(report producer/author: Western Securities, Yi Bin, Xing Kaiyun)
2 On February 17, the National Development and Reform Commission and other departments jointly issued a notice that the "East-to-West Calculation" project deployed by the country's major strategic has been officially launched, and 8 national computing power hub nodes will be built and 10 data center clusters will be planned. As the first article of the "East Number and West Calculation" strategy series report, we will start from 1) What is "East Number and West Calculation"? 2) Where did it come from? 3) What is the market space? 4) How to invest and which industries will benefit? These four dimensions are the first to solve the problem in order to draw a general overview. In addition, we have joined hands with the four major industries of Western Securities to interpret the relevant industrial investment opportunities of "East and West Calculation".
1.1 What is "East counts and west counts"? In the digital economy era, data is one of the most important elements, and "East and West Calculation" is the "South-to-North Water Diversion" in the digital economy era. "East numbers and west calculations" simply put it in a simple way. It is to send massive data from the east to the west through a nationwide integrated computing power network to the west to solve the imbalance of data processing demand and supply to the east and west. From a deeper perspective, "East and West Calculation" on the one hand realizes the market-oriented allocation of data; on the other hand, in the digital economy era, it helps narrow the regional differences between the eastern and western economies, and can be comparable to the "South-to-North Water Diversion" in the digital economy era.
"East Data and West Calculation" realizes the market-oriented allocation of data elements and solves the imbalance of computing power demand and supply between the east and the west. Similar to land factors, human factors, capital factors, and technical factors, in the data economy era, with the explosion of global mobile traffic, data factors have become one of the most important production factors. In addition to the consumer Internet, the development of 5G technology, as well as the processing and application of data by finance, the Internet, and industry, has also continuously expanded the space on the industrial side of data market. However, data elements also face uneven distribution problems faced by factors such as land and manpower. Currently, the distribution of major domestic financial institutions and artificial intelligence enterprises is mostly concentrated in the eastern region, and the demand for computing power is increasing, but the resources in first-tier cities are relatively scarce, resulting in a mismatch between the supply and demand of computing power. Therefore, through the "East Digital and West Calculation" project, the optimized configuration of data can be achieved to a certain extent.
Under the digital wave, narrowing the regional gap between the eastern and western economies. As one of the construction contents of the "East Digital and West Calculation" project, the Data Center, as an industry that can create high GDP and tax revenue per unit of land, is naturally suitable for the western region with a wide area and rich in clean energy. At the same time, with the continuous increase in the revenue of data center value-added business, high-end value-added services will also increase the economic value-added . In addition, as a technology industry, it can also drive high-end employment in related industries to narrow the regional imbalance between the east and west.
1.2 Where does "East and West Calculate" come from? It has been brewing for a long time, and the level has gradually increased
sorted out the policy context. "East counts and west counts" has been brewing for a long time, and it is not the first time it has been mentioned. By sorting out the policy context, the "East Digital and West Calculation" project is not the first time it is mentioned. Tracing back to the source can be regarded as a derivative of the 5G new infrastructure project. There are actually traces to the development of "East and West Calculation". As early as the plan jointly issued by the National Development and Reform Commission and other four departments in May 2021, "East and West Calculation" had already appeared. At the same time, from the launch of the plan, long before the project was officially launched, Guizhou (December 2021), Inner Mongolia (January 2022) and other places had been approved to start the construction of a national hub node project for integrated computing power networks.
"East numbers and west calculations" policy context is gradually clear, and the policy levels are gradually improving.At the national level, the word "East Numbers and West Calculation" has been increasing frequently in the past year. "Corresponding content such as building a national computing power network" has also appeared intensively in documents issued by the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Central Cyberspace Affairs Office, and the Energy Administration. It appeared in the "14th Five-Year Plan for Digital Economy Development" issued by the State Council on January 12, 2022, and the overall planning layout of the digital economy in the "14th Five-Year Plan" is basically consistent with the "East Numbers and West Calculation". It can be seen that the policy is in a process of gradually upgrading at the level and the context is constantly clear.
1.3 What is the market space for "East and West Calculation"?
compares the past major projects of the country such as "South-to-North Water Diversion", "West-to-East Power Transmission", " West-to-East Gas Diversion ". The investment scale directly and indirectly brought by "East and West Calculation" is expected to reach hundreds of billions of dollars. Whether it is the project policy level, investment scale, and its significance to economic and social development, "East counting and west calculation" can be compared with the three major projects of "South-to-North Water Diversion", "West-to-East Power Transmission", and " West-to-East Gas Transmission " since 2000.
From the project conception, it has gone through a process of preliminary preparation and continuous demonstration. The previous national projects were not short-term ideas, but based on the needs of the national economic development, and after long-term demonstration and deliberation, the final project was finally established. The original idea of "South-to-North Water Diversion" originated in the 1950s to solve the water shortage problem in northern China. " West-to-East Power Transmission " was originally proposed in 1986, and the "West-East Gas Transmission" began to be brewed in 1998.
Judging from the construction cycle of project , the time span is a long period of time, all of which are decades of long-term projects, which can continuously drive related industries. The distribution of past projects involved resource coordination between different regions in the north and south, east and west across the country, so the project cycle cannot be completed in a short period of time, with a time span of decades and completed in multiple phases. According to the project introduction of the "South-to-North Water Diversion" Engineering Management Department, the construction cycle of the "South-to-North Water Diversion" will last for half a century; while the "West-East Gas Pipeline" project has been launched in 2002 to the current third-tier project, and the total construction time has exceeded 20 years. Therefore, it can continue to drive investment in related engineering construction.
From the perspective of project investment scale, the direct investment scale is at the hundreds of billions of levels. As an example, the "South-to-North Water Diversion Project" project had a cumulative investment scale of more than 200 billion yuan around 2010, of which as of 2014, the relevant data showed that the cumulative investment had exceeded 240 billion yuan. "West-to-East Power Transmission" and "West-to-East Gas Transmission" are both important projects of " Western Development ", and the initial investment scale exceeded 500 billion and 150 billion yuan respectively. Especially as the project continues, the investment scale of the three major projects is likely to be further expanded. It can be seen that the direct investment space of the project is at the hundreds of billions of levels; if indirect investment benefits are considered, the market investment space will be further expanded.
From the perspective of project results, the construction of water conservancy construction in the south-to-north water diversion, the ultra-high voltage network for west-to-east power transmission, and the construction of natural gas pipelines for west-to-east gas transmission have been leapfrog.
Therefore, analogy to "South-to-North Water Diversion", "West-to-East Power Transmission" and "West-to-East Gas Transmission", it can be foreseeable that the construction cycle of the "East Counting and West Calculation" project will be a long-term project for decades. At the same time, as an heavy asset investment project, the investment volume may be at the hundreds of billions of yuan, which has a huge pulling effect on the upstream and downstream of the new infrastructure industries such as related civil engineering, 5G network construction, IDCh data center, and green power .
"South-to-North Water Diversion" constitutes "four horizontal and three vertical" and drives investment in China's water conservancy engineering construction. The "South-to-North Water Diversion" was officially approved in 2002. It took nearly half a century of preparation before it was finally implemented. The entire project includes three lines: the east line, the middle line and the west line, forming an overall pattern of "four horizontal and three vertical". From the perspective of investment scale, the South-to-North Water Diversion Project cycle is expected to last for 40-50 years, and the entire project directly drives the development of my country's water conservancy projects. Taking water conservancy engineering data as an example, from 2007 to 2019, the scale of under-construction projects, including the "South-to-North Water Diversion" project, continued to grow, from less than 600 billion yuan in 2007 to 2.8 trillion yuan in 2019.From the perspective of the overall economic scale pull effect, in addition to directly driving the economy, the increase in water supply in the north can also bring about additional growth in the output value of agricultural .
"West-to-East Power Transmission", driving State Grid to build the "14 Transport 12 Direct" ultra-high voltage project. The "West-to-East Power Transmission" project was first proposed in 1986. With the development of China's economy, the contradiction between electricity consumption in industrial and social development has become more prominent, and the development of ultra-high voltage transmission technology, the project was finally fully launched in November 2000. The entire project will form three major channels in the north, central and southern regions, and will transmit electricity to Beijing-Tianjin-Hebei, East China and Guangdong. In terms of investment scale, the initial estimated investment amount of the project has reached 520 billion yuan. Comparing the "West-to-East Power Transmission" project before and after the launch of the "West-to-East Power Transmission" project, according to the State Grid data, 26 ultra-high voltage projects of "14 Transportation 12 Directions" have been completed and put into operation, and five ultra-high voltage projects of "2 Transportation 3 Directions" are under construction.
"West-East Gas Pipeline" drives the construction of natural gas pipelines and urban pipelines, and coordinates the energy structure. The "West-East Gas Pipeline" project officially started in July 2002, and has been more than 20 years since then. The entire project includes first-line, second-line and third-line projects, and finally formed three major channels. From the upstream natural gas development to the laying of intermediate pipelines and urban pipelines, the initial total budget driven by the project exceeds 150 billion yuan. The project has gone through nearly 20 years, comparing the national natural gas pipeline length in 2004 and 2020, it has increased by more than 10 times from 71,000 kilometers in 2004 to 850,000 kilometers in 2020.
1.4 "East numbers and west calculations", two main investment lines: technology and green,
"East numbers and west calculations" have both economic and ecological significance. Focusing on digitalization and greenness, we pay attention to the two main investment lines: technology and greenness. At the economic level, it has a huge pulling effect of heavy asset investment and long investment chain. Drawing on the investment drive of "South-to-North Water Diversion", "West-to-East Power Transmission", and "West-to-East Gas Transmission", in the current context of emphasizing stable growth, the "East Digital and West Calculation" project, as a characteristic of heavy asset investment, long investment chain, and location-based pulling of the west, can bring huge pulling effect to the economy.
can achieve the goal of green carbon reduction at the ecological level. Data centers have the attribute of high energy consumption. Through "East Digital and West Calculation", data centers are placed in the western region rich in clean energy for intensive management, which can achieve the purpose of green carbon reduction. In fact, the policy documents that mention "East counts and west counts" also emphasize the requirements of green and energy conservation.
technology main line: greater investment opportunities come from hardware-oriented, 5G, cloud computing, , data center, artificial intelligence, and industrial Internet.
"East and West Calculation" directly corresponds to investment opportunities in the 5G industry chain, and invests in infrastructure hardware-level opportunities such as key communication infrastructure, equipment vendors, IDCs, and operators. The Metaverse is one of the most promising directions on the application side. With the rapid growth of data traffic, the demand for computing power will continue to increase, and going to the cloud will be the future trend. Since the 5G construction cycle, the investment direction of mid-to-upstream infrastructure for 5G investment is no stranger. In addition to the direct corresponding IDC, "East and West Calculation" also involves PCB communication boards, ICT equipment, optical modules, as well as operators, power, infrastructure supporting facilities and other related industrial chains.
Green main line: corresponding to the main line of "dual carbon" investment, new energy construction and supporting facilities.
data center has high energy consumption properties, bringing carbon reduction needs. In the operating cost of of the data center, 70% of the cost comes from electricity, so carbon emission intensity has also become a key focus. Through "East and West Calculation", high-power consumption data centers can be placed in areas in the west with rich wind, light and hydropower resources, so as to achieve the carbon reduction goal and can also drive the construction demand of new energy and supporting facilities.
2. Communication: Data center industry chain and computing power network industry chain benefit long-term
2.1 The core goal of "East and West Calculation": supply and demand balance, green development
We believe that "East and West Calculation" mainly has the following two core points:
(1) Under the guidance of the "digital economy", meet computing power needs and improve efficiency.According to the national plan for data centers, the computing power scale of national hub nodes accounts for more than 70%. By 2023, the final computing power plan will exceed 200 EFLOPS, and the proportion of high-performance computing power will reach 10%. Up to now, the scale of my country's data centers has reached 5 million standard racks, and the computing power has reached 130EFLOPS. Driven by the integrated applications of the new generation of information technology such as cloud computing, 5G, big data, Internet of Things, artificial intelligence, etc., the society still has a very urgent need for computing power. At present, my country's data centers are mainly concentrated in the east. The calculation of the east and west is to guide the computing power demand in the east to the west in an orderly manner, so that high-quality land and energy resources in the west can more fully support the computing of the eastern data.
(2) Promote green development under the background of "dual carbon". Previously, the "Three-Year Action Plan for the Development of New Data Centers (2021 Center Development Three Years)" issued by the Ministry of Industry and Information Technology in July 2021 stipulates that by the end of 2021, the PUE of newly built large and above data centers will be reduced to below 1.35; by the end of 2023, the PUE of newly built large and above data centers will be reduced to below 1.3, and in severe cold and cold areas, it will strive to reduce them to below 1.25. In October of the same year, the "Several Opinions on Strict Energy Efficiency Constraints to Promote Energy Conservation and Carbon Reduction in Key Areas" further clarified that the PUE of large and super-large data centers should not exceed 1.3. We observed that the PUE value targets in each region are more stringent. According to the construction guidelines of each region, the PUE targets in the eastern region are basically 1.3 and the western region does not exceed 1.2.
The current data center listing rate in the western region is still at a low level. Currently, the overall national listing rate is 50.1%, with the East China, North China and South China being about 65%-68%, and the Central China being 39%, while the northwest and southwest of the western region are 34% and 41%, respectively, which are lower than the average. On the other hand, this release clearly emphasized that the average listing rate should reach at least 65%, and the increase in supply should match the growth of demand and avoid disorderly expansion. The current listing rate in the Northwest region is relatively low, and the incremental elasticity in the future is greater. (Report source: Future Think Tank)
2.2 The data center industry chain is long-term positive, and hub node IDC operators may take the lead in benefiting
1) New large and super-large data centers need to be built within the hub node range, especially in the central and western regions. 2) The eastern coastal areas of will further tighten the land, fiscal, taxation, energy consumption indicators, etc. of large/super-large data centers, but there are still opportunities for edge data centers. 3) The western region needs to make great efforts to make up for bottlenecks, especially the direct connection network between data centers, data center operation and maintenance talents, etc. 4) Green, low-energy consumption data center infrastructure equipment will have greater growth opportunities. This project will benefit the data center industry chain and computing power network industry chain in the long run. From the perspective of investment rhythm, IDC civil engineering , green energy supply, and IDC operators within the hub node may take the lead in benefiting, computing network communication , IT equipment manufacturing, basic software, network security software and hardware may be relayed.
3. Computer: The "East Digital World Calculation" project is fully launched, coupled with the development of digital economy and information innovation, the industrial chain dividend continues to release
"East Digital West Calculation" project is launched, promoting the development of computing resources and the construction from west to east. The data center industry chain directly benefits, involving basic software and hardware and construction and operation services. At the same time, the supply side will be more efficient and energy-saving, and putting higher requirements for service providers; the promotion of the "digital economy" plan is intensified, and the information and communication infrastructure will be continuously promoted in the future, stimulating the deepening of the development of IT industries in various vertical fields, and further guiding the application and business formats of emerging industries will be cultivated; coupled with the accelerated promotion of industry information innovation, the dividends of the industrial chain will continue to be released.
3.1 The demand for computing power continues to grow, supporting the high-quality development of economic html
computing power has become an important infrastructure for the development of the national economy. Accelerating the construction of computing power will effectively stimulate the innovation and vitality of data elements, accelerate the process of digital industrialization and industrial digitalization, give birth to new technologies, new industries, new business forms and new models, and support high-quality economic development.
According to data from the National Development and Reform Commission, as of now, the scale of my country's data centers has reached 5 million standard racks, and the computing power has reached 130EFLOPS.According to the Chinese IDC circle, in 2020, the market size of my country's IDC industry has reached 195.8 billion yuan. With the continuous penetration of digital technology into all areas of the economy and society, the whole society still has a very urgent demand for computing power, and it is expected that it will continue to grow rapidly at a rate of more than 20% every year.
3.2 Computing power facilities are laid out from east to west and optimized resource structure. The server and data center industry links are in depth.
Most data centers in my country are distributed in the eastern region. Due to the increasing tight land, energy and other resources, the western region has abundant resources and has the potential to develop data centers and undertake the computing power needs of the eastern region. Western Data Center handles services that have low requirements for the network, such as background processing, offline analysis, storage and backup, and the eastern hub handles services that have high requirements for the network, such as industrial Internet, financial securities, disaster warning, telemedicine, video calls, artificial intelligence reasoning, etc.
implements the "East Digital and West Calculation" project, which will accelerate the large-scale layout of data centers to the west, and achieve reasonable layout of data centers, optimize supply and demand, green intensification and interconnection. Through the national integrated data center layout construction, it will help improve the overall computing power level of the country, improve the efficiency of computing power use, and realize the large-scale and intensive development of computing power in the country; it can also consume green energy in the west nearby and continuously optimize the energy use efficiency of data centers.
computing power industry chain is improving, and the supply side is more efficient and energy-saving. Accelerate the construction of computing power centers, and the data center industry chain will benefit directly, involving servers, IDC operation service providers, basic software, etc., which will usher in an increase in demand prosperity.
Key industrial links: For hardware facilities, servers are the core cornerstone of the digital economy and overall computing power system, and the downstream is mainly distributed in key industries such as the Internet, finance, government, telecommunications , and energy. According to IDC data, in the first half of 2021, the Chinese server market shipments were 1.706 million units, and increased by by 8.9% year-on-year; the market size was US$10.81 billion, an increase of 12.1% year-on-year.
For IDC service providers, it will accelerate the improvement of computing power service quality, reduce network and power costs, plan computing power resources more targeted, improve usage efficiency, and put higher requirements on the supply side.
3.3 The development of the digital economy is highlighted, coupled with the trend of domestic production, and continue to release the dividends of the industrial chain
The "East Digital and West Calculation" project has started to open the curtain for the development of the digital economy. Previously, the State Council issued the "14th Five-Year Plan" Digital Economy Development Plan, clarifying the guiding ideology, basic principles, development goals, key tasks and guarantee measures for promoting the healthy development of the digital economy during the "14th Five-Year Plan" period. According to the plan, the GDP contribution of digital core industries will increase from 7.8% to 10% during the "14th Five-Year Plan" period, and the digital economy will develop in an all-round way. The official launch of the "East Digital and West Calculation" project demonstrates my country's determination and efforts to develop in the digital economy field. In the future, it will continue to drive the continuous upgrading of information and communication infrastructure, stimulate the deepening of the development of IT industries in various vertical fields, and further guide the application and business formats of emerging industries to be cultivated.
plus the development of industry information innovation and innovation, the dividends of the industrial chain continue to be released. In 2022, the process of domesticization accelerates, and industry information innovation is expected to enter the stage of scale promotion. Customers in key industries represented by finance and operators are intensively promoted, and have strong payment capabilities to support it. With the development of the digital economy, domestic basic software and hardware industries such as servers and operating systems are expected to be further expanded.
4. Electronics: "East numbers and west calculations" has effectively driven the upstream and downstream investment of the server industry chain industry
server industry ushered in multiple favorable benefits. On the one hand, as an important implementation direction of the "East Digital Counting and West Calculation" policy, it opens up space for long-term server needs. On the other hand, the development of information technology has promoted the transfer of data in the cloud. The four major cloud computing manufacturers in the world, Amazon , Google , Microsoft , and Meta, capital expenditures reached US$30.972 billion in the first three quarters of 2021, maintaining a high growth of +36.62%. As the impact of the epidemic and chip shortage gradually eases and CPU updates and iterations, the server market will usher in a new round of growth cycle in 2022.
computing power is the core productivity of the digital economy and the infrastructure for the development of my country's national economy.According to the High Technology Department of the National Development and Reform Commission, my country's data center scale has reached 5 million standard racks, with a computing power of 130EFLOPS, and is expected to continue to grow at a rate of more than 20% each year, and the demand for computing power is urgent. The "East Digital and West Calculation" policy will establish 10 national data center clusters around the computing power hub node planning of 8 countries, guiding the computing power demand in the eastern region to the western region in an orderly manner, and optimizing resource allocation.
The data center industry chain is long, the investment scale is large, and the driving effect is strong. Through the construction of computing power hubs and data center clusters, the upstream and downstream investment of the industry will be effectively driven. The server industry chain, as the core carrying equipment of computing power, will benefit comprehensively: 1) Digital infrastructure is the foundation of the "East Data and West Calculation" project. East Data and West Calculation strengthens the main line of traffic and drives the basic links of traffic paths. Servers, routers, switches, and other high-speed network equipment and devices as the core links of traffic paths, and demand elasticity has increased greatly. 2) The east and west calculations are conducive to increasing the computing power demand in the east and west. The growth of computing power demand will accelerate the update and iteration of network technology and promote the upgrading of servers and other equipment. 3) The increase and upgrading of server demand will also drive the continued growth of the memory interface chip market. 4) The demand for information security has increased significantly, and the performance growth of the data security hardware industry has accelerated.
Information technology development promotes data transfer in the cloud, and cloud manufacturers' capital expenditures maintain rapid growth. With the development and maturity of new generation information technologies such as cloud computing, 5G, and AI, the advantages of cloud services accessibility, expandability and flexibility have been further highlighted. Enterprise digital transformation has accelerated the improvement of the penetration rate of cloud services. According to IDC's forecast, the cloud system infrastructure service (IaaS) markets in 2021 and 2022 will be +32.59% and +29.45% year-on-year respectively.
Capital expenditure of cloud computing manufacturers is a leading indicator of IDC demand. The total capital expenditure of the four major cloud computing manufacturers in the world in the first three quarters of 2021 reached US$30.972 billion, up 36.62% year-on-year, maintaining high growth. Meta expects capital expenditure to be $19 billion in 2021 and to $29-34 billion in 2022 to support AI and machine learning spending under the meta-universe transformation. Investment in cloud infrastructure will continue to stimulate data center settings and increase server demand. The
server market has fully recovered and the stocking cycle has arrived. Server shipments in 2020-21 were affected by many aspects: 1) The impact of macroeconomic instability factors such as Sino-US trade frictions and the impact of the epidemic has reduced the IT budget of enterprises, and the shift to leasing of server purchases has led to the suspension of server purchase orders. 2) Due to the delay in the release of the new generation of Intel CPUs, cloud data centers and brand manufacturers are becoming more conservative in pulling goods. 3) Affected by chip shortage, the overall shipment volume is affected by the problem of long and short materials.
Outlook In 2022, as the epidemic and chip shortage gradually ease, the new DDR5 platforms Intel Sapphire Lake and AMD Genoa are expected to be launched, stimulating major manufacturers to purchase models equipped with new generation CPUs.
server industry chain data continues to verify that the prosperity is upward. Judging from the requirements of remote management chips (BMCs) that are essential among servers and hosts, Xinhua Technology, the world's largest supplier (on the server), achieved revenue of 82 million yuan and 70 million yuan in October and November 2021, respectively, an increase of 84.57% and +33.22% year-on-year. The continued growth in performance shows that the stocking cycle has arrived. IDC expects global server shipments to be 14.23 million units in 2022, up 9.78% year-on-year. The global server shipment CAGR will reach +7.18% in 2021-25, and the server market will usher in a new round of growth cycle.
The number of memory modules provided by a single server has increased, driving the demand for memory interface chips to increase. As server data storage and processing load capacity continues to increase, server DRAM demand increases, and the amount of configured memory in a single server increases accordingly. According to Gartner data, the average single memory capacity of a server will also grow from 405GB in 2020 to 810GB in 2024, and the server memory capacity CAGR will reach +18.92% in 2020-24. According to Trendforce's expectations, servers will surpass mobile devices to become the largest downstream DRAM application in 2025, with bit usage accounting for more than 48%.
Currently, the server can carry 1-4 CPUs and connect 6-24 memory channels. On average, each channel can be equipped with 2 memory modules.Under the same memory requirements, solutions with a large number of memory modules can provide faster computing speed. At present, most servers have not yet been fully plugged in, and there is still a lot of room for growth in the number of memory modules.
CPU and memory reading speed gap is getting wider, and the importance of interface chips is becoming increasingly prominent. The memory interface chip is the core control chip of the memory module. Its main function is to improve the speed and stability of memory data access to match the CPU's increasingly improved running speed and performance. Memory interface chips can usually be divided into three categories according to their functions: clock drivers (RCDs), data buffers (DBs) and memory buffers (MB/AMBs).
With the upgrade of technology, the CPU main frequency has been increased from 3.73GHz to 5.30GHz. Due to the increasing difficulty of breakthroughs in DRAM process nodes, the memory particle core frequency has only increased from 133MHz to 200MHz, and the memory reading speed is far less than the CPU computing speed. The cache control module added between DRAM and CPU can improve the speed and stability of memory data access without affecting memory capacity, so as to match the server CPU's growing demand for high performance and large capacity for memory modules, and its importance is becoming increasingly prominent.
5. Electricity New: Demand for power supply and distribution systems, refrigeration and energy-saving equipment is expected to grow
The demand for power supply and distribution systems is expected to benefit the construction of "East Digital and West Calculation". The electricity demand for data centers is large, and the electricity cost accounts for about 60% of the overall operating cost of the data center. Once a problem occurs in power supply system , it will seriously affect the normal operation of the data center. Therefore, a reliable, safe, advanced and efficient power supply and distribution system is needed to ensure the continuous and stable operation of the data center, and to ensure the minimum range of power outage impact in the case of failure to the greatest extent. In terms of power distribution systems, with the continuous improvement of technical strength and responsiveness of domestic low-voltage electrical appliances, we believe that domestic low-voltage electrical appliance import substitution is expected to continue to advance, and with the gradual advancement of the construction of the "East Digital and West Calculation" project, it is expected to benefit from the rapid growth of downstream data center demand.
6. Media: "East and West Calculation" is a huge demand for computing power in the media Internet sector
Media Internet industry, and platform-based enterprises are actively increasing the construction of data centers and extending the industrial chain vertically. At the same time, Internet platforms such as Tencent , Baidu , Alibaba have a layout across the country based on their own cloud computing business development. Benefiting from the "East and West Computing" project, my country's computing power distribution will be more efficient, and will promote the steady expansion of industries including short videos, games, cloud computing and other industries.
6.1 Cloud computing
data center construction is one of the key links in improving cloud computing power. Cloud computing is a method based on a shared infrastructure, in which the software, hardware, platform and other IT resources will be provided to users in the form of services. Cloud computing has the advantages of high reliability, high scalability and low cost, so the total demand in the whole society has grown rapidly. In Q3 2021, the overall market size of China's public cloud services (IaaS/PaaS/SaaS) reached US$7.188 billion. The essence of cloud computing is the concentration of data and applications, but concentration does not change the type of computing. Cloud computing platforms still have to run key core applications such as databases and middleware, and the scale will expand across orders of magnitude. Therefore, the construction of data centers has become one of the key links in improving computing capabilities. In addition, the problem of the green development of big data centers itself cannot be ignored. According to statistics, the annual electricity consumption of various data centers in my country has accounted for about 2% of the total electricity consumption in the society, and the growth rate of power consumption has remained above 10% for many years, so that some eastern regions have clearly positioned data centers as high-energy-consuming industries to restrict development. Although the western region has abundant renewable energy and a suitable climate, it has the potential to undertake data center construction.
According to Gartner, the global cloud computing market size in 2020 reached US$208.3 billion, and Asia-Pacific is the fastest growing region in the world's cloud computing market, with the proportion of China's market that year reaching 16%. Among them, in the IaaS market, the top three companies are Amazon, Microsoft and Alibaba. In addition, Huawei Cloud has ranked among the top five in the world with 4.2% market share.
In terms of the Chinese market, the overall market size of China's public cloud services (IaaS/PaaS/SaaS) in Q3 2021 reached US$7.188 billion. Among them, in the market share of public cloud IaaS+PaaS in Q3 2021, Alibaba Cloud had a market share of 38.24%, ranking first; Tencent Cloud had a market share of 10.92%, ranking second; Huawei Cloud's market share of 10.74%, ranking third. Among the remaining 30% of the markets, cloud manufacturers such as China Telecom , Amazon AWS (China market), Baidu Smart Cloud , and China Mobile followed closely behind.
has 75 global availability zones in the IaaS and PaaS infrastructure fields in 2021, and has more than 2,800 CDN nodes worldwide, including more than 2,300 mainland Chinese nodes (excluding Hong Kong, Macao and Taiwan). In 2021, Tencent Cloud's global availability zones reached 66, including 40 in China; there are more than 2,800 CDN (content distribution network) nodes around the world, including more than 2,000 domestic nodes (including Hong Kong, Macao and Taiwan), and the number of overseas nodes exceeds Alibaba Cloud. In 2021, Huawei Cloud has more than 2,500 CDN nodes worldwide.
In this way, among domestic cloud computing companies, Alibaba Cloud has certain competitive advantages in the domestic cloud computing market and even the global market, while Huawei Cloud and Tencent Cloud have been shortlisted for the second place in China. As the domestic data center layout is gradually optimized, companies such as Alibaba Cloud, Tencent Cloud and Huawei Cloud have all made national layouts for data centers, which is consistent with the current "East and West Calculation" engineering concept.
Alibaba Cloud Zhangbei Data Center and Xuanhua Data Center under construction both belong to the Beijing-Tianjin-Hebei hub in the "East Digital and West Calculation" project. Among them, Zhangbei Data Center was put into production in September 2016. It is the first data center cluster for domestic enterprises to adopt a three-point layout. It vigorously adopts green energy such as wind power and photovoltaics to deploy the largest immersive liquid cooling cluster in the domestic cloud computing data center. In addition, Ulanqab is also an important hub node in the western part of Alibaba Cloud. In June 2020, Alibaba's Ulanqab Data Center opened.
Tencent Cloud has data center layouts in Guizhou hub, Beijing-Tianjin-Hebei hub, Yangtze River Delta hub and Chengdu-Chongqing hub. Tencent Cloud has put into production of Gui'an Seven Star Data Center in Guizhou hub. According to the plan, Tencent Cloud Gui'an Data Center will store 300,000 servers. In addition, at the Beijing-Tianjin-Hebei hub, Tencent Cloud has deployed two data centers in Huailai Ruibei and Dongyuan, with plans to accommodate more than 300,000 servers, and both have been partially put into production; within the Yangtze River Delta hub, Tencent Cloud has Qingpu Data Center; in the Chengdu-Chongqing hub, Tencent Cloud has two cloud computing data centers in Chongqing, one of which was put into use in June 2018 and can accommodate 100,000 servers.
Huawei Cloud proposed the cloud data center layout in southern Guizhou, North Wu in 2017. It plans to build super-large data center bases in Gui'an New District and Ulanqab Big Data Industry Park. The long-term servers have reached more than 1 million units, and they have been put into production and use. In the future, 60%-80% of data centers will be deployed in the west and actively practice the calculation of the east and west.
"East Data and West Calculation" project will help my country's data centers to make reasonable arrangements, thereby improving the national computing power level. Once upon a time, most of my country's data centers were distributed in the eastern region. Due to the increasing tightening of land, energy and other resources, it is difficult to sustain the large-scale development of data centers in the eastern region. The western region of my country is abundant in resources and rich in renewable energy, and has the potential to develop data centers and undertake computing power requirements in the eastern region. Implement the "East Digital and West Calculation" project and accelerate the large-scale layout of data centers to the west, so as to achieve reasonable layout of data centers, optimize supply and demand, green intensiveness and interconnection. Through the national integrated data center layout construction, it will help improve the overall computing power level of the country, improve the efficiency of computing power use, and realize the large-scale and intensive development of computing power in the country; it can also utilize the green energy in the west nearby and continuously optimize the energy use efficiency of data centers.
6.2 Short video
Short video company's business is growing rapidly, and the scale of data processing demand is huge. With the increasingly close integration of 5G and AI with the mobile Internet, short videos have gradually become the mainstream form of content consumption, and the penetration rate of information interaction methods such as on-demand, live broadcast and real-time communication has increased rapidly.At present, the total DAU of the two short video platforms, Douyin and Kuaishou, has exceeded 1 billion, and the daily data processing demand is growing at a rate of more than 40PB and above 10PB respectively. The traditional data center leasing model is difficult to support the data volume corresponding to this business scale. In order to better support the platform's data needs, ByteDance and Kuaishou have all planned to build data center infrastructure.
ByteDance layouts the data center through the volcano engine and extends to the upstream and downstream industrial chains. Volcano Engine is a technical service platform provided by ByteDance to enterprises, providing enterprises with full-link solutions from technical infrastructure to upper-level applications. In terms of infrastructure, Volcano Engine has deployed 500+CDN nodes nationwide, which can provide transmission acceleration services for enterprises and users in the east and west. At present, Volcano Engine is strengthening the construction of the upstream and downstream industrial chain of western data centers and will promote interconnection with other data centers. Nowadays, the digitalization capabilities of information represented by 5G and AI are constantly strengthening. In the future, the requirements of enterprises and individual users for technical services and information interaction will also be simultaneously improved, which will also bring about the demand for larger-scale and higher-efficiency digital infrastructure. While the volcanic engine is gradually being introduced to the market and serving more corporate customers, ByteDance may be expected to accelerate the pace of data center layout and construction.
Kuaishou built its own data center, providing solid support for business development from the bottom layer. In June 2020, Kuaishou announced the establishment of a large-scale data center in Ulanqab. Kuaishou Ulanqab data center is at the Inner Mongolia hub node of "East and West Calculation". It is planned to build approximately 20,000 10-kilowatt cabinets. After all, it is expected to support 300,000 servers. The first phase of the project is expected to be completed and put into production in the first quarter of 2022. Kuaishou Ulanqab Data Center is the first data center in the domestic Internet industry to independently develop and independently complete the overall concept design. It will realize intelligent system operation through AI technology. We expect Kuaishou's data processing and even commercial monetization efficiency to be improved accordingly to meet the needs of long-term business goals. (Report source: Future Think Tank)
6.3 Metauniverse
The construction of the meta-universe world requires great computing power. The CEO of UGC gaming platform Roblox believes that the metaverse has eight characteristics: identity, friends, immersion, low latency, diversity, anytime, anywhere, economic system and civilization. The three core technologies of the metaverse: Artificial intelligence (AI), interactive immersion technology (AR/VR/MR), and blockchain are inseparable from the support of computing power. AI provides infrastructure construction and massive content production for the metaverse; interactive immersion technology blurs the boundaries between reality and virtuality, creating an environment parallel to the real world; blockchain can improve the economic system. Computing power supports the creation and experience of metaverse content. At the same time, the high immersion, strong interaction and low latency multidimensional metaverse world has an exponential growth in computing power. According to Intel's senior vice president Raja Koduri, realizing the metaverse requires increasing the current most advanced computing power level by 1,000 times.
"East numbers and west calculations" helps improve the infrastructure of the meta-universe. We believe that "East Digital and West Calculation" will promote the high-quality and efficient development of the digital economy, gradually alleviate the problem of computing power shortage caused by land resources in the eastern region, and at the same time, computing power costs are expected to further decline. In the medium and long term, the "East Digital and West Computing" project will help improve the infrastructure of the metaverse world, meet the demand for computing power intensity and height of high immersion, strong interaction and low latency, and promote the possibility of human beings reaching the ultimate form of the metaverse world. XR content developers, hardware chip manufacturers, virtual space platforms, etc. are expected to benefit.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
selected report source: [Future Think Tank]. Future Think Tank - Official website
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