2025-10-31 00:59Summary of Conference Call Notes Industry Overview - Industry: China Technology & Communications - Key Focus: Increasing interest in China tech from institutional investors in the US and EU, particularly in AI supply chain beneficiaries and related technologies Core Insights and Arguments 1. Investor Interest in China Tech: There is a growing interest among long-only (LO) investors in quality tech names listed on the H-share market, which is expected to attract more attention and fund flows [1][1][1] 2. AI Supply Chain Expectations: Investors are keen on understanding the pricing of AI expectations and preferred supply chains in HK/China stocks. Concerns were raised about an overly bullish view on the US$2.5 trillion capex outlook from OpenAI [1][1][1] 3. Potential Upside in AI Capex: Anticipated upside from CSP/AI capex hikes for 2026 and improved visibility for 2027 capex/supply chain demand is expected during the upcoming results season [1][1][1] 4. Risks in AI Supply Chain: Potential risks include delays in Rubin and ASIC system deliveries in 2H26, which could impact the expected growth in high-speed optics modules [1][1][1] 5. PCB Supply Tightness: PCB supply tightness is expected to continue into 2026, with aggressive players like VGT likely to capture additional demand from ASICs [1][1][1] Company-Specific Insights Alibaba (BABA) - Capex Needs: Investors are interested in Alibaba's required capex for a 10x capacity datacenter expansion and the availability of AI chips to support this growth [1][1][1] - Competitive Position: China is viewed as a strong competitor to the US in AI development, although challenges remain in AI chipsets [1][1][1] Apple - Foldable iPhone: Increased interest in the foldable iPhone due to better-than-expected iPhone 17 sales. The expected price for the foldable iPhone could exceed US$2500, with Lens Tech identified as a key beneficiary [4][4][4] Xiaomi - Factory Status and Market Sentiment: Investors are inquiring about the status of Xiaomi's Beijing factory phase 2 and its impact on smartphone memory prices. The stock is expected to trade in the HK$45-50 range in the near term [5][5][5] - Catalysts for Growth: Upcoming catalysts include ramping EV delivery and new product launches [5][5][5] Smart Glasses - Market Interest: There is increasing interest in smart glasses as AI edge devices, with Goertek and Sunny Optical identified as major beneficiaries [6][6][6] Semiconductor Localization - Capacity and Demand: The current 7nm-equivalent wafer capacity is expected to support local AI chip demand, which is likely to double by 2026. Memory expansion is anticipated to accelerate due to advancements in stacking etching tools [7][7][7] AI Monetization - Challenges in ToC Segment: Investors noted that the ToC segment is difficult to monetize for AI LLMs, while ToB is more focused on software products for SMEs [8][8][8] Other Important Insights - Investor Sentiment: There is a general consensus among investors regarding the fragmentation in China's software sectors, which may hinder concentration in AI monetization for the next 5-10 years [8][8][8] - Disappointment in GDS/VNET: Foreign investors viewed GDS and VNET as disappointing due to share price volatility and returns, despite potential benefits from China AI capex [1][1][1] Companies Mentioned - Key Companies: Alibaba Group Holding (BABA), Apple Inc. (AAPL), Xiaomi (1810.HK), Sunny Optical Technology Group (2382.HK), Goertek (002241.SZ), among others [9][9][9]