Investment Rating - The report maintains an "Overweight" rating for the company, indicating a positive outlook on its performance and growth potential [196] Core Viewpoints - The company is well-positioned to benefit from the rapid growth in demand for high-performance network equipment in AI computing centers, particularly in the data center switch market [30][31] - The company's deep involvement in Ethernet solutions for AI computing centers and its partnerships with industry leaders like China Mobile and the Ultra Ethernet Consortium (UEC) are key drivers for future growth [22][23] - The company's data center switch products, especially the 400G and upcoming 800G switches, are expected to see significant volume growth due to increasing demand from internet and cloud service providers [32][36] AI Computing Center Network Demand - AI model training requires massive network bandwidth and low-latency communication between GPUs, leading to a surge in demand for high-performance switches in AI computing centers [7][10][11] - The total traffic generated during the training of large AI models like Llama3-70B can reach 85EB per epoch, necessitating the deployment of multiple high-capacity switches to handle the data flow [7] - AI computing centers require ultra-high bandwidth, ultra-low latency, zero packet loss, and strict time synchronization, which can only be met by deploying a large number of high-performance switches [11] Ethernet vs InfiniBand - Ethernet (RoCE) offers better cost-effectiveness and ecosystem compatibility compared to InfiniBand (IB), making it a more attractive option for AI computing centers [17] - The cost of Ethernet (RoCE) network equipment is approximately 50% lower than that of InfiniBand for large-scale AI computing clusters, according to Semianalysis [17] - Ethernet (RoCE) supports larger-scale network expansion and can achieve full interconnectivity for up to 100,000 H100 GPUs, compared to 65,536 for InfiniBand [17] Company's Competitive Advantages - The company has a strong market position in the data center switch market, ranking third in China with a market share of 16.8% in 2022 [32][74] - The company's 400G switches have seen rapid growth, with revenue increasing by 761% year-over-year in the first three quarters of 2024, driven by demand from internet customers [32] - The company has secured significant contracts with major internet and cloud service providers, including Alibaba, Tencent, and ByteDance, for the development of next-generation switches [30][192] White Box Switches - White box switches, which decouple hardware and software, are gaining traction in data center networks due to their flexibility, cost-effectiveness, and programmability [37][175] - The company has been actively involved in the development of white box switches and has secured contracts with major internet companies for JDM (Joint Design Manufacturing) projects [191][192] - The adoption of white box switches in data centers is expected to accelerate, driven by the need for cost-effective, scalable, and highly controllable network solutions [175][176] Financial Projections - The company is expected to achieve revenue of 12.75 billion, 14.67 billion, and 17.20 billion yuan in 2024, 2025, and 2026, respectively, with year-over-year growth rates of 10.47%, 15.05%, and 17.27% [196] - Net profit is projected to grow by 45.20%, 25.87%, and 21.26% in 2024, 2025, and 2026, reaching 583 million, 733 million, and 889 million yuan, respectively [196] - The company's data center switch business is expected to be the primary growth driver, with revenue projected to grow by 13.58%, 16.58%, and 18.67% over the next three years [193]
锐捷网络：公司深度报告：敏锐快捷的ICT大厂，受益智算需求激增