Zhongyuan Securities: North American cloud vendors continue to raise capital expenses Silicon Light helps AI networks expand on a large scale

The Zhitong Finance App learned that Zhongyuan Securities released a research report stating that the total capital expenditure of the four major North American cloud vendors in 25Q3 was US$112.43 billion, an increase of 76.9% over the previous year. CignalAI expects the data center optical device market to grow by more than 60% in 2025, mainly due to the continued volume of 400G/800G products. The development of AI is driving the construction of large-scale data centers and driving continuous and steady growth in demand for optical device products. The reliability requirements of optical modules have increased and the iteration cycle has been shortened, bringing about a significant increase in the technical threshold of the industry, and the advantages of products from leading optical module manufacturers will be further highlighted. The overall supply of high-speed optical chips is tight, and domestic and foreign optical chip manufacturers are speeding up production capacity expansion and process upgrading.

The main views of Zhongyuan Securities are as follows:

From January to September 2025, the total growth rate of China's telecom business rebounded slightly

From January to September 2025, telecom business revenue totaled 1327 billion yuan, +0.9% year-on-year. As of September 2025, 5G mobile phone users from the three major operators and China Radio and Television accounted for 63.9% of mobile phone users; in September 2025, DOU reached 21.23 GB/household/month, +15.5% over the same period; fixed broadband access users with gigabit or higher access rates accounted for 33.9% of the total number of users. The operator focuses on key fields such as industrial manufacturing, digital government, healthcare, education, and energy, giving full play to the advantages of cloud network integration and the integration of next-generation digital technology, and promoting the close integration of digital technology with the real economy.

In September 2025, China's telecommunications equipment retail sales were +16.2% year-on-year

The global smartphone market shipped 3201 million units in 25Q3, an increase of 3% over the previous year, showing signs of recovery. Canalys expects the penetration rate of AI phones to reach 34% in 2025. The streamlining of the end-side model and the upgrading of chip computing power will further boost the penetration of AI phones into the mid-range price segment. New flagship SoCs released by chip manufacturers in 2025, such as the Snapdragon 8SGen4 and Tianji 9400e, already have the ability to run large models on the end side smoothly. The advent of DeepSeek has greatly reduced the use of chip computing power by large models. Under the combined effect of these two major factors, AI phones are expected to maintain the trend of high-speed penetration in 2025-2026.

In September 2025, China's total exports of optical modules were +17.1% month-on-month, and Thailand's total exports of communication equipment, including optical modules, were +123.4% year-on-year

From January to September 2025, China's total exports of optical modules were 27.78 billion yuan, -15.0%; in September 2025, Sichuan Province's export value was 624 million yuan, +76.0% month on month; Hubei Province's export value was 460 million yuan, +86.6% month on month; Shanghai's export value was 200 million yuan, +282.9% month on month. The total capital expenditure of the four largest North American cloud vendors in 25Q3 was US$112.43 billion, an increase of 76.9% over the previous year. CignalAI expects the data center optical device market to grow by more than 60% in 2025, mainly due to the continued volume of 400G/800G products. Silicon photonic technology drives continuous breakthroughs in network bandwidth and helps AI networks expand on a large scale. YoleGroup expects the silicon light market to grow from US$278 million in 2024 to US$2.7 billion in 2030, and the CAGR is expected to reach 46%.

It is recommended to focus on optical communications, AI mobile phones, and telecom operator sectors

1) Optical Communications: Leading cloud vendors have optimistic capital expenditure prospects in 2025, and overseas computing power is developing rapidly. The development of AI is driving the construction of large-scale data centers and driving continuous and steady growth in demand for optical device products. The reliability requirements of optical modules have increased and the iteration cycle has been shortened, bringing about a significant increase in the technical threshold of the industry, and the advantages of products from leading optical module manufacturers will be further highlighted. The overall supply of high-speed optical chips is tight, and domestic and foreign optical chip manufacturers are speeding up production capacity expansion and process upgrading. Continued construction of domestic computing power will bring new increases to computing power businesses such as switching chips, switches, and training and promotion of all-in-one computers.

Recommended attention: Xinyisheng (300502.SZ), Guangxun Technology (002281.SZ), Huagong Technology (000988.SZ), Shijia Photonics (688313.SH), Taichenguang (300570.SZ), ZTE (000063.SZ).

2) AI phones: Iterative upgrades of functions and AI empowers technological innovation to support or bring new user experiences. Innovative and high-end AI phones are expected to bring about an increase in the average sales price of products and an improvement in gross margin. Recommended attention: ZTE, Xinwei Communications (300136.SZ).

3) Telecom operators: The three major operators are high-quality dividend assets. There are two cash dividends at the middle and end of the year. The dividend ratio is expected to continue to increase, and they have high dividend allocation value. The three major telecom operators have been approved for commercial testing of eSIM phones, which will help them expand their business scenarios and promote the upgrading of the industrial ecosystem. The revenue quality of the operator's traditional business has improved, and the decline in capital expenditure is expected to reduce future depreciation and amortization costs, and the operation will remain steady. In addition, operators are expected to use AI to restructure their business models, relying on their own advantages in data centers, big data, and network infrastructure. Recommended attention: China Mobile (600941.SH), China Unicom (600050.SH), China Telecom (601728.SH).

Risk Alerts

International trade dispute risk; supply chain stability risk; cloud vendor or operator capital expenditure falls short of expectations; digital China construction falls short of expectations; AI development falls short of expectations; industry competition intensifies.