Investment Rating - The industry investment rating is "Overweight" and has been maintained from the previous rating [5] Core Insights - The rise of Scale-up architecture is driven by the increasing demand for high-speed interconnects due to the growth of large model parameters and the need for unified computing units formed by connecting multiple GPUs [1][13] - The Scale-up switch market is expected to grow rapidly, with a projected market size of nearly $6 billion by 2025 and a 5-year CAGR of 26% from 2025 to 2030 [1][68] Summary by Sections Scale-up Supernodes: Breaking Through Single Card Computing Bottlenecks - The demand for larger parameter scales in large language models necessitates the expansion of computing clusters, which can significantly enhance model output accuracy and performance [13] - Cross-node communication requirements are heightened due to the use of tensor parallelism and expert parallelism technologies [17] Overview of Mainstream Supernode Systems - NVIDIA's GB200 NVL72 supernode connects 36 Grace CPUs and 72 NVIDIA Blackwell GPUs using NVLink technology, achieving high bandwidth and low latency [31][32] - Google's seventh-generation TPU Ironwood can scale up to 9216 chips, achieving peak performance of 4614 TFLOPS [35][36] - Amazon's Trainium2 server interconnects 64 chips through NeuronLink, ensuring low latency and high bandwidth communication [45][48] - Huawei's CloudMatrix384 supernode is designed for large-scale AI workloads, achieving 300 PFLOPS of BF16 computing power [49][52] Beneficiaries of Scale-up Network Demand - High-end switching chips and interface chips are expected to see increased demand due to the customized networks required for Scale-up architecture [3] - The integration of hardware and software in supernode systems is likely to enhance the value-added services of hardware manufacturers [56] - The demand for short-distance high-speed copper connections is strong, while optical interconnects are gradually being integrated into Scale-up networks [3] Focus Areas - Key companies to watch include: - Interconnect & Switching Chips: Sanken Communication, Lattice Semiconductor, and Wantong Development [4] - Network Equipment: ZTE, Ruijie Networks, and Unisplendour [4] - Optical Interconnect: Zhongji Xuchuang, New Easy, and Tianfu Communication [4] - Copper Interconnect: Ruikeda, Shenyu Co., and Wolker Materials [4]

Summary of Key Points from Conference Call Records Industry Overview - The conference call primarily discusses the **optical communication industry** and its investment opportunities, particularly in the context of **AI** and **data center interconnect (DCI)** technologies [1][2][3]. Core Insights and Arguments - **AI Investment Surge**: There is a significant increase in investment expectations in the AI sector in North America, leading to a rise in demand for optical modules. Oracle's financial results exceeded expectations, indicating a positive outlook for future revenue and capital expenditures [1][2]. - **Transition to Higher Speeds**: The industry is witnessing a clear trend of upgrading orders from **800G to 1.6T** and even higher speeds, which is expected to benefit related companies in the long term [1][2]. - **OCS Development**: The **Optical Circuit Switching (OCS)** market is accelerating, with companies showcasing upgraded port counts from **128×128 to 576×576**. Revenue projections for OCS are optimistic, with estimates of several million dollars by **2025-2026** [1][4]. - **MEMS Technology**: The **MEMS** solution is becoming mainstream in OCS due to its advantages such as low latency, moderate specifications, and lower costs. Companies like **赛微电子** are expanding their MEMS OCS chip production lines, which is expected to reduce costs and enhance OCS capabilities [1][4]. - **Hollow Fiber Technology**: Companies like **Amazon** and **Microsoft** are actively promoting hollow fiber technology for DCI applications, with significant deployments planned. The technology is noted for its potential to reduce latency and improve system efficiency [15][16]. Noteworthy Developments - **China Mobile's Procurement**: The procurement of a hollow fiber cable project by **China Mobile's Ningxia branch** marks a milestone as it is the first public tender for DCI hollow projects by domestic cloud vendors, indicating recognition of domestic capabilities [21][22]. - **Government Support for Satellite Communication**: The issuance of satellite communication licenses by the Ministry of Industry and Information Technology to **China Unicom** signifies a clear government stance on the commercialization of low-orbit satellite communication, which is expected to drive industry growth [25][26]. - **Emerging Technologies**: New technologies such as **air fiber** and **laser solutions** are gaining attention, with companies like **中金公司** and **兴业证券** being highlighted for their growth potential [5]. Companies to Watch - Companies with low valuations and high growth certainty, such as **中金公司** and **兴业证券**, are recommended for investment. Additionally, companies like **天孚**, **华工**, and **光迅** are noted for their significant marginal changes and order demand certainty [3][5]. Conclusion The optical communication industry is poised for growth driven by advancements in AI, increased demand for higher-speed optical modules, and the development of new technologies. Companies that are actively participating in these trends, particularly those involved in OCS and hollow fiber technologies, are expected to benefit significantly in the coming years.