Who is the big winner? Nearly 20 billion AI servers have been centrally procured

China Fund News reporter Wen Xi

The largest AI intelligent computing server in China has been centrally procured.

The reporter learned from China Mobile that the mobile communication operator announced the bidding results of the new intelligent computing center from 2024 to 2025 on May 16, and the total amount of winning bids reached about 19.104 billion yuan (excluding tax).

This epic order finally "spent" 7 suppliers, including not only Huakun Zhenyu, which missed out on high-tech development, but also companies under listed companies such as Fiberhome Communications, Digital China, and Topway Information.

A number of listed companies won the share

A month ago, China Mobile threw out the "2024-2025 New Intelligent Computing Center Procurement Bidding Announcement" on its procurement website. According to the tender announcement, the total scale of artificial intelligence servers purchased in this project reached 8,054 units.

Among them, the most interesting thing is that the project is divided into two bid packages, of which the procurement package 1 is 7994 artificial intelligence servers and supporting products, and the number of winning bidders is 5 to 7. The project procurement package 2 is 60 white-box switches, and the number of winning bidders is 1. At that time, some institutions estimated that according to the previous winning bid, the scale of this procurement may exceed 15 billion yuan.

Judging by the results, the final amount far exceeded expectations. However, the above-mentioned procurement package 2 failed and required a new tender. However, the winning bid amount of procurement package 1 has reached 19.104 billion yuan (excluding tax). This centralized procurement has also become the largest centralized procurement of artificial intelligence servers in China so far.

According to the results announced by China Mobile, there are 7 winners in this epic centralized procurement. Among them, the largest share is Kunlun Technology, a subsidiary of Super Fusion, with a 21.05% share.

Super Fusion has always been a senior player in the domestic server market. According to IDC data, in 2022, Inspur's share of China's server market share will be 28.1%, H3C's will be 17.2%, and Super Fusion will be 10.1%. The company was also "born" from Huawei's x86 server business.

Second only to Kunlun Technology is Huakun Zhenyu, which won the bid with a share of 17.54%. The server supplier had been expected to be acquired by A-share listed company Hi-Tech Development, but a month ago, the major asset restructuring ultimately fell through.

The third and fourth places are Powerleader Computer and Baixin Information, with a share of 15.79% and 14.04% respectively.

The remaining three winning candidates are all subsidiaries of A-share listed companies. Among them, Yangtze River Computing won 12.28% of the share, about 2.346 billion yuan. Through equity penetration, the company is a subsidiary of Fiberhome.

China Kuntai is a subsidiary of Digital China Holdings. Digital China also announced on May 16 that it was one of the winning candidates for China Mobile's project Package 1, with a bid price of 19.117 billion yuan (excluding tax) and a winning share of 10.53%.

Xiangjiang Kunpeng, which is ranked seventh, is a wholly-owned subsidiary of Topway Information, and the company's winning share is 8.77%. Based on this calculation, the winning bid amount is about 1.675 billion yuan. For the whole year of 2023, Topway Information's revenue will be 3.154 billion yuan, and the amount of the winning bid is expected to exceed more than half of its revenue last year.

Domestic servers occupy the leading share

At present, the deployment of AI computing power in China has been on the "fast lane", and the construction of intelligent computing centers is in full swing.

According to IDC, as of April 2024, more than 30 cities in China are building or proposing to build intelligent computing centers. At present, super intelligent computing centers are mainly distributed in the Beijing-Tianjin-Hebei region, the Yangtze River Delta and the Pearl River Delta region, with a computing power scale of more than 1000PFLOPS, and the regional layout focuses on building large-scale computing nodes with a scale of 300PFLOPS to 1000PFLOPS.

In February this year, China Mobile also announced the bidding results of the 2023-2024 New Intelligent Computing Center (Test Network) centralized procurement project, with a total of 2,454 AI training servers corresponding to 12 bid packages.

At that time, the winning bidders and their shares were 40.96% of Kunlun Technology, 30.08% of Huakun Zhenyu, 20.48% of Fiberhome Communications, and 8.48% of Digital China.

Guohai Securities believes that the centralized procurement of AI servers will start again in a short period of time, which may reflect the trend of accelerating the construction of operators' intelligent computing centers, and the new centralized procurement includes 7,994 AI servers, which is about more than twice the scale of AI servers in centralized procurement from 2023 to 2024, and the capital expenditure of operators on AI computing power will also double.

In fact, although the three major operators have reduced their capital expenditures in 2024, they all plan to increase investment in AI infrastructure this year.

According to public data, China Mobile's planned capital expenditure in 2024 will be 173 billion yuan, a year-on-year decrease of 4%, and the proportion of revenue is expected to fall below 20%. However, 47.5 billion yuan was invested in the field of computing power, a year-on-year increase of 21.5%, and the proportion of capital expenditure increased by 5.8 percentage points to 27.5%.

China Telecom plans to spend 96 billion yuan this year, down 2.9% year-on-year. But the company revealed that it will invest 18 billion yuan in cloud/computing power this year.

It should be mentioned that from the results of the two China Mobile centralized procurement, Huawei's Ascend series occupies a leading share.

Previously, Digital China disclosed that it is a leading partner of Huawei's "Kunpeng" and "Ascend" ecosystems, and that the new generation of Kuntai center training servers is based on the Kunpeng 920 + Ascend 910 processors.

For localization, many local governments are also actively introducing incentive policies. The industry generally believes that the proportion of domestic computing power will be greatly increased.

For example, Beijing encourages the strengthening of the deployment and application of domestic chips, and promotes the construction of independent and controllable software and hardware computing power ecology; Qingdao Haizhixin Intelligent Computing Center requires domestic artificial intelligence acceleration cards to account for more than 70%, and Ningxia promotes the implementation of independent and controllable industrial parks such as Loongson Zhongke, and says that it will reward data centers with a localization rate of more than 90% of basic software and hardware.

According to CICC's research report, taking China Telecom as an example, the localization rate of its centralized server procurement from 2022 to 2023 is about 27%, and the evaluation results of the centralized procurement project of AI computing power servers (2023-2024) released in October 2023 show that the localization rate is about 47%.

Guohai Securities believes that there is still a gap between the performance of domestic AI computing products and the international leading level in terms of software ecology, which needs to be further improved and strengthened. But overall, domestic AI computing power is trying to move from "usable" to "easy to use".

Shanxi Securities also believes that under the background of overseas export restrictions and national policy guidance, the proportion of domestic computing power will increase significantly this year.

Editor: Xiao Mo

Review: Muyu