan, with the ChiNext board seeing a net outflow of 12.112 billion yuan and the CSI 300 index stocks a net outflow of 6.366 billion yuan [1] - Among the 21 industries tracked, mechanical equipment, public utilities, and home appliances saw the largest gains, each rising over 1%, while real estate, media, and non-bank financial sectors fell more than 1% [1] - Four industries received net inflows from main funds, with mechanical equipment leading at 394 million yuan, followed by home appliances at 117 million yuan, and coal and petrochemical sectors each exceeding 37 million yuan [1] Group 2: Individual Stock Performance - Among individual stocks, 37 saw net inflows exceeding 100 million yuan, with six stocks surpassing 200 million yuan in inflows [2] - Zhongji Xuchuang, a leader in optical modules, topped the inflow list with 497 million yuan, benefiting from increased demand for ASIC servers driven by growth in ARR for AWS's Anthropic and Google's Gemini [2] - Notable stocks such as Xiangyang Bearing, Brother Technology, and Kelu Electronics also saw significant inflows, with Kelu Electronics reaching a net inflow of 314 million yuan, the highest since June 23, 2016 [2] Group 3: Notable Outflows - Over 90 stocks experienced net outflows exceeding 100 million yuan, with 21 stocks seeing outflows over 300 million yuan [3] - Leading the outflows were BYD and Northern Rare Earth, each with net outflows exceeding 1.1 billion yuan, with Northern Rare Earth's outflow reaching 1.105 billion yuan, marking a new high since November 4, 2024 [3][4] Group 4: Tail-End Market Activity - At the market close, there was a net outflow of 1.483 billion yuan, with the ChiNext board seeing an outflow of 806 million yuan [6] - Notably, the digital currency concept stock Chutianlong saw a significant reversal, with a net inflow of 204 million yuan, despite a projected loss of 35 to 40 million yuan for the upcoming half-year [7] - Other stocks with notable tail-end inflows included Tianyang Technology and Hanyu Pharmaceutical, each exceeding 40 million yuan [8]

Summary of the Conference Call on Switch Industry and AI Computing Power Industry Overview - The report focuses on the **switch industry**, highlighting its critical role in network interconnection and the growing demand driven by data center construction [4][20]. - The global switch market is projected to grow significantly, with the top five manufacturers holding a substantial market share [4][68]. Key Points and Arguments Market Growth and Demand - The global switch market is expected to grow from **$61.9 billion in 2020** to **$96.8 billion by 2025**, with a **CAGR of 9.4%** [24]. - In China, the market is projected to increase from **¥116.8 billion in 2020** to **¥318 billion by 2025**, with a **CAGR of 22.2%** [24]. - The demand for switches is driven by the increasing data center construction and the need for higher data transfer rates [20][30]. Market Concentration - The top five global switch manufacturers, including **Cisco, Arista, Huawei, HPE, and Xinhua San**, hold **69.6%** of the market share, with Cisco leading at **35.9%** [4][68]. - In China, the top five manufacturers account for **89.7%** of the market, with Huawei at **32.4%** [4][68]. Technological Trends - **White-box technology** is emerging, allowing for hardware-software decoupling, which reduces acquisition and operational costs [31][35]. - The **CPO (Chip-Package-Optical)** switch technology is gaining traction, promising lower power consumption and higher efficiency [36][41]. Chip Market Dynamics - The global Ethernet switch chip market is expected to grow, with commercial vendors driving the majority of the growth [81][86]. - The market is currently dominated by overseas giants, indicating significant room for domestic alternatives [87]. Important but Overlooked Content - The report highlights the **risk factors** including the potential underdevelopment of AI applications, escalating US-China trade tensions, intensified market competition, and the risk of failure in new technology and product development [7]. - The **data center switch market** in China is expected to account for **51.7%** of the total switch market by 2026, indicating a growing reliance on data center infrastructure [30]. Recommendations - The report suggests monitoring companies such as **Sengke Communication, Yutai Micro, Ruijie Networks, Unisplendour, ZTE, and Feiling Kesi** for potential investment opportunities [6]. This summary encapsulates the essential insights from the conference call regarding the switch industry and its intersection with AI computing power, providing a comprehensive overview of market dynamics, technological advancements, and investment opportunities.

Core Viewpoint - The development of 5G-A network at Mount Everest Base Camp has significantly improved communication capabilities for tourists and researchers, enhancing their experience and operational efficiency [1][2][4]. Group 1: Network Development - The 5G network at Mount Everest Base Camp has become stable and reliable, allowing visitors to stream videos and share experiences in real-time [1]. - In 2020, China Mobile was responsible for the first-ever 5G signal transmission to the summit of Mount Everest, establishing eight base stations along the climbing route [2]. - The 5G-A network offers lower latency, higher speed, and better user experience compared to 4G, facilitating real-time video calls and data uploads for scientific research [2][3]. Group 2: Technical Challenges - The construction and deployment of communication equipment at high altitudes present significant challenges due to low oxygen levels, extreme cold, and strong winds [3]. - Engineers have made targeted improvements to equipment to ensure reliable operation in harsh conditions, focusing on heat dissipation and equipment sealing [3]. Group 3: Future Plans - China Mobile plans to increase investment in 5G network construction, aiming to cover more key scenic areas with advanced 5G-A networks [4]. - The collaboration between China Mobile and ZTE will deepen in areas such as industry empowerment and smart socialization, contributing to the upgrade of Tibet's communication industry [4].

Core Viewpoint - The acquisition of Haowei Technology by Degute represents a significant "elephant swallowing snake" transaction, with a substantial disparity in revenue and asset size between the two companies [1][2]. Group 1: Acquisition Details - Degute plans to acquire 100% of Haowei Technology through a combination of share issuance and cash payment, making Haowei a wholly-owned subsidiary [1]. - The specific transaction pricing has not been disclosed, but the scale of the acquisition is notable given the financial metrics of both companies [1]. - The transaction involves 14 shareholders of Haowei Technology, with the top three shareholders holding 27.83%, 27.62%, and 13.85% of the shares respectively [2]. Group 2: Financial Comparison - In 2024, Degute's revenue is projected to exceed 500 million yuan, while Haowei Technology's revenue for 2023 and 2024 is reported at 3.861 billion yuan and 3.654 billion yuan respectively, indicating a revenue scale several times larger than Degute's [2][3]. - As of March 31, 2024, Degute's total assets are 1.156 billion yuan with equity of 765 million yuan, whereas Haowei Technology's total assets are 5.617 billion yuan with equity of 2.954 billion yuan [1][2]. Group 3: Business Transition - Following the acquisition, Degute aims to expand its business from energy-saving equipment manufacturing to telecommunications software development, cloud and AI software services, and industry digital solutions, thereby creating a second growth curve [4]. - The company has been transitioning from a "product supplier" to a "system integration service provider," focusing on a full value chain system for clean combustion and efficient heat exchange [5]. Group 4: Historical Context of Haowei Technology - Haowei Technology, previously known as Zhongxing Ruanchuang, was listed on the New Third Board before delisting in 2017 and has undergone multiple rounds of listing guidance since then [1][5]. - The company has received high-level certifications from major cloud service providers, indicating its strong capabilities in cloud management services [2].

Investment Rating - Industry investment rating: Positive (maintained) [1] Core Viewpoints - The report highlights the strong performance of computing-related companies and maintains a positive outlook on the global AIDC (AI Data Center) industry chain, driven by increasing demand for data center infrastructure and AI applications [5][19] - The release of Grok 4 by XAI and the introduction of AWS's GB200 UltraServers are significant advancements in AI computing capabilities, enhancing the competitive landscape [16][17] Summary by Sections 1. Investment Insights - The report emphasizes the impressive earnings forecasts from several companies in the computing sector, with Ruijie Networks expecting a net profit of 400 million to 510 million yuan for H1 2025, representing a year-on-year growth of 160.11% to 231.64% [5][13] - Industrial Fulian anticipates a net profit of 6.727 billion to 6.927 billion yuan for Q2 2025, reflecting a year-on-year increase of 47.72% to 52.11% [15] - The demand for high-speed optical modules in computing centers is rapidly increasing, contributing to significant revenue growth for companies like Huagong Technology, which expects a net profit of 890 million to 950 million yuan for H1 2025, up 42.43% to 52.03% year-on-year [14] 2. Market Trends - As of May 2025, China has established 4.486 million 5G base stations, with a net increase of 235,000 stations since the end of 2024 [29] - The number of 5G mobile phone users reached 1.098 billion, marking a year-on-year growth of 21.3% [29] - The report notes a decline in 5G mobile phone shipments, with 21.19 million units shipped in May 2025, down 17.0% year-on-year [29] 3. Recommended Investment Targets - AIDC Infrastructure: Recommended stocks include New Idea Network Group, Baoxin Software, and Runze Technology; Beneficiary stocks include Guanghuan New Network, Aofei Data, and Century Interconnect [20] - IT Equipment: Recommended stocks include Ziguang Co. and ZTE; Beneficiary stocks include Cambrian and Inspur [21] - Network Equipment: Recommended stocks include Ziguang Co. and ZTE; Beneficiary stocks include Ruijie Networks and Yingtong Technology [22] - Cloud Computing: Beneficiary stocks include China Mobile, China Telecom, and China Unicom [25] - AI Applications: Beneficiary stocks include Guanghe Tong and Yiyuan Communication [26] - Satellite Internet & 6G: Beneficiary stocks include Haige Communication and Shenglu Communication [27]

Core Viewpoint - The development of artificial intelligence and robotics in Guangdong requires a coordinated effort in talent, computing resources, and ecosystem support, with a focus on overcoming existing shortcomings in open-source data and reliance on imported components [1][2]. Group 1: Artificial Intelligence Development - Guangdong should enhance support for companies that actively contribute to open-source AI models, addressing the current shortfall in open-source initiatives [2]. - The establishment of a collaborative innovation center for AI and robotics is essential to lower the barriers for technology transfer and foster a more integrated development model [1][2]. Group 2: Robotics Industry - There is a pressing need for a national-level robotics training facility in Guangdong to facilitate the development and testing of high-end robots in realistic environments [1][2]. - Over 80% of core components for robotics, such as harmonic reducers and high-precision sensors, are still imported, highlighting the need for local innovation and production capabilities [1]. Group 3: Computing Infrastructure - The digital infrastructure, particularly in computing power, is critical for the growth of AI-related industries, with a goal for Guangdong to achieve 65% self-sufficient high-performance computing power by around 2027 [2]. - The establishment of a dedicated "computing power development fund" is recommended to support projects utilizing various domestic chip and server technologies [2]. Group 4: Data Utilization - To address the challenge of insufficient data for AI training, Guangdong should create a large-scale industry information database in collaboration with cities like Guangzhou, Shenzhen, and Dongguan, drawing on successful experiences from Shanghai [2][3]. - The proposal for a "Guangdong-Hong Kong-Macao Industrial Big Data Sharing Platform" aims to unlock the potential of data as a new resource for industry [3].

Group 1 - The core index of the A-share market, the China Securities Industrial 4.0 Index, closed down by 0.49% at 3904.5 points with a trading volume of 43.951 billion yuan [1] - Over the past month, the China Securities Industrial 4.0 Index has increased by 3.35%, by 12.78% over the last three months, and by 4.33% year-to-date [1] - The index reflects the overall performance of companies related to Industrial 4.0, including control hardware, control software, and terminal hardware providers [1] Group 2 - The top ten weighted stocks in the China Securities Industrial 4.0 Index include Industrial Fulian (6.27%), Zhongke Shuguang (5.42%), and Lixun Precision (5.38%) [1] - The market capitalization distribution shows that 56.43% of the index is from the Shenzhen Stock Exchange, 43.35% from the Shanghai Stock Exchange, and 0.22% from the Beijing Stock Exchange [1] - The index sample is adjusted quarterly, with adjustments occurring in the second Friday of March, June, September, and December [2] Group 3 - The industry composition of the index sample indicates that information technology accounts for 60.75%, industrial sector for 33.51%, and communication services for 5.74% [2] - Weight factors are generally fixed until the next scheduled adjustment, with special circumstances allowing for temporary adjustments [2] - Companies that are delisted or undergo mergers, acquisitions, or splits will be handled according to the calculation and maintenance guidelines [2]