Main points:
Weekly gathering of scientific and technological views (Part 2)
1) amd announced the acquisition of DPU’s cutting-edge pensando for us $1.9 billion. Pensando’s products include DSC for server network accelerator cards, DSS for tor switches, and PSM for network and security policy management. Pensando’s main customers include azure, IBM cloud, Oracle cloud, NetApp, HPE, etc. Through the acquisition of pensando, AMD will build the full range of product capabilities of the data center and continue to innovate at the platform level with the help of the software capabilities of the former.
2) why is the DPU market hot? According to synergy statistics, the global data center infrastructure market in 2021 reached US $185 billion. The change of online lifestyle and work style in the post epidemic era, the global expansion of public cloud giants and the rapid development of AI in various industries have kept the investment in data centers strong. The network has accounted for more than 20% of the infrastructure investment in the data center. Due to the wide use of virtual machines and containers in the data center and the increase of data intensive workload, the global server network card market is growing rapidly. Omdia expects to reach US $4.5 billion in 2024. The server network adapter continues to evolve from traditional basic network card to smartnic and then to DPU. DPU can not only further “reduce the burden” of CPU control, but also realize distributed encryption and security processing capabilities, and finally realize the “data centric” network architecture.
3) the four giants occupy the mainstream of DPU commercial chips, and the self-development of Internet manufacturers has made progress. We believe that after amd completes the acquisition of pensando, the global DPU competition pattern will be basically established. At present, commercial chips are mainly from NVIDIA, Intel, Marvell and Broadcom. In the future, NVIDIA will be unique in the field of high-end DPU with nvlink. The medium and high-end and general scenarios are mainly controlled by traditional digital communication leaders such as Intel, AMD, Broadcom and Marvell. Large Internet companies often can significantly reduce costs and actively adapt and accelerate their own SDN protocol stack through self-developed DPU. We believe that Chinese manufacturers will continue to make breakthroughs in medium and low-end information innovation markets such as 25gbe, and the formulation of chip level interconnection standards such as ucie may give new opportunities to ucieswitch / retimer.
Investment advice
Affected by the repeated epidemic and the Fed’s interest rate hike, investors’ risk appetite is low. We believe that the valuation of the communication sector has a good allocation value, but in the short term, there are many uncertain factors such as macroeconomic and epidemic, and the sector may continue to fluctuate under the influence of market sentiment. In the short term, it is recommended to adopt the absolute return allocation strategy, and continue to pay attention to the targets with optimistic performance expectations this year but suppressed by emotions. In April, we still suggested to focus on the three main lines of operators, exports and 0-1 emerging tracks.
1) 5g and Gigabit broadband dividends continue to penetrate, the operator’s C-end ARPU stabilizes and the upward trend remains unchanged, and the fixed network broadband ARPU value continues to improve under the Gigabit broadband and Zhijia strategy. Digital economy has become the main theme of industrial Internet this year, and the b-end aicde business of operators is expected to benefit fully. Among them, the share of mobile and telecom cloud computing continued to increase, and the proportion of b-end performance contribution continued to increase. Operators dominate the construction of computing power network, the attribute of science and innovation is gradually highlighted, and the valuation center is expected to rise. It is suggested to focus on China Mobile and China Telecom Corporation Limited(601728) .
2) the wireless and broadband capital expenditure of North American telecom operators is expected to reach double-digit growth this year, driving the year-on-year high growth of China Ericsson Nokia supply chain and broadband equipment industry; North American top cloud manufacturers will further invest in several major cloud infrastructure, and the global data communication optical module market is expected to achieve a high growth rate of 25%; The global module industry continues to grow at a high rate. China’s leading manufacturers have achieved comprehensive transcendence, with strong industry beta + leading alpha, and high investment certainty in the Internet of things sector. It’s recommended to focus on the , Skyworth Digital Co.Ltd(000810) etc.
3) from 0 to 1, the high boom and high growth sub industries are expected to contribute excess returns in the medium and long term, such as communication + automotive intelligence, communication + new energy, communication + laser sensing, etc. at the same time, the historical burden of relevant companies is small & business adjustment is light, and the high growth rate of molecular end performance is expected to hedge the negative impact of denominator end risk preference. It is suggested to pay attention to Dongguan Dingtong Precision Metal Co.Ltd(688668) , Shenzhen Cotran New Material Co.Ltd(300731) , Jiangsu Zhongtian Technology Co.Ltd(600522) , Shenzhen Envicool Technology Co.Ltd(002837) , torch technology, Changguang Huaxin, etc.
Risk tips
The global epidemic has repeatedly led to macroeconomic downturn, the capital expenditure of cloud and Internet manufacturers is lower than expected, the high cost of DPU in the short term affects the deployment speed, and the Sino US science and technology trade friction.
