The Zhitong Finance App learned that Huajin Securities released a research report saying that on March 19, the GTC conference was held as scheduled, and Nvidia CEO Huang Renxun released the latest generation of AI chip architecture, Blackwell. The GB200, the first Blackwell chip, used a copper cable connection and became one of the highlights of this press conference. According to a report published by LightCounting (LC), sales of high-speed copper cables are growing as server connections and as interconnections in decoupled switches and routers. The compound annual growth rate of high-speed copper cables is expected to be 25% from 2023 to 2027, and shipments of high-speed copper cables are expected to reach 20 million by 2027. The bank believes that data center construction will drive demand for high-speed transmission cables and their connection products.

Recommended attention: Lixun Precision (002475.SZ), Jin Xinnuo (300252.SZ), Dingtong Technology (688668.SH), Electric Connection Technology (300679.SH).

The analysis of Huajin Securities is as follows:

High-speed copper cables are divided into two categories: passive copper cables and active copper cables.

Passive copper DACs, that is, direct-attached cables or direct-attached copper cables are passive cables. Passive DACs have the advantages of low cost, low power consumption, and high reliability, and are commonly used in data centers for data transmission between the same cabinet or adjacent cabinets. Among them, passive DACs are currently the mainstream products in the high-speed cable market. Active copper cable AOC. Active copper cable is the evolution of passive copper cable. As the transmission rate increases, the loss of passive copper cable is too large to meet the length of the interconnection, and active copper cable comes out as needed. The principle is to add a linear Redriver with a certain ability to the Rx end of the cable to provide balanced and shaped relays of the signal and extend the transmission distance from end to end.

Currently, DAC and AOC are mainly used for Ethernet data communication. DACs are generally used for interconnecting devices within a cabinet due to their short transmission distance; AOC active optical cables have a relatively long transmission distance and can be used to interconnect devices between cabinets. Compared with active optical cables (AOC), DACs are more cost-effective. Under the same specifications, the price is only 1/3 to 1/4 of AOC. Therefore, in short-distance network interconnection scenarios, AOC applications have higher advantages.

Data centers are boosting demand for high-speed cables, and the compound growth is expected to reach 25%.

According to Dell'Oro Group statistics, global data center capital expenditure increased 15% in 2022 to reach US$241 billion. According to the RoadMap released by the Ethernet Alliance in 2022, the transmission rate requirements for Ethernet applications in various fields are rapidly increasing. In particular, data center transmission rate requirements in the cloud computing field have reached 400Gbps and have evolved to 800Gbps to 1.6Tbps. According to data from the Ministry of Industry and Information Technology, through integrated layout data and computing power facilities, the total number of data center racks in use nationwide by the end of 2022 exceeded 6.5 million standard racks, and the total computing power growth rate in the past five years was over 25%. According to a report published by LightCounting (LC), sales of high-speed copper cables are growing as server connections and as interconnections in decoupled switches and routers. The compound annual growth rate of high-speed copper cables is expected to be 25% from 2023 to 2027, and shipments of high-speed copper cables are expected to reach 20 million by 2027. Even with the current economic slowdown, cloud computing companies are prioritizing investment in data centers and AI clusters. Data center construction will drive demand for high-speed transmission cables and connected products.

Nvidia GB200 released, NVLink 5.0 copper cable connection.

Nvidia unveiled the GB200 chip at the GTC conference. The single chip integrates 2 GPUs and 1 CPU, and mainly promotes high-performance single cabinet products built with 36 GB200s. In terms of connection technology, Nvidia chose to enhance electrical connection technology rather than optical connectivity. The GB200 NVLink Switch and Spine are fully interconnected by 72 Blackwell GPUs using NVLink, and have 5,000 NVLink copper cables (total length over 2 miles). NVLink5.0 copper cable connections are used inside the single cabinet. This solution can reduce computational energy consumption by 20kW. Copper cables are characterized by low cost, low energy consumption, but close distance and small bandwidth. The cross-cabinet IB network architecture uses optical module connections, which will drive 1.6T optical module usage.

The Internet is the main scenario, and overseas is two generations ahead of the domestic market.

Overseas high-speed cables are mainly 200G/400G. Judging from the situation in the four major data centers in North America, the main suppliers in terms of high-speed copper cable supply share are mainly foreign cable brands, such as TE and Molex. Domestic high-speed cables are mainly 50G/100G, with a small amount of 200G. Among them, large data center users represented by Alibaba were the first to quickly switch to 10G/25G DACs in newly built bases and rapidly scaled; large data centers represented by Tencent introduced active copper cables as a supplement to longer-distance requirements in the >5m demand scenario. In the 25G-NRZ generation, domestic data center users have gradually reaped the dividends brought by high-speed copper cables compared to AOC, and significantly improved cost savings, supply efficiency, and link stability.

The domestic market for high-speed cables surpassed 10 billion dollars, and Zhaolong Internet\ Lixun Precision shipped steadily.

According to the “2023-2028 High-Speed Cable (DAC) Industry Market In-depth Research and Investment Prospect Forecast Analysis Report” released by the New Thinking Industry Research Center, high-speed cables currently occupy an important position in network equipment interconnection and data transmission due to cost performance advantages, and the market size is constantly expanding. The domestic high-speed cable market has exceeded 10 billion yuan in 2022, and the industry has great potential for development. Domestic high-speed cable companies are mainly companies such as Zhaolong Internet, Lixun Precision, Yi Feiyang, and Jin Xinnuo.

Lixun Precision: Connectors extend to high-speed cables. The company has developed 112G PAM4 passive copper cable and 112G PAM4 active copper cable based on self-developed Optamax bulk cable technology. Through OptaMax ultra-low loss high-speed bare wire with Paddle card and cage technology that meets MSA standards, the 8 channels are combined to run at a speed of up to 112 Gbps per channel into a high-density data interface (MDI), and combined with Marvell's DSP chip to provide more than 800 Gbps aggregation data throughput

Zhaolong Internet: High-speed cable technology/order/channel leading enterprise. The company has 40G\ 100G\ 200G\ 400G series high-speed cables for passive high-speed cables. Among them: The 40G QSFP+ DAC contains 8 pairs of high-speed copper wires and supports four-channel 40Gb/s. The 100G QSFP28 DAC contains 8 pairs of high-speed copper wires and supports four-channel 100Gb/s. The 200G QSFP56 DAC contains 8 pairs of high-speed copper wires and supports four-channel 200Gb/s 400g OSFP passive direct connect copper cable (DAC). It is a high-speed, cost-effective alternative to optical modules or active optical cables (AOC) in 400G Ethernet applications. The 400G OSFP DAC contains 16 pairs of high-speed copper wires and supports eight channels of 400Gb/s. Each OSFP port includes an EEPROM or MCU that provides product information that can be read by the host system. The company has now been able to produce high-speed transmission cables and component products with a transmission rate of 400 Gbps on a large scale, and has successfully developed high-speed cable components with a transmission rate of 800 Gbps. At the same time, it is also developing higher speed products that can meet high transmission rates, have good anti-electromagnetic interference and low loss performance, and meet high density and miniaturization to increase wiring density and reduce wiring space within the equipment.

Risk warning: due to objective factors, construction progress falls short of expectations; implementation of local policies is slow; industry transformation progress falls short of expectations.