Huayuan Securities has released a research report indicating that the equipment upgrades driven by the restructuring of the CPO manufacturing system could elevate the valuation center for equipment companies. As the manufacturing boundaries shift from module factories to wafer fabs, optical packaging, and system-level integration, testing, optical coupling, and advanced packaging equipment are expected to be the first to benefit under the prospect of CPO mass production. The firm highlights that investors should focus on equipment enterprises that have entered the core CPO manufacturing processes early and recommends positioning around the three main investment lines of "testing + coupling + advanced packaging."
Additionally, the report suggests monitoring three categories of companies in the optical module equipment sector that possess a certain degree of technological migration capability applicable to CPO process flows. The first category includes companies specializing in test instrumentation equipment. The second category comprises equipment manufacturers with capabilities in core process equipment such as die bonding and coupling. The third category involves AOI inspection equipment providers and upstream machine vision equipment companies that stand to benefit from equipment upgrades.
The key viewpoints of Huayuan Securities are as follows: AI clusters continue to evolve toward higher density, and optical interconnect architectures are progressively transitioning from pluggable optical modules to NPO/CPO. As data rates and bandwidth increase, the power consumption generated by switching chips, SerDes, and optical modules rises correspondingly, placing greater pressure on traditional pluggable optical modules in terms of power efficiency and signal transmission speed. NPO serves as an interim step in the transition from pluggable modules to CPO, achieving power consumption improvements by shortening electrical interconnect distances while keeping the optical engines pluggable. CPO, by positioning optical engines closer to the switching ASIC, reduces the requirements for high-frequency lines and signal integrity components, thereby breaking through the bottleneck of electrical signal transmission and emerging as a key evolutionary direction for AI switches. According to Yole Group, the compound annual growth rate (CAGR) for CPO optical engine shipments from 2024 to 2030 is projected to be approximately 176%.
The manufacturing complexity of CPO far exceeds that of optical modules, and equipment demands are undergoing a corresponding upgrade. The mass production of CPO is expected to drive the optical module manufacturing system to upgrade from traditional "module-level packaging and testing" to a "wafer fab + OSAT" model. Compared to conventional semiconductor processes that primarily revolve around silicon wafer manufacturing, 3D IC stacking, wafer testing, bonding, molding, and final testing, CPO further introduces processes such as laser chip integration, fiber coupling/assembly, electro-thermal co-packaging, and optoelectronic joint testing and calibration based on silicon photonics wafer preparation. Moreover, from photonic wafer testing, chip bonding, and optical engine assembly to system-level testing, each step requires specialized equipment with micron-level precision.
Testing, coupling, and advanced packaging are likely to become the first segments to benefit from industrialization, and the window for equipment localization is opening. Currently, the global CPO industry chain remains dominated by overseas players. ficonTEC, a subsidiary of Robotechnik, has delivered micro-assembly equipment suitable for CPO packaging technology to TSMC and holds a special market position in the Insertion 2 and Insertion 3 stages of CPO testing. Other domestic manufacturers are gradually entering different process segments. Lianxun Instruments is focusing on optical chip KGD sorting and testing, Quick Intelligent is developing TCB thermal compression bonding, and LUSTER LightTech is working on 3D photonic wire bonding. Companies such as Yanmai Technology and JPT Opto-electronics are entering the silicon photonics wafer testing direction. As validation by overseas customers progresses, companies in related equipment fields are expected to gradually share in the dividends of industry volume growth.
Risk warnings: The report notes risks related to CPO industrialization and downstream capital expenditure falling short of expectations, risks associated with the validation and industrialization progress of domestic equipment, and uncertainties regarding the evolution of technology routes and the pace of customer adoption.
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