ZTE President Xu Ziyang: ChatGPT will trigger a new industrial revolution

Per reporter: Wang Jing Per editor: Zhang Haini

On the afternoon of April 6, ZTE (SZ000063, stock price 33.64 yuan, market value 159.3 billion yuan) held the 2022 annual results briefing in the ZTE R&D Building located in Nanshan District, Shenzhen. ZTE President Xu Ziyang, Board Secretary Ding Jianzhong, Executive Vice President and Chief Operating Officer Xie Junshi and others attended the meeting.

At the meeting, ZTE management exchanged views with investors and securities firms on the layout of AI that the outside world is concerned about, the development outlook for 2023 and supply chain security, especially hot topics such as chip self-research.

For chips, Xu Ziyang said, "ZTE has a research and development subsidiary of ZTE Microelectronics, which is developing key chips in 5G networks, including transmission sensing chips. We are through self-developed processes to promote the entire competitiveness lead, in this regard, we work with internationally renowned partners to carry out wafer customization and production. We will also continue to pay attention to the risks and security issues of the entire supply chain, and will continue to move forward in the independent control of wafers and microelectronic key devices. ”

When talking about the global ChatGPT, Xu Ziyang believes that "it is a major leap forward in artificial intelligence, which will trigger a new industrial revolution, and we attach great importance to it." And we vaguely feel that it can change people's lifestyles and greatly improve our production efficiency, ZTE hopes that through such technology (ChatGPT), the internal research and development efficiency may be improved by at least five points (efficiency) in a relatively short period of time. The company has begun to focus on investment based on its own advantages, first of all, a new generation of computing power infrastructure products. ”

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Seize the opportunity of continuous construction of operators' traditional networks

2022 is the first year of ZTE's "strategic transcendence period", for this development cycle, ZTE's strategy is, "steady progress in the first curve, rapid development in the second curve".

Carrier business is undoubtedly the cornerstone of ZTE's development. Xie Junshi said: "We must seize the opportunity of the continuous construction of operators' traditional networks to ensure the steady growth of the company's first-curve revenue. The first curve includes four major products, namely wireless, bearer, road network, and core network, which (business) will retreat if it does not advance, so we must seize the opportunity and face the challenge head-on, and our strategy is to maintain high-intensity R&D investment. ”

The second curve mainly includes servers and storage, terminals (including smart home terminals), 5G industry applications, automotive electronics, digital energy and other services. In 2022, the operating income of ZTE's second-curve innovation business increased by more than 40% year-on-year, of which the server and storage operating income reached nearly 10 billion yuan.

However, in Xie Junshi's view, entering the server market is not without thresholds. "Server does not mean simply buying a CPU, buying a hard disk can make a server out, build a computing power network, in addition to the server, but also with the help of smart network cards, DPU devices, so self-developed key components play a key role in our ability to provide competitive end-to-end solutions."

He believes that with the development of ChatGPT and AI, it will accelerate the entire data center construction and server procurement, which is very good news for this year and the coming years. According to Digitimes Research, global server shipments are expected to grow by 5.2% in 2023, driven by the acceleration of global data center construction.

"This year's ZTE server increment will be a very important part of the company's scale increment. In addition, with the development of computing power, the amount of data center switches will be very large in the future, we have launched self-developed chip data center switch products, starting this year our comprehensive competitiveness will be greatly improved, 2023 our goal is to double. Xie Junshi said.

On March 10, ZTE released its 2022 annual performance report. During the reporting period, the company achieved operating income of 122.95 billion yuan, a year-on-year increase of 7.36%; The net profit attributable to the parent was 8.08 billion yuan, a year-on-year increase of 18.6%. Looking forward to 2023, Xie Junshi believes that the external environment is still relatively complex and full of opportunities. The digital economy is a key force for countries around the world to promote economic recovery and reshape competitive advantage, and this development trend is irreversible, and ZTE will continue to focus on the operator market at the customer level in 2023.

A GPU server supporting high-bandwidth ChatGPT will be launched by the end of the year

In the current era of rapid changes in information, technology, market and external environment, the digital transformation of the whole region is not the icing on the cake, but the only way for enterprises to cope with the uncertainty of normalization, and it will also drive the digital economy to take off again.

From the perspective of changes in the capital expenditure structure of the three major domestic operators, the proportion of investment in the direction of digital transformation represented by cloud and computing power networks is increasing year by year, which means that operators have become a trend to increase investment in computing power infrastructure. As an equipment manufacturer, Xu Ziyang said that ZTE is positioned as "the road builder of the digital economy", and ZTE will focus on the two major areas of "connection" and "computing power" to promote the development of the entire digital economy from the dimension of ICT industry and industry application.

Specifically, in terms of connectivity, on wireless networks, ZTE will continue to research and develop 5G post-evolution related technologies; In terms of computing power, ZTE will strengthen the research and development of next-generation cloud infrastructure, and strengthen the integration and application of AI and big data on the PaaS and SaaS layers. In terms of industry application, ZTE will focus on key areas such as industrial manufacturing, metallurgy and steel, and mining.

In addition, not long ago, ZTE and Baidu jointly announced that ZTE's server will support Baidu's "Wen Xin Yiyan" to provide more powerful computing power support for AI product applications. While optimistic about the development of ChatGPT, whether ZTE will develop its own "ChatGPT-like" products in the future has attracted much attention from the outside world.

In this regard, Xu Ziyang revealed, "The company has begun to focus on investment based on its own advantages. The first is a new generation of computing power infrastructure products, at the end of this year, GPU models that support large-bandwidth ChatGPT will be launched, supporting large model training, including AI servers, high-performance switches, and DPUs, with strong computing power and sufficient bandwidth; Second, at the software level, we will put our capabilities in digital nebula solutions; Third, ZTE will develop a new generation of AI chips to reduce the cost of reasoning, and we hope to work with industry partners to implement large models from ideas to productivity. ”

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