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.

Summary of Key Points from Conference Call Records Industry Overview - The conference call discusses the **domestic computing power industry chain**, particularly focusing on the **switching industry** and its performance in the context of recent market trends and regulatory changes [1][5]. Core Insights and Arguments - **Strong Demand in North America**: There is robust demand for computing power infrastructure in North America, as evidenced by the performance of companies like Nvidia, Stargate Construction, and CO CO Wave, which supports ongoing capital expenditures [1][2]. - **Rising Token Consumption**: Google’s rapid increase in TOKEN consumption indicates a growing demand for vertical industry applications and inference needs, which is expected to sustain capital expenditures [4][14]. - **Impact of H20 Ban**: The H20 ban has accelerated training demand within the domestic data center industry, with companies like Century Internet raising their annual performance guidance, and significant improvements in revenue and profit forecasts from optical module companies [1][5]. - **Profitability Improvement**: In Q2, domestic computing power profitability improved significantly, with Ruijie Network's quarterly profit growth ranging from 93% to 160%, and StarNet Ruijie's growth between 21% and 74% [1][5]. Key Industry Trends - **White Box Switches**: The rise of data center white box switches is meeting the customization needs of internet companies, with Ruijie and Unisoc leading the domestic market, while traditional brands like Cisco are losing their competitive edge [1][7]. - **High Sales and R&D Expenses**: Ruijie Network's sales expense ratio is 15.5% and R&D expense ratio is 16%, attributed to the need for channel establishment and high customization in their switching business [3][9][10]. - **Market Challenges**: The domestic computing power market faces challenges due to the H20 ban leading to reduced capital expenditures, with major companies like Alibaba and Tencent reporting lower capital spending [12]. Future Outlook - **Positive Market Trends**: The domestic computing power market is expected to improve, with indicators such as the rapid increase in Google TOKEN consumption and optimistic performance guidance from Oracle, Broadcom, and Marvell [14]. - **Performance Predictions**: Ruijie Network is projected to generate approximately 11.6 billion RMB in revenue in 2024, with a significant portion of profits expected from its data center switching business [9][15]. - **Investment Recommendations**: There is a suggestion to focus on investing in early performers in the domestic computing power sector, such as StarNet Ruijie and Ruijie Network, due to their favorable valuation compared to peers [15].

Investment Rating - The report gives a "Recommended" rating for the telecommunications industry, considering the sustained high prosperity of the sector driven by AI, 5.5G, and satellite communications [2][5]. Core Insights - The overall market performance for the week (July 7-13, 2025) saw the Shanghai Composite Index rise by 1.09%, the Shenzhen Component Index by 1.78%, and the ChiNext Index by 2.36%. The telecommunications sector, represented by the Shenwan Communications Index, increased by 2.13% during the same period [2][11]. - Within the telecommunications sector, the highest increase was seen in the communication network equipment and devices, which rose by 4.16%, while the communication application value-added services had the lowest increase at 0.16% [2][14]. - Notable individual stock performances included Hengbao Co., which surged by 21.13%, followed by Changxin Bochuang at 19.84% and Shijia Photon at 14.85% [2][16]. Summary by Sections Market Overview - The telecommunications sector is experiencing a high level of prosperity, with significant contributions from advancements in AI and 5.5G technologies, as well as satellite communications [2][3]. - The report highlights a strong performance in the telecommunications sector, with a notable increase in stock prices across various sub-sectors [2][11]. Sub-sector Performance - The communication network equipment and devices sub-sector led the gains with a 4.16% increase, while other sub-sectors also showed positive trends [2][14]. - The report indicates a general upward trend across the telecommunications sub-sectors during the week [2][15]. Individual Stock Highlights - Hengbao Co. led the stock performance with a 21.13% increase, indicating strong market interest and potential investment opportunities [2][16]. - Other notable performers included Changxin Bochuang and Shijia Photon, reflecting a robust market environment for telecommunications stocks [2][16]. Future Focus Areas - The report suggests focusing on the computing power industry chain, particularly the upstream optical chip segment and the module segment, which are expected to benefit from the ongoing demand for AI and computing power [3].

Investment Rating - The report maintains an "Outperform" rating for the communication industry [4] Core Views - The global computing power continues to show high prosperity, driven by the launch of xAI's Grok4 model and strong performance forecasts from computing power infrastructure companies [1][2] - AI inference demand is rapidly increasing, with market size expectations likely to be revised upwards, indicating a significant growth opportunity in the computing power industry [17][18] - The performance forecasts for various companies in the computing power supply chain indicate sustained high growth, particularly in optical modules and copper connection sectors [34][49][51] Summary by Sections Industry News Tracking - xAI launched the Grok4 model, which supports more complex interactions and has a subscription fee of $30/month, surpassing OpenAI's highest fee [1][12] - Broadcom's management indicated that AI inference demand has significantly increased, exceeding current capacity, and this demand was not included in previous market size forecasts of $60-90 billion [1][17] - Mellanox announced the availability of the Quantum-X switch, which features a bandwidth of 115.2 tb/s and is expected to drive orders for related components [1][19][20] Performance Forecasts - Companies such as Ruijie Networks and Huagong Technology forecast substantial profit increases, with Ruijie expecting a net profit of 400-510 million yuan, a year-on-year increase of 160.11%-231.64% [2][34] - Taiwan's AI server ODM manufacturers reported a total monthly revenue of 100.26 billion NTD in June, a 35% year-on-year increase, indicating strong demand in the AI infrastructure market [2][24] Investment Recommendations - The report recommends focusing on various segments of the AI computing power infrastructure, including optical devices and copper connection industries, as well as domestic computing power companies benefiting from increased investments [3][80] - Long-term investment in the three major telecom operators is suggested due to their stable operations and increasing dividend payouts, with a cumulative revenue of 748.8 billion yuan in the first five months of the year, a 1.4% year-on-year increase [3][80]

Group 1 - The Ministry of Finance issued a notice to guide insurance funds for long-term stable investment and to strengthen long-cycle assessments of state-owned commercial insurance companies. The assessment method for "return on net assets" has been adjusted to include annual, 3-year, and 5-year indicators with respective weights of 30%, 50%, and 20% [1][5][16] - The Ministry of Industry and Information Technology (MIIT) is promoting digital transformation in manufacturing and small and medium-sized enterprises (SMEs) through pilot programs and guidelines, aiming to enhance the digital capabilities of key industries [2][3] - The State-owned Assets Supervision and Administration Commission (SASAC) emphasized the need for state-owned enterprises to focus on strategic emerging industries and enhance their role in technological innovation and industrial control [3] Group 2 - The Ministry of Finance allocated 197 million yuan to support agricultural disaster recovery in seven provinces affected by floods and typhoons, focusing on crop replanting and infrastructure repair [4] - The National Development and Reform Commission and the National Energy Administration announced plans to increase the green power consumption ratio for steel, cement, polysilicon industries, and new data centers by 2025 [2] - The Shanghai Stock Exchange released guidelines for the "Science and Technology Innovation Growth Layer," allowing 32 unprofitable companies to enter this new tier without additional listing thresholds [5] Group 3 - The China Securities Regulatory Commission (CSRC) has initiated investigations into companies suspected of financial misconduct, including Yuandao Communication for false financial reporting and Jiaoda Anlian for information disclosure violations [7][32] - The National Energy Administration reported that the new energy capacity connected to the grid exceeded 203 million kilowatts in the first half of the year, marking a 108.7% year-on-year increase [20] - The automotive industry in China is experiencing stability compared to other countries, with a noted decline of only 12% in the passenger car market from 2018 to 2020, indicating strong macroeconomic support [21]

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 - Ruijie Networks (301165) expects a net profit of 400 million to 510 million yuan in the first half of 2025, representing a growth of 160.11% to 231.64% compared to 154 million yuan in the same period last year [1] Group 1: Financial Performance - The projected net profit for the first half of 2025 is between 400 million and 510 million yuan [1] - This represents a significant increase of 160.11% to 231.64% year-on-year from 154 million yuan [1] Group 2: Market Dynamics - The acceleration of AI technology iteration is driving the global computing infrastructure upgrade process [1] - The internet industry is rapidly increasing the construction of data centers, leading to a faster delivery of data center switch product orders aimed at internet clients [1] Group 3: Revenue Growth - The SMB market revenue is steadily growing, contributing to an increase in product gross profit year-on-year [1]

证券代码：301165 证券简称：锐捷网络 公告编号：2025-024 锐捷网络股份有限公司 2025 年半年度业绩预告 本公司及董事会全体成员保证信息披露的内容真实、准确、完整，没有虚 假记载、误导性陈述或重大遗漏。 一、本期业绩预计情况 （一）业绩预告期间 2025 年 1 月 1 日至 2025 年 6 月 30 日。 （二）业绩预告情况 本次业绩预告的相关数据未经会计师事务所审计。 三、业绩变动原因说明 报告期内，AI 技术迭代加速全球算力基础设施升级进程，互联网行业数据中 心加快建设，公司面向互联网客户的数据中心交换机产品订单加速交付；SMB 市 场收入稳步增长，产品毛利同比增加。同时，公司持续推进管理改进和效率提升 工作，期间整体费用率同比有所降低，共同推动业绩增长。 经初步测算，预计非经常性损益对当期净利润的影响约为 2,000 万元。 四、其他相关说明 1 本次业绩预告是公司财务部门初步测算的结果，具体财务数据将在 2025 年 半年度报告中详细披露。公司将严格依照有关法律法规的规定和要求，及时做好 信息披露工作。敬请广大投资者谨慎决策，注意投资风险。 □扭亏为盈 同向上升 □同向下降 | 项 ...

Group 1 - The ChiNext Index (399006) has seen a strong increase of 2.07% as of July 8, 2025, with notable gains in constituent stocks such as Sungrow Power (300274) up 9.32%, Ruijie Networks (301165) up 9.31%, and Guocera Materials (300285) up 8.76% [1] - Since June 24, the ChiNext Index and technology leaders have performed well, driven by trends such as "anti-involution" and the AI industry, with sectors like steel, new energy, building materials, media, communication, and electronics leading the gains [1] - The mid-term outlook suggests that "anti-involution" is a key driver for the index's bullish trend, as it encourages listed companies to reduce capital expenditures and eliminate excess capacity, improving the economic supply-demand relationship and enhancing corporate profitability [1] Group 2 - AI is identified as a crucial force driving the current technological revolution, with investment opportunities emerging from infrastructure development and applications related to AI, impacting multiple industries and themes within the A-share market [1] - The ChiNext ETF (159956) closely tracks the ChiNext Index, which consists of 100 stocks with large market capitalization and good liquidity, reflecting the performance of the ChiNext market [2]

Investment Rating - The report initiates coverage with a rating of "Buy" for the company [6]. Core Viewpoints - The company is positioned to benefit significantly from the development of AI, with projected revenues increasing from 139.65 billion to 182.69 billion CNY from 2025 to 2027, and net profits expected to rise from 7.78 billion to 11.79 billion CNY during the same period [4][6]. Summary by Sections 1. Industry Leading Network Solutions Provider - The company focuses on three main product lines: network equipment, network security, and cloud desktop solutions, with network equipment contributing over 70% of revenue [15][21]. - The company emphasizes independent research and development, with over 50% of its workforce dedicated to R&D, and has established eight R&D centers globally [27][28]. - Revenue has shown consistent growth, with a compound annual growth rate (CAGR) of 17.48% from 2017 to 2024, and overseas revenue has significantly increased [36][45]. 2. New Development Opportunities in the Switch Market - The global and Chinese switch markets are steadily growing, with the Chinese market expected to reach 749 billion CNY by 2024 [50][52]. - The rise of white box switches, which offer cost advantages and operational flexibility, is notable, as they allow users to purchase hardware and install software independently [57][58]. - AI is driving the upgrade of data center switches, with significant growth in demand for high-speed ports, particularly 200G and 400G devices [64][67]. 3. Significant Competitive Advantages and Growth Value - The company targets large clients, successfully penetrating the high-end market for operators, and has won significant contracts with major telecom companies [98][100]. - The company maintains a strong focus on product development, achieving a leading market share in several sectors [105]. - The establishment of self-owned production lines ensures delivery capabilities, and the company has built a robust technical service system for rapid response [3][104]. 4. Financial Forecast and Investment Recommendations - The company is projected to achieve revenues of 139.65 billion, 160.84 billion, and 182.69 billion CNY from 2025 to 2027, with net profits of 7.78 billion, 9.70 billion, and 11.79 billion CNY respectively [4][5]. - The report suggests that the company has substantial growth potential due to its deep engagement in the switch product market and active overseas expansion [4].