In the grand tapestry of human advancement, the past century stands out vividly as a hallmark of extraordinary achievements propelled by revolutionary technological innovationsThe expression "science and technology are the primary productive forces" resonates fiercely today, as we delve into the symbiotic relationship between technological progress and economic empowermentYet, this journey is fraught with uncertainty; innovation inherently carries the specter of potential failure, introducing commensurate risks to investorsSo, how do we ascertain the current phase of global technological innovation? How can we effectively seize the opportunities presented by this paradigm shift? What strategies should we apply to balance the interplay of opportunities and risks inherent in technological investments?

Firstly, what is the current phase of the global technology industry? We believe we are rapidly approaching a 'TECH BIG BANG'.

The 21st century heralds what some may call the golden age of technological innovation

In a span of just over twenty years, we have witnessed two monumental waves of technological revolutionsThe first was the "Internet Revolution." The inception of the Electronic Numerical Integrator and Computer (ENIAC) in 1946 at the University of Pennsylvania marked the beginning of computing, yet it wasn't until the late 1990s that the internet began permeating households en masseThis transformation was powered by the widespread adoption of fiber optics, advancements in computer chip technology, and optimization of software operating systemsThe rise of the personal computer (PC) was epitomized by the Wintel alliance, underlining the birth of leading technology giants.

The second wave emerged as the "Mobile Internet Revolution," exploding in 2007 with the introduction of the first iPhoneThis seismic shift ushered in an era where work and life became increasingly digitized, generating substantial societal value and birthing numerous tech titans

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As we look to the present, it appears we're on the cusp of a third revolution—often referred to as the "Artificial Intelligence Revolution." This phase goes beyond mere recognition of popular large language models; it embodies a broader spectrum of innovationsFrom cutting-edge chips and sophisticated algorithms to groundbreaking vertical applications and emerging technologies like quantum computing and brain-computer interfaces, AI is at the epicenter of a new technological renaissance.

In the realm of chip hardware, industry leaders are actively redefining the landscape by consistently pushing boundaries beyond Moore's LawThe forecast for the semiconductor industry anticipates that by 2030, manufacturers will achieve the 0.7nm node using complementary FET technology, proudly surpassing today's most advanced 3nm standardsIn December 2023, Dutch lithography firm ASML will release its next-generation high-NA EUV lithography machine, catering to the manufacturing demands of 2nm chips

Furthermore, at the upcoming Computex conference in June 2024, key players in the GPU market will unveil ambitious roadmaps for the next three years, which promise to support million-card computing clusters with high-speed interconnectivity.

The evolution of algorithmic models reflects another dynamic aspect of this technological surgeTwo distinct paths are emerging: one led by Silicon Valley startups such as OpenAI and Anthropic, focusing on creating larger and more intelligent supermodels; and the other led by North American cloud service providers, which are catering to cost-effective applications and emphasizing efficient deployment of AI models in real-world applications.

Looking ahead, vertical applications are on the verge of major breakthroughs as wellSelf-driving technology has made strides over the years, yet remains stymied at Level 4 autonomy

Leading companies are leveraging advancements in large language models and extensive computational power to piece together the remaining components of autonomous driving systemsIn the realm of embodied intelligence, the challenge of training AI to achieve generalization capabilities is pivotal for the realization of general-purpose humanoid robots, and 2023 has seen a surge in related patents and innovations following significant technological breakthroughs.

Secondly, how can China seize investment opportunities in this new technological revolution? We advocate for a dual-focus investment strategy centered on 'technological innovation' and 'self-sustainability.'

To start, it's essential to capitalize on the 'technological innovation' thread within China's burgeoning tech landscape

As the third wave of the 21st-century technological revolution unfolds, the potential for investment opportunities in China's tech companies is exceedingly greater than in previous revolutionsFrom foundational sectors such as chips, equipment, and basic software, to downstream applications like autonomous driving and mixed reality, there exists a wealth of opportunities that savvy investors can capitalize upon.

China's advanced technological ecosystem benefits from the most comprehensive supply chain in the worldOver forty years since the onset of economic reforms, the transformation of China's tech industry is nothing short of remarkableParticularly in the last decade, Chinese tech firms have claimed a significant stake in global marketsDuring the internet revolution, Chinese enterprises initially learned from foreign technologies to gradually integrate into the global tech supply chain, a trend that evolved into significant innovation during the mobile internet era, where they not only produced globally recognized smartphone brands but also filled pivotal roles in the supply chains of major tech firms.

Moreover, China's demographic advantages, exemplified by an annual pool of approximately 11 million university graduates—many in STEM fields—provide a formidable foundation for technological innovation

The country's vibrant tech hubs, from Zhangjiang in Shanghai to Zhongguancun in Beijing and Nanshan in Shenzhen, have become hotspots for top talentAdditionally, the sheer scale of the domestic market contributes to an unprecedented impetus for technological development.

The second vital investment focus revolves around 'self-sustainability.' Pre-2015, China’s tech companies primarily engaged in low-end manufacturing and assembly, lacking critical irreplaceable technologiesHowever, significant progress has been made in the past decade, particularly in advanced manufacturing and core technologiesDespite this progress, there still exists a gap in certain critical areas compared to global leadersThe complexities of global supply chains and unpredictable political climates underscore the imperative of maintaining self-sustainability in key technology sectors—viewing investment opportunities through the lens of 'bottleneck' industries like integrated circuits, foundational software, and advanced materials becomes crucial as breakthroughs in these sectors can yield significant returns.

Lastly, how do we achieve a balance between opportunity and risk in technology investments? We assert that a robust foundation in industry research is paramount to navigational success in this fast-evolving landscape.

Investments in technology carry a considerable degree of uncertainty; the risk often surpasses that of traditional sectors

As we have witnessed from the surge and bust of tech stocks during the internet boom from 1995 to 2001, excessive optimism can lead to substantial bubble risksEngaging too early in emerging sectors without sufficient market maturity can be equally detrimental.

To balance opportunities and risks effectively, we pinpoint four critical strategies:

Firstly, prioritize rigorous industry researchApplying Elon Musk's principle of first-principles thinking, we must derive the fundamental truths and understand the essence of technological innovationsThis entails delving deeply into the on-ground realities of progress, innovations, and inherent risks, allowing investors to derive insights and enhance accuracy through logical deduction—a process that necessitates expertise and in-depth industry knowledge.

Secondly, keep a pulse on the overarching cycles of innovation

The trajectory of technological advancements is rarely linear; thus, identifying the right timing to engage is essentialMisjudging the cycles can lead to missed opportunities or unnecessary lossesCompanies like Gartner have categorized innovation into five stages: technology trigger, peak of inflated expectations, trough of disillusionment, slope of enlightenment, and plateau of productivityRecognizing the best investment phases—when expectations are expanding and growth is surging—is key to capturing the most substantial returns.

Thirdly, focus on identifying genuine growth companiesAn all-too-common misstep in tech investments is conflating 'false growth' with 'true growth' and mistaking cyclical gains for sustained performanceEvaluating companies based on their fundamental strengths, management effectiveness, market differentiation, and competitive edges is essential.

Finally, conduct detailed assessments of valuation and long-term risk compensation