Weekly gathering of scientific and technological views (Part 2)
1) OFC 2022 was held, and 800g and pluggable coherence were brilliant in this exhibition. From the manufacturer’s product release and speech, silicon light, CPO and 800g are the key words of this OFC. From the perspective of industrial chain, system equipment manufacturers continue to release stronger chips, higher speed ports and software defined coherent transmission equipment; The new products of module manufacturers focus on data communication 800g and 400g pluggable devices; Key chip manufacturers have launched new silicon optical products for highly integrated CPO.
2) 800g is competing for the best, and mainstream manufacturers have the ability to ship in batches. The 800g solution of China’s mainstream optical module manufacturers shines brightly on the OFC. Xuchuang launched 800gosfp and qsfp-dd 800 silicon optical module product lines, which are mass produced based on self-developed chips The power consumption of the third generation of niobium 800g modulation module is the same as that of the third generation of niobium 800g modulation module, which reduces the power consumption by 20%.
Accelink Technologies Co.Ltd(002281) , Huagong Zhengyuan, Hengtong lockley, etc. also showed the 800g chip using the latest DSP and actively laid out the overseas high-end market. We believe that the 800g discrete device scheme will still be the mainstream and the competition pattern of the industry will not change much. However, looking forward to the future, the silicon light platform is an important ticket. Manufacturers such as xuchuang, Eoptolink Technology Inc.Ltd(300502) , Guangxun and so on have laid out silicon light from the chip level.
3) the pluggable qsfp-dd 400gzr series has attracted the attention of large manufacturers, and the market is expected to grow rapidly. This time, OFC, including industry leader Acacia, China Telecom, xuchuang, Eoptolink Technology Inc.Ltd(300502) , Hisense, etc. all showed the latest 400g qsfp – DD Zr / Zr + series products, which can be used for Telecom man and open decoupled DCI network. Overseas cloud DCI Network + China East digital West computing two wheel drive, pluggable related market is expected to grow rapidly. Lightcounting predicts that 400g Zr series is expected to reach 400000 shipments by 2025, becoming an important part of the global $4 billion DWDM market China United Network Communications Limited(600050) said in the performance briefing of 2021 annual report that capital expenditure in 2022 will match the growth of revenue, and focus on increasing the investment in East digital and West computing network to build a high-speed interconnected “5 + 4 + 31 + X” network.
Investment advice
The recent conflict between Russia and Ukraine and the resurgence of the epidemic have resulted in a significant decline in market risk appetite. We believe that the communication industry has benefited from the steady growth of the “digital economy”, driven by strong investment and overseas exports, and clear performance growth. On the other hand, the absolute return allocation strategy may become the investment target of institutions under the shock market. The proportion of positions held by institutions in the communication industry is low, and some growth logic is still expected to be poor. This year may become a depression with investment value in the growth sector. In the short term, we suggest focusing on the first quarter market.
1) operators have successively released 2021 annual reports / express reports, and their performance continues to improve. China Mobile, China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) expected / realized the net profit attributable to the parent company in 2021, with a year-on-year increase of 6.0-8.1%, 23-25% and 14.2% respectively. Revenue side C-side 5g + Gigabit broadband ARPU dividends continue to penetrate, B-side digital economy aicde benefits in an all-round way, the peak of cost side 5g capital expenditure will pass, and the company’s roe is expected to continue to improve. We continue to suggest paying attention to investment opportunities in the operator sector.
2) the release of new products of OFC 2022 optical communication is still emerging one after another. 800g and pluggable optical communication have become the fastest-growing segment market, and the mainstream optical module manufacturers may still occupy the “C position”. However, the value remodeling brought by chip design, manufacturing and high-end packaging platforms in the mixed integration industrial chain such as silicon optics still deserves high attention. In the short term, we suggest to pay attention to the beneficial targets related to export and calculation from east to west, such as Accelink Technologies Co.Ltd(002281) , Zhongji Innolight Co.Ltd(300308) , Eoptolink Technology Inc.Ltd(300502) , Suzhou Tfc Optical Communication Co.Ltd(300394) , Broadex Technologies Co.Ltd(300548) , Cig Shanghai Co.Ltd(603083) , etc.
3) the conflict between Russia and Ukraine highlights the importance of chip independent control, advanced C4ISR technology and precision guided weapons in modern war. National defense informatization has become one of the most deterministic investment lines during the 14th Five Year Plan period. China’s 2022 defense budget is expected to grow by 7.1% year-on-year, and there is still room for improvement in the proportion of defense budget in GDP. During the 14th Five Year Plan period, the national defense strategic center shifted from mechanization to informatization. We suggest paying attention to the track with large space, high barriers and small fluctuation in national defense informatization, and focusing on the track of embedded computer, military communication and precision guidance.
Risk tips
The conflict between Russia and Ukraine lasted longer than expected, resulting in the decline of global risk appetite, the network investment of cloud and Internet manufacturers was lower than expected, the landing of typical applications of 5g and metauniverse was lower than expected, resulting in the slowdown of traffic growth, and the Sino US science and technology friction affected the stability of the supply chain.
