Hou Bin of Great Wall Securities: Explore investment opportunities in the AI ​​computing industry chain and understand the impact of demand catalysis

At the recent Wind3C conference, Hou Bin, the head of the Great Wall Securities Industrial Finance Research Institute and TMT Research Center, gave a speech titled "AI Computing Power and Satellite Internet"

Hou Bin believes that computing power is the productivity of the development of artificial intelligence. With the rapid development of large artificial intelligence models and the ever-expanding demand for computing power, there has been a mismatch between computing power demand and chip capabilities, which will promote the development of the artificial intelligence computing power industry. As a core product with the highest degree of industrialization and the most cutting-edge technology reserves in China, optical modules will see rapid growth in demand due to the continuous upgrade of computing power driven by the development of large-scale artificial intelligence models.

The satellite Internet industry is still in its infancy, with huge potential for mid- and long-term development in the future and broad development prospects

The following are the core views shared by Hou Bin:

The development of artificial intelligence (AI) computing power can be divided into three industrial paths. The first path is the development of the hardware field, including chip manufacturing, server construction and the research and development of high-performance computing equipment. The second path is the development of algorithms and software, including the application and optimization of technologies such as machine learning, deep learning, and natural language processing. The third path is the development of application fields, including application scenarios in fields such as smart driving, smart homes, and medical health. These three paths are interdependent and mutually reinforcing, and jointly promote the development of AI computing power

We think AI computing power can be roughly divided into several industrial paths. One is NVIDIA computing power industry chain. NVIDIA and the industry chain surrounding NVIDIA such as optical modules and servers include other related supporting PCBs and connectors. Wait, this is an important industrial chain path. The second path, a branch of the industry chain is the industry chain link related to domestic computing power chips. Especially around the Huawei Shengteng industry chain and Cambrian including supporting liquid cooling and related domestic companies that mainly serve these manufacturers. The third item is centered around industry opportunities related to computing power leasing that have attracted a lot of market attention recently.

(Picture from: Hailuo Creative)

The reason why the NVIDIA computing power industry chain has attracted attention from the industry, including the investment circle, I think the essential reason is that OpenAI is the core leader in the AI ​​industry. Most of its past development, including the operation of large models, was based on NVIDIA CUDA. The ecological environment is based on the computing power of a series of chips such as NVIDIA A100 and H100.

We believe that computing power is the productivity of AI development.

The computing power support required by large AI models mainly relies on the underlying computing power chip. The AI ​​chip is a dedicated hardware used to accelerate artificial intelligence training and reasoning tasks. It has a high degree of parallelism and can achieve low power consumption, Characteristics of efficient computing.

As the demand for computing power of large models continues to grow, higher requirements are also put forward for AI chips for data storage. According to OpenAI estimates, the global demand for computing power for head AI models has doubled in 3-4 months since 2012. The computing power required to train the head model increases by as much as 10 times every year. According to Moore's Law, the computing performance of processing chips has doubled in two years, including the continuous evolution of semiconductor support nodes, which may lead to a mismatch between the growth in demand for computing power required for large models and the chip's computing power.

We believe that with the accelerated development of large AI models and the continuous expansion of computing power demand, the mismatch between computing power demand and chip capabilities will catalyze the development of the AI ​​computing power industry.

//What are the investment opportunities in the computing power industry chain //

AI Chip We believe that the space for localization opportunities is very broad. The industry's compound growth rate from 2023 to 2026 will exceed 20%. The market size of domestic AI chips will exceed 40 billion in 2023, and may exceed 120 billion in 2026. At present, the industry leaders are mainly European, American and Japanese companies. The top three are Nvidia, Intel and IBM. Domestic companies include Shengteng, Cambrian and so on.

Directly benefited from the sustained and rapid development of the NVIDIA industry chain, this year has begun to see an important turning point in the industry trend, and the prosperity will continue to increase in the next year

, among which What most directly reflects the market and is relatively easier to understand is the optical module industry chain. In the past few months, we have also seen that many optical module companies have significantly improved their performance, business progress, and market performance. From our perspective, the evolution direction of optical module products can reflect the forward-looking layout of technology. The explosion of data traffic and the abundance of downstream applications have also driven the evolution of optical module products towards smaller sizes, higher speeds, and lower costs. At the same time, optical modules have also developed to 800G and subsequent 1.6T rate upgrades, driving forward-looking research and development and iterative upgrades of optical module-related technical routes.

(Picture from: Hailuo Creative)

We believe that Optical module Block, as the core product with the highest degree of domesticization and cutting-edge technology reserves, driven by the continuous upgrade of computing power driven by the development of AI large models, demand can bring rapid increase. This direction mainly lays out new technologies such as CPO and LPO, while tracking the products and batch shipments of the industry chain. In addition to optical modules, PCB, liquid cooling, high-speed connectors, including server manufacturers that use NVIDIA chips to make AI servers, are all opportunities to benefit from the development of the overall industry.

Optimistic about the long-term development of the satellite Internet industry

In general, we continue to be optimistic about the long-term development of the satellite Internet industry. However, from the perspective of actual business implementation progress and benefits to end users, we believe that it needs to be continuously tracked and observed

First of all, we believe that satellite Internet and ground communication systems are complementary and integrated.. Since 2014, the development of satellite Internet has entered the stage of integration with terrestrial communication networks, mainly led by SpaceX, OneWeb, and domestic Star Network companies. This positioning and ground communication system mainly involves more complementary cooperation and integrated development. The new generation of satellite Internet has the characteristics of wide coverage, low latency, broadband, low cost and so on. The scale of the global satellite Internet industry is growing steadily, and there is still a lot of room for development in commercialization.

At the 2020 National Development and Reform Commission’s regular press conference, satellite Internet was clearly included in the scope of new infrastructure for the first time. Including the subsequent establishment of Star Network Company also means that the future satellite Internet industry chain will have room for continued growth and value. Based on the demand for transmission, we have also seen overseas giants begin to compete in the low-rail market, domestic policies are frequently coming out, and blue oceans are also beginning to emerge. The development of global satellite Internet in low orbit is mainly to solve the problem of shorter delay and smaller path loss. Currently, multiple domestic low-orbit satellite constellation plans are being launched. The entry of private capital can also bring more development opportunities to the satellite Internet industry chain, especially the commercial aerospace field, and also stimulate the rapid development of the industry.

From a mid- to long-term perspective, the satellite Internet industry is still in the early stages of development. We believe that this industry has great growth potential in the medium and long term, including the business and performance development of many companies, and there is huge room for imagination

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