Group 1 - On November 25, among the 31 primary industries tracked by Shenwan, 24 industries experienced net financing inflows, with the communication industry leading at a net inflow of 1.651 billion yuan [1] - Other industries with significant net financing inflows included defense and military, electronics, machinery equipment, computers, transportation, and real estate [1] Group 2 - A total of 1,775 individual stocks received net financing inflows on November 25, with 154 stocks having net inflows exceeding 30 million yuan [1] - Among these, 25 stocks had net inflows exceeding 100 million yuan, with Xinyi Sheng leading at a net inflow of 513 million yuan [1] - Other notable stocks with high net financing inflows included Guangku Technology, ZTE Corporation, Luxshare Precision, Zhongji Xuchuang, Shenghong Technology, Changxin Bochuang, Sunshine Power, and Yidian Tianxia [1]

Core Insights - The AI industry is facing unprecedented bottlenecks as large model parameters reach trillion-level, with issues such as low efficiency of Transformer architecture, high computational costs, and disconnection from the physical world becoming increasingly prominent [2][4][38] - ZTE's recent paper, "Insights into Next-Generation AI Large Model Computing Paradigms," analyzes the core dilemmas of current AI development and outlines potential exploratory directions for the industry [2][38] Current State and Bottlenecks of LLMs - The performance of large language models (LLMs) is heavily dependent on the scaling laws, which indicate that ultimate performance is tied to computational power, parameter count, and training data volume [4][5] - Building advanced foundational models requires substantial computational resources and vast amounts of training data, leading to high sunk costs in the training process [5][6] - The efficiency of the Transformer architecture is low, with significant memory access demands, and the current hardware struggles with parallel operations in specific non-linear functions [6][7] Challenges in Achieving AGI - Current LLMs exhibit issues such as hallucinations and poor interpretability, which are often masked by the increasing capabilities driven by scaling laws [9][10] - There is ongoing debate regarding the ability of existing LLMs to truly understand the physical world, with criticisms focusing on their reliance on "brute force scaling" and lack of intrinsic learning and decision-making capabilities [9][10] Engineering Improvements and Optimizations - Various algorithmic and hardware improvements are being explored to enhance the efficiency of self-regressive LLMs, including attention mechanism optimizations and low-precision quantization techniques [12][13][14] - Innovations in cluster systems and distributed computing paradigms are being implemented to accelerate training and inference processes for large models [16][17] Future Directions in AI Model Development - The industry is exploring next-generation AI models that move beyond the Next-Token Prediction paradigm, focusing on models based on physical first principles and energy dynamics [24][26] - New computing paradigms, such as optical computing, quantum computing, and electromagnetic computing, are being investigated to overcome traditional computational limitations [29][30] ZTE's Exploration and Practices - ZTE is innovating at the micro-architecture level, utilizing advanced technologies to enhance AI accelerator efficiency and exploring new algorithms based on physical first principles [36][38] - The company is also focusing on the integration of hardware and software to create more efficient AI systems, contributing to the industry's shift towards sustainable development [38]

Core Viewpoint - ZTE Corporation's stock rose over 4% following the announcement of its self-developed high-performance chip "Han域" M1, which has been integrated into GAC Group's Aion brand electric vehicle model [1] Group 1: Company Developments - ZTE's subsidiary, ZTE Microelectronics, has developed the "Han域" M1 chip, which features high computing power, high bandwidth, large storage, and high security [1] - The "Han域" M1 chip is classified as an automotive-grade central computing platform SOC chip, designed to support various application scenarios in future domain-centric architectures [1] Group 2: Product Features - The chip utilizes a self-developed network acceleration engine to achieve seamless switching between three networks, enhancing its versatility [1] - It incorporates a multi-core heterogeneous system that supports cross-network forwarding and switching, along with a hardware acceleration engine for information security [1] - The on-chip storage capacity is high, and the real-time domain performance is improved by 25% compared to similar products in the international market [1]

Core Viewpoint - ZTE Corporation's stock price increased by over 4% following the announcement of its new chip, the "Han域" M1, which has been integrated into GAC Group's Aion brand electric vehicle model, the "Hao Bo GT Climbing Edition" [1] Group 1: Company Developments - ZTE Corporation's subsidiary, ZTE Microelectronics, has developed the "Han域" M1 chip, which is a high-performance, high-bandwidth, high-storage, and high-security multi-domain fusion high-speed connection chip [1] - The "Han域" M1 chip is classified as an automotive-grade central computing platform SOC chip, featuring a self-developed network acceleration engine that enables seamless switching between three networks [1] - The chip supports multi-core heterogeneous systems for cross-network forwarding and switching, enhancing real-time domain performance by 25% compared to similar products in the international market [1] Group 2: Market Impact - As of the report, ZTE Corporation's stock was trading at HKD 29.88, with a trading volume of HKD 548 million [1]

Group 1 - The top 20 stocks with significant capital inflow as of November 24 include BlueFocus (1.143 billion yuan), DataPort (806 million yuan), and 360 (794 million yuan) [1] - Other notable stocks in the top 20 by capital inflow are Provincial Advertising Group (587 million yuan), China Shipbuilding (440 million yuan), and Zhangjiang Hi-Tech (403 million yuan) [1] - Additional companies with substantial inflows include Changxin Bochuang (357 million yuan), China Shipbuilding Defense (347 million yuan), and Leike Defense (317 million yuan) [1] Group 2 - The list also features Huajian Group (286 million yuan), Aerospace Development (269 million yuan), and ZTE Corporation (259 million yuan) [1] - Other companies in the top 20 include GAC Group (253 million yuan), Changying Precision (253 million yuan), and Great Wall Military Industry (248 million yuan) [1] - The final entries in the top 20 are Zhongfu Circuit (248 million yuan), Leo Group (243 million yuan), Kunlun Wanwei (240 million yuan), Midea Group (233 million yuan), and Nanwei Software (223 million yuan) [1]

Group 1 - The core viewpoint of the news highlights a significant rise in Hong Kong's stock market, particularly in technology stocks, following the announcement of the "Genesis Plan" by the U.S. government to leverage artificial intelligence for scientific research [1] - The Hang Seng Index and Hang Seng Tech Index opened strongly, with notable gains in companies like Bilibili, Xiaomi, and ZTE, indicating a positive market sentiment towards tech stocks [1] - The Nasdaq Golden Dragon Index, which tracks Chinese tech stocks, rose by 2.82%, with major players like Baidu and Alibaba experiencing substantial increases in their stock prices [1] Group 2 - There is a strong expectation for interest rate cuts by the Federal Reserve, with a probability of 82.9% for a 25 basis point cut in December, which could influence market dynamics positively [2] - Historical data shows that the Hang Seng Index and Hang Seng Tech Index have experienced significant declines recently, with average maximum drawdowns of approximately 17% and 21% respectively during past market corrections [2][3] - The current valuation of the Hong Kong Stock Connect Technology ETF is at a price-to-earnings ratio of 23.55, which is at a historically low level, suggesting potential for recovery [3] Group 3 - The Hong Kong Stock Connect Technology Index has shown greater elasticity compared to similar indices, with a remarkable increase of 170% from February to September 2024, outperforming other indices [4]

Core Viewpoint - The report from Zhongyuan Securities indicates that a series of AI industry catalytic events will occur in 2026, strengthening the leading position of top optical module manufacturers due to their technological, customer, and scale advantages. The current valuation of the communication industry index is below the ten-year average, and the industry maintains a "stronger than the market" investment rating based on performance growth expectations and valuation levels [1][2]. Summary by Sections Review of 2025 - In early 2025, the DeepSeek large model boosted market sentiment, and the three major operators completed the deployment of DeepSeek computing power private networks, enhancing their cloud service capabilities. Domestic cloud manufacturers provided positive capital expenditure guidance, leading to an increase in industry valuations. However, from February to April, the industry index experienced significant fluctuations due to concerns over U.S. tariff policies and future demand for optical modules. By mid-April, the easing of tariff policies and validation of AI computing power demand led to a gradual recovery in the industry index and valuations. In late July, North American cloud manufacturers raised their capital expenditure guidance, further catalyzing the industry. Since September, leading manufacturers faced short-term performance fatigue due to product iterations and customer structure adjustments, raising concerns about unclear downstream business models [2]. Outlook for 2026 - A series of AI industry catalytic events are expected, including the mass production of NVIDIA's next-generation Rubin GPU, the release of Google's new large model Gemini, and clear capital expenditure guidance from cloud manufacturers. AI smartphones equipped with large models are anticipated to become personalized smart assistants, potentially driving the next wave of smartphone upgrades. The development of key 6G technologies by telecom operators is expected to accelerate revenue growth from AI computing power. The report is optimistic about the high industry prosperity and strong growth potential of optical modules, optical devices, optical chips, and the increasing penetration of AI smartphones, as well as the stable operations of quality dividend assets in telecom operators [3][4]. Capital Expenditure Outlook for Leading Cloud Manufacturers - The demand for 800G is increasing, and the industry is transitioning from 800G to 1.6T technology. Leading optical module manufacturers are expected to further highlight their advantages due to technological leadership, stable customer relationships, and scalable delivery capabilities. The development of AI is driving the construction of large data centers, benefiting optical device manufacturers. The long R&D and expansion cycles for optical chips create high barriers in technology, talent, customer validation, and capital, leading to a persistent supply-demand gap for certain optical chips. The increasing demand for domestic controllable solutions is expected to translate into performance for domestic computing power. Recommended companies to watch include: NewEase, Huagong Technology, Guangxun Technology, Yuanjie Technology, Shijia Photon, and Taicheng Light [4]. AI Smartphones and Market Trends - Generative AI smartphones are set to provide users with new interactive experiences, multimodal content generation capabilities, personalized services, and innovative application ecosystems. The continuous improvement of edge AI computing power and large model capabilities is expected to further increase the market penetration of AI smartphones. Innovations and upgrades in AI smartphones are likely to lead to higher average selling prices and improved profit margins. The growth in edge AI shipments will drive sustained growth in core product lines of consumer electronics components [5]. Telecom Operators' Performance - The three major telecom operators are considered quality dividend assets with high dividend yield potential, offering cash dividends twice a year. The quality of traditional business revenue is improving, and a decrease in capital expenditure is expected to lower future depreciation and amortization costs, maintaining stable operations. Additionally, telecom operators are likely to leverage their advantages in data centers, big data, and network infrastructure to reconstruct business models with the help of AI. Investment recommendations include focusing on the optical module, optical device, and optical chip sectors, as well as AI smartphone and telecom operator sectors [6].

Group 1 - UBS's long position in ZTE Corporation's H-shares decreased from 8.05% to 7.81% as of November 18, 2025 [1]

Group 1 - UBS's long position in ZTE Corporation - H shares decreased from 8.05% to 7.81% as of November 18, 2025 [1]

Core Insights - The report maintains a "stronger than market" investment rating for the communication industry, highlighting its growth potential and favorable valuation levels [1][5][12] - The communication industry index has shown significant performance, ranking second among 30 major industry indices with a 60.87% increase as of November 20, 2025 [12][14] - The report emphasizes the optimistic outlook for AI-related developments, particularly in AI computing and cloud services, which are expected to drive industry growth [4][5][45] Market Review and Industry Performance - In the first three quarters of 2025, the communication industry achieved a total revenue of CNY 19,753.67 billion, representing a year-on-year growth of 2.30%, while net profit reached CNY 1,886.40 billion, up 6.95% [18] - The overall gross margin for the communication industry was 28.45%, with a net margin of 10.19% for the first three quarters of 2025, indicating stable profitability [19] - The telecommunications operators segment reported a revenue of CNY 14,819.21 billion, growing by 0.57%, and a net profit of CNY 1,548.98 billion, increasing by 4.30% [35] Segment Performance - The optical communication segment (including optical modules, devices, and chips) saw a revenue of CNY 795.38 billion, a year-on-year increase of 56.14%, with net profit soaring by 116.86% [41] - The telecommunications equipment segment recorded a revenue of CNY 1,390.0 billion, growing by 11.2%, while the consumer electronics components segment also grew by 11.1% [21] - The cable segment achieved a revenue of CNY 464.54 billion, reflecting a growth of 6.99%, driven by increasing demand across multiple applications [46] Investment Recommendations - The report suggests focusing on companies within the optical module/device/chip sector, such as NewEase, Huagong Technology, and Guangxun Technology, due to their strong growth prospects [5][41] - For AI mobile phones, companies like Xunwei Communication and ZTE are highlighted as key players to watch [5][41] - The telecommunications operators, including China Mobile, China Telecom, and China Unicom, are recommended for their stable operations and high dividend yields [5][41]