Moderately advanced layout "counting from east to west"
Editor's note
As a new type of productivity in the era of digital economy, computing power has become the core of the strategic layout of major countries in the world, and it is also a new focus of global strategic competition. According to data from the Ministry of Industry and Information Technology, the total scale of computing power in mainland China ranks second in the world, and the scale of the core industry of computing power reaches 1.8 trillion yuan. Recently, Huawei, ZTE and other solutions to help "East Data and West Computing" have attracted attention. What is the development status of the computing power industry in the mainland? What are the innovations of hashrate companies? How to better promote the "East Data West Calculation" project? This issue of the capital market will conduct an in-depth analysis.
Image source/Xinhua News Agency
■ Liu Hui, reporter of China Economic Times
In June 2023, Huawei and ZTE appeared at the China International Information and Communications Exhibition to showcase the achievements of the information and communication industry and the "East Data and West Computing" solution. Guizhou Province and Shenzhen City signed a cooperation agreement on promoting the coordinated development of computing power in the implementation of "East Data and West Computing"...... With the accelerated development of the digital economy in the mainland, the computing power industry has also accelerated its development. In fact, computing power, as a new type of productivity in the era of digital economy, has become the core of the strategic layout of major countries in the world, and it is also a new focus of global strategic competition.
Experts interviewed by the China Economic Times said that ChatGPT has driven the demand for computing power, and the "East Data and West Computing" project is an important layout of the mainland computing power industry, which should take into account the current demand and future development, plan in advance, appropriately advance, and rationally deploy to balance the future supply and demand of computing power. At the same time, accelerate the listing and financing of scientific and technological enterprises in the computing power industry chain, and use capital strength to make up for the shortcomings of the mainland computing power industry chain.
The computing power industry is still in its infancy and exploration
Yang Chao, director of the second research office of the Innovation and Development Research Department of the Development Research Center of the State Council, said in an interview with the China Economic Times that the computing power industry includes computing hardware manufacturing, software development and related service industries, computing power storage and transmission and other infrastructure industries and computing power service industries. The mainland computing power industry has a good foundation for development, but it is still in the initial stage of exploration. According to the calculation of the China Academy of Information and Communications Technology, among the top 500 global supercomputers in 2021, the mainland has 186 units, ranking first in the world, but the number of the top 100 is less than that of the United States. Companies such as Alibaba, Tencent, China Telecom, and Huawei have become global cloud service providers; New H3C ranks first in the global server market, with a market share of more than 15%, and Inspur, Leitenovo and Huawei are also in the top five in the world.
Xu Chi, chief strategist of Zhongtai Securities, told the China Economic Times reporter that computing power has become the core of the strategic layout of major countries in the world. In recent years, under the guidance of the "Digital China Construction Overall Layout Plan", the mainland has continuously optimized the layout of computing power infrastructure, promoted the efficient complementarity and synergy of computing power between the east and west, and guided the construction of reasonable echelon layout such as general data centers, supercomputing centers, intelligent computing centers, and edge data centers to achieve results. Computing power is helping to implement applications such as financial technology.
However, the development of the computing power industry has not been smooth sailing. Yang Chao said that at present, the application of computing power in the mainland is insufficient, and the economic effect has not yet been fully utilized. The application of computing power is highly concentrated in the fields of finance, transportation, and administration, and the application scenarios of other industries are relatively rare. From the survey situation, although some large supercomputing centers in China have a relatively full amount of tasks, they basically cannot rely on computing power services to achieve breakeven.
According to the "Top 100 Computing Power of China's Digital Technology Algorithms", Tencent, Alibaba, China Mobile, Douyin, Huawei, Meituan, Ant Technology, BYD, Pinduoduo, and JD.com are the top 10 enterprises.
Mainland computing power listed companies can be roughly divided into four categories: chip-related Cambrian, Jingjiawei, Haiguang Information, etc.; Server-related Inspur Information, Unigroup, ZTE, etc.; Storage-related GigaDevice innovation, deep technology, etc.; Transmission-related Zhongji Xuchuang, Xinyisheng, Tianfu Communication, etc.
A person from a securities research institute told the China Economic Times reporter that domestic listed companies have reached a global leading position in some computing power segments. In the 2022 TOP10 list of LightCounting, a market research agency in the optical communication industry, domestic suppliers occupy seven seats. Zhongji Xuchuang has become the world's No. 1 optical module enterprise. In the first half of 2022, Inspur maintained its market position as the second in the world and the first in China, with a market share of 20.9% for AI servers and 13.1% for multi-node servers. ZTE's servers, as suppliers of China Mobile, China Unicom and China Telecom, maintained high growth. In 2022, ZTE's server and storage revenue will be tens of billions of yuan, a year-on-year increase of nearly 80%. Cambrian is a leading enterprise in the field of AI chips in China, with a complete layout of intelligent chip products.
Xu Chi analyzed that from the perspective of the mainland computing power industry chain, the upstream industry is mainly composed of facilities, equipment, software suppliers, network operators, etc., the midstream industry is mainly composed of basic telecommunications enterprises, third-party data center service providers, cloud computing manufacturers, etc., and the downstream industry is mainly composed of Internet enterprises, industrial enterprises and users in various industries such as government, finance, and electricity. In terms of the innovation and development of the computing power industry, innovation is mainly concentrated in the middle and downstream fields of Internet enterprises, basic telecommunications enterprises, and cloud computing manufacturers, and basic software and hardware related industries such as chips, servers, and operating systems mainly rely on foreign countries, and the ability to innovate and control independently is relatively insufficient, and related technologies urgently need to be breakthroughs.
The China Economic Times reporter interviewed the heads of Huawei, Digital China and other enterprises to understand their layout in computing power. The relevant person in charge of Huawei told the China Economic Times reporter that Huawei's computing power mainly has two routes: the first is to benchmark Intel and use the Kunpeng solution to solve the problem of general computing power; The second is to use the Ascend solution to solve the problem of intelligent computing. Huawei starts from root technology on these two routes, and the company's strategy is "open hardware and open software", hoping to jointly build a good ecosystem.
The relevant person in charge of Digital China told the China Economic Times reporter that the company has developed supercomputing services in the field of computing power. Based on the computing power of "Kunpeng + Ascend", the Kuntai series of servers cover computing, security, storage, networking, cloud platform and other fields, and the solution is used in data center scenarios in finance, telecommunications, education and other industries. The development of AIGC will bring a significant increase in the demand for computing power. The emergence of AIGC has brought challenges to the construction of data center infrastructure, and new applications have new requirements for data center computing power, network, storage, and security, and the architecture of data centers will also change, requiring greater bandwidth, lower latency, and lossless from the network side, and higher computing power density on the computing side.
Speed up the project of "counting data from east to west"
As early as May 2021, the mainland proposed to implement the "East Data and West Computing" project, which is an important layout of the computing power industry and is of great significance to the efficient development of the computing power industry.
How to accelerate the "East Data West Calculation" project? Yang Chao suggested that, first of all, we should grasp the principle of being moderately ahead. In recent years, with the acceleration of digital transformation and upgrading of various industries, the rapid popularization and application of new technologies such as 5G, artificial intelligence, and the Internet of Things, the total amount of data in the whole society has exploded, and the demand for computing power has increased rapidly. Since the beginning of this year, great progress has been made in the development and application of large models represented by ChatGPT, which has led to a significant increase in computing power demand, especially intelligent computing power. Some studies estimate that the demand for computing power for artificial intelligence in 2030 will increase by 500 times compared with 2020. The layout of computing power facilities in "East Data and West Computing" should take into account the current needs and future development, fully consider the potential needs of technological progress and industrial development, plan in advance, appropriately advance and rationally deploy, and balance the supply and demand of future computing power.
Second, we should grasp the structure of different types of computing power. Intelligent computing power, general computing power and super computing power are respectively applicable to different fields such as artificial intelligence, data centers, and scientific research, and their construction, development and operation models are also different. The demand and supply of intelligent computing power are showing rapid growth. According to the statistics of the ICPA Intelligent Computing Alliance, there are about 40 in operation or under construction in the mainland. In the next step of the overall layout of computing power, we should better understand the requirements of the three types of computing power, and balance the overall scale and layout of the three types of computing power centers on this basis.
Xu Chi said that computing power as a strategic focus of new infrastructure and the development of digital economy, from the national level, it is necessary to do a good job in the top-level design of the industry, optimize the layout of computing power resource structure, promote transformation and upgrading, evaluation and evaluation, and improve the innovation environment of the computing power industry. From the perspective of the industrial chain, it is necessary to give full play to the leading role of state-owned enterprises in the computing power industry chain in the process of building a valuation system with Chinese characteristics, enhance the discourse power and influence of state-owned enterprises through technological integration and strategic mergers, and achieve scientific and technological innovation and breakthroughs in key fields and core technical links. As far as the capital market is concerned, the science and technology innovation board mainly serves scientific and technological innovation enterprises that conform to the national strategy, break through key core technologies, and have high market recognition, and can provide financing support for science and technology enterprises in the computing power industry chain.
In order to protect the network security of "counting from east to west", Luo Hailong, vice president of Qianxin Group, told the China Economic Times reporter that it is recommended that the competent department should coordinate and command, and the operator and third-party security companies should cooperate with the operation and responsibility, and establish a three-level situational awareness system. The first level realizes global monitoring, response and disposal, event reporting, and closed-loop operation at the computing node level. At the second level, at the data cluster level, operators collaborate with third-party security companies to conduct global situational awareness. At the level of competent departments, the third level coordinates national network security resources to unify research and analysis, and truly realize the dynamic protection of "counting from east to west".
A person from a securities research institute said that most of the mainland data centers are distributed in the eastern region, and the western region has the potential to develop data centers and undertake the demand for computing power in the east. Computing services that do not require high network requirements, such as background processing, offline analysis, and storage and backup, in the western data center can improve resource efficiency. In addition, the supporting facilities and ecology are equally important. For example, in terms of data transmission, it is necessary to establish a reliable transmission network, and improve the data transmission rate and quality through structural optimization and infrastructure upgrades. Companies related to computing power face localization opportunities, on the one hand, the difficulty of financing is relatively low, and the constraints on R&D investment are small; On the other hand, downstream customers have a strong willingness to match. Companies that are already leading the world can maintain their leading market share by continuously iterating technology to create a snowball competitive advantage. Other enterprises can seize the opportunity of domestic substitution, accelerate technological innovation, and form their own "moat".
Multi-party joint efforts to promote the high-quality development of the computing power industry
Image source/Xinhua News Agency
■ Sun Zhao, reporter of China Economic Times
Computing power has become the core productive force of the development of the digital economy and an important infrastructure for the development of the national economy. According to data from the Ministry of Industry and Information Technology, the total scale of computing power in mainland China has reached 180EFLOPS, the total scale of storage capacity has exceeded 1000EB, the one-way delay of the network between national hub nodes has been reduced to less than 20 milliseconds, and the scale of the core computing power industry has reached 1.8 trillion yuan.
Experts interviewed by the China Economic Times said that the mainland's computing power enterprises have developed rapidly in recent years, which not only drives the rapid growth of the digital economy, but also provides strong support for the promotion of the "East Data and West Computing" project. To further promote the development of China's computing power industry, it is necessary to focus on the synchronous matching of industrial supporting environment, resources, talents, and technology, as well as the coordinated development of data centers and digital industries in the east.
Computing power enterprises help "East Data West Calculation"
At the 31st China International Information and Communication Exhibition held recently, ZTE and other enterprises' full-stack products and solutions of "East Data and West Computing" project attracted attention. Computing power enterprises continue to innovate and help the "East Data and West Computing" project to further advance.
Song Xiangqing, deputy dean of the Institute of Government Management and director of the Industrial Economy Research Center of Beijing Normal University, told the China Economic Times reporter that with the help of computing power enterprises, the "East Data and West Calculation" project can be regarded as the source of accelerated progress. As a key productivity factor in the era of digital economy, computing power enterprises have become the core supporting force and key driving force for promoting the high-quality and sustainable development of the "East Data and West Computing" project.
"The more computing power enterprises, the higher the computing power of the computing power enterprises, which means that the higher the efficiency of the future development of the city related to the 'East Data and West Computing' project, the stronger the core competitiveness of the city, and the more momentum of GDP growth." Therefore, focusing on improving the concentration of computing power enterprises and resources in cities along the 'East Data and West Computing' project, and the balanced allocation degree between regions and industries, is not only conducive to the rapid growth of GDP, but also promotes the maximization of urban resource efficiency, so that the city and computing power are integrated and symbiotic, and a number of high-end intelligent enterprise brands and industrial groups with resource self-allocation power, chain independent fastening and market automatic adaptability are born. Song Xiangqing said.
Pan Helin, co-director and researcher of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, told the China Economic Times reporter that from the chip industry to the server industry to ICT equipment, the industrial chain of computing power is very long. Computing power enterprises are the core enterprises in the construction and operation of infrastructure such as computing power centers, and are the integrators of resources in the entire industrial chain. For the "East Data and West Computing" project, the construction and resource integration of "West Computing", as well as the docking of demand-side computing power, all depend on computing power enterprises to achieve.
Multi-party coordination to promote the development of the industry
The development of mainland computing power enterprises is of great positive significance to the promotion of the "East Data and West Computing" project. At the same time, the computing power industry is also facing some challenges.
"To further promote the high-quality development of China's computing power industry, we must focus on the simultaneous matching of industrial supporting environment, resources, talents, and technology, as well as the coordinated development of data centers and digital industries in the east." Bai Wenxi, chief economist of IPG China, told this reporter.
"We should focus on the rational allocation of computing resources." Pan and Lin pointed out that the layout of the computing power center needs to be further optimized to meet the requirements of the demand side, and the overall solution of computing power required by the demand side also needs to have a platform to dock.
Song Xiangqing said that the first is to pay attention to the balanced allocation of computing power resources in the east and west. At present, most of the cities with developed computing power in the mainland are in the eastern region and some developed cities in the west, and most cities in the central and western regions and northeast do not have sufficient source computing power systems. The second is to pay attention to the potential of computing power in activating endogenous factors of the economy, and the problem of invalid computing power precipitation of "computing power but no effect" should be paid attention to. The third is to pay attention to the attraction of computing power to high-end capital. In the future, further improving the degree of computing power capital agglomeration and enhancing the role of computing power technology is the preferred path for cities in the central and western regions to improve the efficiency of digital services and accelerate transformation and upgrading.
"It is recommended that local governments further stretch the data center industry chain, expand the scale of investment in digital computing power, and improve the driving effect of computing power on local industries." Through the construction of computing power hub stations, data clusters, digital industry zones, etc., drive the upstream and downstream investment of the digital industry chain, thereby activating the 'magnetic effect' of computing power on economic development, social governance, cultural construction, and even rural revitalization, and cultivating a new ecology of advanced digital industry with computing power and algorithms as the core. Song Xiangqing said.
A computing power enterprise standing on the cusp
Image source/Xinhua News Agency
■ Zhang Wei
Since 2023, the overall performance of A-shares has been sluggish. However, in the structural market, the AI sector and the "medium special estimate" of the Chinese character are the winners. Some analysts believe that the A-share stock capital game, funds will move from large consumption to new energy in 2021, and funds will move from new energy to AI in 2023.
In terms of gains, it is not surprising that the AI sector is better than the "medium special estimate", and the stock price has doubled. On June 9, the concept stock of computing power strengthened, of which Topway Information, which rose to the limit on the day, has risen by more than 160% this year.
Data, computing power and models are the three elements of AI development. Among them, data and models are inseparable from the support of computing power. Computing power is an important factor of production in the era of digital economy, and is becoming an increasingly high proportion of productivity sources. The development prospects of computing power are detailed in the 2021 annual reports of relevant listed companies. However, in 2022, computing power concept stocks are not fragrant, and some have fallen by more than 20% throughout the year.
Computing power concept stocks stand out in 2023, thanks to the AI large model represented by ChatGPT, Wen Xin Yiyan, etc., which has triggered a new wave of artificial intelligence commercialization. Although there is still discussion in the market about whether ChatGPT is a technological revolution or a wave of "disturbance", under the two-wheel drive of technological development and policy catalysis, it has become a consensus that the AI industry chain and commercial application have entered an accelerated development stage. ChatGPT has boosted the AI sector and raised the market's growth expectations for computing power concept stocks. The AI sector in the A-share market is super strong, and it also benefits from most small and mid-cap stocks, which bring a greater upward effect after the inflow of main funds.
Computing power has become a key factor in AI breakthroughs. A number of listed computing power companies cited IDC reports in their annual reports, optimistic that the mainland is expected to become the world's largest intelligent computing market. IDC reports that the penetration of AI applications in all walks of life is deepening, resulting in rapid growth in demand for intelligent computing power. In 2022, the scale of mainland intelligent computing power will reach 268 Eflops (floating point operations per second), which has exceeded the scale of general computing power, and it is expected that the scale of mainland intelligent computing power will reach 1271.4 Eflops in 2026, with a compound annual growth rate of 52.3%, and the growth rate of general computing power in the same period is 18.5%.
Some people believe that comprehensive demand, industrial chain and cost, and pre-computing power infrastructure related links are expected to gradually enter the performance realization period.
The new round of artificial intelligence industrial competition continues to heat up, local support policies are intensively introduced, and "computing power" has become a hot word. For example, the "Lingang New Area to Accelerate the Construction of Computing Power Industry Ecological Action Plan" was recently released in Shanghai, by 2025, Lingang New Area will form a diversified computing power supply system based on intelligent computing power, basic computing power and supercomputing power coordination, and the overall scale of the computing power industry (including related hardware, software, applications, services, etc.) will exceed 10 billion yuan.
The good development prospects of computing power have allowed enterprises in the industrial chain to see business opportunities and increase investment in research and development. Taking Shuguang as an example, the layout and construction of a "national integrated computing power service platform" is committed to linking various computing power centers in various places. The company's investment in technology research and development has continued to increase, with a cumulative investment of 4.946 billion yuan in R&D in the past three years, of which 2.472 billion yuan will be invested in R&D in 2022, accounting for 19.01% of the main business income.
After the big rise, some of the computing power concept stocks fluctuated at a high level, and some showed a certain degree of correction under the impact of major shareholders reducing their holdings or taking profits, but the development prospects of the head enterprises were continued to be optimistic by institutions.
Kaiyuan Securities believes that the demand for computing power in the upstream of AI is relatively certain, the overall pattern of the upstream computing power chip field is relatively stable, and the position of the head company is relatively stable. Zhongtai Securities Research reported that computing power is the underlying "soil" of AI chips, and the demand for computing power will grow explosively in the future. The landing of AI applications is inseparable from the support of huge computing power, which will also promote the rapid growth of the computing power industry chain.
Whether the computing power enterprises standing on the cusp can continue to develop depends on whether the fundamentals of the industry have substantially changed in the future. If the development of the AI industry is confirmed as "an opportunity similar to the industrial revolution similar to the invention of electricity that has not been encountered in hundreds of years", and China becomes an AI powerhouse, the computing power industry will likely give birth to "great enterprises". In that case, the capital's attention to computing power enterprises will not be limited to short-term speculation, but long-term sharing of the fruits of scientific and technological innovation and development.
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