This is the second article in the AI industry chain.
In the previous article, we said that when investing in AI, you must buy core assets, because core assets have the strongest certainty and sustainability.
In the AI industry, Nvidia and Open AI are the most core assets, equivalent to the chip + operating system combination of Intel and Microsoft in the PC era, which account for the majority of the profit distribution, so the market value is the highest, and the potential return on long-term stock price holding is also the highest.
Of course, we can't buy these assets in A-shares, so the best choice is to invest in the optical module sector in the AI overseas industry chain.
Optical modules, due to their market size, growth prospects and certainty of benefits, can be worthy of the position of "AI second-tier core assets".
Just like the inverter sector for the photovoltaic industry, although the market size is not as large as that of LONGi Green Energy's monocrystalline silicon wafers, it also performed quite well in the last round of new energy bull market.
Taking Sungrow as an example, from 2020 to 2021, the stock price soared from 10 yuan to 180 yuan, an increase of up to 18 times.
Another segment leader, Jinlang Technology's rise is even more exaggerated, from 2019 to 2022, the stock price has increased from 68 yuan rose to 291 yuan, an increase of 42 times.
Today, we will focus on talking to you about the optical module sector.
Optical modules and inverters are both responsible for photoelectric conversion functions, and their status is very similar, but the former is used in the communication industry, and the latter is used in the photovoltaic industry.
In the communication industry, the use of optical modules is very extensive, as long as it involves data processing and exchange, most of them use optical modules, and with the rise of various new technologies in recent years, 5G, big data, cloud computing, metaverse, artificial intelligence, etc., information traffic has exploded, and optical modules have become "popular fried chicken".
For example, in the wave of data center expansion that has emerged in recent years, the ratio of the number of GPU chips to optical modules used in a data center is usually between 1 to 4 5.
According to the industry, with the outbreak of AI** data, the proportion of the two will be further increased to 1 to 6 in the future.
Although the unit price of optical modules cannot be compared with GPU chips, due to the large number of uses and the rapid growth of demand, the long-term development prospects are still quite attractive.
According to YOLE data**, the global optical module market space will be about $10.2 billion in 2021 and will increase to $24.7 billion by 2027, with a compound annual growth rate of 16%.
In the optical module, there are two main segments, one is the telecommunications market and the other is the data communication market.
Due to the strong communication equipment industry in China, Huawei and ZTE are world-class leaders, so a group of optical module players that grew up in China in the early days are mainly concentrated in the telecommunications market.
Like Accelink, Huagong and Borche, the product lines are mainly in the telecom market, and the customers are mainly Huawei and ZTE.
In the past ten years, in the process of upgrading and expanding the telecommunications industry from 2G, 3G, 4G and 5G, these companies are standing on the tuyere, and their performance has grown rapidly, and they are the representative enterprises of China's optical module industry.
But alas, now the telecommunications industry has passed.
The tuyere has turned to the data communication market
By industry**, the telecom market will grow from US$4.3 billion in 2021 to US$7.9 billion in 2027, with an average annual compound growth rate of only 8%, with a slow single-digit growth.
Due to the two powerful driving forces of artificial intelligence and cloud computing, the market size of the data communication market is expected to increase from US$5.9 billion in 2021 to US$16.8 billion in 2027, with an average annual compound growth rate of 19%.
Taking advantage of this outlet, China has also risen a number of new leaders in recent years, typical representatives of which are Zhongji Innolight and New Yisheng.
Take a look at the following world ranking of optical module manufacturers released by Lightcounting:
In 2010, the optical module industry was basically monopolized by American and Japanese companies.
By 2016, the list had undergone a seismic change, with Chinese companies rising strongly, with four companies making it into the top 10.
Among them, the top three leading Hisense Broadband and Accelink Technology are all big players in the telecommunications market.
In 2018, however, the trend changed again, with Chinese companies still occupying four of the top 10 spots, but in a different ranking.
The original fourth boss of Chinese enterprises, Zhongji InnoLight, became the boss of Chinese enterprises, completely stealing the limelight from Hisense and Accelink.
In 2020, among the top 10 global optical modules, the number of Chinese enterprises increased to 6, and three new names appeared: Huawei, which ranked third, Xin Yisheng, which ranked ninth, and Huagong Technology, which ranked tenth.
Huawei's inclusion on the list is due to Huawei's important position in 5G equipment upgrades.
With Huawei's strong position in the communications industry, Huawei's entry into the market is definitely to "slaughter the list"!
Do you still remember the inverter industry back then, not long after Huawei entered the photovoltaic inverter industry, it quickly snatched a large share of the original boss Sungrow Power Supply and jumped to become the new leader.
However, it is worth noting that in the 2020 list, Huawei is still pressed by Zhongji Innolight, which cannot be said to be "aggrieved".
In 2022, the industry landscape has changed again.
The number of Chinese companies in the top 10 has increased to seven, and a monopoly momentum has been formed, Huawei is still in a solid position, and the rankings of Xinyisheng and Huagong Technology have also risen.
What's more, Zhongji InnoLight has snatched the first place in the industry that has been occupied by American companies for a long time!
From this list, we can fully see the pattern change trend of the optical module industry, and there are two main lines
One is the rise of high-end manufacturing in China, from 1 in 2010, 4 in 2016, 6 in 2020, and 7 in 2022.
China's high-end manufacturing industry chain is complete, engineers are abundant, infrastructure is perfect, and the cost performance is outstanding, as long as it is not the jewel in the crown of industry, there is basically no rival in the world.
It is basically not wrong to bet on the main line of "China's high-end manufacturing will continue to rise in the next decade".
The other is the C-position pattern of the data communication market, which has always remained the same, and the industry leader for so many years has been the main data communication market.
The two main lines converge and finally form a result:
The collective rise of Chinese enterprises continues to encroach on the global optical module market, but the leading Chinese enterprises that have truly achieved the world's top and far ahead are not Hisense and Accelink, which have done well in telecom optical modules, nor Huawei, which has personally ended, but the leader of digital communication optical modules, Zhongji Innolight.
After talking about the development trend and industry pattern, in the next article of the AI industry chain, we will focus on several fast-growing subdivision leaders
The differences between Zhongji Innolight, Xinyisheng, Huagong Technology and Cambridge Technology are welcome to pay attention.