Summary of ZTE Conference Call Company Overview - **Company**: ZTE Corporation (0763.HK) - **Industry**: Telecommunications and AI Infrastructure Key Points and Arguments Financial Performance - ZTE's server and storage revenues increased by **200% YoY** in 1H25, with AI servers contributing **55%** of total revenues [1][2] - Projected **3Q25 revenues** are expected to grow **26% YoY**, compared to **21% YoY** in 2Q25, with a gross margin stabilizing at **31%** [1] - Estimated **net income** for 3Q25 is projected to be **Rmb2.4 billion**, reflecting a **12% YoY** growth [1] Market Position and Growth Drivers - ZTE is positioned as a major beneficiary in the telecom and enterprise AI data center market, supplying GPU servers, general servers, storage, and networking cards [2] - Recent procurement wins include: - **Rmb3 billion** general server procurement from ICBC [2] - **Rmb1.9 billion** PC server procurement from China Mobile [2] - **Rmb5 billion** AI inferencing server procurement from China Mobile [2] - The demand for AI and general computing infrastructure in China is increasing, with ZTE benefiting from comprehensive product lines and long-term customer relationships [2] Capital Expenditure Trends - Chinese Cloud Service Providers (CSPs) are expected to increase capital expenditures by **65%** in 2025, **20%** in 2026, and **9%** in 2027 [2][8] Earnings Revisions - 2026-27E net income estimates have been revised up by **1%** and **2%** respectively due to higher revenue expectations [11] - Revenue estimates for 2026E and 2027E have been increased by **1%** and **2%** respectively [11] Valuation and Price Target - The 12-month target price for ZTE's H-shares has been raised by **14%** to **HK$43.6**, reflecting a market re-rating of AI infrastructure players [1][12] - The target P/E multiple for H-shares is now **19.2x**, up from **17.0x** [11] - The 12-month target price for A-shares is raised by **13.6%** to **Rmb67.6** [12] Risks and Considerations - Key risks include faster or slower-than-expected demand in telecom infrastructure and potential non-operating gains or losses that could impact earnings estimates [22] Revenue Mix - ZTE is seeing an increasing contribution from non-telecom business segments, indicating diversification in revenue sources [13] Additional Important Information - The company maintains a **Neutral rating** due to fair valuation despite positive growth outlook [1] - The report emphasizes the importance of considering ZTE's normal earnings power without factoring in non-operating items, which have historically varied significantly [22]

Core Insights - Silicom Ltd. has secured a new design win that is expected to increase annual sales to a key customer to approximately $4 million [1] - The partnership with the customer has expanded over time, showcasing the value of Silicom's diverse product portfolio [2][3] Company Overview - Silicom Ltd. is a leading provider of high-performance networking and data infrastructure solutions, primarily aimed at enhancing performance and efficiency in Cloud and Data Center environments [4] - The company's solutions are designed to improve throughput, reduce latency, and enhance the performance of servers and networking appliances [4] Product and Market Position - Silicom's products are utilized by major Cloud players, service providers, telcos, and OEMs, serving as components in their infrastructure offerings [5] - The company has established long-term relationships with over 200 customers globally, with more than 400 active design wins and over 300 product SKUs [6]