Core Viewpoint - The communication industry is experiencing steady revenue growth and accelerated profitability in H1 2025, with a total revenue of 1785.003 billion yuan (up 10.07% year-on-year) and a net profit attributable to shareholders of 160.432 billion yuan (up 11.26% year-on-year) [1][2] Revenue and Profit Analysis - In H1 2025, the communication industry achieved a total revenue of 1785.003 billion yuan, with a year-on-year growth of 10.07%. The net profit attributable to shareholders reached 160.432 billion yuan, reflecting an increase of 11.26%. The net profit after deducting non-recurring items was 149.023 billion yuan, up 13.04% year-on-year [1] - In Q2 2025, the industry reported a revenue of 942.483 billion yuan, marking a year-on-year increase of 10.91%. The net profit attributable to shareholders was 98.682 billion yuan, up 12.33%, while the net profit after deducting non-recurring items was 91.262 billion yuan, reflecting a growth of 12.94% [1] Sector Performance - In H1 2025, the top-performing sectors in terms of revenue growth included optical modules, communication PCBs, network equipment manufacturers, IoT modules, and RF components related to base station equipment. The sectors with the highest net profit growth were also led by optical modules, communication PCBs, network security and visualization analysis, IoT modules, and network equipment manufacturers [2] - The industry is currently underweight, with capital expenditures on computing power maintaining high growth. The domestic market is accelerating in line with global AI development, indicating significant upward potential for holdings in the communication sector [2] Future Outlook - The AI computing power industry chain is expected to continue its rapid development in 2025, driven by ongoing advancements in GPU capabilities and increased investments from major cloud computing companies in North America. This trend is anticipated to benefit companies closely linked to the overseas AI industry chain, leading to impressive performance [2]

Core Insights - The meeting held on July 28 emphasized the promotion of high-quality development in the information and communication industry, aiming to consolidate and enhance competitive advantages and leading positions [1] - The communication industry is currently underweight, with capital expenditure on computing power maintaining high growth, and the domestic market accelerating in line with global AI development [1][2] - By 2025, the AI computing power industry chain is expected to continue accelerating, benefiting the communication industry and related sectors [1] Group 1 - The meeting highlighted the need to promote the popularization and quality improvement of 5G and gigabit optical networks, as well as the ongoing "signal upgrade" initiative [1] - There is an increased focus on the construction and layout of computing power centers to enhance resource supply capacity and utilization efficiency [1] - Domestic AI application breakthroughs are anticipated, with significant capital expenditure growth from internet companies starting in 2024 [1] Group 2 - The communication industry is entering a period of technological iteration and policy dividends by 2025, with new productivity directions like AI and quantum communication driving growth [2] - Recovery in the inventory of cellular IoT modules is expected, alongside continued construction of communication facilities such as base stations, optical cables, and data centers [2] - Companies are advised to focus on opportunities arising from the intersection of technology commercialization, policy catalysis, and performance certainty [2]

Core Viewpoint - The communication industry is experiencing a positive turnaround in fund holdings, with a market value share of 3.90% in Q2 2025, reflecting a quarter-on-quarter increase of 1.31 percentage points, returning to the top ten sectors [1][3]. Group 1: Fund Holdings and Market Position - In Q2 2025, the communication sector's fund holdings ranked fifth among 31 primary industries, with the top five being electronics, power equipment, food and beverage, pharmaceuticals, and banking, with respective shares of 17.22%, 9.80%, 9.55%, 9.04%, and 7.90% [3]. - The AI industry chain remains a focal point, with the top three companies in the communication sector by fund holding market value being NewEase, Zhongji Xuchuang, and Hudian Co., with market values of 31.207 billion yuan (up 123.28%), 28.788 billion yuan (up 124.58%), and 12.311 billion yuan (up 178.32%) respectively [3]. Group 2: Industry Outlook and Growth Potential - The communication industry maintains an "overweight" rating, driven by the ongoing high growth phase of capital expenditure in computing power, closely aligned with the global AI development trajectory [2]. - Significant capital expenditures are anticipated in the domestic AI sector, with Alibaba projecting that its investment in cloud and AI infrastructure over the next three years will exceed the total of the past decade, while Tencent's capital expenditure is expected to triple year-on-year to 10.7 billion USD in 2024 [2]. - The AI computing power industry chain is expected to continue accelerating in 2025, with evolving demand in inference capabilities, presenting broader growth opportunities for the communication sector [2].

Group 1 - The AI computing power industry chain is expected to accelerate its development by 2025, driven by evolving demand on the inference side, which will create broader growth opportunities for the telecommunications industry [1] - Capital expenditure in computing power remains in a high growth phase, with the domestic market closely following the global AI development process, indicating significant room for improvement in telecommunications sector holdings [1] - Nvidia continues to upgrade its GPU capabilities, while Broadcom's AI-related revenue and network switching chip shipments are experiencing rapid growth, contributing to strong performance for companies closely linked to the overseas AI industry chain [1] Group 2 - The domestic AI industry is undergoing significant changes, with major internet companies in China expected to increase capital expenditure on cloud and AI infrastructure, with Alibaba projecting that its spending over the next three years will exceed the total of the past decade [1] - Tencent's capital expenditure is expected to triple year-on-year in 2024, reaching $10.7 billion, indicating a strong commitment to infrastructure investment [1] - The telecommunications sector's fund holdings decreased in Q1 2025, with a market value share of 2.59%, ranking 13th among 31 primary industries [1] Group 3 - The focus of major stock holdings remains primarily on the AI industry chain, with an increase in the proportion of domestic industry chain holdings [2] - The top ten holdings account for 58% of the telecommunications sector's holdings, with a decrease of 3 percentage points; eight companies in the AI industry chain represent 82% of the top ten holdings [2] - The proportion of stocks benefiting from the development of the domestic computing power industry chain has significantly increased [2]

Core Viewpoint - The communication industry is experiencing a decline in fund holdings, but there is significant potential for growth in AI-related investments due to increased capital expenditure in computing power and the acceleration of AI development in the domestic market [1][2]. Group 1: Fund Holdings Overview - In Q1 2025, the fund holdings in the communication industry accounted for 2.59% of the total market value, reflecting a decrease of 0.98 percentage points from the previous period, ranking 13th among 31 industries [2]. - The overweight ratio has also decreased to -1.76%, indicating a low allocation in the sector [2]. Group 2: Focus on AI Industry Chain - The top ten holdings represent 58% of the communication industry's total holdings, with a decrease of 3 percentage points [2]. - Eight out of the top ten holdings are focused on the AI industry chain, including companies involved in network equipment, device manufacturing, optical modules, and communication PCBs, which account for 82% of the top ten holdings [2]. - There is a noticeable increase in the proportion of holdings benefiting from the development of the domestic computing power industry chain [2]. Group 3: Industry Growth Potential - The domestic AI industry is entering a phase of rapid growth, with significant capital expenditure increases from major internet companies [1]. - Alibaba's latest financial report indicates that its capital expenditure on cloud and AI infrastructure over the next three years will exceed the total of the past decade [1]. - Tencent's capital expenditure is projected to triple year-on-year, reaching $10.7 billion in 2024 [1]. - The AI computing power industry chain is expected to continue accelerating in 2025, driven by evolving demand in inference applications, providing broader growth opportunities for the communication industry's related sectors [1].