Core Viewpoint - Zhongke Soft (603927) is actively monitoring technological advancements and their application prospects across various industries, particularly in intelligent computing solutions [1] Group 1: Company Overview - The largest shareholder of Zhongke Soft is Beijing Kesoft Chuangyuan Software Technology Co., Ltd., which holds equity in Zhongke Arc Light [1] - The company focuses on the development of industry application software and operates in the downstream of the computing power industry chain [1] Group 2: Industry Collaboration - Zhongke Soft has established ecological partnerships with major intelligent computing platforms and computing infrastructure manufacturers, including Huawei, Alibaba Cloud, and Tencent Cloud [1] - The company aims to deliver digital intelligence solutions to downstream industry clients, driven by the demand for intelligent computing from sectors such as insurance, government, and healthcare [1]

Core Insights - Arteris has licensed its comprehensive product portfolio to Altera for the development of next-generation FPGA and SoC FPGA solutions, enhancing design productivity, performance, and scalability across various applications [1][2][3] Company Overview - Arteris is a global leader in system IP for semiconductors, focusing on high-performance and power-efficient silicon creation, with its products used by top semiconductor and technology companies [4] Technology and Product Integration - The integration of Arteris' Ncore cache coherent interconnect IP, FlexGen smart NoC IP, and Magillem software will streamline assembly, optimize on-chip data movement, and accelerate the development of programmable architectures [2][3] - Arteris technology is essential for expediting the market introduction of innovative programmable solutions, allowing Altera to meet customer demands for power, performance, and scalability [3] Market Impact - The collaboration between Arteris and Altera is expected to enhance the efficiency of data movement and system-level automation, addressing coherent data processing needs for improved performance and reduced time-to-market [3]

Group 1 - The core viewpoint of the report emphasizes that the rise of the intelligent computing era presents unprecedented development opportunities for the domestic computing power industry chain in China, driven by the deep integration of artificial intelligence and the digital economy [1][2]. - The report highlights that artificial intelligence has penetrated 80% of application scenarios, making intelligent computing a fundamental resource akin to water and electricity, although its scarcity and high costs remain key bottlenecks for AI development [2][3]. - The Chinese AI market spending reached $14.75 billion in 2023, with a projected compound annual growth rate (CAGR) exceeding 20% from 2021 to 2026, indicating strong demand for AI servers, which accounted for over 80% of hardware investments [2][3]. Group 2 - The report identifies three driving forces reshaping the computing power landscape, including the structural transformation of computing forms due to the prevalence of large-scale AI models, which significantly boosts demand for intelligent computing [3][4]. - In 2022, China's intelligent computing scale reached 268 EFLOPS, with expectations to exceed 1271 EFLOPS by 2026, reflecting a CAGR of 47.6% [3][4]. - The report outlines national policies supporting the development of computing infrastructure, with specific targets set for 2025, including a total computing power scale of 300 EFLOPS and an intelligent computing proportion of 35% [4][5]. Group 3 - The report discusses the rapid growth of the AI chip market, with the market size reaching 120.6 billion yuan in 2023 and expected to grow to 141.2 billion yuan in 2024, highlighting the increasing domestic market share of AI chips [6][7]. - AI servers are differentiated from traditional servers by their design, which includes multiple GPU acceleration cards and specialized cooling systems, with chip costs accounting for up to 83% of high-end server expenses [6][7]. - The report notes that service providers are evolving from basic data center leasing to offering value-added services, establishing a service system that combines wholesale and retail models [7][8]. Group 4 - The report emphasizes the importance of domestic technology breakthroughs, with companies like Huawei and Cambricon making significant advancements in AI solutions and chip technology [4][5]. - The construction of intelligent computing centers is accelerating, with over 140 projects tendered in the first seven months of 2024, indicating a trend towards large-scale development [4][5]. - The report highlights the collaborative layout of computing resources across regions, driven by initiatives like the "East Data West Computing" project, which optimizes national computing resource allocation [7][8].

Financial Data and Key Metrics Changes - Operating revenue increased to JPY 386.89 billion, representing a 4.6% growth year-on-year [5] - Profitability reached JPY 20.6 billion, a 10.1% increase compared to the same period last year [5] - Return on equity rose by 5.8% [5] - Total mobile and broadband subscribers reached 470 million, with IoT connections exceeding 620 million [5] Business Line Data and Key Metrics Changes - Uni Unicom cloud revenue grew by 17.1% to JPY 68.6 billion [6] - Data center revenue increased by 7.4% to JPY 25.9 billion [6] - Net contract value of Intelligent Computing business exceeded JPY 1 billion [6] Market Data and Key Metrics Changes - International business revenue reached JPY 500 million, a 15.2% increase over the previous year [22] - The company established 40 global branches in countries like Saudi Arabia, Peru, UAE, and Uzbekistan [22] Company Strategy and Development Direction - Focus on connectivity communications, computing, and digital smart appliances, emphasizing innovation and breakthroughs [4] - Investment strategy aimed at building new infrastructure with a focus on intelligent operations [7] - Anticipated CapEx for 2025 is around JPY 55 billion, with a 28% year-on-year increase in computing power [25] - Commitment to enhancing innovation momentum and optimizing business structure [26] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory and commitment to enhancing quality, efficiency, and revenue [25] - The company aims to create more value for society and investors while fulfilling corporate ESG responsibilities [23][26] Other Important Information - The company was included in the FTSE China A50 index, effective soon [24] - Dividend payout ratio increased by 5% points, with a 20.1% increase in dividend payout [24][25] Q&A Session Summary Question: What are the expectations for future growth? - Management indicated that they anticipate continued growth in both domestic and international markets, with a focus on innovation and infrastructure development [25] Question: How is the company addressing ESG responsibilities? - The company highlighted its efforts in energy efficiency, clean energy use, and serving rural areas through digital platforms [23] Question: What are the key areas of investment for the upcoming year? - Key areas of investment include computing power, AI projects, and infrastructure development, with a special budget allocated for these initiatives [25]