Investment Rating - The industry investment rating is "Outperform the Market" (maintained) [3][36] Core Viewpoints - The report highlights that artificial intelligence (AI) is driving a semiconductor supercycle, with significant investments and collaborations in the sector, such as Anthropic's partnership with Google, which includes a deal for up to one million custom TPU chips [3] - Major memory manufacturers like Samsung and SK Hynix are expected to raise prices of DRAM and NAND storage products by up to 30% in response to the surge in AI-driven demand [3] - Amphenol reported a 53.35% year-on-year increase in revenue for Q3 2025, driven by the growing demand for data center solutions [3] - The report anticipates a substantial increase in overall computing power by 2035, predicting a growth of up to 100,000 times, emphasizing the transformative potential of general artificial intelligence [3] Summary by Sections 1. Market Review - The electronic industry saw a weekly increase of 8.49% from October 20 to October 24, with the communication sector leading at 11.55% [6] - The Philadelphia Semiconductor Index rose from 6,885.03 points to 6,976.94 points during the same period, indicating a positive trend since April 2025 [11] 2. Industry High-Frequency Data Tracking 2.1 Panel Prices - TV panel prices are expected to stabilize due to healthy inventory levels, with no significant changes anticipated for various sizes [17] 2.2 Memory Prices - Prices for DDR5 and DDR4 memory chips have shown an upward trend, with DDR5 increasing from $10.457 to $12.615 and DDR4 from $24.333 to $24.721 between October 20 and October 24 [21]

Core Insights - The semiconductor sector experienced a decline of 0.9% on October 23, with Dazhi Semiconductor leading the drop [1] - The Shanghai Composite Index closed at 3922.41, up 0.22%, while the Shenzhen Component Index closed at 13025.45, also up 0.22% [1] Semiconductor Sector Performance - Notable gainers included: - Xidian Co., Ltd. (301629) with a closing price of 214.12, up 13.09% and a trading volume of 37,700 [1] - Jiangbolong (301308) closed at 190.19, up 5.12% with a trading volume of 213,000 [1] - Pudian Co., Ltd. (688766) closed at 119.06, up 4.44% with a trading volume of 85,400 [1] - Major decliners included: - Dazhi Semiconductor (688691) closed at 134.00, down 11.41% with a trading volume of 116,800 [2] - Jinhaitong (603061) closed at 132.20, down 5.10% with a trading volume of 16,800 [2] - Tailin Micro (688591) closed at 47.01, down 4.70% with a trading volume of 115,900 [2] Capital Flow Analysis - The semiconductor sector saw a net outflow of 2.971 billion yuan from institutional investors, while retail investors contributed a net inflow of 2.597 billion yuan [2][3] - Notable capital flows included: - Demingli (001309) with a net inflow of 631 million yuan from institutional investors [3] - Jiangbolong (301308) had a net inflow of 263 million yuan from institutional investors [3] - Zhongke Lanyun (688332) experienced a net inflow of 56.43 million yuan from institutional investors [3]

Core Viewpoint - Shengke Communication experienced a 5.01% decline in stock price, closing at 115.37 CNY per share, with a total market capitalization of 47.302 billion CNY as of October 23 [1] Company Overview - Shengke Communication, established on January 31, 2005, is located in Suzhou Industrial Park, Jiangsu Province. The company specializes in the research, design, and sales of Ethernet switch chips and related products [1] - The revenue composition of Shengke Communication includes: Ethernet switch chips (72.43%), Ethernet switch chip modules (11.94%), Ethernet switches (10.48%), customized solutions and others (3.18%), and licensing (1.97%) [1] Shareholder Analysis - Noan Fund's Noan Growth Mixed A (320007) is among the top ten circulating shareholders of Shengke Communication, holding 2.816 million shares, unchanged from the previous period, representing 1.4% of circulating shares. The estimated floating loss today is approximately 17.1214 million CNY [2] - Noan Growth Mixed A (320007) was established on March 10, 2009, with a latest scale of 18.447 billion CNY. Year-to-date return is 33.62%, ranking 2192 out of 8159 in its category; the one-year return is 34.21%, ranking 1819 out of 8030; and since inception, the return is 176.2% [2] Fund Performance - The fund manager of Noan Growth Mixed A (320007) is Liu Huiying, who has been in the position for 3 years and 83 days. The total asset scale is 23.674 billion CNY, with the best fund return during the tenure being 68.38% and the worst being 10.61% [3] Top Holdings - Noan Fund's Noan Yixin Flexible Allocation Mixed A (002292) is a major holding in Shengke Communication, with 48,300 shares held, unchanged from the previous period, accounting for 5.97% of the fund's net value. The estimated floating loss today is about 293,700 CNY [4] - Noan Yixin Flexible Allocation Mixed A (002292) was established on January 22, 2016, with a latest scale of 43.6534 million CNY. Year-to-date return is 31.59%, ranking 2454 out of 8159; the one-year return is 33.72%, ranking 1869 out of 8030; and since inception, the return is 132.09% [4] Fund Manager Profile - The fund manager of Noan Yixin Flexible Allocation Mixed A (002292) is Chen Yanpeng, who has been in the position for 5 years and 107 days. The total asset scale is 3.078 billion CNY, with the best fund return during the tenure being 78.5% and the worst being 20.56% [5]

Core Viewpoint - Shengke Communication's stock price increased by 5.13% to 123.08 CNY per share, with a total market capitalization of 50.463 billion CNY as of October 22 [1] Company Overview - Shengke Communication, established on January 31, 2005, is located in Suzhou Industrial Park, Jiangsu Province. The company specializes in the research, design, and sales of Ethernet switch chips and related products [1] - The revenue composition of Shengke Communication includes: Ethernet switch chips (72.43%), Ethernet switch chip modules (11.94%), Ethernet switches (10.48%), customized solutions and others (3.18%), and licensing (1.97%) [1] Shareholder Information - Noan Fund's Noan Growth Mixed A (320007) is among the top ten circulating shareholders of Shengke Communication, holding 2.816 million shares, unchanged from the previous period, representing 1.4% of circulating shares. The estimated floating profit today is approximately 16.9243 million CNY [2] - Noan Growth Mixed A (320007) was established on March 10, 2009, with a latest scale of 18.447 billion CNY. Year-to-date return is 33.84%, ranking 2264 out of 8160 in its category; the one-year return is 32.4%, ranking 2194 out of 8026; and since inception, the return is 176.65% [2] Fund Manager Information - The fund manager of Noan Growth Mixed A (320007) is Liu Huiying, who has been in the position for 3 years and 82 days. The total asset scale is 23.674 billion CNY, with the best fund return during the tenure being 64.69% and the worst being 8.69% [3] Fund Holdings - Noan Fund's Noan Yixin Flexible Allocation Mixed A (002292) is a major holding in Shengke Communication, with 48,300 shares held, unchanged from the previous period, representing 5.97% of the fund's net value. The estimated floating profit today is approximately 290,300 CNY [4] - Noan Yixin Flexible Allocation Mixed A (002292) was established on January 22, 2016, with a latest scale of 43.6534 million CNY. Year-to-date return is 31.96%, ranking 2538 out of 8160; the one-year return is 34.39%, ranking 1959 out of 8026; and since inception, the return is 132.73% [4] Additional Fund Manager Information - The fund manager of Noan Yixin Flexible Allocation Mixed A (002292) is Chen Yanpeng, who has been in the position for 5 years and 106 days. The total asset scale is 3.078 billion CNY, with the best fund return during the tenure being 75.19% and the worst being 17.62% [5]

Group 1 - The core point of the news is the performance and market position of Shengke Communication, which saw a stock price increase of 5.13% to 123.08 CNY per share, with a total market capitalization of 50.463 billion CNY [1] - Shengke Communication, established on January 31, 2005, specializes in the research, design, and sales of Ethernet switching chips and related products, with its main revenue sources being Ethernet switching chips (72.43%), Ethernet switching chip modules (11.94%), Ethernet switches (10.48%), customized solutions and others (3.18%), and licensing (1.97%) [1] - The company was listed on September 14, 2023, and has a trading volume of 403 million CNY and a turnover rate of 1.66% as of the report [1] Group 2 - From the perspective of fund holdings, Shengke Communication is a top ten holding of the Vanguard Fund, specifically the Vanguard Jingyi A (003586), which held 1,079 shares in the second quarter, unchanged from the previous period, representing 2.97% of the fund's net value [2] - The Vanguard Jingyi A fund was established on November 18, 2016, with a current scale of 1.0139 million CNY, and has achieved a year-to-date return of 17.15% and a one-year return of 22.49% [2]

Market Performance - The large fund concept sector increased by 1.26% on October 15, with Huada Jiutian leading the gains [1] - The Shanghai Composite Index closed at 3912.21, up 1.22%, while the Shenzhen Component Index closed at 13118.75, up 1.73% [1] Top Gainers in Large Fund Concept Sector - Huada Jiutian (301269) closed at 135.42, up 7.30% with a trading volume of 267,300 shares and a transaction value of 3.581 billion [1] - Shengke Communication (688702) closed at 116.35, up 3.79% with a trading volume of 40,000 shares and a transaction value of 461 million [1] - Changdian Technology (600584) closed at 41.92, up 2.77% with a trading volume of 841,200 shares and a transaction value of 3.448 billion [1] Top Losers in Large Fund Concept Sector - Zhichun Technology (603690) closed at 37.00, down 8.48% with a trading volume of 1,205,900 shares and a transaction value of 4.518 billion [2] - Hushi Silicon Industry (688126) closed at 27.08, down 2.62% with a trading volume of 606,800 shares and a transaction value of 1.642 billion [2] - Sitwei (688213) closed at 108.39, down 2.44% with a trading volume of 87,100 shares and a transaction value of 940 million [2] Fund Flow Analysis - The large fund concept sector experienced a net outflow of 2.387 billion from institutional investors, while retail investors saw a net inflow of 2.344 billion [2][3] - The top stocks by net inflow from retail investors included Deep South Circuit (002916) with 41.41 million and North Huachuang (002371) with 45.73 million [3] Summary of Individual Stock Performance - Deep South Circuit (002916) had a net inflow of 41.41 million from retail investors, while institutional investors had a net outflow of 1.23 billion [3] - North Huachuang (002371) saw a net inflow of 45.73 million from retail investors, with a net outflow of 1.61 billion from institutional investors [3] - Huada Jiutian (301269) had a net inflow of 46.12 million from retail investors, while institutional investors had a net outflow of 462 million [3]

Core Viewpoint - The traditional computing architecture is insufficient for the efficient, low-energy, and large-scale collaborative AI training needs, leading to the trend of supernodes which significantly boosts the demand for Scale up-related hardware [1][3] Group 1: AI Hardware Capabilities - AI hardware capabilities are driven by three main factors: computing power (determined by GPU performance and quantity), storage capacity (high-bandwidth memory cache close to GPUs), and communication capacity (encompassing Scale up, Scale out, and Scale across scenarios) [1][2] Group 2: Market Trends and Projections - The market for Scale up switching chips is expected to reach nearly $18 billion by 2030, with a CAGR of approximately 28% from 2022 to 2030, driven by the demand for supernodes [3] - The construction of large-scale AI clusters necessitates extensive interconnectivity between nodes, leading to increased demand for Scale out hardware, while power resource limitations in single regions will promote the adoption of Scale across solutions [3] Group 3: Communication Protocols - Different communication protocols are required for Scale up and Scale out, with major companies developing proprietary protocols alongside third-party and smaller firms promoting public protocols [4] - Notable proprietary protocols for Scale up include NVIDIA's NVlink and AMD's Infinity Fabric, while public protocols include Broadcom's SUE and PCIe [4] Group 4: Domestic Hardware Development - The domestic production rate of communication hardware is currently very low, presenting a significant opportunity for domestic replacement in the market [5] - Companies like Shudao Technology and Shengke Communication are advancing towards commercialization of their products, indicating a growing domestic market potential [5] Group 5: Investment Opportunities - Beneficiaries of PCIe hardware include Wantong Development and Lanke Technology, while Ethernet hardware beneficiaries include Shengke Communication and ZTE [6]

Group 1 - The core viewpoint of the news is that Shengke Communication has seen a stock price increase of 5.13%, reaching 117.85 CNY per share, with a total market capitalization of 48.319 billion CNY as of October 15 [1] - Shengke Communication, established on January 31, 2005, specializes in the research, design, and sales of Ethernet switch chips and related products, with its main revenue sources being Ethernet switch chips (72.43%), Ethernet switch chip modules (11.94%), Ethernet switches (10.48%), customized solutions and others (3.18%), and licensing (1.97%) [1] Group 2 - From the perspective of fund holdings, the Vanguard Fund has a significant position in Shengke Communication, with the Vanguard Jingyi A fund holding 1,079 shares, unchanged from the previous period, representing 2.97% of the fund's net value [2] - The Vanguard Jingyi A fund, established on November 18, 2016, has a current scale of 1.0139 million CNY and has achieved a year-to-date return of 16.09%, ranking 4,709 out of 8,161 in its category [2] Group 3 - The fund manager of Vanguard Jingyi A is Zeng Jie, who has been in the position for 2 years and 293 days, with the fund's total assets amounting to 49.2696 million CNY [3] - During Zeng Jie's tenure, the best fund return was 62.42%, while the worst return was 33.17% [3]

Investment Rating - The report maintains an "Overweight" rating for the electronic industry [1] Core Insights - The report highlights the competitive landscape of Switch chip manufacturers, with NVIDIA dominating the market through proprietary protocols, while Broadcom is gaining traction with its open-source SUE architecture [6][13] - It emphasizes the potential for domestic manufacturers to replace imported Switch chips, with companies like Shengke Communication leading the way in Ethernet chip production [35] - The report suggests investment in key players such as Haiguang Information and Shengke Communication, while also recommending attention to companies like ZTE and Lanke Technology [6][35] Summary by Sections 1. Switch Chip Manufacturers - NVIDIA's NVSwitch is noted as the highest bandwidth and most mature private solution in the Scale-Up segment [11] - Broadcom holds a 90% market share in cloud data center switches and has introduced the SUE architecture for open Ethernet interconnects [13] - Astera Labs is recognized for its complete product chain, being the only company that integrates switch chips, extension lines, and software management platforms [20] 2. Achieving Domestic Replacement of Switch Chips - Shengke Communication is identified as a leading domestic Ethernet switch chip manufacturer, with 12.8T and 25.6T chips entering customer promotion stages [35] - Other domestic players like Shudao Technology and Lanke Technology are making strides in the PCIe segment, with Shudao expected to achieve breakthroughs in domestic replacement by the end of 2025 [41] - Major manufacturers such as Haiguang, Huawei, and ZTE are also developing self-researched chips to support domestic replacement efforts [43][45][50] 3. Investment Recommendations - The report recommends focusing on Haiguang Information and Shengke Communication for investment opportunities, while suggesting to keep an eye on ZTE, Wantong Development, and Lanke Technology [6][35]

Investment Rating - The report maintains a positive outlook on the ASIC industry, indicating a favorable investment rating for the sector [2]. Core Insights - The report highlights the significant cost-effectiveness and efficiency advantages of ASICs over GPUs, particularly in the context of AI model inference, with Google's TPU v5 demonstrating an energy efficiency ratio 1.46 times that of NVIDIA's H200 [3][19]. - The increasing penetration of AI applications is driving a surge in inference demand, expanding the market for ASICs, with projections indicating the global AI ASIC market could reach $125 billion by 2028 [3][32]. - The report emphasizes the complexity of ASIC design, underscoring the critical role of design service providers like Broadcom and Marvell, which are expected to benefit from the growing demand for custom ASIC solutions [4][44]. Summary by Sections 1. Demand Driven by Large Model Inference - The global AI chip market is projected to reach $500 billion by 2028-2030, with significant growth in AI infrastructure spending anticipated [13]. - ASICs are specialized chips that offer strong cost and efficiency advantages, particularly in specific applications like text and video inference [14][19]. - The report notes that the demand for ASICs is expected to rise sharply due to the increasing consumption of tokens in AI applications, exemplified by the rapid growth of ChatGPT's user engagement [25][31]. 2. High Complexity of ASIC Design and Value of Service Providers - ASIC design involves a complex supply chain, with cloud vendors often relying on specialized design service providers for chip architecture and optimization [41][44]. - Broadcom's ASIC revenue is projected to exceed $12 billion in 2024, driven by the success of its TPU designs for Google and other clients [60]. - The report identifies the importance of a complete IP system and design experience as key factors for service providers to secure new orders in the ASIC market [63]. 3. Domestic Developments: Not Just Following Trends - Leading Chinese cloud providers like Alibaba and Baidu are making significant strides in self-developed ASICs, indicating a robust domestic ecosystem [3][4]. - The report highlights the emergence of domestic design service providers such as Chipone and Aowei Technology, which are positioned to capitalize on the growing demand for ASICs [3][4]. - The trends of PD separation and supernodes are identified as critical developments in the domestic ASIC landscape, with companies like Huawei and Haiguang leading the way [4][44]. 4. Key Trends in Domestic ASIC Development - PD separation involves using different chips for prefill and decode tasks, enhancing efficiency in specific applications [4]. - Supernodes are being developed to create unified computing systems through high-bandwidth interconnections, with early implementations seen in domestic companies [4][44].