New policies favor the computing power sector!
On the afternoon of October 16, the Ministry of Industry and Information Technology (MIIT) announced the "Notice on the Launch of the Metropolitan 'Millisecond Computing Power' Special Action." This notice outlines a goal to achieve one-way optical interconnection latency of less than 1 millisecond among medium and large computing centers in metropolitan areas by 2027. It aims to accelerate the deployment of high-performance networks between computing centers, targeting a deployment rate of at least 50% for 400Gbps exports from metropolitan medium and large computing centers by 2027.
Brokerages have pointed out that the layout of computing power is becoming increasingly vital in the AI industry. Currently, domestic AI chips are being continuously iterated, and progress in achieving autonomy and control is on track, leading to recommendations to seize investment opportunities in domestic computing power.
Significant Announcement from MIIT According to MIIT's official website, the MIIT Office released the aforementioned notice.
The notice emphasizes the development of computing power networks, aiming to establish a high-speed, high-capacity, low-latency metropolitan network with pervasive coverage to provide millisecond-level access to computing resources. This involves achieving millisecond interconnection (less than 1 millisecond) between computing centers, ensuring that key locations can access computing resources with similar latency, and optimizing application terminal access to ensure network latency is below 10 milliseconds. This special action will drive industry stakeholders to focus on facilitating the development of millisecond computing channels, building an efficient metropolitan computing network by 2027.
Key components include improving the interconnect network architecture between computing centers, guiding the optimization of metropolitan network layouts for computing centers, and refining network hierarchies and interconnection topologies. By 2027, the goal is to implement one-way optical interconnection latency of less than 1 millisecond between metropolitan medium and large computing centers.
Furthermore, the plan calls for accelerating the deployment of high-performance networks between computing centers, facilitating the application of high-speed optical transmission systems, and achieving at least 50% deployment rate of 400Gbps exports from these computing centers, along with a 50% deployment rate for optical cross-connects at major metropolitan sites.
Innovative network technology verification will also be conducted for interconnecting computing centers. This initiative aims to accelerate the research and validation of advanced technologies like lossless transmission and smart operations for computing networks, enhancing the overall efficiency of integrated computing operations.
Optimizing access networks for significant locations aims to promote the deployment of optical devices at comprehensive access points and industry parks to achieve broad coverage and establish a metropolitan low-latency computing capacity. New technology validations, such as small-particle optical transport networks and deterministic networks, will guide telecommunications firms to upgrade the services for dedicated computing lines.
Assessment of millisecond access capabilities will also be established. By 2027, the objective is for 70% of metropolitan computing centers to achieve millisecond latency coverage and to build a robust foundation for high-quality computing access.
Efforts will also be made to minimize latency from computing terminals to servers, encouraging innovations in networking and protocols within computing centers to improve communication efficiencies for AI training and inference applications. Technological deployments such as all-optical switching and optoelectronic convergence networking are expected to enhance network performance, paving the way to achieve less than 10 milliseconds latency from computing terminals to servers by 2027.
Doubling down on integrating computing capabilities across manufacturing, finance, transportation, healthcare, education, and entertainment sectors aims to encourage telecommunications firms to introduce customized computing service packages that provide flexible, inclusive service capabilities. This will support interactions in typical applications, such as industrial quality inspections and auxiliary diagnosis, fostering enhanced AI-driven industrial modernization.
Institutions: Continued Optimism for Industry Chain Opportunities Recently, a wave of favorable news has emerged for the computing power industry. Several brokerages express confidence in the long-term investment prospects of computing power sectors.
On October 11, a joint document from seven national departments, including MIIT, the Ministry of Human Resources and Social Security, and the Ministry of Commerce, outlined plans to promote innovation in service-oriented manufacturing from 2025 to 2028. The plan stresses the enhancement of new information infrastructure, deepening the synergy between "5G and the Industrial Internet," promoting the integration of computing infrastructure, and catalyzing industry applications. It aims to improve the provision of industrial data elements and build quality industry data repositories.
Notably, during the recent National Day holiday in 2025, China's AI computing ecosystem continued to evolve: In server orders, both the Industrial and Commercial Bank of China and China Unicom announced a joint server procurement exceeding 10 billion RMB, with domestic computing power suppliers winning over 90% of the bids. In large models, Alibaba released the large model Qwen3-VL-30B-A3B, achieving immediate support from Huawei’s Ascend line.
CITIC Securities believes that the acceleration of domestic large model iteration is ongoing, while domestic computing power chips seamlessly integrate to create a closed ecosystem, fostering sustainable development in domestic AI. The brokerage notes that previously in Q2 2025, despite geopolitical constraints on overseas AI chips, cloud providers like Alibaba saw robust Capex growth. As domestic AI chips continue to evolve and autonomous systems make steady progress, the infrastructure for computing power expansion remains strong. At the same time, domestic cloud firms are ramping up efforts to catch up with North American counterparts, and more are expected to invest in computing power, facilitating a return to high growth for the sector.
Zhejiang Commercial Securities anticipates the rise of domestic computing power by 2025, with major firms maintaining high capital expenditures and reaching a consensus on domestic computing. Breakthroughs in advanced processes, alongside rising revenues for companies like Cambrian and Moore Threads, and Huawei’s three-year product planning, indicate a gradually forming autonomous domestic computing industry chain. As power cabinet output increases, supply and liquid cooling solutions will upgrade. With challenges in chip enhancement in the short term, domestic giants such as Huawei and Alibaba are leveraging large cluster systems to enhance computing power, indicating ongoing optimism for optical communication sectors.
Guotai Junan Securities suggests monitoring sectors like servers and IDC, driven by domestic AI development, along with those linked to overseas AI growth, such as servers and optical modules.
Huatai Securities forecasts a 167% year-on-year increase in net profit attributable to the parent in the optical communication sector for Q3. Specifically, demand for overseas 800G optical modules is expected to maintain rapid growth, and leading firms are anticipated to continue their impressive performance. Moreover, with the expected ramp-up of 1.6T optical modules, there is a bullish outlook for related optical module and engine manufacturers.
Caitong Securities maintains a favorable view on the trends in the AI industry chain, particularly benefiting from the rising global demand for AI computing power, such as in PCB and server ODM sectors. Additionally, as model capabilities enhance and AI application scenarios permeate, leading ODM companies are also expected to benefit from increased AI terminal demand.
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