As the A-share listed company earnings season concludes, the optical communication industry, serving as the foundation for computing power, has delivered outstanding results. This is primarily driven by significant increases in capital expenditure for AI infrastructure both domestically and internationally in 2025, leading to a comprehensive surge in demand for optical modules.
In terms of shipment structure, 800G products became the dominant force in the market in 2025, while 1.6T high-speed products entered the introduction phase. Volume shipments of 1.6T are expected to begin in 2026, with their commercialization pace potentially becoming the next competitive benchmark.
Driven by both rising demand and technological transitions, leading optical module companies experienced high earnings growth. In 2025, Zhongji Innolight, Eoptolink Technology Inc.,Ltd., and TFC Optical Communication saw their revenues increase by 60.25%, 187.29%, and 58.79% year-over-year, respectively. In the first quarter of 2026, their revenues grew by 192.12%, 105.76%, and 40.82% year-over-year. Notably, Zhongji Innolight's Q1 2026 revenue already surpassed its total revenue for the first half of 2025.
However, the industry's high growth is accompanied by supply chain volatility. In Q1 2026, prepayments for Zhongji Innolight, Eoptolink, and TFC Optical Communication showed significant changes, rising from 134 million yuan, 17 million yuan, and 21 million yuan at the start of the year to 1.488 billion yuan, 682 million yuan, and 97 million yuan, respectively. The collective total increased thirteen-fold.
This substantial rise in prepayments indicates that the three optical module leaders are securing advantages with suppliers by providing upfront liquidity. This suggests that the expansion of upstream raw material production capacity is lagging behind downstream demand, making the supply side a key bottleneck constraining the entire industry chain's growth.
Zhongji Innolight's leading position remains solid, while Eoptolink demonstrates the strongest earnings volatility.
From a business scale perspective, Zhongji Innolight shows a commanding lead and is the undisputed leader among domestic optical module manufacturers.
In 2025, Zhongji Innolight, Eoptolink, and TFC Optical Communication reported revenues of 38.240 billion yuan, 24.842 billion yuan, and 5.163 billion yuan, respectively. Their net profits attributable to shareholders were 10.797 billion yuan, 9.532 billion yuan, and 2.017 billion yuan, respectively. Zhongji Innolight's revenue far exceeded the combined revenue of the other two companies.
In Q1 2026, revenues for Zhongji Innolight, Eoptolink, and TFC Optical Communication were 19.496 billion yuan, 8.338 billion yuan, and 1.330 billion yuan, respectively. Net profits were 5.735 billion yuan, 2.780 billion yuan, and 492 million yuan, respectively. Zhongji Innolight's revenue and net profit both significantly exceeded the sum of the other two companies.
According to Zhongji Innolight's earnings call minutes, the company's current revenue is primarily supported by 800G and 1.6T products. Shipments of 1.6T products began in Q3 2025 and are expected to show sequential growth each quarter this year. 3.2T capacity is under preparation, with products not yet at the sampling stage.
Furthermore, the company is optimistic about its 2026 outlook, anticipating significant demand and shipments for both 1.6T and 800G optical modules. The company has sufficient orders on hand, including some full-year 2026 orders from customers.
From a growth rate perspective, Eoptolink exhibits extremely strong growth volatility.
In 2025, Eoptolink's revenue grew 187.29% year-over-year, and its net profit grew 236.64% year-over-year, with both growth rates far exceeding those of the other two companies. However, it is noteworthy that in Q1 2026, Eoptolink experienced a situation where revenue increased without a proportional increase in profit. The company's quarterly revenue grew 83.38% year-over-year, while net profit grew 76.80%, which was lower than the revenue growth rate.
The primary reason for Eoptolink's revenue growth outpacing profit growth was significant foreign exchange losses in the quarter. In Q1 2026, the Renminbi strengthened against the US Dollar. Eoptolink's financial expenses increased from -33 million yuan in the same period last year to 522 million yuan, negatively impacting profits.
It is important to note that as the three leaders primarily operate overseas, they all face some degree of exchange rate fluctuation risk. In 2025, the overseas revenue proportions for Zhongji Innolight, Eoptolink, and TFC Optical Communication were 90.58%, 98.01%, and 74.35%, respectively. Eoptolink has the highest overseas revenue exposure and was therefore the most affected.
Concurrently, the financial expenses for Zhongji Innolight and TFC Optical Communication in Q1 2026 also turned positive from -17 million yuan and -11 million yuan in the same period last year to 251 million yuan and 24 million yuan, respectively.
Zhongji Innolight stated during its earnings call that a large portion of the Q1 foreign exchange loss was not due to actual currency settlement and that these losses would be adjusted accordingly with future exchange rate fluctuations.
Prepayments surged thirteen-fold, indicating the supply side may be a growth bottleneck.
In the financial reports of the three leading companies, a previously minor account has garnered significant market attention.
In Q1 2026, prepayments for Zhongji Innolight, Eoptolink, and TFC Optical Communication increased sharply, rising from 134 million yuan, 17 million yuan, and 21 million yuan at the beginning of the year to 1.488 billion yuan, 682 million yuan, and 97 million yuan, respectively. The combined total grew from 172 million yuan to 2.267 billion yuan, a thirteen-fold increase in just one quarter.
The main reason for this is the reliance of domestic optical module leaders on overseas suppliers and volatility in upstream production capacity.
The upstream segment of the optical module industry primarily includes optical chips, electrical chips, active optical components, and passive optical components. Optical chips account for a significant portion of optical module costs. Currently, suppliers capable of mass-producing mid-to-high-end optical chips are mainly overseas, and EML lasers with rates of 200G and above still need to be imported.
According to the respective annual reports, the procurement proportions from the largest supplier for Zhongji Innolight, Eoptolink, and TFC Optical Communication were 35.76%, 23.87%, and 34.81%, respectively. The procurement proportion from the second-largest supplier did not exceed 10% for any company. When downstream demand multiplies, and the ramp-up cycle for upstream optical chip capacity is long, it becomes difficult to match the pace of downstream demand growth, creating a supply bottleneck.
Zhongji Innolight explicitly stated during its earnings call that against the backdrop of volume shipments for high-speed optical modules, resource constraints exist in key upstream segments. The company will use commercial terms to ensure delivery certainty and production priority.
TFC Optical Communication also noted in its annual report that due to factors like the pace of upstream capacity release and yield ramp-up, there are risks of periodic tight supply, extended lead times, and price fluctuations for some key materials in the supply chain. This could adversely affect order fulfillment, costs, gross margins, and the production ramp-up speed of new products.
Eoptolink provided a more optimistic and specific outlook, stating during its earnings call, "Some raw materials experienced relative tightness in Q1 this year, which is expected to gradually ease starting in Q2. The supply chain is anticipated to stabilize in the second half of the year."
Despite upstream constraints, the three leaders have not slowed their capacity expansion efforts. Over the past year and one quarter, the total scale of fixed assets and construction in progress for all three companies has continued to grow significantly. Zhongji Innolight, the most aggressive in expansion, saw its fixed assets grow from 5.820 billion yuan in 2024 to 7.081 billion yuan in 2025, and further to 7.907 billion yuan in Q1 2026. Its construction in progress increased from 53 million yuan to 1.422 billion yuan, and further to 2.360 billion yuan.
Regarding future expansion, Zhongji Innolight and Eoptolink maintain a positive stance. Zhongji Innolight stated that starting in 2026, the company will continue to expand capacity rapidly to meet growing customer demand. Eoptolink indicated that the expansion pace for the second phase of its Thailand factory will accelerate this year to reach full capacity quickly. The Thailand factory is expected to continue scaling up to meet delivery demands.
TFC Optical Communication's business nature differs from the other two, as it focuses on optical components and optical engines, positioning it more upstream. Its view on expansion is more cautious. TFC Optical Communication stated that current production and operations are affected by supply bottlenecks for specific materials, so the focus is more on supply chain security and production process optimization. The company will dynamically assess plans for additional capacity based on the specific situation.
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