Research Notes | Domestic Computing Power

Event: The National Development and Reform Commission and other departments issued the “Special Action Plan for Green and Low-Carbon Development of Data Centers”, with the goal of ensuring that by the end of 2025, various types of newly added computing power in national hub node areas account for more than 60% of the country’s newly added computing power, the overall rack rate is not less than 60%, the average power usage effectiveness is reduced to below 1.5, the utilization rate of renewable energy increases by 10% annually, and the average energy efficiency and carbon efficiency per unit of computing power are significantly improved.

Newly built and renovated data centers should adopt energy-efficient servers that meet or exceed the energy-saving levels specified in “Limited Values and Energy Efficiency Grades of Tower and Rack Servers” (GB43630-2023) and “Evaluation Requirements for Energy Efficiency ‘Leader’ of Servers and Data Storage Equipment” (T/CECA-G0284-2024), i.e., servers with 14nm+ chip computing power ≥0.25 TFlops/W and servers with less than 14nm chip computing power ≥0.5 TFlops/W.

According to calculations, the unit energy efficiency computing power of H20 is only 0.37 TFlops/W (148/400), far below the required 0.5 TFlops/W. Products from Cambricon, Ascend, and others all meet the requirements. 1. The Ministry of Industry and Information Technology now has a reason to restrict NVIDIA’s H20, as it does not meet the energy consumption ratio requirements of domestic data centers, and this is 90% likely to be true.
2. It is rumored that H20 chips are no longer allowed to enter customs. Previously, I verified that the review procedures have become more complex. If it does indeed evolve into not allowing entry into customs, it is recommended to go all-in on domestic AI chips. 3. The domestic AI chip market space, calculated based on NVIDIA’s demand, corresponds to a 1000-1500e market. 4. The fact is that domestic AI chip clusters are currently unable to be used for the training of large voice models (the current main demand for computing power). Most domestic models are trained overseas and then brought back to China for fine-tuning and implementation. The gap between domestic capabilities and NVIDIA in terms of performance, cluster capabilities, and other aspects is still relatively large. In addition, supply (SMIC’s capacity) is also a limiting factor.

5. It is rumored that ByteDance has placed an order for 160,000 chips from Cambricon, which I believe is not highly credible. Even if NVIDIA chips cannot be imported, the volume of domestic chips will not increase so quickly, as they are still in the verification stage. However, not allowing imports = a major positive, and the stock market may react first, with valuations based on market space. Latest feedback from AI experts: 1) There is a possibility of H20 being stopped, but the predicted impact is not significant. The current combined order volume from BAT+ByteDance is still within 400,000, and it is predicted that it will mainly be used to replace some A800 cloud rentals; 2) The Ministry of Industry and Information Technology will consider controlling the construction and implementation of overseas cards’ AIDC through PUE indicators, as seen in the documents issued tonight; 3) Kunlunxin’s wafer production is expected to be 100,000+ this year, with a single card price of 12-15W/chip; 4) You can look forward to the visual model, Ji Meng, released by ByteDance in August. 5) Currently, the main increase in AI training procurement volume is from car manufacturers such as Geely and Xiaomi, and mobile phone manufacturers such as OV also have increased demand;

6) Tesla is looking for cloud service providers to cooperate for FSD in China, with an expected demand of 200,000 H20 chips.

The copper interconnect industry chain rose sharply today, mainly due to:

1) Market rumors that Leiting’s cable sample has passed;

2) Amphenol’s earnings conference tonight, with market expectations for optimistic guidance

We updated the recent situation of the copper interconnect industry chain in our B20 view this Monday:

– 3Q24 Amphenol’s production line is accelerating stocking, with shipments increasing to 300-400 sets of cartridges per day in September-October, and the performance contribution rhythm of the GB200 industry chain is expected to accelerate;

– NVIDIA B20 adopts a cabinet form. Previously, the market expected the H20 shipments in 2025 to be 700,000-1 million chips. If all are switched to B20, it will bring a significant increase in PCB + copper interconnect.