The optical module industry's primary constraint has shifted from the demand side to the supply side, with scarcity in raw materials such as DSPs and lasers, along with capacity-locking strategies by leading manufacturers, set to be the decisive variables in the 2027 profit distribution landscape.
After visiting 15 optical communications companies in China, Goldman Sachs has significantly raised its high-speed optical module demand forecasts and anticipates that pricing discipline will be better than market expectations. The core logic revealed in this research report extends beyond order backlogs — supply-side raw material bottlenecks and the capacity-locking strategies of leading companies are quietly reshaping how profits are distributed across this wave of AI infrastructure investment.
Goldman Sachs raised its 2027/2028 demand forecasts for 800G and above optical modules by 39% and 36%, respectively, to 144 million units and 171 million units. Meanwhile, the report maintains that 1.6T optical module prices will stay above $700, with 800G product price declines of only single digits in 2027. The logic supporting this pricing view lies in the persistent shortage of key components such as DSPs, lasers, and PCBs, as well as the supply chain management strategies of leading manufacturers, who are actively locking in capacity through prepayments and long-term agreements.
On the commercialization path of CPO (co-packaged optics), Goldman Sachs points out that testing and coupling equipment makers are the first to realize revenue. Robotechnik's second-quarter revenue grew 172% quarter-over-quarter, exceeding Goldman Sachs's expectations by 141%, confirming this assessment. The report also projects CPO switch shipments to surge from 10,000 units in 2026 to 131,000 units by 2028, with equipment order visibility extending into 2028.
Demand Upgrade: Dual Drivers of Scale Expansion and Specification Upgrades
The basis for Goldman Sachs's demand upgrade comes from a comprehensive assessment of global 800G and 1.6T optical module demand gathered from surveyed companies — respondents indicated a range of 130 million to 200 million units, leading Goldman Sachs to finalize its 2027/2028 forecasts at 144 million and 171 million units.
The growth drivers come from three levels: continued expansion of AI server racks, the evolution of optical module applications from horizontal scaling (scale out) to vertical scaling (scale up) and cross-layer interconnection (scale across), and ongoing product specification upgrades. This means the demand upgrade is not driven by a single factor but rather a combined effect of simultaneous cluster scale expansion and specification iteration.
In the Chinese market, surveyed companies expect overall demand to achieve double-digit growth, exceeding 50 million units, with 800G and 400G products still dominating and 1.6T in its early ramp-up phase. Notably, surveyed management teams emphasized that every optical module currently shipped has been actually deployed in data centers, reflecting genuine end-user demand rather than channel stocking, which to some extent reduces the risk of repeating the "double ordering" scenario seen during the 2000s internet bubble.
Laser Shortages Set to Cap Actual 2027 Shipments
While demand forecasts are being raised, supply-side constraints are becoming the industry's true variable. Surveyed companies generally noted that persistent shortages in DSPs, lasers, and PCBs could suppress actual 2027 shipment volumes, meaning the 144 million unit demand forecast carries the risk of not being fully realized on the supply side.
In the laser segment, Chinese suppliers are accelerating efforts to expand 200G EML capacity and technical capabilities to support the 1.6T optical module ramp-up in 2027. For the laser capacity Everbright (688048.SS) has reserved for 2027, EML slightly exceeds CW lasers, with EML internally dominated by 100G while 200G still represents a small portion. Dongshan Precision's 200G EML has entered mass production, but shipment volumes remain limited due to DSP supply constraints; the company has locked in 10 million DSP units for 2027 supply, supporting both laser and optical module shipments.
Regarding InP epitaxial wafer leader VPEC, InP substrate supply is improving as export permits stabilize, more customers bring their own InP substrates, and second through fourth suppliers outside China gradually grow. VPEC's MOCVD equipment count will expand from the current 62 units to 69 units by the second quarter of 2027, with plans to build new production bases in 2027.
Leaders Lock Capacity, Why Prices Won't Collapse
Against the backdrop of tight supply, Goldman Sachs expects 800G optical module price declines to stay within single digits in 2027, with 1.6T prices maintained above $700. The core support for this view lies in the industry competitive landscape and the supply chain management strategies of leading manufacturers.
Surveyed management teams emphasized that optical modules are not purely assembly businesses — products have numerous SKUs requiring extremely high R&D capabilities and responsiveness from suppliers. Compared with the five-year product cycle in the telecom market, the product iteration cycle in the data communications market has shortened to one to two years, making R&D capability and mass production execution competitive barriers rather than pure price competition.
The approach of global leader Innolight (300308.SZ / 3308.HK) is representative: by engaging in R&D collaboration with suppliers, directly investing in suppliers, and signing prepayment agreements and long-term supply contracts, it locks in sustainable capacity during tight supply cycles. This deep supply chain integration strategy, under geopolitical pressure where customers require dispersed production bases, further strengthens the leader's competitive advantage and provides structural support for overall pricing discipline.
CPO Commercialization: Equipment Makers Benefit First, Order Visibility Extends to 2028
The commercialization of CPO technology still faces challenges. Laser suppliers point out that in the external light source (ELS) approach, 300mW/400mW continuous wave (CW) lasers face heat dissipation difficulties, with the NPO solution using 100mW+ paired with PA currently being prioritized. Optical module manufacturers also observe strong demand for 3.2T NPO optical engines in both Chinese and overseas markets.
Although large-scale CPO deployment will take time, testing and coupling equipment makers are already benefiting first. Goldman Sachs notes that expensive final modules require multiple testing steps during production — the earlier defects are discovered, the lower the loss costs — giving testing equipment demand structural support.
Robotechnik's second-quarter revenue grew 172% quarter-over-quarter, exceeding Goldman Sachs's expectations by 141%, directly confirming this logic. Both Robotechnik and FiconTEC stated that the number of tools planned for shipment over the next year will exceed half of their cumulative shipments over the past 25 years, with order visibility extending to 2028. Goldman Sachs projects CPO switch shipments to grow from 10,000 units in 2026 to 92,000 units in 2027, and then to 131,000 units in 2028.
On the technology upgrade front, Robotechnik and FiconTEC plan to reduce wafer-level testing time by 50% to 60% next year and achieve a 4x improvement in chip-level testing speed. Enlitech's NightJar hyperspectral imaging system enables known-good-die (KGD) screening at the early wafer testing stage, further reducing failure costs.
Validation Window: Three Key Indicators Determine Whether the Thesis Holds
Each of the above assessments comes with clear verifiable conditions.
On the demand side, if actual shipments of 800G and above optical modules reach the lower bound of the 144 million unit range in 2027, the upgraded forecast holds; otherwise, a downward revision would be needed. The validation window is the annual shipment guidance from manufacturers in the first quarter of 2027.
On the pricing side, if the average 1.6T optical module price falls below $700, the pricing discipline assessment would be overturned.
On the equipment side, if equipment makers' quarter-over-quarter revenue growth turns negative for two consecutive quarters, the order visibility assessment would not hold. The validation window is the third-quarter 2026 earnings release period (October to November).
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