Investment Rating - The report maintains an "Outperform" investment rating for the communication industry [4][8]. Core Insights - In July 2025, the communication industry index increased by 11.21%, outperforming the Shanghai Composite Index (+3.74%), CSI 300 Index (+3.54%), Shenzhen Component Index (+5.20%), and ChiNext Index (+8.14%) [4][14]. - The total telecom business revenue in China for the first half of 2025 reached 905.5 billion yuan, with a year-on-year growth of 1.0% [7][39]. - The report highlights the rapid growth of 5G mobile phone users, which reached 1.118 billion, accounting for 61.8% of total mobile phone users by June 2025 [7][40]. - The report emphasizes the increasing demand for AI-enabled smartphones, predicting a 34% penetration rate for AI phones in 2025 [7][8]. - The report notes a significant increase in capital expenditure by major North American cloud providers, with a total of $95.06 billion in Q2 2025, representing a year-on-year growth of 66.6% [7][21]. Summary by Sections Market Review - The communication industry index rose by 11.21% in July 2025, outperforming major indices [4][14]. - Sub-sectors such as network connection and tower installation, cables, and system equipment saw increases of 34.05%, 7.42%, and 5.09% respectively [17]. Industry Tracking - The global cloud infrastructure is experiencing increased investment, with major players like Amazon, Microsoft, Google, and Meta expected to invest over $300 billion in 2025 [21][26]. - The report indicates that the AI-related demand is driving the growth of the ICT market, with a projected CAGR of 6.5% from 2023 to 2028 [33][34]. Telecom Industry Tracking - The telecom business revenue for the first half of 2025 was 905.5 billion yuan, with a total business volume growth of 9.3% year-on-year [39]. - The number of fixed broadband users with gigabit access reached 226 million, accounting for 33.0% of total users by June 2025 [45]. Mobile Phone Industry Tracking - The retail sales of communication equipment increased by 13.9% year-on-year in June 2025, driven by smartphone upgrades and marketing activities [37][38]. - The global smartphone shipment is expected to reach 1.22 billion units in 2025, with a slight year-on-year growth of 0.1% [7][8]. Investment Recommendations - The report suggests focusing on sectors such as optical communication, AI smartphones, and telecom operators, highlighting the robust capital expenditure outlook for leading cloud providers [8].

Investment Rating - The report maintains an "Outperform" investment rating for the communication industry [6][7]. Core Insights - The communication industry index outperformed the CSI 300 index in June 2025, with a rise of 13.15% compared to the Shanghai Composite Index (+2.90%) and CSI 300 Index (+2.50%) [6][12]. - Telecom business revenue showed a year-on-year increase of 1.4% in the first five months of 2025, totaling 748.8 billion yuan [6][41]. - The penetration of 5G mobile phone users reached 60.8% by May 2025, with a monthly average data usage (DOU) of 21.3GB per user, reflecting a year-on-year increase of 14.9% [6][43][47]. - Retail sales of communication equipment increased by 33.0% year-on-year in May 2025, driven by smartphone upgrades and market promotions [6][37]. - The report highlights the expected growth in AI mobile phones, with a projected penetration rate of 34% in 2025 [6][7]. Summary by Sections Market Review - The communication industry index rose by 13.15% in June 2025, outperforming major indices [12][15]. - Sub-sectors such as network equipment and communication terminals saw significant gains, with increases of 37.00% and 13.97% respectively [15][16]. Industry Tracking - Global cloud infrastructure spending reached $90.9 billion in Q1 2025, a 21% year-on-year increase, driven by AI application deployments [20][28]. - The domestic ICT market is projected to grow significantly, with an estimated size of $751.76 billion by 2028, reflecting a CAGR of 6.5% [32][40]. Domestic Telecom Industry Tracking - Telecom business revenue totaled 748.8 billion yuan in the first five months of 2025, with a total business volume growth of 8.6% [41][42]. - The number of 5G mobile phone users reached 1.098 billion by May 2025, with a net increase of 84.14 million users since the end of 2024 [43][44]. - The number of broadband users with gigabit access reached 223 million, accounting for 32.7% of total broadband users [45][53]. Emerging Business Development - Telecom operators are focusing on key sectors such as industrial manufacturing and digital government, leveraging cloud and new digital technologies [56][62].