On Tuesday, March 31, computing hardware components such as CPO (Co-Packaged Optics) optical modules led the market decline, with the artificial intelligence sector on the Growth Enterprise Market (GEM) experiencing a full-day volatile correction. Among the decliners, TAI-Chen Technology led with a drop of over 8%, followed by Lante Communications falling more than 6%. Companies including Ingenic Semiconductor, CIG Photonics, TFC Optical Communication, Eoptolink Technology, and Zhongji Innolight Co.,Ltd. each declined over 3%.
Regarding popular ETFs, the largest and most liquid fund of its kind, the GEM AI ETF Huabao (159363), closed down 2.54% with a reduced trading volume of 539 million yuan. Despite the market downturn, the ETF saw significant net capital inflows, recording a single-day net subscription of 94 million units. This follows a cumulative net inflow of nearly 140 million yuan over the previous three trading days.
Overall, the technology sector's adjustment appears driven by a confluence of sentiment factors, including heightened geopolitical risks increasing risk aversion and uncertainty around Federal Reserve policy unsettling valuations for interest-rate-sensitive assets. However, from a fundamental perspective, the strong growth narrative for computing hardware like CPO optical modules remains intact.
In corporate news, leading optical module manufacturer Zhongji Innolight Co.,Ltd. reported impressive annual results: the company achieved a net profit attributable to shareholders of 10.797 billion yuan in 2025, a substantial year-on-year increase of 108.78%. In its annual report, the company attributed this growth to robust investment in computing infrastructure by downstream clients, leading to rapid shipment growth for high-speed optical modules, particularly an increasing proportion of higher-rate products. This, combined with continuous product optimization and improved operational efficiency, drove significant revenue and profit growth.
In a subsequent conference call, the company provided an outlook for 2026, anticipating continued strong demand in the optical module industry. It expects 1.6T and 800G products to become the main drivers of growth, with new scale-up scenarios likely to generate additional demand for optical connectivity. Addressing potential upstream component shortages, the company stated it is proactively managing the situation through increased procurement and supply assurance agreements, expressing confidence in its ability to enhance delivery capacity.
As the market enters a reconfiguration window following the first quarter, Guolian Minsheng Securities recommends focusing on sectors with strong Q1 earnings performance. The institution notes that the AI technological revolution is fueling a new growth cycle, creating significant opportunities in areas such as optical connectivity, domestic computing power, AI edge applications, and commercial aerospace. It advises selecting leading companies within sub-sectors that demonstrate solid earnings support, such as top optical module manufacturers.
A recent research report from Guosheng Securities points out that as AI computing clusters evolve towards higher density in 2026, 1.6T optical modules are entering a phase of large-scale deployment. This is leading to a renewed tightening in the supply of key upstream components (including DSPs, EMLs, silicon photonics capacity, and isolators). Leading optical module manufacturers, with their in-house silicon photonics R&D and supply chain control capabilities, are well-positioned to extend their advantages during this 1.6T expansion cycle.
To capture opportunities in AI computing, investors may consider the GEM AI ETF (159363), which focuses on leading optical module companies, along with its off-exchange counterparts (Class A: 023407, Class C: 023408). These instruments offer direct exposure to the growth potential driven by the commercial adoption of AI technology. In terms of portfolio allocation, the GEM AI ETF invests approximately 60% of its assets in computing power (including leading optical module/CPO companies) and about 40% in AI applications, making it not only a core play on "computing power" but also a representative vehicle for "AI application" exposure.
According to data from sources like the Shanghai and Shenzhen Stock Exchanges, as of March 27, 2026, the GEM AI ETF Huabao had a net asset value of 5.598 billion yuan. Its average daily turnover over the past six months reached 739 million yuan, ranking it first in both size and trading volume among the 26 ETFs tracking the GEM AI Index, the STAR AI Index, and the STAR Market & GEM AI Index.
*Institutional views are referenced from: Guosheng Securities "Optical Modules: 1.6T Deployment Imminent, Upstream Supply Tightening Again"; Guolian Minsheng "Communications Industry Q1 2026 Earnings Preview".
ETF fee information: Subscription and redemption agents may charge a commission of up to 0.5% when investors subscribe for or redeem fund units. On-market trading fees are subject to the rates charged by the securities firm; no sales service fee is levied.
Connecting fund fee information: The GEM AI ETF Feeder Fund Class C does not charge a subscription fee. A redemption fee of 1.5% applies for holdings under 7 days; holdings of 7 days or more incur a 0% redemption fee. A sales service fee of 0.3% applies annually. For the GEM AI ETF Feeder Fund Class A, the subscription fee is 1% for investments below 1 million yuan, 0.6% for investments between 1 million (inclusive) and 2 million yuan, and a flat fee of 1,000 yuan per transaction for investments of 2 million yuan (inclusive) or above. A redemption fee of 1.5% applies for holdings under 7 days; holdings of 7 days or more incur a 0% redemption fee. No sales service fee is charged.
Risk Disclosure: The GEM AI ETF Huabao passively tracks the GEM AI Index. The base date for this index is December 28, 2018, and its release date is July 11, 2024. The annual performance of the GEM AI Index from 2021 to 2025 was +17.57%, -34.52%, +47.83%, +38.44%, and +106.35%, respectively. The index constituents are adjusted according to the index methodology rules. Past index performance is not indicative of future results. The mention of specific index constituents herein is for illustrative purposes only and does not constitute investment advice of any form, nor does it represent the holdings or trading intentions of any fund managed by the fund manager. The fund manager has assessed this fund's risk rating as R4 (Medium-High Risk), suitable for Aggressive (C4) and higher risk-profile investors. The final suitability assessment is determined by the selling institution. All information presented (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of expression) is for reference only. Investors are solely responsible for their investment decisions. Furthermore, any views, analysis, or predictions contained herein do not constitute investment advice to the reader, and no liability is accepted for any direct or indirect losses resulting from the use of this content. Fund investment carries risks. Past performance of a fund is not indicative of its future results. The performance of other funds managed by the fund manager does not guarantee the performance of this fund. Investors should exercise caution when investing in funds.
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