Summary of Key Points from the Expert Call on Japan Technology: Hardware - Industrial Electronics Industry Overview - The focus is on the industrial electronics sector, particularly in relation to power supply systems for generative AI data centers, highlighting the involvement of Japanese heavy electrical equipment manufacturers like Hitachi and Mitsubishi Electric [2][3] Core Insights - Power Consumption Trends: Generative AI data centers are experiencing increased power consumption, leading to a shift towards higher voltages to minimize power loss. This trend benefits companies like Hitachi and Mitsubishi Electric, which are expanding their business into data centers [2] - Next-Generation Transformers: Hitachi and Mitsubishi Electric are participating in Nvidia's 800V architecture ecosystem and are expected to supply next-generation transformers, including solid-state transformers (SSTs) [2][12] - Battery Backup Units (BBUs): Companies like Panasonic are developing advanced products such as Capacitor Backup Units (CBUs) to manage power consumption fluctuations in generative AI applications [2] - High-Temperature Superconducting (HTS) Cables: The use of HTS cables is being explored for efficient DC power transmission, with companies like Fujikura and Furukawa Electric leading in this area [3][15] Technical Developments - Power Supply Evolution: The evolution of power supply systems for data centers includes moving from supplying 100 VAC to 415 VAC, and now to integrating power supply units within racks to provide 48 VDC [4][9] - Power Stabilization Methods: New configurations involve using battery energy storage systems (BESS) and supercapacitors to stabilize power supply, particularly in high-demand scenarios [10][11] - Voltage Supply Changes: The power supply configuration is evolving to provide +/-400 VDC and 800 VDC, with future plans for 1,500 VDC power supply [9] Market Dynamics - Power Supply Issues: Generative AI data centers are emerging with large power capacities (up to 5 GW), leading to local production for local consumption strategies, including building small nuclear plants or gas turbine power plants near data centers [17] - Networking Evolution: The approach to data center networking is shifting from scale-up to scale-out, and now to a scale-across concept, connecting multiple data center campuses [19] Component Demand - Increased Demand for Components: The need for stable power supply in GPU servers is driving demand for multi-layer ceramic capacitors (MLCCs) from companies like Murata Manufacturing and Taiyo Yuden [21] - Google's TPU Development: Google’s 7th generation TPU is becoming competitive with NVIDIA's GPUs, emphasizing the importance of in-house hardware and software development [22] Company-Specific Insights - Hitachi: Target price set at ¥5,900 with risks including project delays and forex swings [23] - Mitsubishi Electric: Target price set at ¥5,200 with risks related to industrial automation and competition [24] - Panasonic Holdings: Target price set at ¥2,100 with risks including demand fluctuations and competition in the battery market [28] - Fujikura: Target price set at ¥22,700 with risks in telecommunications and electronics sectors [29] - Furukawa Electric: Target price set at ¥10,000 with risks in energy infrastructure and electronics [30] Additional Considerations - Investment Risks: The report highlights potential conflicts of interest due to Goldman Sachs' business relationships with the companies discussed, advising investors to consider this when making decisions [5][39] This summary encapsulates the key points from the expert call, focusing on the industrial electronics sector's developments, market dynamics, and company-specific insights.