On February 11th, an online rumor suggesting a change in the order path for optical module companies circulated widely. It claimed that Cloud Service Provider (CSP) vendors were bypassing module manufacturers like Zhongji Innolight Co.,Ltd. by placing orders directly with upstream laser equipment supplier Lumentum. These orders would then be routed through Lumentum's designated module/assembly plants, allegedly skipping intermediate layers and squeezing the profit margins of Chinese module manufacturers. CSPs refer to large cloud service providers such as Google, Amazon, Microsoft, and Meta.
This speculative online post sparked market concerns about leading optical module companies. At the market close on February 11th, shares of optical module-related stocks, including Zhongji Innolight, saw declines. Specifically, Zhongji Innolight, which was mentioned in the rumor, fell by 4.28%.
In response, investors questioned Zhongji Innolight on an interactive platform, urging the company's board secretary to promptly clarify the situation. Zhongji Innolight stated on the platform that optical module products are custom-developed and designed by module manufacturers based on CSP clients' data center network requirements. This process requires manufacturers to possess efficient R&D capabilities, mature manufacturing processes, sufficient production capacity, and large-scale manufacturing and delivery capabilities. Furthermore, manufacturers must pass rigorous product testing, qualification certification, and factory audits by CSP clients before becoming qualified suppliers in their supply chains.
Therefore, the company clarified that CSP clients place orders directly with Zhongji Innolight, and the company manufactures and delivers the products directly to the clients. This business model remains unchanged. The scenario described in the rumor, where CSP clients place orders with upstream optical chip manufacturers, bypassing companies like Zhongji Innolight, and then have orders transferred to chip-designated module/assembly plants, does not exist.
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