Hong Kong Stock Concept Tracking | Microsoft's Blue Screen Triggers Global Crash, Institutions Bullish on Operating System Localization (Concept Stocks Attached)

According to Zhitong Finance and Economics APP, on July 19th, Microsoft experienced a major service outage globally, affecting the normal use of global enterprises and users from the Americas to Asia. Industries such as aviation, railways, media, cinemas, exchanges, schools, and banks were in chaos. The company estimates that Crowdstrike's update affected 850,000 devices. TF Securities pointed out that independent controllability is the cornerstone of cybersecurity, and the localization of operating systems is a major trend. In addition, the Third Plenum has repeatedly emphasized security, and independent controllability is expected to accelerate.

The impact of this incident is significant. Due to the widespread use of CrowdStrike, especially in foreign-funded enterprises and critical infrastructure, the severity of this incident is comparable to a major cyber attack. The recovery process may take a long time and require a large amount of human resources. Enterprises and organizations need to develop detailed recovery plans and ensure data security and system stability.

On the other hand, domestically, it has been reported that several airlines including Air China, China Eastern Airlines, China Southern Airlines, Lucky Air, and Spring Airlines are operating normally without being affected by widespread system technical failures. Other public services such as high-speed rail and banks remain stable.

Cybersecurity industry insiders believe that the reasons behind these companies being able to "stand alone" may be related to three aspects. For example, industries commonly use domestic terminal security protection software such as 360; domestic security vendors do not rely entirely on the automatic upgrade of cybersecurity products, but pay more attention to the overall operation of the system and team building; and in recent years, through regular cybersecurity attack and defense drills, simulating real network attack scenarios, discovering potential security product and system vulnerabilities, and testing and improving the protection capabilities of critical information infrastructure.

It is reported that with the lowering of the threshold for network attacks by generative AI, the number of global network attacks is expected to increase and become more efficient by 2023. According to CrowdStrike's 24M2 global threat report, the average time for global network attacks to breach defenses in 2023 decreased from 84 minutes the previous year to 62 minutes, with cloud intrusion cases increasing by 75% year-on-year.

According to Gartner's statistics and forecasts, global information security spending is expected to increase year-on-year from 2019 to 2024, reaching $214.95 billion in 2024, a 14.3% increase. In terms of segmentation, spending on security services, infrastructure protection, and network security equipment is expected to reach 41.9%, 15.5%, and 11.3% respectively in 2024. In addition, according to the IANS Security Budget Benchmark Report, the proportion of network security budgets in enterprise IT budgets is expected to increase from 8.6% in 2020 to 11.6% in 2023.

Generative AI has lowered the threshold for cyber attacks, while also enhancing the monitoring and response capabilities of cybersecurity tools, which is expected to promote the growth of global information security spending on both the supply and demand sides. Additionally, factors such as major national elections and escalating geopolitical conflicts in 2024 have raised higher requirements for information security.

Recently, multiple institutions globally have conducted security checks on large AI models and found significant weaknesses in content security, data security, and other areas. The AI security issues have attracted high attention. In this context, listed companies are increasing their layout in large AI model detection, content security, and data security businesses. The data security market is rapidly forming an industry scale of hundreds of billions. Yan Huaizhi, member of the Information and Communication Technology Committee of the Ministry of Industry and Information Technology and director of the Network Security Research Institute, pointed out that AI security construction brings many market opportunities, such as privacy protection technology, risk assessment and governance, security education and training, security consulting, and services. With the continuous development of large model technology, the cybersecurity industry needs to innovate and improve continuously to meet the growing security demands.

On June 6th, at the cybersecurity conference held in Beijing, it was stated that "AI-driven security is the trend, and in the future, whoever masters AI will dominate the network security space." In the keynote speech, Qi Xiangdong, member of the National Committee of the Chinese People's Political Consultative Conference, vice chairman of the All-China Federation of Industry and Commerce, and chairman of Qihoo 360 Group, judged that the current cybersecurity landscape is being disrupted and reconstructed, bringing not only new security challenges but also unprecedented strategic opportunities for the cybersecurity industry.

East Money believes that this event reflects the need for high caution in the update and management of security software to ensure that it does not negatively impact the stability of users' systems. Attention to detail in security products needs to be emphasized, focusing on the cybersecurity sector.

TF Securities stated that independent controllability is the "cornerstone" of cybersecurity, and the localization of operating systems is a major trend. Domestic operating systems have also made important achievements in high reliability. Taking Huawei's HarmonyOS as an example, the Harmony kernel has no Root permission, which enhances system security from the source. The Third Plenum has repeatedly emphasized security, and independent controllability is expected to accelerate.

Related Concept Stocks:

• Pactera Edge (00354): A HarmonyOS element service partner with complete north-south capabilities, deeply involved in the promotion and empowerment of the HarmonyOS ecosystem, driving performance growth by leveraging the HarmonyOS momentum. Pactera Edge collaborates with HarmonyOS ecosystem service companies to fully leverage their respective advantageous resources and technological capabilities, jointly explore the development path of the HarmonyOS ecosystem in different industry sectors, and unite efforts to create a prosperous era for the HarmonyOS ecosystem.

• HH Semiconductor (01347): The company's customers are mainly domestic design manufacturers, with major products in power semiconductors and MCU products. The main customers include XJ Electric (IGBT and superjunction), StarPower Semiconductor (IGBT), and AW Electronics (MCU); the main customers of RF devices are domestic leading design company ZTE Microelectronics; CIS main customers include Goke Micro and Howie Technology (Well Semiconductor) Shanghai Fudan (01385): As a domestic chip design company with a wide product line, the company's business covers four major product lines: security and identification chips, non-volatile memory, smart meter chips, and Field-Programmable Gate Array (FPGA).

SMIC (00981): The company is the most advanced integrated circuit manufacturing enterprise in mainland China, with the most complete supporting facilities, the largest scale, and multinational operations, providing wafer foundry and technical services for different technology nodes ranging from 0.35 microns to 14 nanometers