Main points:
Weekly gathering of scientific and technological views (Part 2)
1) 2022 science and technology investment outlook: hard science and technology will continue to make breakthroughs, and “specialization and innovation” contains rich structural opportunities. In the past 2021, China has experienced great challenges and baptism from the perspective of a country or a nation; But specific to China’s science and technology industry, it has experienced a sublimation from public opinion to spiritual level. We have seen how the leaders of Chinese science and technology enterprises break through the encirclement of Phoenix Nirvana. We have also seen that frontier technology companies such as quantum and AI have been sought after after after listing. We have also seen that science and technology, as the primary productivity, has been deeply rooted in the hearts of the people. Looking forward to the investment in the science and technology industry in 2022, we firmly believe that the landscape is still good, and new technologies represented by AI, Internet of things and space technology and new applications represented by metauniverse are surging.
2) “Hard” technology is the core technology at the bottom, and the investment opportunities of specialization and innovation are worth exploring. The breakthrough of “hard” science and technology will have an important impact on many fields. In the long run, it is related to the national economy and the people’s livelihood and the comprehensive competitiveness of the country in the future. For “hard” science and technology countries, policy encouragement, investment in talent training and government guided investment may be carried out. From the perspective of profit model, “hard” technology is mostly suitable for “top-down” analysis. We believe that looking forward to the future, it is difficult for hard technologies such as communication to have marginal downward factors, and new opportunities such as communication chip, optical communication, Internet of things and 5g application emerge one after another. Since 2020, the theme of “specialization and innovation” has been continuously pursued by investors. We believe that in the future, with the normalization of the registration system, the market will shift from the short-term style of “small speculation and new speculation” to individual stocks with excellent market fundamentals, and the in-depth investment and research ability based on the industry will become the primary ability.
3) The application for listing of Shengke communication technology innovation board, the leader of switch chip, will accelerate the development of China’s digital communication industry. Shengke communication is the leader of domestic Ethernet switching chips, ranking first among domestic manufacturers with a market share of 1.6% in China in 2020. Shengke communication products are benchmarked against Broadcom Trident series, covering Enterprise Park, edge computing, 5g bearer and data center market. In 2021, the scale of China’s Ethernet switching chip market was 10.9 billion yuan. At present, Broadcom has a share of more than 60% in the field of commercial chips. China urgently needs a stable domestic chip alternative. The company’s Tsingma MX series chips support 400g ports with a maximum capacity of 2.4tbps, which fully meet the tor, aggregation and core switching capabilities of the data center, and can reach 80% of the market space or exceed the whole market. The data center communication core chip series includes intelligent network card, PCIe signal chain, switching, routing, PHY, optical module, electrical chip, etc. We believe that the domestic substitution process of high-speed switching chips will be synchronized with the supporting test of domestic optical modules, and will promote the development of domestic high-end electrical chips at the same time.
Investment advice
Shengke communication submitted a prospectus and is expected to land on the science and innovation board in mid-2022, which will be a landmark event in the development of core technology of China’s data center. The domestic production of chips in the whole digital communication industry chain is expected to accelerate.
1) As the leader of switch chips in China, Shengke communication will have a market space of more than 10 billion in the future. At present, it has been introduced into some mainstream switch manufacturers. We suggest to actively pay attention to the listing process of Shengke communication.
2) Sino US science and technology friction has become the norm. Huawei’s switch share has been damaged in the short term or brought opportunities to relevant mainstream manufacturers. From a long-term perspective, the introduction of national produced switches will bring double opportunities in terms of market and cost. It is suggested to pay attention to Unisplendour Corporation Limited(000938) , Fujian Star-Net Communication Co.Ltd(002396) , Zte Corporation(000063) .
3) The global ultra large-scale data center optical module follows the rapid iteration of switch chips. At present, the North American data center is in the stage of large-scale deployment of 200g / 400g and small-scale deployment of 800g. It is recommended to pay attention to the global data communication leaders Zhongji Innolight Co.Ltd(300308) , Eoptolink Technology Inc.Ltd(300502) and Cig Shanghai Co.Ltd(603083) , Broadex Technologies Co.Ltd(300548) , Accelink Technologies Co.Ltd(002281) which are expected to open the market in equipment manufacturers with 800g / silicon light.
Risk statement
The lack of typical applications of 5g and the immaturity of meta universe have led to lower than expected global traffic growth, lower than expected research and development progress of domestic high-end digital communication chips, and intensified scientific and technological friction between China and the United States, resulting in OEM risks of high-end process chips.
