NVIDIA's market cap once again reaches the pinnacle globally, with the AI wave strongly driving the concept of high-speed copper cable connectivity to rise against the trend [SMM Flash News]

SMM News on June 26:

With the maturation of generative AI technology and the acceleration of data center construction, the demand for copper cables in short-distance high-speed interconnection scenarios has significantly increased. The Ministry of Industry and Information Technology (MIIT) recently issued the "Action Plan for Computing Power Interconnection and Interoperability," explicitly promoting the efficient interconnection of computing power infrastructure. As a core component for short-distance transmission in data centers, high-speed copper cables are expected to become a key focus of policy support. Nvidia regained the crown of the world's "most valuable company" on Wednesday. A Wall Street analyst predicts that Nvidia is about to ride the "golden wave" of artificial intelligence (AI). Market optimism towards the AI sector continues to rise, boosting the market performance of chip stocks and high-speed copper cable interconnection concept stocks. In addition, Goldman Sachs has raised its copper price forecast for the second half of 2025 (H2), and the market's reassessment of the strategic value of copper resources has indirectly boosted confidence in the high-speed copper cable interconnection industry chain. As of 13:14 on June 26, the high-speed copper cable interconnection concept rose by 1.34%. Among individual stocks, Zhaolong Interconnection rose by 7.31%, while Huafeng Technology, Shaanxi Huada, Kingsignal Technology, and Zhongyuan New Materials were among the top gainers.

News Updates

[MIIT: Formulating Guidelines for Computing Power Interconnection Standardization and Establishing a Standard System for Computing Power Interconnection and Interoperability] On May 30, the Ministry of Industry and Information Technology issued the "Action Plan for Computing Power Interconnection and Interoperability." It proposes to formulate standard specifications, including guidelines for computing power interconnection standardization and the establishment of a standard system for computing power interconnection and interoperability. It will formulate and revise general technical standards to clarify requirements for key links such as communication network interconnection, computing power resource interconnection, business scheduling interconnection, data transmission and flow, and application architecture adaptation. It will also formulate and revise industry application standards to promote the interconnection of computing power and the development of computing power services in industry scenarios such as AI and scientific computing. It will advance international standard innovation to lead the development of global computing power interconnection technology.

[Nvidia Regains Crown as World's "Most Valuable Company": Wall Street Investment Bank Says AI "Golden Wave" is Coming!] On Wednesday, "AI chip leader" Nvidia's stock price hit an all-time high, regaining the crown of the world's "most valuable company." Earlier that day, a Wall Street analyst predicted that Nvidia is about to ride the "golden wave" of AI. As one of the catalysts for Nvidia's stock price rise on Wednesday, Wall Street investment bank Loop Capital raised Nvidia's target price from $175 to $250 on the same day, an increase of over 40%, while maintaining a "buy" rating on the stock. Loop Capital also stated that the AI trends that have driven Nvidia's stock price over the past few years show no signs of weakening, and may even push the company's market capitalization to eventually reach $6 trillion, a valuation more than 65% higher than Nvidia's current market capitalization. The performance report of another chip manufacturer may keep Nvidia's stock price on an upward trajectory in the short term. Micron Technology, a manufacturer of high-bandwidth memory (HBM) chips, announced better-than-expected performance results after market close on Wednesday and provided an optimistic outlook. Micron's performance is crucial for Nvidia as it is a major supplier of HBM chips required for Nvidia's AI accelerators. (Financial Link) 》Click to view details

[Zhaolong Interconnect: The company's high-speed cables and component products can meet the stringent requirements of data centers and AI computing centers for high bandwidth and low latency.] On June 24, Zhaolong Interconnect stated on the investor interaction platform that the company has been deeply involved in the digital communication cable field for over three decades, possessing advantages in business scale, customer resources, R&D technology, product qualifications, and quality control. Currently, the company's high-speed cables and component products can meet the stringent requirements of data centers and AI computing centers for high bandwidth and low latency, and have been widely applied in the data center and cloud computing fields. The company closely monitors the development trends of AI technology and, in response to the demand for high-speed interconnection driven by technological advancements, will continue to strengthen its technological reserves, advance product R&D, and actively seize market opportunities.

On May 8, Jiang Xipei, Chairman of Far East Smarter Energy, stated at the performance briefing: The company is actively optimistic about the future development of the industry and will focus on three major businesses: intelligent cable networks, intelligent batteries/energy storage systems, and smart airports. It will actively embrace the AI and digital intelligence wave and continue to make efforts in new energy, big data, computing power, cloud computing, robotics, and other fields.

An investor asked on the investor interaction platform: Currently, the domestic AI server market is experiencing rapid growth, and DAC cables are currently in high demand. The company ranks first in China in both technology and mass production scale. Does the company have collaborations with Huawei and Nvidia? On March 17, Kingsignal stated on the investor interaction platform that the company mainly provides key signal interconnection products within and between base station equipment for the communications industry. Due to commercial confidentiality clauses, specific customer information cannot be disclosed at this time.

Various Opinions

A research report by Soochow Securities points out: Marvell has raised the total addressable market (TAM) for data centers, and the market for customized chip accessories is growing strongly. The trend of AI ASICs has become clear, with attention being paid to the copper connection market in data centers. From the currently known CSP ASIC server solutions, the use of copper cables for short-distance interconnection has become a trend. According to a Fibermall report, AWS is expected to procure 1.5 million self-developed chips this year, with most using AEC interconnection. Although Trainium2's computing power is lower than that of Nvidia's H100, it can use 400G AEC. With the launch of Trainium3 at the end of the year, the demand for 800G AEC is expected to increase. Although Microsoft is slower than AWS in adopting AEC copper cables, it has already started using AEC to build AI networks. Google's TPU interconnection currently mainly uses passive copper cables (DAC), and with the increase in speed, it may switch to AEC. Although there is currently no clear information about Meta's use of AEC copper cables, its Minerva cabinet system employs two detachable cable backplane boxes to connect compute trays and network trays. These cable backplane boxes utilize 112G PAM4 connectors and cables, with each box containing four cable groups, each comprising 384 pairs of different cables, forming a 1,536-pair cable network across eight MTIA trays, six network trays, and one cabinet management system tray. Beyond the leading CSP producers, X.AI has also demonstrated significant demand for AEC, primarily for interconnecting chips and top-of-rack switches (TORs) in AI cabinet servers. In the domestic market, companies like Alibaba and ByteDance are also considering or have already begun adopting AEC. The co-founder of 650 Group projects that shipments of AEC chips are expected to reach nearly 25 million by 2026. We believe that the trend of AI ASICs is already clear, and as AI ASIC chips gradually increase in volume, copper cable brand owners, toll processors, cable suppliers, and connector suppliers will all benefit.

Shanxi Securities' research report states: For the capital market, Shanxi Securities believes that the satellite internet sector will face at least three catalysts and investment opportunities in the coming period. 1.1 The design plan for the next-generation integrated space-ground low-orbit constellation has basically matured, and participants in the ground 5G industry chain will accelerate the transition and deeply benefit. 1.2 With the impending trial commercialization of low-orbit constellations by State Grid and others, ground infrastructure and other links will accelerate in volume. 2. AMD Helios cabinet design update: Fully benchmarked against Rubin NVL144's super-node cabinet. According to Semianalysis's "AMD Advancing AI: MI350X and MI400 UA LoE72, MI500 UA LoE256" analysis, the Mi400 series will use UALINK over Ethernet for Scaleup networking, which will be based on the Tomahawk6 switch chip. The Mi400 Helios cabinet is expected to integrate 72 Mi400 GPUs. Benchmarking against Rubin 144's Scaleup bandwidth of 1,800GB/s per GPU, it will require over 10,000 224G copper cables and corresponding high-density backplane connectors (or there may also be a demand for overpass jumpers in the Switch tray). In terms of Scaleout networking, the Mi400 is designed with a bandwidth of 300GB/s per GPU, which means each GPU may be configured with three 800G high-speed network cards. Connecting servers to a single layer of switches alone would require six 800G optical modules or three DAC/AEC copper cables. The doubling of network bandwidth and the addition of super-node designs are commonalities we observe in GPU and ASIC server designs for 2026-2027, indicating that high-speed copper cables and optical modules will continue to be in an upward cycle of robust supply and demand.

CITIC Securities points out that the current training and inference demands for large AI models continue to grow robustly, with scaling laws continuing to evolve in directions such as post-training and online inference. The underlying infrastructure is evolving towards larger clusters. The computational power of a single chip is expected to slow down in terms of future iteration speed under the influence of advanced manufacturing processes. Meanwhile, system-level nodes are expected to become a key direction for the development of AI computational power by addressing issues such as interconnection, networking, and memory walls. Judging from the development trends of system-level products from leading enterprises in the computational power sector and the history of mergers and acquisitions in the semiconductor industry, system-level computational power is expected to be the next frontier for AI development. Domestic GPU chip companies are expected to catch up with and surpass overseas products by building computational power infrastructure with higher resource density. It is recommended to pay attention to: 1) the shipment status of system-level products such as NVIDIA's NVL72; 2) the progress of domestic system-level products represented by Huawei's CloudMatrix384 super node, and to focus on relevant companies in the domestic industry chain.

Western Securities: High-speed copper cables are mainly used for short-distance interconnection transmission scenarios within data centers, such as between servers and switches, and between switches. Compared with traditional technologies, copper cable solutions not only help improve data transmission speed and reliability but also offer significant advantages in terms of heat dissipation efficiency, signal transmission, and cost.

Everbright Securities: Against the backdrop of the accelerated explosion of a new round of AI data centers and led by tech giants, copper cable high-speed connection technology is expected to leverage its unique advantages, such as low-cost high-speed transmission, and usher in broader development opportunities in the global data center market. Attention should be paid to opportunities across various segments of the industry chain, including relevant material suppliers, equipment producers, and system integration service providers.

Haitong Securities: Copper connection products have always played an important role in high-speed interconnection products within data centers, especially in short-distance transmission scenarios within servers. Copper connections offer significant advantages in terms of heat dissipation efficiency, signal transmission, and cost. Active Ethernet Cables (AECs) are lighter and offer better performance compared to Direct Attach Cables (DACs), and are more cost-effective compared to Active Optical Cables (AOCs), making them equally promising for potential applications in the AI data center market in the future.

Orient Securities: With the gradual maturation of generative artificial intelligence (AIGC) technology, emerging applications based on "big data + large computational volume" models are constantly emerging, significantly driving the continuous rise in demand for computational power. Domestic copper connection producers are on the rise, and the future market prospects look promising. Domestic producers already possess the capability for mass production of high-speed copper cables and their upstream parts required for AI computational power.

Huafu Securities stated that the catalysis of AI will drive the continuous growth in the application ratio of active copper cables. Market institutions predict that the market size of active copper cable chips will grow from $100 million in 2023 to over $1 billion in 2027, with a compound growth rate exceeding 70%.

GF Securities' research report points out that as the proportion of self-developed ASICs increases, the demand for AEC (active copper cables) is rapidly rising. By 2025, with the increase in demand from North American cloud producers, the market size is expected to reach USD 2 billion. In 2026, the domestic market will take over, and the overseas market will continue to see an increase in penetration as GPU self-development progresses, with the market size still expected to grow rapidly.

From the copper foil industry chain, it can be seen that computers and related equipment are one of the downstream application areas. How much copper demand can the high-speed connection of copper cables, which is closely watched by the market, specifically bring? Zhou Mingliang, Director of the Research Center of the Shenzhen Connector Industry Association, shared the application and prospects of copper semis in connectors at the 2024 (19th) SMM Copper Industry Conference and Copper Industry Expo - Copper Billet Industry Development Forum, jointly organized by SMM and Shandong Humon Smelting Co., Ltd. When mentioning the huge market size for copper semis amid the AI wave, he stated: Hot topic: NVIDIA GB200 NVL72 architecture - NVIDIA's new chip GB200 adopts copper interconnection technology to enhance AI performance and reduce energy consumption. It is expected that the market size for copper cables will grow significantly by 2025. Copper cables are cost-effective and fast for short-distance transmission within data centers, and the value of copper interconnection solutions per server is high. In the next two years, the shipments of GB200 NVL72 are expected to reach 3,000 units and 50,000 units respectively, with the market size for copper interconnection solutions climbing year by year. As network equipment upgrades to 800G, silver-plated copper wires may become mainstream due to their excellent performance, making up for the deficiencies of traditional materials in high-frequency transmission. The market size for copper alloy materials is huge, with global copper alloy demand expected to reach approximately 60,000 mt by 2025.