Core Viewpoint - The PCB industry is experiencing significant growth driven by increasing demand for HDI products, particularly due to advancements in AI server technology and substantial capital investments from major tech companies [3][7]. Market Trends - The HDI market is projected to grow at a compound annual growth rate (CAGR) of 6.4% from 2024 to 2029, reaching a global market size of $17.037 billion by 2029 [3]. - Major companies like Google are increasing their capital expenditures, with a reported $22.446 billion for Q2 2025, marking a 30.5% quarter-over-quarter increase and a 70.2% year-over-year increase [3]. Company Performance - Shengyi Technology (生益电子) reported a 91% year-over-year increase in revenue for the first half of 2025, reaching 3.769 billion yuan, and a 452% increase in net profit to 531 million yuan [3]. Technological Developments - The PCB industry is evolving towards high-frequency, lightweight, and lead-free technologies, with CoWoP (Chip-on-Wafer-on-Panel) becoming a focal point for innovation [5][9]. - CoWoP technology requires Low-CTE (Coefficient of Thermal Expansion) materials to ensure compatibility with high-precision applications, leading to a focus on specialized materials and advanced manufacturing processes [9]. Key Drivers of Demand - The demand for PCBs is primarily driven by two segments: high-performance GPUs led by Nvidia and custom ASIC chips developed by cloud service providers like Google and Amazon [7][8]. - The shift towards custom ASICs is aimed at optimizing workloads and reducing reliance on external suppliers, which is expected to further increase PCB demand [8]. Advanced Packaging and Materials - CoWoP technology transforms PCBs from mere connectors to high-precision "inner substrates," necessitating advanced materials and manufacturing techniques [9]. - The introduction of HVLP (High-Voltage Low-Power) copper foil is essential for high-speed signal transmission, with surface roughness controlled to minimize signal loss [12][13]. Resin Innovations - The industry is moving away from traditional epoxy resins due to high dielectric loss, favoring advanced resin systems like PPO, PTFE, and CH, which offer better electrical performance [14].

Core Viewpoint - The company confirms its ability to meet customer demand for precision resistors used in NVIDIA's GB300 servers, indicating a flexible adaptation to client needs and maintaining high production capacity [1] Group 1 - The company’s resistors are configured based on customer requirements for NVIDIA servers, allowing for flexible adaptation [1] - The company maintains a high level of production capacity, ensuring stable fulfillment of customer demand [1] - Future production capacity will be gradually adjusted based on actual order situations to ensure supply chain stability and flexibility [1]

Summary of Industrial Fulian Conference Call Company Overview - **Company**: Industrial Fulian - **Industry**: AI Computing and Server Manufacturing Key Points and Arguments Revenue and Market Capitalization Projections - Industrial Fulian raised its revenue forecast for 2026 to 50 billion yuan, with a market capitalization potentially reaching 750 billion yuan in 2025 and 1 trillion yuan in 2026, driven by significant increases in GB200/GB300 server shipments [1][4] - The GB200 server shipments are expected to triple quarter-over-quarter in Q3, with an annual projection of over 25,000 units, contributing approximately 6.5-6.6 billion yuan in net profit for every 10,000 cabinets sold [1][5] Impact of NVIDIA GPU Shipments - NVIDIA's GPU shipments are crucial for Industrial Fulian, with expectations of 8 million GPUs shipped in 2026, primarily for NVL cabinets, leading to double-digit growth in cabinet shipments and improved net profit margins due to scale effects [1][6] - An additional order of 300,000 H20 chips from NVIDIA is anticipated to enhance Industrial Fulian's performance, as the company is a supplier for B200 and other special modules [1][9] Liquid Cooling Technology - The development of liquid cooling technology is expected to improve both gross and net profit margins, with a dedicated subsidiary focusing on this area [1][10] AI Server Business Growth - The AI server business is projected to have high growth potential in 2025, with general servers benefiting from AI applications, maintaining double-digit growth from 2025 to 2026 [1][10] ASIC Server Development - Industrial Fulian aims to introduce Tranium ASIC servers from Amazon and plans to incorporate Google ASIC servers by 2026, which will enhance its ASIC server product line share [2][11] Stargate Project - The Stargate project is progressing well, with the first station operational and a 4.5GW agreement signed with Oracle. The project is expected to involve a total investment of 500 billion USD over five years, with a peak CAPEX of 150 billion USD, providing substantial revenue opportunities for Industrial Fulian [3][12] Capital Expenditure Plans - The company plans to increase capital expenditures by over 20% in 2025, with 60-70% allocated for capacity expansion, reflecting confidence in demand [3][13] Long-term Benefits in AI Computing - Industrial Fulian is positioned for long-term benefits in the AI computing sector due to the increasing demand for computing power across various applications, including AI and AGI, with significant growth potential in GPU deployment [1][15][16] - The company has strong ties with core customers, directly supplying NVIDIA modules and potentially entering the ASIC supply chains of Google and Amazon, which enhances its competitive advantage [1][16] Additional Important Insights - The server market is evolving with a focus on optimizing network and storage capabilities, which is critical for enhancing overall computing power [1][15] - The competitive landscape is expected to intensify, with macroeconomic risks and potential underperformance in the AI industry being notable concerns [1][16]

Group 1 - Nvidia CEO Jensen Huang praised China's open-source AI as a catalyst for global progress, highlighting the advancement of hundreds of projects based on the NVIDIA Omniverse platform for digital twin modeling and virtual training in factories and warehouses [1][3] - The H20 chip's return to the Chinese market signals positive expectations, potentially alleviating local AI companies' concerns regarding computing power and promoting the large-scale deployment of agents and inference models [3][4] - The AI sector is experiencing a resonance between hardware upgrades on the computing side and model iterations on the application side, presenting investment opportunities in AI [2][4] Group 2 - TSMC reported a 60.7% year-on-year increase in net profit for Q2 2025, driven by strong demand for AI chip foundry services, with overall revenue growth in the wafer foundry industry expected to reach 17%-18% [2][5] - The GB300 chip is set to launch in September, with multiple manufacturers, including Dell, expected to begin shipping systems designed for inference tasks, significantly enhancing AI model training capabilities [5][6] - The PCB market is expected to see growth driven by the launch of GB300 and increased demand for high-end PCBs due to the expansion of ASIC server applications [6] Group 3 - The demand for display panels has slowed, with price adjustments observed in July, but leading companies like BOE and TCL Technology have shown resilience, with BOE becoming the top supplier in the foldable OLED screen market [7] - TCL Technology's semiconductor display business reported a net profit exceeding 4.6 billion yuan, reflecting a 70% year-on-year increase, while its solar business faced losses due to supply-demand imbalances [7] - The report suggests monitoring various companies in the consumer electronics sector, including those involved in components, materials, and automation equipment, indicating a broad interest in the industry [8]

Investment Rating - Industry Rating: Outperform the Market (Maintain Rating) [1] Core Viewpoints - The visit of NVIDIA CEO Jensen Huang to China signals positive developments in the AI sector, highlighting the potential for investment opportunities in computing power and application synergy [4][12] - The Kimi K2 model has achieved significant parameter upgrades, positioning itself competitively against global counterparts, while reshaping the agent competition landscape [5][6][19] - TSMC reported a 60.7% year-on-year increase in Q2 profits, driven by strong demand for AI chips, with expectations for continued growth in the foundry market [7][21] - The GB300 server is set to launch in September, with multiple manufacturers preparing for significant output, enhancing AI model training capabilities [8][23] Summary by Sections AI Investment Opportunities - Huang's visit emphasizes the role of Chinese open-source AI as a catalyst for global progress, with numerous projects utilizing NVIDIA's Omniverse platform for digital twin modeling and robotic training [5][14] - The Kimi K2 model, with 1 trillion parameters, surpasses several domestic models and competes closely with international leaders like GPT-4.1, showcasing advanced capabilities in programming and reasoning [6][18] - The AI chip demand is expected to drive TSMC's sales growth significantly, with projections indicating a 30% increase in sales due to robust AI-related orders [7][21] Server and Hardware Developments - The GB300 server, featuring advanced technologies such as the Blackwell Ultra architecture and liquid cooling, is anticipated to enhance AI model training efficiency [8][24] - The GB200 server has already seen significant output, with expectations for the GB300 to follow suit, indicating a strong upward trend in server demand [9][25] Panel Industry Insights - The panel industry is experiencing a slowdown in demand, with price adjustments observed across various sizes, although leading companies are showing resilience [10][33] - BOE has surpassed Samsung Display in the foldable OLED screen sector, indicating a shift in market leadership [10][38] - TCL's semiconductor display business has reported impressive growth, with a projected net profit increase of over 70% year-on-year [10][41] Market Performance - The electronic industry has outperformed the broader market indices, with significant gains noted in the consumption electronics sector [43][52] - The performance of individual stocks within the consumption electronics sector has varied, with notable increases in several key companies [56][57]

Investment Rating - The industry rating is "Outperform the Market" (maintained rating) [6] Core Insights - The report highlights the launch of the GB300 AI server and the anticipated growth in demand for AI infrastructure, driven by the GB200 and GB300 servers [2][10] - The foldable iPhone has entered the P1 prototype stage, which is expected to benefit the foldable screen supply chain, with an early shipment estimate of 7 million units [1][14] - The AI-PCB market is experiencing growth due to increased demand from NVIDIA AI servers and ASIC requirements [3][32] Summary by Sections Section 1: Market Trends - The foldable iPhone project by Apple is in the P1 development stage, with a potential market rebound for foldable smartphones expected in 2026 [1][14] - The GB300 AI server, launched by NVIDIA, is set to significantly enhance AI inference capabilities, with a 50-fold increase in output and a 5-fold increase in throughput [2][20] - Marvell predicts that by 2028, over half of the $500 billion data center chip expenditure will be allocated to AI acceleration, with a CAGR of 35% for the custom ASIC market [2][24] Section 2: AI-PCB Growth - The demand for AI-PCB is driven by the requirements of NVIDIA's AI servers and the growth of ASIC technology, leading to a rapid increase in the AI PCB industry's value [3][32] - The GB200 NVL72 architecture from NVIDIA raises the standards for PCB, necessitating higher layer counts and advanced materials [3][35] - The ASIC development is pushing PCB demand, with the value of AI PCBs expected to quadruple in the coming years due to increased complexity and performance requirements [3][39] Section 3: Panel Industry Overview - The overall demand for panels is slowing, with a slight decrease in prices observed in July, particularly for television panels [4][41] - TCL Technology reported a significant increase in net profit for its semiconductor display business, while facing challenges in its solar energy segment [4][46] Section 4: Investment Recommendations - The report suggests focusing on various companies within the consumer electronics sector, including industrial and electronic component manufacturers, as well as companies involved in the foldable screen supply chain [5]

Core Viewpoint - The company anticipates a significant increase in net profit for the first half of 2025, with a year-on-year growth of 36.84% to 39.12% [2] Financial Performance - The preliminary estimate for the company's net profit attributable to shareholders for H1 2025 is between 11.958 billion to 12.158 billion yuan, with a year-on-year increase of 36.84% to 39.12% [2] - The net profit for Q2 2025 is projected to be between 6.727 billion to 6.927 billion yuan, reflecting a year-on-year growth of 47.72% to 52.11% and a quarter-on-quarter increase of 28.61% to 32.44% [2] Cloud Computing Business - The cloud computing segment experienced over 50% year-on-year revenue growth in Q2 2025, driven by increasing demand for AI data center products [3] - Revenue from AI servers grew by over 60% year-on-year, while revenue from servers for cloud service providers increased by more than 1.5 times [3] - The company maintains a leading market share in core products among major clients, with significant growth in shipments of advanced AI computing products [3] Communication Equipment Business - The communication and mobile network equipment segment achieved steady growth, with a notable increase in revenue from 800G high-speed switches, which reached three times the total revenue for 2024 in Q2 [4] - The company is focusing on the integration of smart manufacturing and AI, enhancing its core product technology development [4] AI Infrastructure Development - The deployment of the GB300 server, based on NVIDIA's latest high-end chips, marks a significant advancement in AI inference workload performance [5] - NVIDIA's CEO indicated that the company is entering a "decade-long AI infrastructure construction cycle," highlighting AI and robotics as major growth opportunities with a potential trillion-dollar market [5]

Group 1 - The valuation levels of two IDC REITs projects are 16.5 and 14.3 times, which are expected to provide new valuation anchors for IDC companies [1] - IDC companies are currently at historical low valuations and represent a significant segment in the domestic computing power industry chain with strong capital carrying capacity [1] - The GB300 server raises higher requirements for high-speed interconnection, pushing the optical communication industry into the 1.6T era, benefiting core supply chain-related enterprises and enhancing performance growth certainty [1] Group 2 - Domestic customers show higher acceptance of B-series GPU servers, with computing power leasing offering a high ROI and ample profit margins [1] - The GB300 system integrates 72 Blackwell Ultra GPUs and 36 Arm Neoverse architecture-based Grace CPUs, improving AI computing power by 1.5 times compared to the GB200, achieving a computing density of 3 PFLOPS per cabinet, reducing large model training cycles by 30%, and lowering power consumption per computing power by 40% with a PUE below 1.08 [1] - The communication ETF tracks the communication equipment index, which is compiled by China Securities Index Co., Ltd., selecting listed companies involved in communication network infrastructure, terminals, and related equipment from the A-share market to reflect the overall performance of the communication equipment industry [1]

Summary of Conference Call Records Industry Overview - The conference call primarily discusses the PCB (Printed Circuit Board) industry, focusing on AI server demand and related materials such as copper foil and electronic cloth [1][2]. Key Points and Arguments AI Server Demand - The GB200 server has entered mass production, with an expected shipment of 20,000 to 25,000 cabinets this year. In the first half of the year, 12,000 cabinets were shipped, with a forecast of 13,000 cabinets for the second half. The price fluctuates between 35,000 to 40,000 yuan per square meter [1][3]. - The GB300 solution is set to adopt HDR high-layer designs, with sample shipments already sent out. Production is expected to start gradually in August, with an estimated shipment of 10,000 to 15,000 cabinets this year [1][5]. Supplier Landscape - Major suppliers for SVD high-layer boards include Huadian (40%), TTM (20%), Shenghong (20%), and Youde Maike (10%). The GB200 is expected to reach 25,000 cabinets this year and over 15,000 cabinets next year [2][4]. Material Challenges - The LDK third-generation quartz cloth faces challenges in drilling processes due to its high hardness, which complicates laser drilling and can lead to larger hole diameters and resin tearing. Improvements are needed in fiber cloth hardness and light absorption rates [1][6][7]. - New material development faces technical hurdles, particularly with Q cloth, which poses ion migration risks in small hole spacing designs. Solutions include optimizing product designs and collaboration between material suppliers and PCB manufacturers [1][8]. Equipment and Capacity - Core equipment, such as laser processing machines, has long lead times (12-15 months) due to high market demand, which limits capacity expansion. However, existing factories still maintain testing capabilities [2][9]. Market Trends - The domestic market shows increasing demand for high-end materials, with companies like Huawei leading the way. However, the overall impact has yet to be fully realized. Shengyi has captured the largest share in the BT storage substrate market and is collaborating with Huawei on advanced technologies [2][18]. - The iPhone-related server shipments are projected to reach 10 million units in 2025, with AR-related products accounting for 25%-30% of that volume. This percentage is expected to increase by 15-20 percentage points annually [2][12]. Future Outlook - The AR supply chain demand has exceeded expectations in the first half of 2025, while the smartphone and consumer electronics market saw a 20% decline in sales in the second quarter of 2025, leading to a drop in related substrate orders [2][17]. - Shengyi has opportunities to capture market share in the NV sector, leveraging its experience in high-layer substrates and connections within the NV supply chain [2][19]. Additional Important Information - The glass substrate solution is not yet fully defined, facing processing difficulties and yield issues when combined with ABF. Traditional organic substrates will continue to dominate in the short term [2][13]. - Domestic companies like Shengyi and Nanya are expanding their production capabilities, with Shengyi aiming to increase its market share in high-end materials [2][14][18].

Investment Rating - The industry rating is "Outperform the Market" (maintained) [5] Core Insights - The upcoming launch of the GB300 server and Oracle's contract are expected to drive investment opportunities in computing power [12] - The listing plans of Lens Technology and Luxshare Precision in Hong Kong, along with the US-Vietnam tariff adjustments, are stimulating the recovery of the consumer electronics supply chain [12][15] - The GB300 AI server chip from NVIDIA is set to be released in the second half of the year, with revenue opportunities expected to increase by 50 times compared to the previous generation [16] - Oracle has signed multiple cloud service contracts, which are anticipated to significantly boost demand for computing power and related infrastructure [20][21] - The demand for PCB (Printed Circuit Board) is expected to rise due to the increasing needs from AI servers and ASIC (Application-Specific Integrated Circuit) developments [23][31] Summary by Sections 1. Consumer Electronics Sector - Lens Technology and Luxshare Precision are planning to list in Hong Kong, enhancing their global presence and benefiting from tariff adjustments between the US and Vietnam [12][15] - The US-Vietnam trade agreement is expected to lower supply chain costs for companies like Apple, positively impacting the consumer electronics sector [15] 2. Computing Power Infrastructure - The GB300 AI server chip is anticipated to drive significant orders and technological upgrades within the industry [16][17] - Oracle's cloud service contracts are projected to contribute over $30 billion annually, indicating strong demand for AI infrastructure [20] 3. PCB Market Dynamics - The demand for PCB is expected to grow due to the increasing requirements from AI servers and ASIC technologies [23][31] - The GB200 NVL72 architecture from NVIDIA is raising the standards for PCB, leading to increased growth in the sector [26] 4. Smartphone Market Insights - Huawei continues to lead the Chinese smartphone market, with a 12% year-on-year growth in the second quarter of 2025 [35] - The release of new models from major brands is expected to drive further innovation and competition in the smartphone market [38][40]