Guosheng Securities Annual Strategy for the Electronic Industry in 2025: Global AI Industry Enters Rapid Development Stage, Focusing on Increasing AI Computing Power at the End.

MPC;TriaA The research report released by Guosheng Securities stated that the Chinese AI industry urgently needs to promote comprehensive localization. The breakthrough in domestic high-end chips such as computing power, storage, and interconnection cannot be achieved without the cooperation of the entire industry chain including IC design, wafer manufacturing, advanced packaging testing, semiconductor equipment, materials, and components. In addition, attention needs to be paid to the entire supporting facilities, including the independent supply chain construction of key components such as power management, PCB, and high-performance heat dissipation solutions. With the global competition in AI heating up, active layout in core technology independent innovation and complete industrial chain construction is highly hopeful for the opportunities brought by the localization of the AI supply chain. Guosheng Securities' main points are as follows: Computing power: ASIC accelerates customization, and domestic chips accelerate entry Cloud providers continue to increase their investments in AI-related fields. Capital expenditures have been increasing since 3Q23, with a total capital expenditure of 57.5 billion US dollars from the four major CSPs in 3Q24, a year-on-year increase of 61% and a month-on-month increase of 11%. At present, GPUs still dominate the AI computing power market, with NVIDIA's complete software and hardware ecosystem continuously upgraded. It is expected to upgrade to the Rubin platform in 25-26, consolidating its core competitiveness in large-scale training on-device. On the other hand, cloud providers actively layout customized ASICs. Broadcom has guided that the AISAM will increase from 15-20 billion US dollars in 2024 to 60-90 billion US dollars in 27, with a rapidly growing market. The continued intensification of US technology blockade against China has provided ample space for domestic chips to achieve performance and cost-effectiveness while remaining controllable. With the volume growth of on-device AI in 2025, the market share of domestic computing power chips is expected to accelerate. Storage: Comprehensive expansion of demand on cloud and edge, giants accelerate HBM production With the continuous upgrading of AI acceleration chips, the total capacity and bandwidth of HBM, etc., are continuously upgraded, driving the rapid increase in single-machine HBM capacity and value. According to Intel Market Research, by 2030, the global HBM market size is expected to reach 489.3 billion US dollars, with a CAGR of 68.1% from 2023 to 2030. The demand side is highly prosperous, with the three major manufacturers accelerating the expansion of HBM. According to Trend Force, it is expected that by 2025, the total monthly production capacity of HBM chips will be 540,000 pieces, an increase of 276,000 pieces over 2024, a year-on-year increase of 105%. The expansion of the three giants will drive the continuous prosperity of the HBM industry chain. On the other hand, AI on cloud and edge AI, represented by AI servers, AIPC, and AIphone, will drive the rapid growth of the 3DNAND market. According to Counter Point, it is estimated that by 2030, the overall NAND flash market will exceed 93 billion US dollars, with 400 billion US dollars in 2023. According to Trend Force, AI servers are expected to continue to drive the annual growth rate of SSD demand to exceed 60%. In addition, the share of AISSD demand in the entire NANDFlash market is expected to increase from 5% in 2024 to 9% in 2025. In the future, large-capacity high-performance storage represented by enterprise-level SSDs will continue to grow rapidly, driving continuous benefits for related companies in the industry chain. Interconnection: Optical and copper coexist, interconnection solutions evolve towards high performance and low cost With its high bandwidth, fast transmission rate, and long transmission distance, optical modules are widely used and continuously upgraded in data center switch interconnection scenarios. In short-distance connections between server network cards and switches, with the upgrading of switching chips, active copper cable technology, and the custom deployment of IDC by cloud providers, the application share and scale of AEC/ACC are expected to rapidly increase. Silicon photonics is based on silicon and silicon-based substrate materials, develops and integrates optical devices through CMOS processes, and can bring low cost, low power consumption, and other advantages in the high-speed optical module field. It can also solve the shortage of EML and increase the share of silicon photonics modules. LPO is expected to become a fast landing solution for high-speed optical modules in 25-26 due to its plug-and-play capabilities and low power consumption. CPO&OIO, as a higher integrated next-generation high-speed communication solution, manufacturers such as TSMC and Qualcomm are also actively laying out. TSMC expects its switch CPO platform to mature in 26. Power supply: The advancement of AI technology leads to a significant increase in power consumption, making high-efficiency server power supplies critical. AI server power supplies, as the basic equipment for high-performance computing and data centers, are responsible for providing stable and efficient power supply for server clusters. The increasing demand for computing power will significantly increase the amount of capacitance required. PCB: The HDI wave driven by AI has arrived With the upgrading of AI servers, high-speed and high-density interconnectivity performance has been comprehensively improved, and power consumption and heat dissipation requirements have also significantly increased. HDI can effectively reduce the layer of PCBs and increase wiring density compared to high multilayer PCBs. It can effectively reduce the distance of signal transmission on the board, increase signal transmission speed, reduce transmission delay; from a power consumption perspective, HDI based on its advantages of high integration can reduce system redundancy, reduce additional power consumption, and also significantly reduce power consumption during signal transmission in terms of power consumption. At the same time, heat dissipation compared to high multi-layer also has significant advantages, so HDI is expected to be the fastest growing PCB product in the next five years, especially for high-level HDI products above 4 orders. According to Prismark, HDI will be the fastest-growing category in the PCB market related to AI servers, with an average compound annual growth rate of 16.3% from 2023 to 2028. In terms of actual production, the corresponding layer number and area of AIHDI are higher, so in the actual production process, both the production capacity and the yield are significantly reduced. The production capacity is very scarce, and manufacturers with the ability to mass produce on a global scale are expected to benefit greatly from this wave of AIHDI. Consumer electronics: Accelerated innovation in AI terminals, the prosperity of the consumer electronics industry chain continues to rise By the end of 2024, AI innovation is accelerating, and is expected to drive the recovery of terminal demand. Open AI 12-day live broadcast release, launching the full version of o1, o3 models, Wensheng video Sora; Apple releases the M computer concept model, entering the PC field; HP Tria, A fish, multiple brands innovate smart speakers are released, and terminal products are gradually evolving from simple applications to complex applications. The prosperity of the consumer electronics industry chain is expected to continue to rise.After releasing iOS 18.2, the focus was on updating Apple Intelligence; at the Winter Force conference of the Volcano Engine, the DouBao visual understanding model made its first appearance and the DouBao flagship general model was upgraded.Mobile end: Canalys predicts that global smartphone shipments will reach 1.22 billion units in 2024, a year-on-year increase of 6%. Apple has launched Apple Intelligence, fully opening the AI era, and major Android manufacturers are also actively laying out AI. PC end: The penetration rate of AIPC continues to increase, and it is expected that the Greater China region will reach 73% by 2028. Wearable devices: The AI glasses wave has arrived, and MetaRay-Ban is expected to sell more than 1.5 million pairs in 2024. With the improvement of display functions, it is moving towards AR development. Policy end: The "two new" policies effectively stimulate domestic demand potential, and many places have started subsidies for 3C digital products, which will further accelerate the replacement cycle. With the landing of AI multi-terminal on the end side opening a new round of replacement cycle, and the impact of government subsidy policies stimulating consumption, the demand for consumer electronics terminal market will further increase. Risk warning: Technology roadmap evolution risk, R&D progress falling behind expectations, geopolitical risks.