PRIMER 23 March 2026 China Semiconductors on 23-Mar-2026 Future of Tech: AI Datacenter Networking Primer Qingyuan Lin, Ph.D. +852 2123 2654 qingyuan.lin@bernsteinsg.com Stacy A. Rasgon, Ph.D. +1 213 559 5917 stacy.rasgon@bernsteinsg.com Francis Ma +852 2123 2626 francis.ma@bernsteinsg.com +852 2123 2694 zheng.cui@bernsteinsg.com Arpad von Nemes +1 917 344 8461 arpad.vonnemes@bernsteinsg.com Alrick Shaw +1 917 344 8454 alrick.shaw@bernsteinsg.com See the Disclosure Appendix of this report for required disclo ...

J P M O R G A N North America Equity Research 18 March 2026 Hardware & Networking OFC Insights: CIEN, CSCO, COHR, FN, & LITE Meeting Takeaways The second day of the Optical Fiber Communication (OFC) Conference had us attending presentations and discussion sessions with Ciena, Cisco, Coherent, Fabrinet, and Lumentum, all of which served to highlight a combination of new growth opportunities being actively pursued across the group as well as continued robust growth in existing product lines, setting the secto ...

North America Equity Research 17 March 2026 J P M O R G A N Hardware & Networking OFC Insights: Executive Forum Takeaways The first day of the Optical Fiber Communication (OFC) Conference opened with the Executive Forum, featuring a plethora of industry leaders, including CEOs, CTOs, and senior engineers from the likes of large hyperscalers and model builders (e.g., Google, Meta, Microsoft, OpenAI) as well as infrastructure and component providers (e.g., Arista, Broadcom, Ciena, Coherent, Lumentum, Marvell, ...

19 March 2026 | 2:14PM EDT Equity Research AMERICAS TECHNOLOGY: HARDWARE Networking and Optical market update with 650 Group We hosted a meeting in Los Angeles with Alan Weckel and Chris Depuy of 650 Group on March 19th, 2026 to discuss key industry takeaways from the Optical Fiber Communications conference. +1(212)357-6403 | zorayda.montemayor@gs.com Goldman Sachs & Co. LLC Key takeaways Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors shoul ...

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China Auto Sector**, specifically analyzing companies involved in **AIDC engines**, **heavy-duty trucks (HDT)**, and **electric two-wheelers (e-2W)**. Key companies mentioned include **Weichai Power (2338.HK)**, **China Yuchai International (CYI.US)**, **Sinotruk - H (3808.HK)**, **Ninebot (689009.SH)**, and **CFMoto (603129.SH)** [2][3][7][11][18]. Core Insights and Arguments AIDC Engine Market - **Weichai Power** is expected to see its AIDC engine sales volume grow at more than a **30% CAGR** from 2025 to 2028, driven by robust demand in both China and the US, with **50% of its volume growth** coming from outside China [6][10]. - The **global AIDC engine market** is projected to expand at a **20%+ CAGR** from 2024 to 2028, with Chinese OEMs expected to add **30-50%** to their capacity [10]. - **Yuchai** is anticipated to maintain a **40-50% market share** in China's AIDC engine market due to its cost advantages and strong client relationships [10]. Heavy-Duty Truck (HDT) Market - **Sinotruk** is forecasted to increase its overseas sales volume from approximately **153k units in 2025** to **250k units by 2030** [12]. - The global total addressable market (TAM) for Chinese HDTs is estimated at around **800k units**, with Sinotruk expected to maintain a **45% market share** in HDT exports [17]. - Export profitability for Sinotruk is higher than domestic sales, with **70-80% of net profit** derived from HDT exports [17]. Electric Two-Wheelers (e-2W) Market - **Ninebot** is experiencing rapid growth in the e-2W market, outpacing competitors like Niu and Zeeho [20]. - The company is also venturing into the robotic lawn mower market, which could represent a **TAM of Rmb50-60 billion** by 2030, significantly increasing from the current size of **Rmb20-30 billion** [20]. Additional Important Insights - **Pricing Dynamics**: AIDC engines in China are sold at only **one-third the price** of similar products in the US and EU, allowing Weichai to leverage price and margin premiums in these markets [6]. - **Market Share Projections**: By 2028, Yuchai is expected to increase its engine market share from **27% to 53%**, while Weichai's share is projected to rise from **12% to 30%** [9]. - **Risks**: The heavy-duty truck industry faces cyclical risks, including economic growth fluctuations and changes in environmental policies [27]. For the e-2W sector, risks include potential shifts in transport preferences and fierce price competition [26][30]. Conclusion The conference call highlights significant growth opportunities in the China Auto Sector, particularly in AIDC engines, heavy-duty trucks, and electric two-wheelers. Companies like Weichai, Yuchai, Sinotruk, and Ninebot are well-positioned to capitalize on these trends, although they must navigate various market risks and competitive pressures.

Summary of Key Points from Conference Call Records Industry Overview - **Industry**: Optical Communication and Networking Technology - **Key Events**: GTC 2026 (GPU Technology Conference) and OFC 2026 (Optical Fiber Communication Conference) scheduled for March 16-19, 2026 Core Company Insights NVIDIA - **CPO Roadmap**: Anticipation for detailed announcements regarding NVIDIA's Co-packaged optics (CPO) roadmap during GTC 2026, particularly focusing on the Spectrum CPO switch and its potential to achieve a Total Addressable Market (TAM) 4-5 times larger than scale-out CPO [1][5] - **Scale-out CPO Penetration**: Expected to remain low at around 54k units or 8% penetration in 2027, with potential upside due to bundling sales strategies [1][6] - **Scale-up CPO Solutions**: Expected to be adopted on the Rubin Ultra platform in 2027, facing technology challenges such as 3D packaging and thermal management [1][14] - **Market TAM Estimates**: Projected TAM for scale-out CPO switches to reach USD 23.5 billion by 2030, while scale-up CPO solutions could reach USD 104 billion [3][14] Optical Communication Sector - **Key Drivers**: Strong infrastructure investment and technology upgrades from 800G to 1.6T transceivers, with CPO expected to dominate in scale-up networks while pluggable transceivers remain dominant in scale-out networks [3] - **Component Value Breakdown**: Key components in the CPO supply chain include optical engines, external laser modules, and fiber array units, with estimated value shares of 38%, 19%, and 8% respectively in 2027 [3][12] Upcoming Technologies and Developments OFC 2026 Highlights - **NPO vs CPO**: Cloud Service Providers (CSPs) are expected to favor Near-field Packaged Optics (NPO) over CPO due to better flexibility and a more mature supply chain [2][20] - **New Developments**: Anticipated advancements in 400G EML chips, high-power CW lasers, and new materials like Thin Film Lithium Niobate (TFLN) for optical transceivers [2][21][25] Optical Transceivers - **3.2T Transceivers**: Expected to showcase advancements in optical transceivers, including DSP-powered pluggable optical transceivers and silicon-based transceivers [23] - **TFLN Modulators**: Identified as key materials for achieving 400G per lane technology, with potential applications in CPO and LPO [25][26] Market Dynamics - **CSPs Deployment**: Leading CSPs, including Alibaba, are actively deploying NPO solutions to meet higher bandwidth and lower power consumption needs, with significant advancements in their optical network architectures [28][29] - **Optical Fiber Demand**: Meta's partnership with Corning for fiber optic cables worth up to USD 6 billion by 2030 indicates growing demand driven by AI clusters [36] Conclusion - The optical communication sector is poised for significant growth driven by advancements in CPO and NPO technologies, with major events like GTC 2026 and OFC 2026 expected to provide further insights into market trends and technological innovations. The competitive landscape is evolving, with key players like NVIDIA and Alibaba leading the charge in developing next-generation optical solutions.

Summary of Conference Call Notes on Networking and Telecom Equipment Industry Overview - The optical transport market is expected to grow over 10% in 2026 and 2027, driven by three main factors: increased bandwidth requirements in existing non-AI data centers, significant new data center buildouts from 2026 to 2028, and new scale-across architectures creating demand for optical interconnects [1][2] - ZR/ZR+ pluggables are projected to grow at an average rate of 30% per annum [1] Key Companies Ciena - Ciena's market share in the optical transport market increased from 25% in 2021 to 30% in 2025 [20] - The company is well-positioned for scale-across deployments, with expectations of significant growth in 800G demand due to its WaveLogic 6 Nano platform [20] - Ciena's DCOM offering, designed for data center asset management, is expected to generate over $100 million in sales in 2026 [21] Cisco - Cisco holds about 6% of the optical transport market, with a significant presence in the 400G ZR pluggables segment, reaching approximately 35% market share [22][23] - The company recently launched its 800G pluggable solution and is expected to maintain a leading position in the market [23] Market Dynamics - The scale-across architecture is a key growth driver, expected to expand significantly, with Gartner projecting an 11x growth in 2026 [3][19] - The 800G ZR/ZR+ pluggable revenue is forecasted to grow at an 83% CAGR from 2025 through 2030, indicating a shift in market dynamics as customers migrate from 400G to 800G [15][18] - The 400G market is expected to decline by about 10% per annum as customers transition to 800G [13] Financial Projections - The total ZR/ZR+ optics market is projected to grow from $1,457 million in 2025 to $1,966 million in 2026, reflecting a year-over-year change of 34.9% [9] - Ciena's revenue from 800G ZR/ZR+ optics is expected to grow significantly, with the company currently holding a 29% market share in this segment [18] Risks and Considerations - Potential risks include sustained weakness in carrier spending on optical infrastructure and increased competition from peers [25][28] - Cisco faces challenges due to lower power savings from its 4nm DSP geometry compared to Ciena's 3nm DSP geometry [23] Conclusion - The optical transport market is poised for significant growth, with Ciena and Cisco positioned to benefit from the ongoing demand for higher bandwidth and advanced optical solutions. The transition to 800G is expected to reshape market dynamics, presenting both opportunities and risks for key players in the industry.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the optical transceiver industry, particularly companies like Lumentum, Coherent, Ciena, and Corning, as well as the broader implications of optical and copper interconnect technologies [1][2][3][6][12]. Core Insights and Arguments 1. **Market Sentiment Shift**: The bearish outlook on optical transceiver companies has reversed, with a +50% average increase in share prices attributed to rising demand and confidence in supply chain capabilities [1]. 2. **Growth Drivers**: Key growth drivers include: - Nvidia's emphasis on scale-up optics for enhanced compute performance [1]. - Increased Total Addressable Market (TAM) expectations for Optical Circuit Switching (OCS) [1][28]. - Optical companies' improved visibility into component supply, enabling them to meet rising demand [1]. - A resurgence in growth expectations for telecom products, particularly in Data Center Interconnect (DCI) and ZR pluggables [1]. 3. **Valuation Divergence**: Despite robust growth prospects for optical companies, valuation multiples have diverged, making copper interconnect companies potentially more attractive in the short term [2]. 4. **Lumentum's Ambitious Targets**: Lumentum aims to double its revenue to $8-9 billion within 12-18 months, targeting a 40% operating margin, which could lead to earnings power of ~$25 per share [3][34][40]. 5. **CPO Market Growth**: The CPO market is expected to grow significantly, from <$500 million in 2027 to ~$10 billion by 2030, driven primarily by scale-up use cases [8][12]. 6. **OCS Market Inflection**: The OCS market forecast has increased from $1-2 billion to over $4 billion, indicating a broadening customer base beyond Google [18][19]. Additional Important Insights 1. **Copper Interconnects**: Investors are expected to focus on the adoption of optical solutions for intra-rack scaling and the potential for copper interconnects to recover due to better-than-expected demand [2][16]. 2. **Role of Contract Manufacturers**: The role of contract manufacturers in the CPO supply chain will be scrutinized, especially regarding their capabilities in silicon and indium phosphide fabs [15]. 3. **Ciena's New Solutions**: Ciena is focusing on new products like the Vesta 200 optical engine and is expected to balance pricing and gross margin outcomes amid supply constraints [44][45]. 4. **Corning's Portfolio**: Corning will showcase its optical portfolio and is expected to discuss its ability to price for innovation and capture upside in a supply-constrained environment [46]. 5. **Fabrinet's Demand Drivers**: Fabrinet's focus will be on demand drivers from key customers like Ciena and Nvidia, with expectations for significant revenue contributions from new builds [43]. Conclusion The optical transceiver industry is experiencing a significant shift in market sentiment, driven by robust growth expectations and strategic developments from key players. Companies like Lumentum and Coherent are positioned to capitalize on these trends, while the copper interconnect market may also see renewed interest due to valuation divergences. Investors are advised to monitor these developments closely as they could impact investment strategies in the sector.

Summary of Optical Market Opportunities Conference Call Industry Overview - The optical market is projected to exceed $65 billion by 2028, growing at a compound annual growth rate (CAGR) of approximately 30% due to increased speed and investment in AI data centers [1][8] - The current optical market is estimated at around $30 billion in 2025, having grown at a CAGR of about 40% over the past four years [3][8] Key Market Insights - Incremental optical opportunities are estimated to create an additional $23 billion in total addressable market (TAM) by 2028 [3][8] - Traditional networks are reaching their limits, necessitating the adoption of new optical technologies [1][3] - Five key markets are identified for increased optical investment: 1. Transition from copper to fiber in scale-up 2. Co-packaged optics (CPO) on-chip 3. CPO on-board 4. Optical circuit switching (OCS) 5. Passive optical for out-of-band management [3][8] Market Dynamics - The transition to optical technologies is expected to be gradual, with significant architectural changes required for implementation [11][12] - The optical transceiver market is projected to be the largest segment, estimated at around $50 billion [10][12] - Current pricing dynamics are uncertain, with potential for price increases due to tightness in the Electro-absorption Modulated Laser (EML) market [10][31] Company Valuations and Recommendations - Current valuations for optical companies are high, with many trading at 30-40 times FY28 estimates [9][26] - Corning Inc (GLW) is viewed as the best long-term opportunity due to its exposure to the copper to fiber transition, while Lumentum Holdings Inc (LITE) is seen as the most cautious investment due to high expectations built into its valuation [9][26] Risks and Unknowns - The biggest unknowns include the pace of CPO adoption and pricing stability in the optical market [10][31] - The transition to new architectures may take longer than anticipated, impacting market growth [30][31] - The potential for pricing to revert to historical declines (10-15% annually) poses a risk to current valuations [31][32] Conclusion - The optical market is poised for significant growth driven by technological advancements and increasing demand from AI data centers - Investors should be cautious of high valuations and the uncertainties surrounding market dynamics and adoption timelines for new technologies

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Data Center and AI Infrastructure Market [1] - **Key Players**: Digital Realty (DLR), Equinix (EQIX), Iren (IREN) [3] Core Insights 1. **Hyperscalers' Capacity Strategy**: - Hyperscalers prefer self-building data centers for cost optimization and control but are increasingly relying on colocation providers due to rising AI demand [2][3] - Colocation providers have a competitive edge by securing zoning, power, and permits in advance, which can take 12-30 months, allowing for quicker capacity delivery [2][3] 2. **Geographic Trends**: - AI training clusters are moving to remote, power-rich areas (e.g., West Texas, central Ohio), while cloud and AI inference workloads remain in tier-one metropolitan areas [2][7] - Land with interconnection queue or permitting for on-site power is valued at 3-5 times that of raw land, particularly in high-demand areas [7] 3. **Power Solutions**: - Behind-the-meter power is a temporary, high-cost solution, with operators expected to transition to grid power as it becomes available [2][8] - On-site power is estimated to be twice as expensive as grid-connected utility power [8] 4. **Neocloud Providers**: - Neocloud partnerships serve as a capacity stopgap rather than a strategic differentiator, offering slightly lower prices but lacking fundamental advantages [4][6] - Demand for high-performance hardware remains strong, with technology refresh cycles expected every ~2 years due to rapid advancements [6] 5. **Capacity Demand and Forecasting**: - Hyperscalers conduct quarterly demand forecasting, turning to colocation providers when internal capacity is insufficient [3][6] - The revenue potential of a 1 GW AI training site is estimated at $10-$12 billion, with high switching costs making AI training customers sticky [7] Additional Considerations - **Market Dynamics**: The geographic landscape for data centers is bifurcating, with specific site selection driven by the AI lifecycle requirements [2][7] - **Regulatory Environment**: The ERCOT batch study process aims for grid connection by 2027 for large loads, but utilities may not commit to full power allocations initially [8] This summary encapsulates the critical insights and trends discussed in the conference call, highlighting the evolving landscape of the data center and AI infrastructure market.