Event: On July 19, the 2024 Unicom Partner Conference - Computing Network Ecology Conference was held in Shanghai.
With the theme of “Building a Foundation for Computing Networks, Embracing Intelligence, and Promoting Ecological Development”, the conference comprehensively showcased China Unicom's all-round upgrade in the field of intelligent computing. At the same time, it also unveiled three innovative vehicle networking products and Unicom's entire ecosystem platform for car life, which accelerated the transformation into a technology service enterprise.
The computing network digital intelligence business is developing steadily:
Artificial intelligence is an important strategic direction for the company. The company works with industry chain partners to jointly create a computing network ecosystem. The first curve of business, that is, traditional business based on networked communication, is stabilizing. The second curve business, that is, the emerging business represented by the digital intelligence of the computing network, is booming more and more. In 2023, the company's second-curve business revenue reached 75.2 billion yuan, accounting for 23.5%, which is 2.3 percentage points higher than the industry average for the same period.
In the context of an era where artificial intelligence catalyzes the development of traditional industries, the company shows the characteristics of early departure, rapid strategic deployment, and high business share among traditional operators. At this ecological conference, the overall domestic strategy was deployed around the three aspects of “building a foundation of computing power, intelligent connectivity, and computing network capabilities.”
Computing power built the foundation, provided the power of the computing network, launched five major products and three major services, and became the “foundational builder” of intelligent computing.
In order to create a new supply of computing power, the company deployed the Shanghai and Hohhot 10,000 computing power clusters, and the entire network's intelligent computing power exceeded 15 EFLOPS, providing an AIDC base covering the country's “East Digital and Western Computing” hubs, key cities in 31 provinces, and over 600 edge nodes. The intelligent computing cluster released five major intelligent computing products for the five usage scenarios of “centralized training, one-stop development, computing power operation, distributed training and inference, rendering and local reasoning”, and provided the three major intelligent computing products of AICC, AICP, “Starlight” scheduling platform, AI edge all-in-one computer, and cloud GPU, providing the three major services of intelligent computing center construction, computing power proxy operation, migration and optimization, and became the “foundation builder” of intelligent computing.
Strengthen the intelligent connectivity of computing power, build an intelligent Internet of computing power, and become a “connector” of intelligent computing power. Relying on rich experience in traditional network construction, under the guidance of the new strategy, the company is committed to building a high-throughput, high-performance, and high-intelligence intelligent computing power intelligent network (AInet), and is actively building a “new eight vertical and eight horizontal” backbone optical cable network. At present, this project has achieved the industry's first lossless transmission of massive data exceeding 3,000 kilometers, successfully opening up the main “artery” connecting intelligent computing power, laying a solid foundation for future intelligent applications, and making it a “connector” in the field of intelligent computing across the country.
Build new quality calculation network capabilities and become an “enabler” for optimizing ecological development. The company continues to promote the construction of a global computing network brain to integrate and schedule multi-factor resources such as computing, networks, security, and applications.
Through this platform, industry users can obtain a wide range of computing resources, flexible network access, and intelligent scheduling capabilities as needed, thereby supporting efficient operation and innovative development of various application scenarios, and becoming an “enabler” for optimizing ecological development.
Digital-intelligence integration business accelerates transformation:
Launch digital-intelligence integration products to enable intelligent connected vehicles. At the conference, the company released the three digital intelligence integrated products of “Know-how”, “Know-how”, and “Know-how” to implement Yuanjing 2.0, a large model with 100 billion parameters for networking, operation, and traffic scenarios, while also bringing terminal products such as car-road collaboration and smart cockpits to create an ecosystem platform for people's lives. During the signing process, its subsidiary Unicom Smart Network Technology signed a strategic agreement with Huawei for intelligent connectivity; strategic contracts were signed with Hitachi Solutions, Spitz, Longchuang Auto, and Desai Xiwei. The signatory parties will work together to establish a new ecosystem for the connected car industry in the fields of AI+ smart cockpit, AI+ voice, and AI+ car design.
Seize the opportunities of intelligent connectivity and accelerate transformation into a technology service enterprise. With the gradual implementation of the “vehicle-road cloud integration” policy, the smart connectivity market space continues to expand. At the same time, V2X vehicle-road collaboration and cloud-based reasoning are more closely linked, which means that future competition for intelligent connected vehicles will not only compete for individual solutions, but also competition for the overall ecosystem, providing space for companies to transform into technology service enterprises.
The company aims to transform into a world-class technology service enterprise, and the continuous implementation of downstream scenarios of AI models has accelerated the process. With the development of AI, demand for computing power continues to increase. Taking intelligent connected vehicles as an example, CSAE and CI predict that the share of the cloud and roadside markets will rise from 11.6% to 21.5% from 2025 to 2030. The company actively invests in the AI process and enters new business scenarios, extending from infrastructure to intelligent automotive terminals, and further broadening the market space.
Future outlook: Focus on the implementation of the “Computing Power +” scenario. The company has always insisted on a business layout with computing power infrastructure as the core. The company empowers intelligent connected vehicles, thanks to its high connectivity infrastructure coverage (70%) of connected vehicle computing power. In addition to intelligent connected vehicles, at the conference, the company also showcased AI solutions to enable various scenarios such as the low-altitude economy, digital government, industrial Internet, cultural tourism, etc., including releasing the “China Unicom Space-Time Model” to help comprehensively promote innovation and promote the application of big models in various industries such as smart cities, industrial Internet, transportation and cultural tourism, agriculture, forestry, animal husbandry and fishing. Looking forward to the future, we believe that the company can continue to rely on its solid basic computing power capabilities to further expand other application scenarios, make comprehensive breakthroughs in data, algorithms, etc., and achieve sustainable growth in the intelligent computing business.
Investment advice: We expect the company's 2024-2026 net profit to be 9.2/10.4/11.5 billion yuan, YoY +13%/+12%/+11%, corresponding to the 2024-2026 EPS 0.29/0.33/0.36 yuan. The company continues to promote innovation and development, focusing on investing in computing and digital intelligence, to accelerate the development of businesses such as cloud and data centers. Innovative transformation continues to broaden growth poles, and basic businesses such as mobile and fixed networks are developing steadily and maintaining a “buy” rating.
Risk warning: Increased market competition, risk of exchange rate fluctuations, overseas business development falls short of expectations.