Investment Rating - Industry Rating: Outperform the Market (maintained rating) [5] Core Insights - The report discusses the challenges in data center link technologies, emphasizing the trade-offs between transmission distance, power consumption, and reliability. Copper cables offer high efficiency and reliability but are limited to distances of less than 2 meters, while optical links provide longer distances at the cost of higher power consumption and lower reliability [1][11]. - The introduction of the MOSAIC optical transmission technology by Microsoft aims to overcome the limitations of both optical and copper links, achieving long-distance transmission, low power consumption, and high reliability without requiring hardware changes [2][18]. - MOSAIC utilizes a wide-and-slow architecture with numerous parallel channels operating at lower data rates, employing Micro LEDs as transmitters to achieve high data rates [3][26]. Summary by Sections 1. Challenges in Current Link Technologies - Data center networks face fundamental trade-offs in transmission distance, power consumption, and reliability, with copper cables being limited in distance and optical links suffering from high power consumption [1][11]. - The performance of copper cables declines rapidly with increased data rates, while optical links experience significant power increases [12][15]. 2. MOSAIC Technology Overview - MOSAIC is designed to be backward compatible with existing standards and interfaces, allowing seamless integration into current network architectures [2][18]. - The architecture employs a large number of parallel channels, each operating at a lower data rate of 2 Gbps, to achieve higher aggregate speeds [3][26]. - MOSAIC has demonstrated the ability to maintain stable data transmission over distances of up to 30 meters, significantly exceeding traditional copper cable capabilities [32]. 3. Component Increment from MOSAIC - The implementation of MOSAIC is expected to benefit several components, including Micro LEDs, multi-core imaging fibers, TIR lenses, CMOS sensors, and Micro LED optical connectors [4][42]. - The report highlights specific companies that could benefit from this technology, such as Zhaochi Co., Sanan Optoelectronics, and Longfly Fiber [5][64]. 4. Investment Recommendations - The report suggests focusing on companies involved in the MOSAIC supply chain, particularly those producing Micro LEDs and related optical components, as they are likely to see significant growth with the adoption of this technology [4][64].