Western: Focus on the insufficient supply of AI computing power and the evolution of new technologies. Low-orbit satellites entering a boom cycle.

Western released a research report stating that looking forward to 2026, the focus will be on the insufficient supply of AI computing power and the evolution of new technologies, with a focus on the entry of low-orbit satellites into a boom cycle. AI has entered a new development stage, with the continuous evolution of AI's ability for large models, the continuous penetration of AI applications, and the continuous high demand for AI computing power. There is much discussion about the scissor difference between CAPEX and short-term industry returns. Multiple segments of the AI computing power industry chain are showing a tight supply situation. Overall, the investment in AI computing power is still in a period of high growth in the short term, and the commercial realization path of applications is still being explored and nurtured. The breakthrough of rocket capacity is a key variable for the turning point of China's commercial aerospace industry and the formation of trends in the capital market, and low-orbit satellite internet is expected to enter an accelerated boom phase. Western's main points are as follows: AI Computing Power AI computing power has entered a new stage, and there will be structural changes to be observed in 2026. 1) Training power vs. Inference power: The demand for computing power is accelerating its migration from the training end to the inference end. 2) Capex investment structure: The leading cloud factories are stable and dominant, with second-tier cloud factories joining. 3) Network architecture for computing power: In addition to scaleout, scale up and scale across bring incremental network demand. 4) Chip structure for computing power: GPU continues to upgrade, ASIC chips are increasing, and domestically produced computing power is accelerating. Optical Interconnection Focus on the supply-demand gap and new technology trends. Focus on supply-demand segments: optical modules, optical chips, Faraday rotation plates. New technology trends focus on 1.6T, silicon optics, OCS, CPO. The main demand for the optical module industry comes from the North American computing power market, and the core focus in 2026 is on solving and optimizing the industry contradictions of supply-demand and the impact on the supplier landscape and profitability under the framework of technological upgrades. Key focuses include 1) Leading companies in the optical module industry benefiting from technological upgrades: Zhongji Innolight, Eoptolink Technology Inc., Suzhou TFC Optical Communication. 2) Shortage of supply segments: Optical chip supplier Yuanjie Semiconductor Technology, Henan Shijia Photons Technology, etc. 3) Isolator and Faraday rotation plate suppliers Hubei DOTI Micro Technology, Castech Inc., etc. 4) Core participants in the emerging technology direction OCS: Optowide Technologies, Castech Inc., etc. 5) Beneficiaries in the new scenario DCI direction Wuxi Taclink Optoelectronics Technology. 6) Second-tier manufacturers of optical modules and optical devices that are breaking through in the context of supply-demand: such as Cig Shanghai, Sols, Huagong Tech, Linktel Technologies, etc. Liquid Cooling Accelerate the racetrack, set sail from 0 to 1. The server liquid cooling plate market is at a historic turning point, with North America, Southeast Asia, and China being important carriers in the liquid cooling market, especially in the North American computing power market. On the supply side, liquid cooling plate solution providers are currently dominated by manufacturers in China's Taiwan and the United States. In the future, domestic manufacturers may achieve breakthroughs from 0 to 1 and 1 to n. Key focus on Shenzhen Envicool Technology. AIDC Going abroad, optimizing the industry landscape, and the release of new REITs may be the highlights of 2026. In 2026, the IDC industry will maintain its expansion trend under the drive of AI development, and the penetration rate of AIDC may further increase. Core focus areas: 1) Third-party IDC companies going abroad; 2) Industry competition landscape optimization, leading companies' market share may increase; 3) The release of new REITs may enhance the company's financing capabilities. Recommended focus on Unidata, Range Intelligent Computing Technology Group, Century Internet. Super Node Integrated Equipment The added value of integrated solutions is increasing, with a focus on communication chip and equipment providers. Super node networks have high requirements for whole cabinets, boards, and connection chips, with strong coupling between software and hardware components and high supply chain stickiness. It is suggested to focus on connection chip suppliers such as switch chips and interface chips, as well as Ethernet switch manufacturers. Spotlight on Ruijie Networks, ZTE Corporation, Unisplendour Corporation, etc. Commercial Aerospace Focus on the acceleration of low-orbit satellite entry into a boom cycle. China's commercial aerospace industry is a key direction supported by national strength, with a firm and continuous upward trend in the industry. Satellites combined with computing power provide multiple possibilities for space data processing. The first flight of the Vermillion No. 3 marks the beginning of China's commercial aerospace industry, with a vast industry space poised for a high-growth golden development period. The breakthrough in rocket capacity is a key variable for the turning point of China's commercial aerospace industry and the formation of trends in the capital market. The focus in the future will be on the success rate of various rocket payload orbits and their production capacity planning. After stable capacity, attention will be on the release of satellite constellation bidding orders. Risk Warning: AI development falls short of expectations; international trade friction; economic recession in Europe and America; intensifying competition.