Summary of Zhaoyi Innovation Conference Call Company Overview - Zhaoyi Innovation is positioned in the semiconductor industry, focusing on customized storage products and MCU (Microcontroller Unit) solutions. The company is leveraging its first-mover advantage in the market, particularly benefiting from the implementation of edge AI technology [2][4]. Key Points and Arguments Customized Storage Products - The customized storage product line is expected to achieve revenue growth due to its first-mover advantage and the ongoing deployment of edge AI [2][4]. - The company holds a 78% stake in Qingyun Technology and is implementing employee stock incentives to demonstrate confidence in the long-term growth of this product line [2][4]. Management Team Stability - The management team has a stable background, which is crucial for ensuring the company's long-term growth. Continuous employee stock incentives are in place to motivate core technical personnel [5]. R&D Investment and Outcomes - The company has been expanding its R&D personnel and increasing its patent portfolio, which provides a competitive edge for future business development. Revenue and profit are expected to recover starting in 2024, reflecting a rebound in demand and an increase in market share across various product lines [6]. Norflash Market Outlook - The global Norflash market is currently valued at approximately $3 billion, with Zhaoyi Innovation holding the second-largest market share. The market is projected to grow to $5 billion, driven by increased demand from wearable devices, AI PCs, and industrial applications [7]. DRAM Business Development - The global DRAM market is valued at around $100 billion, with niche DRAM accounting for about 10% of this market. Zhaoyi Innovation is expected to maintain high growth rates over the next two to three years due to the exit of major competitors [8]. Competitive Advantages in DRAM - Zhaoyi Innovation's DRAM product line benefits from advanced process nodes, resulting in lower costs compared to competitors. The exit of major players has led to price increases for DDR4 and DDR3, improving gross and operating margins. The company anticipates generating over $1 billion in revenue from this segment [9]. Collaboration with Changxin Storage - The partnership with Changxin Storage is structured through equity investment and contractual agreements, ensuring ongoing collaboration in the niche DRAM market. This relationship is expected to support Zhaoyi Innovation's growth despite concerns over market share competition [10]. SLC NAND Flash Development - Zhaoyi Innovation is advancing in the SLC NAND Flash sector, with process nodes reaching 24nm and plans to move to 19nm. The focus is on the automotive sector to meet the growing demand for high-reliability storage solutions [11][12]. Importance of Customized Storage - Customized storage is identified as a critical future direction, with products designed to enhance data transfer capabilities and efficiency, particularly in cloud applications. Zhaoyi Innovation is leading in this area, ahead of competitors by at least one generation [13]. MCU Product Line Outlook - The MCU market is currently at a price bottom, but growth in industrial and automotive sectors is expected to provide stable revenue. The company covers 61 categories of MCU, including automotive-grade products, and is expanding its product line through acquisitions [14]. Future Development Focus - Key areas to watch include niche DRAM and customized storage, both projected to exceed $1 billion in revenue, significantly contributing to the company's revenue certainty [15]. - As a leading domestic player in storage and MCU, Zhaoyi Innovation aims to maintain growth through strategic goals, client development, and international market expansion [16].

Group 1: China Market Focus - Extreme weather has led to a decline in manufacturing sentiment, with the manufacturing PMI for July at 49.3, down 0.4 points from the previous month and 0.7 points below the five-year average [13][12] - The political bureau meeting in July emphasized the need for macro policies to "continue to exert force and increase strength" to address structural economic issues [12] - The manufacturing PMI's decline is attributed to high temperatures and heavy rainfall, affecting production and demand, while price indices have shown a significant rebound due to anti-involution effects [13][12] Group 2: Stock Recommendations - Covos (603486 CH) is focusing on expanding its robotics core components and manufacturing project, with an expected annual output of 20 million key components and a projected revenue exceeding 1 billion yuan [21] - Zhaoyi Innovation (603986 CH) is positioned well in the AI era with its customized storage solutions, benefiting from trends in high bandwidth and low power consumption, and is expected to gain market share in the DRAM sector [21] Group 3: UK Market Focus - The UK economy is showing signs of risk, with GDP growth in April and May falling short of expectations, and a potential for two more interest rate cuts this year [31][29] - The UK stock market is facing structural challenges, with high international exposure and a strong pound affecting corporate earnings, while sectors like defense and utilities may perform better [32][31] Group 4: India Market Focus - India's economic growth is projected to slightly decline from 6.5% to 6.2% in the fiscal year 2026, with risks stemming from a slowdown in rural recovery and industrial activity [46] - The Indian government has approved significant defense contracts, with Hindustan Aeronautics (HNAL IN) expected to benefit from a substantial order backlog, indicating strong growth potential in the defense sector [51][46]