Summary of Conference Call on Optical Module Industry Industry Overview - The optical module industry is expected to benefit significantly from the advent of the optical CPU era, which will lead to a substantial increase in the number of board-level connection interfaces, thereby improving supply and demand dynamics in the industry [1][2] - The optical communication market is projected to expand significantly in the coming years, potentially reaching a market capacity of several hundred billion yuan, driven by new technologies such as Ruby, Ultra, and FIMAN [1][8] Key Companies - Leading companies like Yizhongtian are well-positioned to capitalize on ecosystem development and demand growth, solidifying their market position [1][2] - Yizhongtian and other top manufacturers possess strong delivery capabilities and are expected to continue to perform well in their quarterly reports [1][5] - These companies are becoming crucial players in the global optical communication supply chain, with their market share steadily increasing due to supply-demand tightness [1][10] Competitive Advantages - Yizhongtian and other leading firms have significant competitive advantages, including superior data transmission capabilities, strong delivery capacity, and effective supply chain management [1][4] - The self-developed silicon photonic chips are anticipated to enhance profit margins for leading manufacturers by reducing costs and improving product performance [1][6] Technological Developments - The Ruby architecture update is expected to expand the scale-up space in the optical communication industry, increasing card quantities and accelerating iteration speed [1][7] - Recent technological advancements showcased at the Optical Expo, including optical switching and silicon photonics, indicate a positive trend in the industry, with improved yield rates [1][11] Market Dynamics - The demand for 800G and 1.6T products is optimistic for 2026, with delivery capability becoming a critical factor for manufacturers [1][17] - Companies with strong material support and production capacity, especially those with overseas capabilities, are likely to gain market share [1][17] Emerging Trends - The concept of space computing is gaining traction, utilizing inter-satellite and ground communication to address energy supply and heat dissipation issues on Earth [1][18][19] - Companies like StarCloud are planning to launch satellites equipped with NVIDIA H100 chips by 2025, indicating a growing interest in space-based computing solutions [1][23] Conclusion - The optical module industry is on the brink of significant growth, driven by technological advancements and increasing demand for high-capacity data transmission solutions. Leading companies are well-positioned to leverage these trends, while emerging concepts like space computing present new opportunities for innovation and expansion [1][25]

Summary of Key Points from Conference Call Industry Overview - The conference call discusses the optical module market, highlighting a surge in demand driven by increased interconnect density, which is expected to rise by 5-10 times. This trend is leading to a favorable industry outlook, with tight supply of chips and devices making delivery capability a key competitive factor for manufacturers [1][5][11]. Core Insights and Arguments - Major players such as Manta, Oracle, and NVIDIA are experiencing rapid demand growth, with a focus on delivery capabilities and supply chain integration expected to dominate competition by 2026 [1][4]. - NVIDIA's Ruby architecture significantly enhances network-side performance, doubling the configuration of network cards and driving a substantial increase in optical module demand. The bandwidth and pricing are rapidly increasing with the iteration of network cards [1][6][8]. - The optical module market is transitioning from an order placement phase to a delivery phase, with a projected demand for 800G optical modules exceeding 40 million units by 2026. This shift is expected to create significant supply pressure, making delivery capability crucial [3][10]. - The market is currently characterized by explosive demand and limited overseas supply, leading to optimistic delivery conditions for manufacturers in 2026, positively impacting prices and profit margins [11][12]. Competitive Landscape - The competitive landscape in the optical communication industry is shifting, with leading companies focusing on delivery capabilities and supply chain management. The integration of silicon photonics technology is becoming essential for major manufacturers [3][4][10]. - VeriSilicon is positioned as a leader in new technology solutions, including silicon photonics and LPO, which are expected to effectively address supply issues in a tight global supply chain [13][14]. Emerging Technologies and Trends - Liquid cooling technology is identified as the ultimate solution for high-density AI computing environments, with major companies gaining advantages in this area due to their experience and system design capabilities [2][27]. - Future developments in liquid cooling may include two-phase cooling and silent cooling, which are suitable for high-density power processing [28][29]. Market Dynamics - The current market is experiencing a price boom due to explosive demand and constrained supply, particularly in segments with high overseas supply. This situation is expected to favor manufacturers' pricing and profit margins in the coming years [11][12]. - The upcoming challenges for manufacturers include ensuring stable delivery capabilities amidst healthy and sustained demand, with a focus on inventory management and production stability [10][12]. Conclusion - The optical module market is poised for significant growth driven by technological advancements and increasing demand for high-performance computing and communication devices. Companies that can effectively manage their supply chains and innovate in technology will likely emerge as leaders in this evolving landscape [1][3][11].

Group 1 - Shenzhen has transformed from a small town with a population of less than 30,000 in 1980 to a city with over 20 million residents in 45 years [1] - The city has become a platform for dreamers and achievers, showcasing a mutual growth journey between the city and its inhabitants [1] Group 2 - The Daya Bay Nuclear Power Station has been operational since 1993, with a team led by Qiao Sukai providing integrated technical services for six nuclear power plants, completing over 230 core fuel loading and unloading tasks [5] - Lu Jianxin, a chief expert at China State Construction Steel Structure Corporation, has contributed to the construction of major buildings in Shenzhen, developing advanced steel structure construction technologies over 43 years [9] - Huang Binling, a landscape designer, returned to Shenzhen to work on urban village renovations, fostering community relationships and a sense of belonging for migrant workers [11] - Song Changhua has been a forest ranger at the Futian Mangrove Nature Reserve for over 20 years, protecting this vital urban green space [13] - Wang Qinjing, a pilot at SF Airlines, progressed from a warehouse manager to a flight captain, earning national recognition for his contributions [18] - Xu Jincheng, founder of PAXINI Technology, was attracted to Shenzhen's entrepreneurial environment and resources for robotics development, leading to the creation of a humanoid robot [22] - Liu Xingyao, a drone operations manager at Meituan, plays a crucial role in the rapidly growing low-altitude economy in Shenzhen [26] - Jiang Xiaolin, an electronics entrepreneur in Huaqiangbei, has adapted his business model to include smart glasses, achieving significant sales growth [29] - He Jian, a technical director at Shenzhen Air Traffic Control Station, has overseen the safe management of over one million flights, contributing to the city's aviation development [33] - Zhang Yuetong, an international climbing athlete from Shenzhen, has achieved significant milestones, including representing China at the 2024 Paris Olympics [35]

Summary of Conference Call Records Companies and Industries Involved - **Companies**:环旭电子 (Huanxu Electronics), 工业富联 (Industrial Fulian), 比亚迪电子 (BYD Electronics) - **Industries**: Electronics, AI, Automotive, Cooling Technology Key Points and Arguments Huanxu Electronics - Benefiting from integrated SoC eyewear solutions, with expected unit value reaching three-digit USD levels, driven by increased orders from Meta, presenting new investment opportunities [1] - Achieved breakthroughs in 1.6T optical modules, network cards, and power supply businesses, leveraging the packaging capabilities of its parent company, ASE Group, and the advantages of the Taiwanese supply chain [1][2] - The high-voltage power supply product line is projected to reach a market size of $4 billion by 2027, with a target to capture nearly half of the market share [2] Industrial Fulian - Recent strong stock performance attributed to outstanding Q2 financial results, with GB200 cabinets and products beginning to ship, validating its high barriers to entry and profitability [1][4] - The proliferation of liquid cooling technology and the delegation of procurement rights from NVIDIA have reduced overall costs for mainland manufacturers, enhancing profitability [1][4] - Increased shipment volumes and scale effects have made even minor profit improvements significantly impactful for the company [4] BYD Electronics - Continuously improving the structure of North American key customer components and assembly business through the acquisition of JEP and operational improvements, leading to reduced financial costs [1][5] - Major customers plan to launch foldable smartphones and smart home products in 2026, which will provide profit elasticity [5] - Expanding from smart cockpit to smart driving and thermal management in the automotive sector, enhancing competitiveness [3][5] - After obtaining certification from Hengwei in 2024, the company has become a qualified supplier in the power supply and liquid cooling sectors, with strong manufacturing capabilities expected to further expand market share [3][5] - The current valuation of Hong Kong stocks relative to A-shares still has discount space, but the development of AI product lines may change this situation [3][5] Other Important but Possibly Overlooked Content - The integration of AI-related components in Huanxu Electronics' product offerings, including SIP modules for WiFi and integrated solutions with SoC, is expected to significantly enhance product miniaturization and value [2] - The impact of supply chain dynamics on BYD Electronics' competitive advantage and potential valuation uplift if supply chains are relaxed in the future [3][5]

Summary of Conference Call Notes Industry Overview - The conference call discusses the computing power interconnection sector, focusing on the transition of growth logic within the industry and the implications for major cloud service providers like Google and Microsoft [1][2]. Key Points and Arguments 1. **Shift from Capex to Token Count**: The correlation between traditional cloud providers' capital expenditure (capex) and industry prosperity has weakened. The growth in TOKEN count is now a more accurate reflection of inference computing power demand, creating an ecological flywheel effect [1][3]. 2. **Transition from GPU to ASIC**: The industry is moving from reliance on GPUs to ASICs (Application-Specific Integrated Circuits), which offer better cost-performance ratios. This shift suggests that the growth rate of the industry chain may exceed that of cloud providers' capital expenditure [1][4]. 3. **Network Architecture Upgrade**: AI computing demands are driving upgrades in network architecture, including the development of scale-out networks (doubling Ethernet switch capacity and increasing optical module rates) and scale-up networks to meet higher frequency and larger data transmission needs [1][4]. 4. **Market Dynamics**: The overseas computing power market has experienced multiple cycles of growth and correction, influenced by technological advancements and product releases, such as those from NVIDIA [1][5][6]. 5. **Characteristics of Scale-Up Networks**: Scale-up networks feature higher bandwidth per card with fewer cards in a cluster. This trend is expected to continue as cloud computing transitions from GPU to ASIC, leading to sustained growth in card quantity and bandwidth demand [1][7]. 6. **Impact of Token Count Growth**: The increase in TOKEN count drives demand for supporting equipment like optical modules, PCBs, and active copper cables, with growth rates likely surpassing that of computing chip shipments [1][8]. 7. **CPO Technology Concerns**: Recent comments from Broadcom regarding CPO (Co-Packaged Optics) technology alleviated concerns about its potential to replace optical modules and PCBs, primarily due to higher failure rates in CPO compared to traditional components [1][10]. 8. **NVIDIA's Product Strategy**: NVIDIA's product roadmap illustrates the evolution towards scale-up networks, with various configurations being tested to optimize cost and performance [1][11]. 9. **Future Industry Opportunities**: The period from Q1 to Q2 2025 is expected to present three waves of opportunities, including earnings releases, upward revisions of demand expectations, and second-quarter report forecasts, indicating ongoing growth potential in the industry [1][12]. Additional Important Insights - The transition in the computing power market is characterized by evolving logic and technology, with each cycle of growth driven by new innovations and market demands [1][6]. - The current market dynamics suggest that while there are short-term fluctuations, the long-term outlook remains positive due to the underlying technological advancements and shifts in demand patterns [1][6][12].

Sales Distribution and Future Plans - In 2024, online sales reached 463,086.39 million CNY, accounting for 75.10% of total revenue, while offline sales were 153,547.02 million CNY, making up 24.90% [1][2] - The company plans to deepen existing sales channels and explore new markets, focusing on both online and offline strategies [1][2] Product Categories and Revenue Contribution - The product line consists of five main categories: - Charging products: 38.08% of total revenue [3] - Transmission products: 28.40% of total revenue [3] - Audio and video products: 17.19% of total revenue [3] - Storage products: 6.34% of total revenue [3] - Mobile peripherals: 8.42% of total revenue [3] Core Competencies - The company emphasizes technological innovation, with over 90% of revenue and gross profit derived from self-designed products [4][5] - Brand value is a key competitive advantage, with a focus on long-term brand building and consumer loyalty [5][6] - A multi-channel ecosystem is established, combining online and offline sales across various global markets [6][7] Supply Chain and Operational Efficiency - The company has developed a dual-driven supply chain model, enhancing its competitive edge through quality control and innovation [7][8] - A comprehensive supplier evaluation mechanism is in place to ensure high standards in production and service delivery [7][8] Corporate Culture and Vision - The mission is to create value for users, enhance employee well-being, and contribute to social development [8] - The vision is to become a valuable and warm global brand, guided by a user-centered approach and continuous optimization [8]