Core Viewpoint - The CXL (Compute Express Link) market has not yet launched as expected, primarily due to the underperformance of key players like Samsung Electronics and Intel [1][3]. Group 1: Market Status - The CXL market is currently stagnant, with a notable lack of discussions surrounding it, attributed to the weak performance of market leaders Samsung and Intel [3]. - Intel's next-generation server CPU, "Diamond Rapids," which is crucial for CXL's market launch, may face delays due to internal restructuring and layoffs [3][4]. - Samsung is in a holding pattern, waiting for the market to open, as the development of CXL-compatible memory products cannot proceed without corresponding processors [4]. Group 2: Opportunities and Risks - The introduction of CXL may lead to a decline in overall sales of processors and memory, as it aims to utilize existing resources more efficiently, which could negatively impact companies reliant on these sales in the short term [6][7]. - However, CXL-compatible chips are high-value products that could improve the profit structure for both Samsung and Intel, aligning with the semiconductor industry's trend towards high-value offerings to avoid cyclical fluctuations and competition with low-cost manufacturers [7]. - The CXL market is expected to see significant growth by 2026, with hyperscale cloud service providers likely to dominate this market due to their need for improved resource utilization and cost savings [8][9].

Core Viewpoint - The company focuses on high-speed interconnect chips, with computing power chips becoming a new growth engine, achieving significant revenue and profit growth in recent quarters [3][4][5]. Financial Performance - In 2024, the company achieved revenue of 3.639 billion yuan (YoY +59%), with interconnect chips and server platforms accounting for 92% and 8% of revenue respectively. The CAGR from 2016 to 2024 was 20% [5][18]. - The net profit attributable to shareholders reached 1.412 billion yuan (YoY +213%), with a CAGR of 41% from 2016 to 2024 [5][18]. - In Q1 2025, the company reported revenue of 1.222 billion yuan (YoY +65.78%, QoQ +14.43%) and a net profit of 525 million yuan (YoY +135.14%, QoQ +21.13%), both setting quarterly records [5][4]. Product Development - The company is one of the top three global manufacturers of DDR5 memory interface chips, leading the second-generation DDR5 iteration, with shipments exceeding DDR4 in 2024 [6][43]. - Three new computing power products, including PCIe Retimer, MRCD/MDB, and CKD, achieved significant revenue growth, totaling approximately 422 million yuan in 2024, an eightfold increase from 2023 [7][23]. - The MXC chip has entered the first batch of compliant suppliers for CXL 2.0, and the company is shifting R&D resources towards PCIe Switch chips [8][83]. Market Trends - The global memory interface chip market is projected to reach $5.7 billion by 2031, with the company being a key player in the DDR5 generation [38]. - The demand for AI servers is expected to drive the usage of PCIe Retimer chips, with the market for PCIe/USB Retimer projected to grow at a CAGR of 46.8% from 2024 to 2032 [76][79]. R&D and Human Resources - The company had 536 R&D personnel by the end of 2024, with a revenue per employee of 5.07 million yuan [25]. - The company is actively involved in the standardization of memory modules through its participation in JEDEC, contributing to the development of DDR5 standards [36][62].

Investment Rating - The report maintains an "Outperform" rating for the company [5]. Core Views - The company focuses on high-speed interconnect chips, with its capacity chips becoming a new growth engine. In 2024, interconnect chips and the Tsingdai server platform accounted for 92% and 8% of revenue, respectively. The company achieved a revenue of 3.639 billion yuan in 2024, a year-on-year increase of 59%, and a net profit of 1.412 billion yuan, a year-on-year increase of 213% [1][11]. - The company is one of the three major DDR5 memory interface chip manufacturers globally, leading the second-generation iteration of DDR5. The continuous iteration of CPUs supporting higher-speed DDR5 will drive the large-scale use and upgrade of DDR5 memory modules [2][45]. - The MXC chip has entered the first batch of compliant suppliers for CXL 2.0, and the company has decided to shift its R&D focus from AI computing chips for data centers to PCIe Switch chips [3][12]. Summary by Sections Financial Performance - In 2024, the company achieved a revenue of 3.639 billion yuan, with a year-on-year growth of 59%. The net profit reached 1.412 billion yuan, marking a year-on-year increase of 213%. The revenue and net profit for Q1 2025 were 1.222 billion yuan and 525 million yuan, respectively, both setting quarterly records [1][11][16]. - The company's revenue from interconnect chips was 3.349 billion yuan, with a gross margin of 62.7% in 2024 [24][22]. Product Development - The company has successfully launched multiple high-performance capacity chips, including PCIe Retimer, MRCD/MDB, and CKD, with a combined revenue of approximately 422 million yuan in 2024, which is eight times that of 2023 [2][56]. - The company has initiated the second-generation iteration of DDR5 memory interface chips, with the second-generation RCD chip shipments exceeding those of the first generation in 2024 [46][45]. Market Position - The company is positioned as a leading provider of interconnect chips and server platforms, with a CAGR of 20% in revenue from 2016 to 2024 and a CAGR of 41% in net profit during the same period [11][16]. - The global market for memory interface chips is expected to reach $5.7 billion by 2031, with the company being one of the three main suppliers [40][41]. Valuation - The report provides a reasonable valuation range for the company's stock at 84.50 to 93.89 yuan, representing a premium of 11% to 24% over the closing price of 75.84 yuan on May 27 [5][4].