Concept stock of the week: ChatGPT drives a surge in demand for CPO/storage markets

Recently, driven by artificial intelligence technology represented by ChatGPT, the market demand for high-performance computing has been ignited, and in the face of the problem of huge data transmission and transfer, semiconductor manufacturers have been optimistic about CPO technology solutions and accelerated layout. At the same time, ChatGPT drives the demand for AI servers and data centers to continue to rise, which in turn drives the medium and long-term growth trend of the memory chip market.

In addition, under the trend of localization substitution, the listing application progress of domestic semiconductor companies has also accelerated significantly. Within this week, Xinxinwei, Collide, and Chao Microelectronics were accepted, Kangxi Communications, Jiangtong Copper Foil successfully passed the meeting, and Shengjingwei also launched the meeting on June 20, in addition, the IPO registration applications of Zhongjuxin, Zhidi Technology and Mengguli were also approved by the CSRC.

Semiconductor manufacturers accelerate the deployment of CPO technology

Driven by artificial intelligence technology represented by ChatGPT, the market demand for high-performance computing has been ignited, and in the face of the problem of huge data transmission and transfer, TSMC, Intel, NVIDIA, ASE, Changjian Technology and other semiconductor manufacturers are optimistic about CPO technology solutions, and the industry expects that CPO technology will be widely used in the market after 2025.

Although CPO technology has just entered the market, the cost is high, and most manufacturers are still in the process of technology research and development, in the A-share market, since February this year, CPO-driven optical module concept stocks have been popular with investors, and the heat is continuing to heat up.

With the surge in data traffic, the mainstream rate of data centers is replacing from 100G to 200G, 400G, and 800G, but the industry expects pluggable optics to face performance limits when supporting transmission rates of 1.6Tb/s, 3.2Tb/s or higher. Therefore, CPO technology, which integrates silicon photonics (SiPh) optics and switch-specific application chips (ASICs), has emerged through packaging.

As early as 2021, TSMC launched the COUPE silicon photonics chip heterogeneous integration technology for data centers, which is regarded as a CPO technology. ASE also launched CPO packaging technology in 2022, and its silicon products are also a member of the Broadcom silicon photonics high-speed network communication chip/module supply chain, providing CPO services for them.

As an emerging technology, CPO is currently being favored by more and more semiconductor manufacturers. As early as April this year, Zheng Li, director and CEO of Changjian Technology, said at a public meeting that photoelectric combined packaging (CPO) was originally mainly used in the field of optical communications, but with the development of high-performance computing, the connection of optical cables can no longer meet the bandwidth and speed requirements. Customers in the industry began to adopt the form of photoelectric sealing, which greatly optimized the bandwidth and computing power of the interconnection between chips. With the development of AI, photoelectric sealing will also become a very important form of high-performance packaging technology.

In a conference call on May 18, Intel Assembly and Test Manager Pooya Tadayon also shared the company's future direction of advanced packaging technology, one of which is the promising common packaging optical component (CPO), which is expected to be put into production by the end of next year, which can provide higher speed broadband demand for chips.

In fact, with the increasing demand for bandwidth in data centers, CPO technology has gradually become commercially available. On August 22, 2022, Broadcom and Tencent announced a strategic partnership to accelerate the application of high-bandwidth co-packaged optical (CPO) network switches in cloud infrastructure.

According to Yole, the revenue generated by the CPO market reached approximately $38 million in 2022 and is expected to reach $2.6 billion in 2033, with a CAGR of 46% from 2022 to 2033.

CPO technology has broad market prospects, and related concept stocks are also sought after by the capital market, while listed companies such as Changjian Technology, Tongfu Microelectric, Huatian Technology, China Wafer Square Technology, Helin Weina, Luoboteco, Luxshare Precision, Sirui New Materials, Guangxun Technology, and Xinyuan Micro Equipment also disclosed the latest progress of CPO technology.

The storage cycle inflection point is up

In addition to CPO technology, under the rapid evolution of AI large models led by ChatGPT, the amount of data has surged, and the demand for AI servers and data centers has continued to rise, driving the medium and long-term growth trend of the memory chip market.

WSTS expects a significant rebound in the memory segment in 2024, up about 40% year-on-year. Researchers said that the entire storage industry has completely bottomed out this year, and will definitely continue to reverse in the second half of the year, and the prosperity will resume the upward cycle again next year.

As the industry bottomed out, relevant manufacturers also opened the price increase mode. According to supply chain sources, the price of Changjiang Storage's original flash memory began to rise, by about 3-5%, for example, 256G has increased by 4-5 US dollars (about 28-35 yuan). It is reported that the price increase will first affect the enterprise-level market, and it may take some time for the consumer-grade spot market to see a significant increase.

At the same time, Samsung and SK Hynix are not to be outdone, and they have also announced price increases. According to Digitime, Samsung and SK Hynix have sought to raise NAND flash prices by 3%-5% to test market reaction, saying that the price of NAND flash has fallen below variable costs.

TrendForce pointed out that after South Korean storage manufacturers cut production sharply in May, some suppliers have increased the price of NAND wafers, and their quotations for the Chinese market have been slightly higher than the transaction price in March-April. The agency predicts that downstream SSD module factories will start stocking in June, and 512Gb NAND flash wafers are expected to stop falling and rebound slightly, ending a 13-month downward trend in prices.

The author learned that because Samsung finally joined the production reduction army in Q2 this year, some NAND buyers increased their willingness to purchase, and the SSD manufacturers and PCOEM in the lower stream were the most active. As a result, overall NAND storage shipments in the second quarter are expected to grow 5.2% sequentially.

In addition, TrendForce expects NAND prices to increase by up to 5% from the third quarter of this year, and further expand to 8%-13% in the fourth quarter.

In the case of the bottom of the industry and the expectation of improvement, the stock prices of storage industry chain companies have risen sharply, among which, Baiwei Storage has risen by 363% in the past three months, Longsys has risen by more than 90%, and the deep technology deeply bound to Hefei Changxin has risen by more than 80%.

A number of companies have embarked on their journey to listing

As the semiconductor industry bottomed out and the localization of substitution accelerated, domestic semiconductor-related enterprises also accelerated the listing application process. Within this week, Xinxinwei, Collide, and Chao Microelectronics were accepted, Kangxi Communications, Jiangtong Copper Foil successfully passed the meeting, and Shengjingwei also launched the meeting on June 20, in addition, the IPO registration applications of Zhongjuxin, Zhidi Technology and Mengguli were also approved by the CSRC.

On June 12, the Shanghai Stock Exchange officially accepted the listing application of Xinxin Micro Science and Technology Innovation Board. The company is a Fabless mode chip design company focusing on display chips and AIoT intelligent control chips, committed to providing display chip solutions for various display panels and display terminals, and providing frequency conversion and main control solutions for smart home appliances.

On June 13, the China Securities Regulatory Commission (CSRC) disclosed its approval of the registration of Zhongjuxin's initial public offering and approved the IPO registration application of Zhongjuxin Science and Technology Innovation Board. The company focuses on the field of electronic chemical materials, mainly engaged in the research and development, production and sales of electronic wet chemicals, electronic special gases and precursor materials.

On June 14, according to the results of the 51st deliberation meeting of the Listing Review Committee of the Shanghai Stock Exchange in 2023, the IPO of Kangxi Communication Science and Technology Innovation Board successfully passed the meeting. The company is a professional RF front-end chip design enterprise, mainly engaged in the research and development, design and sales of Wi-Fi RF front-end chips and modules.

On June 14, the China Securities Regulatory Commission (CSRC) approved the registration of Zhidi Technology's initial public offering on the Growth Enterprise Market of the Shenzhen Stock Exchange. The company is a high-tech enterprise mainly engaged in computer peripheral hardware products, integrating R&D, production and sales, focusing on the field of computer peripherals, mainly engaged in the research and development, production and sales of computer peripheral products such as keyboards and mice.

On June 15, the Shanghai Stock Exchange officially accepted the listing application of Collide Science and Technology Innovation Board. The company is mainly engaged in the research and development, production and sales of electronic special gases and semiconductor precursor materials, and is one of the few domestic local manufacturers of electronic special gases whose self-produced products can cover key manufacturing processes such as deposition, etching, doping, ion implantation and cleaning.

On June 15, the Shenzhen Stock Exchange officially accepted the listing application of the main board of North Korea Microelectronics. The company is a high-tech enterprise specializing in the design, research and development, production and sales of military semiconductor discrete devices, integrated circuits and special power supplies.

On June 15, according to the results of the 43rd deliberation meeting of the Listing Review Committee of the Shenzhen Stock Exchange in 2023, the IPO of Jiangcu Copper Foil Growth Enterprise Market was successfully held, and the company is mainly engaged in the research and development, production and sales of various high-performance electrolytic copper foils.