HK Stock Market Move | ZTE Corporation (00763) surged more than 9% at the close, with institutions predicting that ZTE Microelectronics' ASIC chips are expected to achieve a breakthrough.

ZTE Corporation (00763) closed up over 9% at 23.4 Hong Kong dollars, with a trade volume of 9.81 billion Hong Kong dollars at the time of writing. Earlier reports indicated a 8.58% increase. In terms of news, there are rumors circulating in the market today that Byteasic has started testing, but this information has not been confirmed. Minsheng Securities released a research report stating that Byte AI has made initial efforts on the mobile phone side, collaborating with ZTE Corporation in the mobile phone business. The company is involved in the design and manufacturing, jointly redefining AI phones. This cooperation reshapes the company's consumer business imagination space; ZTE Microelectronics is the second largest semiconductor design company in China after Huawei HiSilicon. The company's chip products for self-use have continuously improved the company's gross profit margin, and recently started shipping CPUs to large internet companies. We expect ASIC chips will also have breakthroughs; telecommunications operators are also expected to increase. Although capital expenditures for 5G base stations by operators are decreasing, investments in 5G-A and wired connections are expected to offset the impact on the company's income, with a strong overseas market. We expect limited declines in traditional core revenue, with second-tier products like servers and switches maintaining high growth rates. Shenwan Hongyuan Group released a research report citing ZTE Corporation's annual report, indicating that ZTE Microelectronics achieved a revenue of 9.73 billion yuan and a net profit of 846 million yuan in 2021. Its products cover the full range of the ICT industry including computing power, networking, and terminals. The value contribution of the company's chip capabilities cannot be ignored, with a full range of chip development capabilities in switching network chips, lookup chips, and NP chips. The company's communication products have also shifted to full self-research in core chips, serving as one of the core driving forces for the steady improvement of profitability and possessing industry scarcity.