The Zhitong Finance app learned that CICC released a research report saying that the reopening of trading in 2023: AI changes drive the bottom of the sector's valuation. In 2023, there were many changes in industries such as AIGC, satellite Internet, and 5G-A. As the underlying information pillar of application-side evolution, the communications equipment sector ushered in a resounding increase in valuation and attention. Looking ahead to 2024, the bank suggests focusing on four major opportunities in the communications equipment industry: 1) the AI industry accelerates exploration of a positive business cycle model, and application development drives the boom in new infrastructure; 2) the implementation of the 5G-A standard is expected to spawn opportunities for emerging industries; 3) in the fourth year of the “14th Five-Year Plan”, the implementation of the Eastern Digital and Western Computing Plan is expected to accelerate; 4) the “Belt and Road” will boost opportunities for the industrial chain to go overseas.

CICC's views are as follows:

On the industrial side, it is recommended to actively pay attention to the application of AI and the deepening evolution of 5G technology.

In terms of the AI market, the bank expects that in 2024, more AI businesses are expected to enter the large-scale implementation stage, the industry will accelerate exploration of effective models of positive business cycles, and multi-modal AI applications may blossom in many ways. In this context, investment opportunities in the domestic hardware industry chain related to AI reasoning are worth paying attention to, and the highly deterministic optical module iteration direction such as silicon optics and LPO contains structural opportunities. In addition, the Internet of Things uses a wide range of terminals as a point of contact to obtain massive amounts of high-quality data, providing an important data foundation for the development of artificial intelligence. The bank believes it is expected to accelerate the innovation and application of AI on more edge sides, and demand from the industry itself will also grow. In terms of the telecom market, the 3GPP plan REL-18 will complete the agreement design in March 2024. The bank believes that the development of the 5G-A industry is expected to gradually begin in 2024. To match the higher network speed and capacity requirements of 5G-A, millimeter wave communication is expected to accelerate implementation, and related industry chains are expected to usher in structured opportunities.

On the policy side, the East, the West, and the Belt and Road Initiative are expected to form positive catalysts from both domestic and overseas markets, respectively.

On the domestic side, as the “14th Five-Year Plan” enters the fourth year, the policy of calculating east numbers and west is expected to accelerate, and the integrated migration of computing power to the west may be implemented at an accelerated pace. The procurement of related projects in the western region may drive domestic demand for communication equipment beyond expectations. In terms of overseas travel, the “Belt and Road” partner countries still have a large population not connected to the Internet. With the technological upgrading and industrial development of China's satellite Internet, it is expected to be an important part of information technology infrastructure and export capabilities to countries along the “Belt and Road”; while the “Belt and Road” and Saudi Arabia's “Vision 2030” have complementary advantages and spiritual compatibility in regional development, and after connecting with each other, it is expected to bring overseas opportunities for leading manufacturers in China's smart city-related industry chain.

Risk warning: investment in information infrastructure falls short of expectations; uncertainty in the development of new technologies such as AI; trade and technological friction.