The A-share market today displayed a clear pattern of weakness in Shanghai and strength in Shenzhen, with the ChiNext Index hitting a new phase high. Technology concepts such as optical communications, electronic cloth, PCBs, and CPO led the gains strongly.
The sector continues its upward trend. On April 10, the China Securities Regulatory Commission (CSRC) released the "Opinions on Deepening ChiNext Reform to Better Serve the Development of New Quality Productive Forces." The document proposes eight reform measures, including optimizing listing standards to enhance inclusivity and attractiveness, and actively leveraging local governments to improve review and registration efficiency. Possibly influenced by this, the market on April 13 showed a distinct pattern of a weaker Shanghai market, a stronger Shenzhen market, and growth stocks leading the gains, with the ChiNext Index reaching a new phase high.
Within this, the optical communications sector continued to perform well. Analysis suggests this rally is not driven by short-term sentiment but is the result of multiple fundamental positives converging. First, AI computing power construction is continuously accelerating, leading to an explosion in demand for high-speed optical modules. Global cloud providers are tilting capital expenditures towards AI infrastructure, with penetration rates for 800G optical modules rising rapidly and 1.6T products entering mass production cycles. The demand for optical modules per AI server is multiples that of traditional servers, supporting a narrative of volume and price increases for the industry. Second, the OFC industry conference released positive signals, with technological iterations exceeding expectations. The global annual optical communications event, OFC 2026, was held, where domestic manufacturers demonstrated outstanding performance in cutting-edge technologies like high-speed optical modules, silicon photonics, and CPO/NPO, gaining high recognition from overseas clients and extending order visibility, thereby strengthening growth certainty for the sector. Third, fiber optic cable prices continue to rise, with supply-demand dynamics significantly improving. Driven by projects like "East Data West Computing," computing power networks, 5G-Advanced, and overseas infrastructure demand, fiber optic demand is steadily recovering. Coupled with long-term industry capacity rationalization, fiber prices are on an upward trajectory, leading to a substantial release of profit elasticity for related companies. Fourth, domestic policies are increasing support for computing power network construction, continuously boosting industry sentiment. The Ministry of Industry and Information Technology is persistently promoting all-optical networks and computing power infrastructure construction, setting clear goals for self-sufficiency in key components like high-speed optical modules and optical chips, providing a stable policy environment for the industry's medium to long-term development. Looking ahead, as the "digital highway" of the AI era, the optical communications sector has clear growth logic and vast medium to long-term development space.
This year, veteran market participant Peng Zu has also consistently stated in public videos that 2026 is a big year for optical communications, advising investors to "walk with light." Dongshan Precision, mentioned in his videos, has seen its stock price continuously reach new highs recently.
Performance is booming across the board. Based on 2025 results, the optical communications sector experienced a comprehensive breakout, with numerous stocks seeing net profit double year-over-year. Source Photonics' net profit attributable to shareholders surged over 30-fold year-over-year. According to its 2025 annual report, Source Photonics achieved annual operating revenue of 601 million yuan, a 138.5% increase year-over-year, and net profit attributable to shareholders of 191 million yuan, a massive 3212.62% increase. The primary reasons were the company's active optimization of its product mix and increased sales of data center laser chips and high-end telecom laser chips, which generally command higher average selling prices. Alongside the significant earnings growth, Source Photonics' stock price has continued to climb in the secondary market, repeatedly refreshing historical highs, with an intraday high today touching 1322.16 yuan per share, firmly maintaining its position as the second highest-priced stock in the A-share market.
Similarly focused on the optical communications industry, SG Photonics, whose main business covers optical chips and devices, indoor optical cables, and cable materials, also reported 2025 operating revenue and net profit attributable to shareholders of 2.129 billion yuan and 342 million yuan, representing year-over-year growth of 98.12% and 426.15% compared to 2024. The company previously stated that with the scalable growth of AI large models and computing power demand, market demand for optical communication-related products is rapidly increasing. Data centers are gradually upgrading from 100G/200G interconnects to 400G/800G/1.6T optical interconnects, and higher-speed CPO packaging forms are also developing rapidly. The gigabit penetration rate of global fiber access networks has significantly increased, entering the promotion stage for 10-gigabit networks. In the future, optical chips and devices, along with fiber optic cables, will usher in new development opportunities. Regarding the reasons for its 2025 revenue growth, SG Photonics cited the rapid growth of the datacom market driven by AI development. The company adapted to market demand, its product competitive advantages became prominent, and customer recognition improved. Orders for optical chips and devices, indoor optical cables, and cable polymer materials increased to varying degrees compared to the same period last year. For the increase in net profit attributable to shareholders and non-recurring profit during the reporting period, the company attributed it mainly to the year-over-year increase in operating revenue, continuous improvement in operational management capabilities, strengthened cost reduction and efficiency enhancement efforts, improved product yield, enhanced product competitiveness, and increased profitability. In the secondary market, SG Photonics' stock price has also been rising steadily recently, refreshing its historical high.
The Social Security Fund is actively increasing holdings in high-performing stocks. Also based on annual report data, in the fourth quarter of 2025, the "national team" funds, including the Social Security Fund, bulk-added several high-performing optical communication concept stocks. For instance, JPT, benefiting from rising global demand for lasers and achieving rapid revenue growth in areas like precision processing for new energy power batteries and consumer-grade lasers, coupled with its optical communication business quickly entering the market and showing significant growth, reported 2025 operating revenue of 2.074 billion yuan, a 42.66% increase year-over-year, and net profit attributable to shareholders of 279 million yuan, a 110.11% increase. Reviewing the shareholding of its top ten shareholders, the Social Security Fund 503 Combination continued to hold a significant public position in the company, increasing its holding by 100,000 shares compared to the end of the previous reporting period, with 4.1 million shares held at the end of the quarter. Another example is Anfu Technology. Its 2025 annual report showed operating revenue of 4.775 billion yuan, a 2.94% increase year-over-year, and net profit attributable to shareholders of 226 million yuan, a 34.38% increase. The company stated that the performance growth was mainly due to stable operational performance growth and an increase in its equity stake in its core asset, Nanfu Battery, from 26.09% to 46.02%. In 2025, Nanfu Battery achieved a net profit attributable to shareholders of 957 million yuan, exceeding its performance commitment. Reviewing the company's latest top ten shareholder list, the Social Security Fund 17022 Combination also remained listed and increased its holding by 1.432 million shares compared to the end of the third quarter of 2025. Similar companies include Fujing Technology, T&S Communications, and Universal Scientific Industrial.
Looking forward, as the "digital highway" of the AI era, optical communications have upgraded from a supporting communication industry to a core infrastructure of the digital economy, entering a long-term golden period of high growth. The market size continues to expand rapidly. Driven by AI, industry insiders point out that the global optical module market size is expected to reach $24 billion in 2026, a 50% year-over-year increase, and break through $40 billion in 2027, with the 800G/1.6T optical module market size reaching nearly 70 billion yuan. Long-term, Lumentum predicts the total addressable market (TAM) for AI optical communications will surge from $18 billion in 2025 to $90 billion by 2030, with a high compound annual growth rate of 40%, continuously opening up industry growth space. The sector is expected to become a core long-term theme in the A-share market.
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