Summary of Honor Electronic (300870.SZ) Conference Call Company Overview - **Company**: Honor Electronic (300870.SZ) - **Industry**: Server Power Supply (PSU) Market Key Points R&D Partnership and Sales Outlook - Honor has established an R&D partnership with a US-based Cloud Service Provider (CSP) for next-generation server power supplies, with potential sales contributions expected in 2027 after production tests in 2026 [1] - The company aims for a 10% wallet share in the first-batch order, which is considered optimistic due to its smaller historical sales in GPU/CPU server power supplies compared to incumbents [1] Product Compatibility and Market Position - Most of Honor's products are compatible with mainstream AI accelerators from both global and domestic GPU brands, as well as domestic ASIC makers [1] - The highest power supply currently available in the domestic market is 5.5kW, with most projects deployed in China and some in Southeast Asia [1][5] Capacity Expansion Plans - Honor plans to add approximately Rmb1 billion in capacity in Suzhou, China by the end of 2026 [6] - A factory in Vietnam is also operational, supporting 15-20% of total production [6] - Capacity addition is relatively straightforward, taking about two quarters from equipment purchase to production readiness [6] Pricing and Margins - Current Average Selling Prices (ASP) are Rmb0.7-0.8/W for 5.5kW PSUs and Rmb0.3-0.4/W for 3-4kW PSUs [7] - Gross Profit Margin (GPM) for high-power PSUs (≥2kW) was approximately 28% in the first three quarters of 2025, while low-power PSUs had a GPM of only 10-20% due to intense competition [7] New Product Development - Honor is developing PSUs in the range of 8-19kW, although there is no immediate demand from customers [8] - The company is also preparing for the industry transition towards 800V DC architecture by developing PSUs that support 800V/400V DC input [8] Competitive Landscape - The global server power supply market is seeing an influx of new entrants, but mass production capabilities, especially for high-power products, remain a significant challenge for these new players [6][1] Domestic Market Presence - Honor is a key PSU supplier in the domestic server market, directly supplying major Chinese Original Design Manufacturers (ODMs) such as Inspur and Foxconn [2][5] Strategic Engagements - The company is in early-stage discussions with multiple overseas CSPs and ODMs to expand its customer base [1] Additional Insights - The partnership with the US CSP aims to diversify supplier risk and leverage Honor's product quality, R&D responsiveness, and service capabilities [1] - The company has been supplying adapters to the US CSP for its residential AIoT products since 2023, indicating a growing relationship [1] This summary encapsulates the critical insights from the conference call regarding Honor Electronic's strategic initiatives, market positioning, and future outlook in the server power supply industry.

Group 1 - The core viewpoint is that AI is driving the evolution of power cabinets towards the 100kW-MW level, leading to technological changes in energy conversion and an increase in equipment prices and market dynamics [1] - Global AIDC capital expenditure is experiencing high growth, driven by the demand for data centers as essential infrastructure for AI development, with total installed capacity expected to exceed 100GW by 2025 [1] - CSPs and Colo operators are anticipated to become the main investors in AIDC, with electrical equipment accounting for approximately 35% of data center investment [1] Group 2 - The power supply technology for data centers is evolving from traditional AC power with UPS to direct current and high-voltage direct current systems, aiming to enhance overall power supply efficiency and reduce CAPEX [2] - The market for external power supply is projected to reach 99.6 billion yuan by 2030, with a CAGR of approximately 50% from 2024 to 2030 [2] Group 3 - AI server power supplies are following the OCP ORV3 standard, with increasing power density as GPU power rises, and the global server power supply market is expected to reach 147 billion yuan by 2030, with a CAGR of about 42% [3] - The competition in the power supply industry is heavily influenced by technology and customer resources, with a focus on companies certified by major CSPs [3] Group 4 - The characteristics of AI computing chips create new demands for auxiliary power sources like BBU and supercapacitors, which help stabilize power fluctuations and improve energy storage efficiency [4] - The penetration of products such as active power filters and solid-state DC circuit breakers is expected to accelerate alongside the development of AIDC [4]

Summary of Conference Call Records Industry Overview - The AI infrastructure industry is experiencing a high-intensity investment cycle globally, with major companies like Microsoft and Google significantly increasing their capital expenditures for 2025 to $30 billion per quarter and $85 billion annually, respectively, indicating sustained high investment from 2021 to at least 2026 [1][2] Key Insights and Arguments - **Diverse Investment Sources**: In China, the construction of data centers is diversified, with internet and cloud companies accounting for just over 30%, telecom operators 23%, local governments and state-owned platforms 13%, and IDC vendors less than 10%. Nearly 30% comes from AI enterprises and central state-owned enterprises, indicating overall investment intensity is lower than overseas levels [1][4] - **Projected Growth in Power Demand**: China's data center power demand is expected to maintain a compound annual growth rate (CAGR) of 37% from 2024 to 2027, with AI data centers projected to add approximately 3.6 GW in 2025, a year-on-year increase of 220%, and around 10 GW by 2027 [1][5] - **Capital Expenditure Trends**: In 2024, domestic internet companies are expected to see capital expenditures grow by over 230%, while upstream equipment suppliers show varied growth rates, with some experiencing declines [8][9] - **AI Server Proportion**: In 2024, AI servers are expected to account for 9.3% of all server shipments, with AI computing power being approximately ten times that of general computing power [10] Additional Important Insights - **Telecom Operators' Investments**: The three major telecom operators in China are projected to invest a total of 85.9 billion yuan in computing-related fields in 2024, a 25% increase year-on-year. For 2025, China Telecom and China Unicom plan to increase their investments by 22% and 28%, respectively, while China Mobile's investment is expected to remain flat [3][12] - **Government Cloud Market Growth**: The government cloud market in China is expected to reach approximately 90 billion yuan in 2024, growing by 18%. Many governments are shifting some public cloud services to dedicated clouds due to security compliance, driving significant data center construction demand [16] - **Financial Sector AI Adoption**: The financial sector, particularly banks, has begun applying AI models in various areas, including customer service and risk management, although specific investment amounts in data centers remain unclear [14][15] Future Projections - **2025 Data Center Demand**: For 2025, the projected growth rates for various sectors are as follows: internet industry 80%, telecom operators 15%, government 10%, IDC 70%, financial sector 5%, and other sectors 10%. Overall, China's new data center power is expected to approach 8 GW, with AI data centers accounting for about 3.6 GW [17] Technology Trends and Investment Recommendations - **Emerging Technologies**: The report highlights the importance of new technologies such as liquid cooling, HVDC, and high-power server power supplies. Companies like Infinera, Shenneng Environment, and Zhongke Electric are recommended for their advancements in these areas [6][18]