CMSC has released a research report highlighting that the optical module testing industry is entering a new phase of growth, fueled by "volume and price increases" driven by innovations in upstream components and the escalating demands of downstream applications. Testing equipment, serving as the core "quality inspector" on optical module production lines, is set to benefit from two key factors: the rapid production expansion of downstream optical module manufacturers and the industry's transition from 800G to 1.6T and higher data rates. This upgrade cycle is expected to drive both higher volumes and prices for testing equipment, and the firm recommends focusing on companies with strong technical reserves and established client relationships. CMSC's primary viewpoints are as follows:
Testing Equipment: The Core "Shovel Seller" and "Quality Inspector" of Optical Modules
Optical module testing is a critical step in ensuring module performance and quality, covering items such as optical power, sensitivity, bit error rate, extinction ratio, and eye diagrams. Key instruments include sampling oscilloscopes and bit error rate testers. According to data from the Sihan Industry Research Institute, testing accounts for 27% of total production line equipment investment (approximately 500 million yuan per 100 million units of 800G optical module production lines), making it a vital link in the production chain. Core components (chips), customer certifications, and technological iteration form the primary barriers to entry.
Core Components, Customer Certification, and Technological Iteration Build High Barriers
Core components determine the upper limit of testing equipment performance. Currently, some components, such as high-speed chips (e.g., those needed for oscilloscopes with bandwidths above 110GHz), are still dominated by a few overseas semiconductor companies. This creates challenges for domestic equipment manufacturers in high-end products, including long procurement cycles, supply constraints, and high costs. Testing instruments operate in an industry with extremely high customer stickiness, where certification cycles can last 1 to 2 years. The rapid leap in optical module data rates forces rapid instrument updates, significantly raising the testing threshold and imposing high demands on testing instrument suppliers for continuous technological advancement.
Market Space: Soaring Optical Module Demand Drives Volume and Price Increases for Testing Equipment
The market size for optical module testing equipment depends on two variables: the shipment volume of optical modules (volume) and the value of testing equipment (price). Driven by AI computing power demand, the market for optical modules is experiencing explosive growth, leading major manufacturers to start capacity expansion cycles. As optical modules upgrade from 400G to 800G, 1.6T, and higher speeds, signal complexity, bit error rate requirements, and synchronization precision also increase, significantly boosting the value of testing instruments. According to Frost & Sullivan, the size of China's optical communication testing instrument market reached 3.3 billion yuan in 2024, and is expected to grow to 6.59 billion yuan by 2029, representing a compound annual growth rate (CAGR) of 14.8% from 2024 to 2029.
Competitive Landscape: Global Market is Highly Oligopolistic, Domestic Players Accelerating Catch-Up
According to Frost & Sullivan, five companies—Keysight, Anritsu, Tektronix, VIAVI, and EXFO—hold the majority of the global market share. The combined market share of domestic Chinese companies is only about 16%, leaving significant room for expansion. In 2024, Lianxin Instrument ranked third globally and first among domestic Chinese companies with a 9.9% market share. Additionally, domestic companies such as HYC, UV, HCPET, UNIT, RIGOL, and Siglent are making continuous breakthroughs, which is expected to accelerate the pace of domestic penetration. Risks include downstream optical module expansion and technological iteration falling short of expectations, slower-than-anticipated R&D progress, and intensified industry competition.
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