A domestic breakthrough in photonic chip technology has been achieved. The National Information Optoelectronics Innovation Center has developed the world's first 170GHz ultra-broadband device product based on its self-developed ultra-broadband photonic chip technology, which has been applied in domestically produced optoelectronic measurement equipment. This technology is expected to provide foundational support for 6G communications and be utilized in next-generation high-speed optical module products.
In terms of application prospects, the value of this domestically developed ultra-broadband photonic chip extends far beyond current uses, with potential to deeply empower multiple cutting-edge fields. According to sources from the center, the chip will enable a wide range of application scenarios, with high-speed optical modules being a key focus. Leveraging thin-film lithium niobate material innovation and heterogeneous integration technology, the chip is anticipated to be widely adopted in next-generation high-speed optical modules of 1.6T and above. This will facilitate industry upgrades and help address the mismatch between AI computing power and data transmission rates.
Furthermore, the chip will provide core foundational support for 6G's integrated "space-air-ground" communications. As a hallmark feature of 6G, this integration requires breaking the coverage limitations of terrestrial networks to achieve seamless global connectivity. The high bandwidth and low latency characteristics of the ultra-broadband photonic chip are well-suited to meet this demand. Future applications may extend to satellite-borne communications, aiding the development of domestic satellite communication equipment and propelling China's 6G technology forward.
In the realm of AI data centers, the chip can further enhance transmission speeds and reduce latency, offering more efficient foundational support for scenarios like large AI model training and cloud computing. Optical modules act as the "blood vessels" of AI computing infrastructure, responsible for high-speed data transfer between GPU clusters, switches, and servers. In the era of massive AI clusters with tens or hundreds of thousands of cards, traditional electrical interconnects are approaching physical limits in bandwidth, latency, power consumption, and cost, making optical interconnects a core solution.
The market for AI-specific optical transceiver modules is projected to surge from $16.5 billion in 2025 to $26 billion in 2026, representing growth of over 57%, according to TrendForce. LightCounting data indicates the Ethernet optical module market is expected to grow another 65% in 2026. Goldman Sachs forecasts that the addressable market for optical interconnects could expand from approximately $15 billion currently to about $154 billion by 2027-2028, a nearly tenfold increase.
Given the growing importance of optical interconnects in AI data center construction, investment opportunities are seen in high-speed optical modules and upstream segments of the optical communication industry chain, including core materials, optical devices, and optical chips. Attention is also advised on leading companies developing technologies like CPO and OCS.
Related concept stocks: CIG (06166): The company reported a significant year-on-year increase in revenue and net profit for Q1, primarily driven by a substantial expansion in its high-speed optical module business. Global data center demand for 800G and 1.6T high-speed optical modules remains robust. CIG is actively expanding production capacity at its Jiashan and Malaysia facilities and advancing capacity construction at its Mexico production base to meet market delivery pressures. The company expects 800G optical modules to remain its primary shipment driver in 2026.
JOYSON ELEC (00699): The company reported growth in annual operating revenue and net profit for 2025. Its new business order scale reached approximately 97 billion yuan, with breakthroughs in emerging areas like intelligent driving and central computing units, laying a solid foundation for rapid growth in its automotive electronics business. Notably, JOYSON ELEC recently completed a strategic investment in optical module company New Feiguang.
TIME INTERCON (01729): The company is identified as a core domestic supplier of MPO products for Google. Its growth prospects are driven by three main pillars: computing power, automotive, and medical sectors. The sustained high demand for AI computing power is expected to support continued growth in its MPO, server, and high-speed copper cable businesses. The company's core customer base includes leading overseas cloud providers. Its optical interconnect products, primarily high-density fiber solutions like MPO, are a major current revenue source and have secured a stable position in the supply chain of a key North American customer, with plans to further strengthen this advantage.
YOFC (06869): The company reported significant year-on-year growth in Q1 revenue and net profit. While the net profit figure was below some market expectations, confidence remains in its profit growth over the coming quarters. The full impact of rising fiber prices is expected to take time to materialize, and with sustained growth in data center demand, the company is seen as likely to meet full-year forecasts. The profit growth rate in Q1 significantly outpaced revenue growth, largely attributed to a substantial improvement in gross margin. Fiber prices showed a monthly increasing trend during the quarter, though the delivery mix still included some lower-priced long-term/centralized procurement orders. As higher-priced orders are expected to be recognized starting in Q2, profit elasticity is anticipated to accelerate. The company's performance is expected to benefit significantly from the dual drivers of rising core fiber optic cable business景气度 and diversified operations like optical interconnect components. An "Overweight" rating is maintained.
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