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Year of writing: 2020
Author: Tony
Related stocks: Intel , AMD , Jiaze (3533), Youqun (3217), Nvidia , Creative (3443) , Worldchip (3661), Xilinx, Department Micro (6231), Xinhua (5274), Nuvoton (4919) ), Spectrum (4966), Xiangshuo (5269), Realtek (2370), Broadcom, Marvell, Micron, Samsung, SK Hynix, Nanya Branch (2408), Golden Image Electronics (2368), Bozhi (8155), Tripod (3044), HannStar (5469), Jiance (3653), Guangyun (6125), Liande (3308), Colliers (8996), Delta (2308), Group Power (6412), Lite-On Section (2301), Kangshu (6282)
Data Center Data Cente r Part 3
Full analysis of the supply chain──Introduction to the concept stocks of data centers and white-label servers
Mining good value stocks from the industrial chain
The cloud data center has a huge supply chain system. From the brains of the most upstream electronic products-the chip to the mother of electronics-the printed circuit board PCB, and even the middle reaches of the heat dissipation module, chassis, etc., the cloud server has huge business opportunities. This introduction can also understand the rapid growth of cloud business opportunities, but the relative technical threshold and quality requirements are much higher than other electronic products such as laptops and smart phones. We will introduce them one by one.
1. CPU Central Processing Unit
The first in the cloud data center industry chain in the picture above is the CPU, which is also the core of the data center. The CPU manufacturers are divided into two, namely Intel, which has been the leader for a long time, and recently relying on TSMC’s advanced manufacturing process and Su Ma (Su Ma). Zifeng) led the comeback of AMD. Intel’s Xeon series was the main server market, with a market share of 99% at its peak. Even now, AMD’s momentum is booming. Intel has a market share of over 80% in the server field, while Intel’s The reason why AMD’s market share is most eroded is the manufacturing process. When TSMC is preparing for mass production of 5nm, Intel’s 10nm production capacity is still very unstable, and Intel’s advanced manufacturing process is one to two generations behind TSMC. The lack of CPU materials has also forced Intel to place orders for TSMC. Even so, the server chip is still a high-margin golden chicken for Intel. Intel's overall gross profit margin in recent years is as high as 61%, and it accounts for 35% of overall revenue. Or so, because a small chip is the cheapest to be 300 US dollars, and the more expensive one is as high as 2-3 thousand US dollars or more. It is conceivable that no one is willing to give up this big pie.
Next, I will introduce the AMD, which is booming in the CPU industry. AMD's processor EPYC specifically for servers is a rising star compared to Intel, but it relies on affordable but efficient products to conquer the city. Behind these there is an invisible pusher. It is TSMC. TSMC supports AMD products with the most advanced manufacturing process, and has successfully won the favor of AWS, Google, Oracle, etc. It currently accounts for nearly 20% of the data center market, and the data center business accounts for about 15% of the company’s overall revenue. There will be great room for growth in the future. Comparing the gross profit margins of Intel and AMD, like Qualcomm and MediaTek for mobile chips, one has a gross profit margin of more than 60%, while the other is only 3 or 40%. At this time, the latter will face bargaining competition from the strong, that is, the former, often leading the way. Relying on the product portfolio spreading across the high, middle and low price bands combined with better brand value, and the price cuts of some products to grab the market and defeat the latecomers, AMD is still facing great challenges to overcome. It depends on what Su Ma has. There is no way to escape the fate of the CPU second child, and on the same level as Intel.
Next, let’s talk about stocks. AMD’s recent stock price has soared until October 2020. AMD has risen by 186% in the past year. In contrast, Intel is almost flat. In terms of P/E ratio, AMD's P/E ratio is as high as 180 times, but Intel's P/E ratio is only 9.7 times, which is enough to show that everyone has high expectations for AMD's growth, but Intel is expected to decline, and related risks still need to be paid attention to.
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Two, CPU / Memory Socket socket
Industrial chain is a view of a second connector, we usually ignore this industry, but because it is known for the cloud server, connector manufacturers carbatex, in addition to Type C, also has a metal socket server buckle Software and processor sockets benefit from the business opportunities of cloud servers. The processor socket is used to fix the CPU on the motherboard. As shown in the figure below, there are usually two ways to fix the CPU on the motherboard. The first is on-board. , It is not easy to replace the CPU by welding and sticking it to the motherboard; the second method is to use the Socket method, as long as the CPU pin number and other conditions are the same, you can open and replace it by yourself. Open the metal cover as shown in the figure below, install the CPU, and close the cover It can be done (sometimes it is necessary to replace the BIOS, etc.). Jiaze's customers include the two giants Intel and AMD. In the past, AMD accounted for only 2% of revenue, but now it is expected to increase to 5% as AMD rises, and the future can be expected.
CPU Socket (taken from Wikipedia)
3. GPU/ASIC/FPGA chip
In the previous article, it was mentioned that the cloud data center is not just a storage slot for data. It is also responsible for the increasing number of AI operations, machine learning, and big data operations. To achieve machine learning and even AI visual recognition, GPU graphics processors will Very important, and the GPU proposer is Nvidia Huida, and the other latecomer is AMD. AMD challenged the two giants (Nvidia, Intel) at one time and met each other. Personally, from product observations, I believe that AMD's performance in the CPU field has reached or even surpassed Intel; however, it still lags behind Nvidia in terms of GPU, and there is still a way to catch up. However, GPUs are not the only way to achieve AI computing. Some large companies, because of different AI applications, need to focus on certain parts to improve performance. They will look for ASIC (Special Application Integrated Circuits) manufacturers such as creative electronics to tailor-made high-speed Chips such as Google Data Center and MediaTek custom-made ASICs. The high unit price of ASICs helps increase gross profit margin. If the future is really limited by Moore’s Law, the process can no longer be scaled down (process scale down: the same area can be filled with more transistors, the challenge is 5nm→3nm→2nm→1nm, process scale down can improve performance), ASIC There will be opportunities to be reused, because with the increasing complexity of AI and the increasing amount of data, the chip manufacturing process cannot be improved, and the only way to improve the efficiency of special applications is to start with IC design. At present, about 25% of Nvidia's revenue comes from data centers. Next year, it is expected that up to 45% will come from data centers. This shows the rapid growth of data centers. From the perspective of stock price, Nvidia has also grown by 197% in the past year (2020/10/9), and its stock price has tripled. It is expected that it will maintain its growth momentum in the future.
Fourth, the BIOS chip
Servers have software and hardware that are not enough. BIOS firmware is needed to make the entire server work. BIOS is a relatively high-threshold chip market with few competitors. It is the third largest manufacturer in the world and the largest in Taiwan. The factory is Microsystems and supports both Intel and AMD platforms. Therefore, it has also succeeded in conquering the heart of AWS, a big cloud server manufacturer. Microsystems also has a good performance in traditional servers. It has cooperated with server motherboard manufacturers such as Supermicro. Dell, HP, etc., have an astonishing gross profit margin of over 80% in terms of financial performance, which also shows the characteristics of IC design factories. The cost is concentrated on R&D talents, and the cost is low but the operating expenses are high.
five, BMC server management chip
Next, I will introduce a very important part of the server-the server management chip (BMC). As the name suggests, this chip is used for remote management and host management. It can remotely control firmware upgrades, fan management, data flow management, and even predict failures. Therefore, it can greatly reduce the difficulty of managing a huge data center. BMC is an oligopolistic market. Currently, the two major manufacturers are Xinhua and Nuvoton. Xinhua has become the world's first through acquisition, and its stock price has also risen with the cloud, becoming a thousand-year-old stock. One is that the BMC usage in the data center is extremely large, almost one BMC is needed for every two CPUs, so the high market share is still promising in the future. Nuvoton holds many traditional server orders. Although they are not as strong as Xinhua in the cloud, they should not be underestimated.
Six, high-speed transmission chip
An industry that includes many Taiwanese stocks: high-speed transmission chips. Because of the increasing amount of data, faster transmission is required, such as PCIE and Thorunderbolt. Therefore, the rise of high-speed transmission chips. When the signal is attenuated and the timing is misaligned during transmission, high-speed transmission is required. Chip compensation signals and correction signals have also created two high-margin companies, Pray and Xiangshuo.
Seven, Netcom chip
Another important element for data center equipment to be connected to each other and to the client is the Netcom chip. Without the Netcom chip, it will not be able to connect to the wired (Ethernet) or wireless network (Wifi). A good Netcom chip can provide stable and For high-speed networks, currently Netcom chips are mostly controlled by giants such as Marvell, Broadcom, Intel, and Taiwan's Realtek. Netcom chips not only benefit from cloud data centers, but also routers on the client side and even connected devices PCs, mobile phones, and Internet of Things. Netcom chips are indispensable.
8. DRAM dynamic random access memory
The price of DRAM in Memory fluctuates severely by the ratio of supply and demand, so it has obvious periodicity. In the DRAM industry, servers account for nearly 30%, and DDR (Double Data Rate Synchronous Dynamic Random Access Memory) has a very high proportion. In the past few years, the DRAM market has declined sharply due to overcapacity, and also due to the rise of data centers. The demand for cloud servers has seriously affected the fluctuations in DRAM prices. There are only three DRAM manufacturers in the world. According to the market share ranking, they are Samsung, Hynix, Micron, and Taiwan once had the smashing DRAM factories Huayako, Nanyako, and Powerchip. Finally, Huayako was acquired by Micron, and Nanyako became a niche DRAM, while Powerchip became a DRAM foundry. It was renamed Power Semiconductor Manufacturing Co., Ltd. due to its poor performance, which caused many stock market controversies and became one of the "four tragedies."
DRAM (taken from Samsung)
Nine, PCB printed circuit board
The mother of industry PCB is of course also a necessary component in the cloud server. The stock prices of Jinxiangdian, Bozhi, HannStar, Tripod, etc. rely on the server. The number of layers of the PCB will greatly affect the difficulty of the process and the drilling. , Which indirectly affects the price. At present, the number of layers of hard boards for servers is about 10~14. In the near future, if Intel launches a new server platform, it will reach 16 layers, and the speed will also need to be accelerated. Part of the Switch switch used in the data center The PCB is up to 36 layers. About 50% of Jinxiang Power’s revenue comes from servers, and Bozhi’s revenue is as high as 70%. Therefore, the stock price has risen accordingly.
Extended reading-FPC Industry Part 1: What is FPC?
10. Cooling module
Heat dissipation is undoubtedly a big headache for cloud data centers. The higher the efficiency of the device, the more heat it will generate, which requires a stronger Thermal Solution. In order to solve the heat problem, 24 hours Operating equipment has become a draught monster, and heat dissipation equipment is in great demand. Different from mobile phones, NB uses a large number of heat sinks, heat sinks, and heat pipes. Servers use fans. Taiwan’s major fan manufacturers are among the best, but there is still a high proportion of revenue in traditional servers. In the future Will analyze the heat dissipation group carefully.
11. Power Supply PSU
The stability of the power supply in the data center is extremely demanding, and it needs to provide stable 24-hour operation of power. In addition to the PSU (power supply), it also needs an uninterrupted power system, and even prepares the power supply to be replaced at any time to avoid a power failure. There are Taiwanese giants Delta, Lite-On, and Group Electronics under Chicony. As the CPU and GPU continue to upgrade, the required wattage is also increasing. Therefore, the power supply is bound to develop in a higher wattage or density. According to research institutes, the average wattage per rack in 2017 is 5.6kW By 2020, it will be 8.4kW, and even some 20kW cabinets will be built. To be more specific, the PSU of a general desktop computer is about 300W, and it is enough to use 2080 graphics cards about 700W. However, the power consumption of a cabinet in the data center can be as high as 66 desktop computers (20kW/0.3W), it can be seen that the data center needs a huge PSU.
Pick good stocks
I have talked so much today, and the assembly plant will introduce them one by one next time, so stay tuned.
However, there are so many industries introduced above, and there are so many manufacturers involved. How should we find good stocks worth investing in? In the form of profit pools, but from the perspective of the weighted average gross profit margin and net profit margin, the threshold of the cloud data center industry and the strength of competition are used to identify the secondary industry and unearth the good stocks.
From the above picture, if the average gross profit margin is the highest in the IC design related industries (CPU / GPU / ASIC / BIOS / BMC / high-speed transmission chip / Netcom chip), this is because most of the expenses for the IC design industry are operating expenses After all, a lot of R&D personnel are needed. As for the BIOS chip, it is only the data of the micro company. Although it has a gross profit margin of 85%, the final net profit margin is relatively ordinary. It is because of the lower revenue and the fixed cost that needs to be shared-business It is caused by higher expenses, but it also represents future revenue growth, and the net profit margin will have the opportunity to grow explosively; after all IC design plants reach a certain scale, the individual R&D expenses to be shared will be reduced, which can create an excellent net profit margin. Therefore, usually investors are willing to give a higher price-to-earnings ratio. The heat dissipation module also has a good performance in the net profit margin. One major reason is that the heat dissipation threshold of the cloud server will be higher and higher. In OEM/ODM, there are many competitors. In order to obtain more major customers, everyone is reduced to "three to four gross". Nevertheless, huge turnover can also create a business empire. Cloud server foundry is for this group of foundries. It can be regarded as a high-margin product, so it has gradually become a battleground for military strategists. The next chapter will also analyze the influence of foundries on cloud servers.