Investment Rating - The report maintains a "Buy" rating for key stocks in the semiconductor and storage sectors, including companies like 香农芯创, 东山精密, 胜宏科技, and 工业富联 [5] Core Insights - The storage market is undergoing a significant structural transformation, with DRAM and NAND flash experiencing unprecedented supply shortages, expected to last until at least 2026 [1][10] - The demand for optical chips is surging, exacerbating the supply-demand imbalance, particularly in the data center sector [1][37] - SK Hynix is transitioning towards a comprehensive AI storage strategy, introducing customized HBM and AI-focused DRAM and NAND products [2][13] - SanDisk reported exceptional FY26 Q1 results, driven by strong NAND demand, with revenue reaching $2.308 billion, a 21% increase quarter-over-quarter [3][29] Summary by Sections Storage Supply and Demand - The DRAM market is experiencing a severe shortage, with prices for DDR5 and DDR4 expected to rise until 2027, driven by a lack of new capacity and high demand from data centers [1][10] - NAND flash supply is also tight, with significant price increases observed in November, reflecting a 50% rise in quotes [1][10] - SanDisk's NAND bit shipments grew by approximately 15%, with expectations of continued strong demand through 2026 [3][29] Optical Chip Demand - Lumentum and Coherent reported strong earnings, benefiting from increased demand for optical chips in data centers, with Lumentum noting a supply-demand gap widening to 25-30% [1][43][49] - Coherent's Q1 revenue reached $1.58 billion, with a significant portion coming from data center and communication sectors [2][51] Key Company Developments - SK Hynix unveiled its product roadmap focusing on AI storage solutions, including customized HBM and AI DRAM, aiming to enhance computational efficiency [2][13] - Lumentum's Q1 revenue was $533.8 million, with a gross margin of 39.4%, driven by strong demand in data center interconnects [43][44] - Coherent's Q1 revenue was $1.58 billion, with a focus on expanding its phosphide production capacity to meet growing demand [50][58]

Core Viewpoint - AMD's Q3 financial results exceeded expectations in revenue, profit, and capital expenditure, but the Q4 revenue guidance did not impress investors, leading to a decline in stock price post-announcement. Concerns remain about the pace of AI-related revenue realization and AMD's ability to challenge Nvidia in the AI market [1][10][12]. Financial Highlights - Revenue: AMD reported Q3 revenue of $9.246 billion, up 36% from $6.819 billion year-over-year, surpassing analyst expectations of $8.74 billion [4]. - Gross Profit: Q3 gross profit was $4.78 billion, a 40% increase from $3.419 billion year-over-year, with a gross margin of 52%, up 2 percentage points from the previous year [5]. - Operating Profit: Q3 operating profit reached $1.27 billion, a 75% increase from $724 million year-over-year; net profit was $1.243 billion, up 61% from $771 million [6]. - Earnings Per Share: Q3 EPS was $0.75, up from $0.47 year-over-year, with non-GAAP EPS at $1.20, exceeding analyst expectations of $1.17 [6]. - Capital Expenditure: Q3 capital expenditure was $258 million, higher than the expected $219.7 million [6]. Business Segment Performance - Data Center Business: Revenue from the data center segment was $4.3 billion, a 22% year-over-year increase, exceeding analyst expectations of $4.14 billion, driven by strong demand for AMD EPYC processors and Instinct MI350 GPUs [6]. - Client and Gaming Business: Revenue from the client and gaming segment was $4 billion, a 73% increase year-over-year, surpassing analyst expectations of $2.6 billion [7]. - Embedded Business: Revenue from the embedded segment was $857 million, down 8% year-over-year [8]. Q4 Guidance - Revenue Guidance: AMD expects Q4 revenue to be between $9.3 billion and $9.9 billion, with an average analyst expectation of $9.21 billion. The midpoint of this range indicates a year-over-year growth of approximately 25% and a quarter-over-quarter growth of about 4% [8]. - Gross Margin Guidance: Non-GAAP gross margin is expected to be around 54.5%, in line with analyst expectations [9]. Market Position and Strategic Moves - AMD's recent partnerships with OpenAI and Oracle reflect a significant interest in its MI series AI accelerators, which compete directly with Nvidia's chips [16][17]. - AMD's collaboration with OpenAI involves providing up to 6 GW of GPU computing power for AI data centers, with OpenAI agreeing to purchase up to 160 million shares of AMD stock [16]. - AMD is also supplying chips for two supercomputers being built for the U.S. Department of Energy, representing a $1 billion investment [17]. - Despite these advancements, AMD still trails Nvidia, which holds a dominant position in the AI market with a market cap exceeding $5 trillion compared to AMD's approximately $418 billion [18]. Analyst Insights - Analysts express cautious optimism about AMD's future growth, emphasizing the importance of the MI450 chip and rack-level products in the company's strategy [19]. - There are concerns regarding AMD's ability to deliver higher returns on investment compared to Nvidia, as well as challenges related to ecosystem issues and rack density [20]. - Some analysts believe AMD is at a potential turning point, contingent on operational execution and the ability to produce high-performance chips at scale [20].

Economic Data - China's October RatingDog Manufacturing PMI is expected to be 51.2, indicating a stable manufacturing sector [3] - The US October ISM Manufacturing Index is projected to rise slightly to 49.2 from 49.1, reflecting improvements in new orders and employment [3] - China's October import growth is forecasted at 1.2% year-on-year, while export growth is expected to rebound to 4.9% [10][11] Key Events - The International Financial Leaders Investment Summit will take place in Hong Kong from November 3 to 5, gathering around 300 financial leaders [19] - The annual Tesla shareholder meeting is scheduled for November 6, where key proposals including CEO Elon Musk's compensation plan will be voted on [16] - The US Senate is set to vote on a funding bill to end the government shutdown, with the next vote expected on November 3 [19] Company Earnings - The Q3 earnings season continues with major companies like AMD, Qualcomm, and McDonald's reporting results, with AMD's growth driven by strong performance in data center and client businesses [24] - The performance of semiconductor and consumer sectors will be critical in assessing the resilience of domestic demand and AI investment themes [24] Monetary Policy - The Bank of England is expected to maintain its policy rate at 4% amid persistent inflation and economic slowdown [14] - The Federal Reserve officials are scheduled to speak this week following a recent interest rate cut, providing insights into future monetary policy directions [20]

Economic Data and Events - China will release October CPI and PPI data on November 9, with expectations of a mild recovery in CPI to 0.6% year-on-year due to last year's low base [6]. - PPI is expected to narrow its decline from -2.8% in September to -2.2% in October, supported by rising price indicators in the PMI [7]. - China's October import growth is projected at 1.2%, while export growth is expected to rebound to 4.9% due to delayed orders being released [8][9]. - The US will release the ADP employment report on November 5, with non-farm payroll data potentially delayed due to government shutdown [11]. - The ISM manufacturing index for October is anticipated to rise slightly to 49.5, indicating improvements in new orders and employment [12]. Central Bank and Policy Decisions - The Bank of England is expected to maintain its policy rate at 4% during its announcement on November 6, amid inflation and growth challenges [13][14]. - The Federal Reserve will have multiple officials speaking next week following a recent rate cut, with discussions on future monetary policy directions [22]. Corporate Events and Earnings Reports - Tesla's annual shareholder meeting is scheduled for November 6, where key proposals including CEO Elon Musk's compensation plan will be voted on [15][16]. - The upcoming earnings season will see 129 S&P 500 companies, including AMD, Qualcomm, and McDonald's, report their results, with AMD's growth driven by strong data center performance [27]. Market and Investment Opportunities - The International Financial Leaders Investment Summit will take place in Hong Kong from November 3 to 5, focusing on macroeconomic trends and investment opportunities [24]. - Pony.ai and WeRide plan to list simultaneously on the Hong Kong Stock Exchange on November 6, marking a competitive entry into the autonomous driving sector [23].

Economic Data and Events - China will release October CPI and PPI data on November 9, with CPI expected to rise to 0.6% year-on-year due to last year's low base, while PPI's decline is projected to narrow from -2.8% in September to -2.2% [8] - China's October import and export data will be published on November 7, with exports expected to rebound to a growth rate of 4.9% year-on-year, supported by delayed orders, and imports projected to grow by 1.2% year-on-year [9] - The US will release the ADP employment report on November 5, with non-farm payroll data potentially delayed due to government shutdown, and a forecast of only 50,000 jobs added in October [11] - The US ISM manufacturing index is expected to slightly rise to 49.5 in October, indicating improvements in new orders and employment, but also raising concerns about persistent inflation [12] - The Bank of England is expected to maintain its policy rate at 4% during its meeting on November 6, amid challenges of persistent inflation and slowing growth [13] Corporate Events - Tesla's annual shareholder meeting is scheduled for November 6, where key proposals including CEO Elon Musk's compensation plan will be voted on, with potential implications for stock price and company strategy [14][15] - Xiaoma Zhixing and Wenyan Zhixing plan to list on the Hong Kong Stock Exchange on November 6, competing for the title of "first stock of Robotaxi" in Hong Kong [19] - The international financial leaders investment summit will take place in Hong Kong from November 3 to 5, gathering around 300 financial leaders to discuss macroeconomic trends and opportunities [20] Earnings Reports - The Q3 earnings season continues with 129 S&P 500 companies, including AMD, Qualcomm, and McDonald's, expected to report results, with AMD's growth driven by strong performance in data center and client businesses [22]

Investment Rating - The report maintains an "Outperform" rating for the communication industry [5][68]. Core Insights - The AI inference demand is driving significant upgrades in front-end networks, as evidenced by the strong performance of North American tech companies like Arista and AMD [12][17]. - OpenAI's release of the GPT-5 series has significantly reduced inference costs and improved industry applications, particularly in health and coding [20][21]. - The commercial space sector in China is accelerating, with successful satellite launches enhancing the satellite internet landscape [61]. Summary by Sections Industry News Tracking - North American tech companies are showing strong earnings, with Arista reporting Q2 2025 revenue of $2.205 billion, a 10% increase quarter-over-quarter and a 30.4% increase year-over-year [12]. - AMD's data center business is rapidly growing, with Q2 2025 revenue of $3.24 billion, a 14% year-over-year increase [17]. - Taiwan's AI server ODM manufacturers reported a total revenue of NT$123.8577 billion in July 2025, an 18.82% year-over-year increase [37]. Investment Recommendations - Focus on AI computing infrastructure and the satellite internet industry, recommending companies like Huagong Technology, Guangxun Technology, and ZTE [68]. - Long-term investment in the three major telecom operators is advised due to their stable operations and increasing dividend payouts [68]. Market Performance Review - The communication index rose by 1.30% this week, with 5G, satellite internet, and IoT controllers showing strong performance [63][65].

Core Viewpoint - AMD's CDNA 4 architecture represents a moderate update over CDNA 3, focusing on enhancing matrix multiplication performance for low-precision data types, which are crucial for machine learning workloads [2][26]. Architecture Overview - CDNA 4 maintains a similar system-level architecture to CDNA 3, utilizing a large chiplet setup with eight compute dies (XCD) and a memory-side cache of 256 MB [4][20]. - The architecture employs AMD's Infinity Fabric technology for consistent memory access across multiple chips [4]. Performance Comparison - The MI355X GPU, based on CDNA 4, features a clock speed of 2.4 GHz and 256 cores, compared to MI300X's 304 cores at 2.1 GHz, indicating a slight reduction in core count but improved clock speed [5]. - MI355X offers 288 GB of HBM3E memory with a bandwidth of 8 TB/s, surpassing Nvidia's B200, which has a maximum capacity of 180 GB and bandwidth of 7.7 TB/s [25]. Matrix and Vector Throughput - CDNA 4 has rebalanced execution units to focus on low-precision matrix multiplication, doubling matrix throughput per compute unit (CU) in many cases [6][39]. - The architecture supports new low-precision data formats, significantly enhancing AI performance, with matrix core improvements leading to nearly four times the computational throughput for low-precision formats [46][47]. Local Data Sharing (LDS) Enhancements - CDNA 4 increases the Local Data Share (LDS) capacity to 160 KB and doubles the read bandwidth to 256 bytes per clock, improving data locality for matrix multiplication routines [14][48]. - The architecture introduces new instructions for reading transposed LDS, optimizing memory access patterns for matrix operations [18]. Memory Hierarchy and Cache - The memory hierarchy includes a shared 4 MB L2 cache and a 32 KB L1 vector cache per CU, with enhancements for caching non-coherent data from DRAM [49][50]. - The Infinity Cache remains at 256 MB, providing high bandwidth and supporting the increased memory demands of modern AI workloads [53]. Chiplet Architecture - The CDNA 4 architecture continues to leverage a chiplet-based design, allowing for independent evolution of each chiplet for improved performance and manufacturability [35][36]. - Each XCD contains 36 compute units, organized into arrays, with a focus on maximizing yield and operational frequency [39]. System Communication and Expansion - The architecture includes eight AMD Infinity Fabric links, with improved speeds of up to 38.4 Gbps, enhancing communication bandwidth within server nodes [63]. - The design supports both direct compatibility with previous generations and progressive improvements for high-performance systems [62]. Conclusion - AMD's CDNA 4 architecture builds on the success of CDNA 3, focusing on optimizing performance for machine learning workloads while maintaining a competitive edge against Nvidia [26][27].