Group 1 - The Chinese government is enhancing its focus on state-owned enterprises, directing capital towards key industries related to national security and public services [2] - The Shanghai Stock Exchange is promoting higher dividend payouts and increased frequency of dividends among listed companies to enhance investment value [1] - The Ministry of Industry and Information Technology is pushing for the integration of artificial intelligence in manufacturing to accelerate smart upgrades in key industries [1] Group 2 - Vanke A announced that Shenzhen Metro Group plans to provide a loan of up to 3 billion yuan to the company [2] - Longi Green Energy's shareholder HHLR plans to reduce its stake by up to 0.5% [3] - BlueFocus Communication Group is planning to issue H-shares and list on the Hong Kong Stock Exchange [2][3]

Investment Rating - The report maintains a "Recommended" rating for the telecommunications industry, reflecting the sustained high prosperity of the sector driven by AI, 5.5G, and satellite communications [1][2]. Core Insights - The overall market performance for the week (June 2-6, 2025) saw the Shanghai Composite Index rise by 1.13%, the Shenzhen Component Index by 1.42%, and the ChiNext Index by 2.32%. The telecommunications sector, represented by the Shenwan Communications Index, increased by 5.27% during the same period, indicating a strong upward trend across various sub-sectors [1][10]. - The highest increase among the telecommunications sub-sectors was in communication network equipment and devices, which rose by 8.33%. Other sub-sectors also showed positive growth, with the lowest increase being 1.55% [11][12]. - Notable individual stock performances included Huamai Technology, which surged by 33.74%, followed by Zhongjia Bochuang at 33.33% and Taicheng Guang at 30.31% [14]. Summary by Relevant Sections Market Overview - The telecommunications sector experienced a significant increase in stock prices, with a weekly rise of 5.27% [10]. - The sub-sector of communication network equipment and devices led the gains with an 8.33% increase [11]. Key Developments - The report highlights the successful launch of the fourth batch of "GW Constellation" satellites, which accelerates the establishment of satellite internet networks [26][27]. - The introduction of Broadcom's Tomahawk 6 switch chip, which offers a capacity of 102.4 Tbps, is expected to enhance AI network capabilities significantly [23][24]. - The Ministry of Industry and Information Technology's issuance of the "Computing Power Interconnection Action Plan" aims to improve the efficiency and service level of public computing resources [21][22]. Investment Opportunities - The report suggests focusing on the computing power industry chain and satellite internet as key areas for investment, given the positive developments and government support in these sectors [2].

Investment Rating - The report maintains an "Increase" rating for the industry, emphasizing the explosive demand for ASICs and the investment opportunities in self-developed chip industries by CSPs like Amazon and Google [5][7][31]. Core Insights - The demand for custom ASICs is experiencing a comprehensive explosion, with significant growth expected in the custom acceleration computing chip market, projected to reach $42.9 billion by 2028, growing at a CAGR of 45% from 2023 to 2028 [14][31]. - Major North American CSPs are accelerating their self-developed ASIC layouts, with Google and Amazon leading the progress in custom chip development [14][19]. - Broadcom's guidance indicates that XPU deployments will exceed expectations in 2026, driven by strong demand for customized AI accelerators [20][22]. - Marvell is set to start 3nm chip production in 2026, with significant progress in custom AI XPU projects for large-scale data center clients [3][26]. - Wistron reported a significant revenue increase in May 2025, indicating a robust growth phase for ASIC demand, with AI inference servers expected to account for nearly 50% of the market [30][31]. Summary by Sections ASIC Demand and CSP Developments - The custom acceleration computing chip market is projected to grow from $6.6 billion in 2023 to $42.9 billion by 2028, with a CAGR of 45% [14]. - Google has launched the TPU v6 Trillium chip, expected to replace the TPU v5 by 2025, while Amazon is focusing on the Trainium v2 chip for generative AI applications [15][19]. - Meta is developing the MTIA v2 chip in collaboration with Broadcom, focusing on energy efficiency and low-latency architecture [18]. - Microsoft is enhancing its Maia series chips for Azure cloud applications, with the next generation being developed in partnership with GUC and Marvell [18][19]. Broadcom's Performance and Projections - Broadcom reported AI semiconductor revenue exceeding $4.4 billion in Q2 2025, a 46% year-over-year increase, with expectations for continued growth into 2026 [20][22]. - The company is collaborating with three clients and four potential clients for custom AI accelerator deployments, anticipating significant demand for XPUs in the second half of 2026 [20][22]. Marvell's Innovations and Collaborations - Marvell is set to initiate 3nm chip production in 2026, with strong demand from large-scale data center clients driving revenue growth [3][26]. - The partnership with NVIDIA to incorporate NVLink Fusion technology into custom platforms enhances Marvell's capabilities in the custom chip market [26]. Wistron's Revenue Growth - Wistron reported a revenue of 208.4 billion New Taiwan Dollars in May 2025, reflecting a 162% year-over-year increase, driven by the explosive demand for ASICs [30][31].

Investment Rating - The report maintains a "Recommendation" rating for the technology sector in A-shares, expecting the industry index to outperform the benchmark index by more than 5% in the next 3-6 months [35]. Core Views - The delivery of Broadcom's Tomahawk 6 (TH6) chip marks a significant breakthrough in AI infrastructure, addressing network bottlenecks and enhancing GPU utilization from 40% to over 90%, which is crucial for training large AI models [17][18]. - The report highlights the strong performance of the communication sector, which has outperformed the Shanghai and Shenzhen 300 index by 4.40 percentage points this week, with a 5.27% increase [9][11]. - The report emphasizes the growth potential in the domestic communication industry, particularly in light of the advancements in AI infrastructure and the increasing focus on high-performance technology [27][28]. Summary by Sections Industry Basic Data - The communication industry consists of 124 listed companies with a total market capitalization of 48,971.71 billion and a circulating market capitalization of 21,813.38 billion [2]. Relative Index Performance - The absolute performance of the communication sector over the past month is 7.2%, 6 months is 2.2%, and 12 months is 30.5% [3]. Market Review - The communication sector has shown a year-to-date increase of 0.94%, outperforming the Shanghai and Shenzhen 300 index, which has decreased by 1.55% [9]. - The top five gainers in the communication sector this week include Huamai Technology (+33.74%), ST Zhongjia (+33.33%), and Taicheng Light (+30.31%) [14]. Broadcom's TH6 Chip Delivery - The TH6 chip has a switching capacity of 102.4 Tbps, doubling the current market standard and increasing throughput by six times compared to its predecessor [17]. - The chip's architecture allows for high-density, low-loss connections, significantly reducing latency and power consumption [18][19]. Broadcom's Q2 FY25 Financial Analysis - Broadcom reported a revenue of 15 billion USD for Q2 FY25, a 20% year-on-year increase, driven primarily by AI business growth [23]. - The semiconductor business generated 8.4 billion USD, with AI business revenue reaching 4.4 billion USD, indicating a strong growth outlook for the second half of the year [24]. Investment Recommendations - Key recommendations include China Mobile, China Telecom, and China Unicom for operators; New Yisheng, Tianfu Communication, and Zhongji Xuchuang for optical modules; and Haige Communication for military and satellite communications [29].

Investment Rating - The report maintains an "Increase" rating for the industry, emphasizing the explosive demand for ASICs and the investment opportunities in self-developed chip industries by CSPs like Amazon and Google [5][7][31]. Core Insights - The demand for custom ASICs is experiencing a comprehensive explosion, with significant growth expected in the custom acceleration computing chip market, projected to reach $42.9 billion by 2028, growing at a CAGR of 45% from 2023 to 2028 [14][31]. - Major North American CSPs are accelerating their self-developed ASIC layouts, with Google and Amazon leading the progress in custom chip development [14][19]. - Broadcom's guidance indicates that XPU deployments will exceed expectations in 2026, driven by strong demand for customized AI accelerators [20][22]. - Marvell is set to start 3nm chip production in 2026, with significant progress in custom AI XPU projects for large-scale data center clients [3][26]. - Wistron reported a significant revenue increase in May 2025, indicating a robust growth phase for ASIC demand, with AI inference servers expected to account for nearly 50% of the market [30][31]. Summary by Sections ASIC Demand and CSP Developments - The custom acceleration computing chip market is projected to grow from $6.6 billion in 2023 to $42.9 billion by 2028, with a CAGR of 45% [14]. - Google has launched the TPU v6 Trillium chip, expected to replace the TPU v5 by 2025, while Amazon is focusing on the Trainium v2 chip for generative AI applications [15][19]. - Meta is developing the MTIA v2 chip in collaboration with Broadcom, focusing on energy efficiency and low-latency architecture [18][19]. - Microsoft is accelerating the development of its Maia series chips for Azure cloud applications, with the next generation Maia v2 in progress [18][19]. Broadcom's Performance and Projections - Broadcom's AI semiconductor revenue reached over $4.4 billion in Q2 2025, marking a 46% year-over-year increase [20][22]. - The company expects to deploy at least 1 million AI accelerator clusters for three clients by 2027, with a significant portion being custom XPUs [20][22]. Marvell's Advancements - Marvell's revenue reached a record $1.895 billion in Q1 FY26, driven by strong AI demand, with expectations for continued growth in custom AI XPU revenue [3][24]. - The company is collaborating with NVIDIA to enhance its custom platform capabilities, integrating NVLink Fusion technology [26]. Wistron's Revenue Growth - Wistron reported a revenue of 208.4 billion New Taiwan Dollars in May 2025, reflecting a 162% year-over-year increase, driven by ASIC demand [30][31]. - The shift from AI training to AI inference is expected to boost the demand for AI servers significantly [30][31]. Analog Chip Market Insights - The global analog chip market is projected to reach $84.3 billion by 2025, with a strong focus on domestic production to meet rising demand [40][43]. - The domestic market for analog chips is expected to grow steadily, with a CAGR of 11% from 2025 to 2029 [43][46].

Investment Rating - The report recommends a "Buy" rating for key companies in the computing and optical communication sectors, including Broadcom, Ciena, and several others in the supply chain [11]. Core Insights - The report emphasizes the growing importance of network infrastructure in AI systems, highlighting that the network has become a critical factor in performance optimization, shifting the bottleneck from single-chip computing to node interconnection [2][3]. - It notes that the capital expenditure (Capex) structure for AI infrastructure is increasingly allocating a larger share to networking components, as seen in Meta's deployment of a 24K cluster where network costs exceed one-third of the total computing expenses [3][4]. - The report discusses the long-term trend of ASICs being explored by major companies like Microsoft and Google, suggesting that while ASICs may optimize costs, the reliance on high-performance networking remains essential across all architectures [4][5]. Summary by Sections Section 1: Broadcom - Broadcom reported FY25 Q2 revenue of $15 billion, a 20% year-over-year increase, driven by AI business growth and VMware integration [1]. - The semiconductor solutions segment generated $8.4 billion, with AI business revenue reaching $4.4 billion, up 46% year-over-year [1][22]. - The company projects FY25 Q3 revenue of $15.8 billion, with AI business expected to contribute $5.1 billion [1][22]. Section 2: Ciena - Ciena's FY25 Q2 revenue was $1.13 billion, a 24% increase year-over-year, with a GAAP net profit of $9 million compared to a loss of $16.8 million in the previous year [7]. - The decline in gross margin to 41% from 43.5% is attributed to strong demand for pluggable optical modules, impacting cost pressures [7][29]. - The report suggests that Ciena's reliance on foreign suppliers may affect its cost structure, and a shift back to domestic suppliers could improve margins [29]. Section 3: Industry Trends - The optical communication index outperformed the broader communication sector, with significant gains in companies like Zhongji Xuchuang and Xinyi [18][19]. - The report highlights a notable recovery trend in overseas computing demand, recommending investments in leading optical module companies and related sectors [8][29]. - The communication sector's performance is illustrated by various indices, with the optical communication index rising by 8.9% [21]. Section 4: Investment Recommendations - The report suggests focusing on companies within the computing and optical communication sectors, including Zhongji Xuchuang, Xinyi, and others, as they are well-positioned to benefit from the ongoing demand for AI infrastructure [8][14]. - Specific recommendations include companies involved in optical components, copper links, computing devices, and edge computing platforms [14].

Investment Rating - The report maintains a "Recommendation" rating for the technology sector in A-shares, expecting the industry index to outperform the benchmark index by more than 5% in the next 3-6 months [35]. Core Insights - The delivery of Broadcom's Tomahawk 6 (TH6) switch chip marks a significant breakthrough in AI infrastructure, enhancing network capabilities and addressing bottlenecks in AI computing [17][19]. - The communication industry has shown strong performance, with a 5.27% increase in the index, outperforming the CSI 300 index by 4.40 percentage points [9][11]. - Broadcom's Q2 FY25 financial results indicate a 20% year-on-year revenue growth, driven primarily by the strong performance of its AI business [23][24]. Summary by Sections Industry Basic Data - The communication industry comprises 124 stocks with a total market value of 48,971.71 billion and a circulating market value of 21,813.38 billion [2]. Relative Index Performance - The absolute performance over 1 month, 6 months, and 12 months is 7.2%, 2.2%, and 30.5% respectively, while the relative performance is 5.5%, 4.7%, and 22.7% [3]. Market Review - The communication sector has outperformed both the CSI 300 and ChiNext indices this week, with notable stock performances including Huamai Technology (+33.74%) and ST Zhongjia (+33.33%) [6][14]. Broadcom TH6 Chip Delivery - The TH6 chip offers a switching capacity of 102.4 Tbps, doubling the current market standard and increasing throughput by six times compared to its predecessor [17][18]. Financial Analysis of Broadcom - Broadcom's Q2 FY25 revenue reached 15 billion USD, with AI business revenue at 4.4 billion USD, reflecting a 46% year-on-year increase [23][24]. Investment Recommendations - Key recommendations include China Mobile, China Telecom, and China Unicom for operators, and New Yisheng, Tianfu Communication, and Zhongji Xuchuang for optical modules and chips [29].

Market Overview - The U.S. equity market experienced a strong recovery in May 2025, driven by robust earnings, decreasing trade tensions, and rising investor confidence in the economy, marking a significant improvement from April 2025 [1] - Deutsche Bank analysts have raised the target for the S&P 500 index from 6,150 to 6,550 by the end of 2025 [1] AI Stocks Potential - AI stocks are expected to be key beneficiaries of the renewed market optimism, presenting significant growth potential for long-term investors [2] Company Analysis: Nvidia - Nvidia reported revenue of $44.1 billion for Q1 fiscal 2026, a 69% year-over-year increase, and generated $26 billion in free cash flow [4] - The company holds nearly 80% of the AI accelerator market and is focused on both AI training and inference workloads, with major cloud providers deploying approximately 72,000 GPUs weekly [5] - Nvidia's software ecosystem, including CUDA and TensorRT, creates a sticky customer base, with networking revenue growing 64% quarter over quarter to $5 billion [6] - Despite facing nearly $8 billion in revenue loss due to export restrictions to China, Nvidia maintains a positive outlook for Q2 fiscal 2026 [7] Company Analysis: Broadcom - Broadcom has established itself as a significant player in AI infrastructure, with custom AI chips being utilized by major hyperscalers [8] - The CEO projects a serviceable addressable market of $60 billion to $90 billion from these clients by fiscal 2027, with additional engagements with four more hyperscalers [9] - The recent $69 billion acquisition of VMware enhances Broadcom's position in enterprise software and hybrid cloud infrastructure, allowing it to offer comprehensive AI solutions [10] Company Analysis: CoreWeave - CoreWeave has transitioned from cryptocurrency mining to becoming a prominent AI hyperscaler, with a cloud infrastructure specifically designed for AI workloads [12] - The company reported $982 million in revenue for Q1 fiscal 2025, a 420% year-over-year increase, and adjusted operating income rose 550% to $163 million [13] - CoreWeave has a $25.9 billion revenue backlog from multi-year contracts, indicating strong demand for its services [13] - A strategic partnership with Nvidia provides CoreWeave with preferential access to advanced GPUs, supported by Nvidia's $2.5 billion equity stake in the company [14] - CoreWeave's stock trades at 37.5 times sales, reflecting its large addressable market and impressive financial performance [15]

Investment Rating - The report maintains a "Positive" investment rating for the communication industry [9] Core Insights - The communication sector saw a 4.80% increase in the 23rd week of 2025, ranking first among major industries in the Yangtze River region; year-to-date, the sector is up 1.88%, ranking 16th [2][4] - Broadcom's FY25Q2 AI chip revenue reached approximately $4.4 billion, a 46% year-on-year increase, marking a historical high; demand for inference continues to grow [5] - Major tech companies are accelerating investments in AI infrastructure and applications, driving demand for inference and terminal computing power [6] - The communication sector is benefiting from the global acceleration of AI infrastructure and explosive demand for inference, with low valuations offering high cost-performance ratios [2][5] Summary by Sections Market Performance - In the 23rd week of 2025, the communication sector increased by 4.80%, leading the Yangtze River region; since the beginning of the year, it has risen by 1.88% [2][4] - Among companies with a market capitalization above 8 billion, the top three gainers this week were Taicheng Light (+30.3%), 263 (+24.4%), and Cambridge Technology (+23.7%); the top three losers were Ruijie Networks (-21.9%), Canqin Technology (-5.3%), and Haige Communication (-5.2%) [4] Company Performance - Broadcom's FY25Q2 revenue reached $15 billion, a 20.2% year-on-year increase, with net profit of $4.97 billion, up 134.1% [5] - Broadcom's AI-related chip revenue reached approximately $4.4 billion, a 46% year-on-year increase, contributing to a 17% growth in the semiconductor business [5] - The company has begun shipping its next-generation data center switch chip, Tomahawk 6, which significantly enhances AI workload network throughput [5] Investment Recommendations - The report recommends focusing on operators such as China Mobile, China Telecom, and China Unicom; for optical modules, it suggests Zhongji Xuchuang, Xinyi Sheng, and Tianfu Communication [7] - For domestic computing, it highlights Fenghuo Communication, Huafeng Technology, and ZTE; for IoT, it recommends Heertai, Tuobang, and Meige Intelligent [7]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The launch of Broadcom's TH6 switch chip, with a capacity of 102.4 Tbps, is expected to enhance the global computing infrastructure investment logic, supporting the next generation of AI networks [4][14] - The report emphasizes the importance of the AI computing infrastructure investment wave, highlighting the need for upgrades in communication network equipment and the development of the computing network [6][14] - The report identifies seven key investment directions within the AI computing industry chain, including AIDC data center construction, IT equipment, network devices, cloud computing, AI applications, satellite internet, and 6G [7][16] Summary by Sections Section 1: Investment Insights - Broadcom's TH6 switch chip is the first in the world to achieve 102.4 Tbps, doubling the current Ethernet switch bandwidth, and is designed to support AI clusters with over 1 million XPUs [4][13] - The TH6 chip features advanced technologies such as flexible connection options, AI-optimized routing, and support for various network topologies, making it suitable for large-scale AI network operations [5][13] Section 2: Market Review - The communication index rose by 4.06% during the week of June 2 to June 6, 2025, ranking first among the TMT sector [24] Section 3: Communication Data Tracking - As of April 2025, the total number of 5G base stations in China reached 4.439 million, with a net increase of 188,000 stations compared to the end of 2024 [25] - The number of 5G mobile phone users reached 1.081 billion, a year-on-year increase of 21.6% [25] - 5G mobile phone shipments in April 2025 were 19.889 million units, accounting for 79.4% of total shipments, with a year-on-year decrease of 1.7% [25] Section 4: Operator Performance - The report highlights strong growth in innovative business development among the three major operators, with significant revenue increases in cloud computing services [39][40] - The ARPU values for the three major operators remained stable, with slight variations noted [39][44]