TFC(SZ:300394)2026-03-01 17:22Investment Rating - The report indicates a positive investment outlook for Tianfu Communication (TFC) as a key beneficiary in the CPO era [5][12]. Core Insights - The projected market size for 2027 includes FAU connectors at approximately $2.2 billion, ELS at $7.7 billion, optical fiber shapers at $3.3 billion, and optical fiber trays at $5.6 billion, with adjustments made due to supply chain dynamics [4]. - The anticipated deployment of CPO technology is expected to occur by the end of 2027, with a total of 209,000 CPU switches projected, including 40,000 related to horizontal expansion and 69,000 for vertical expansion [2][3]. - The transition from traditional optical modules to CPO/CTO architecture is expected to shift DSP costs significantly, impacting pricing structures and profit margins in the optical module market [8][13]. Market Size Projections - The 2027 market size estimates are as follows: FAU connectors approximately $2.2 billion, ELS around $7.7 billion, optical fiber shapers about $3.3 billion, and optical fiber trays near $5.6 billion [4]. - The supply of continuous wave lasers is adjusted upwards to 115 million units, based on the assumption of 5-6 connection methods between GPUs [4]. Competitive Landscape - Tianfu Communication (TFC) is identified as a primary beneficiary in the CPO era, while TNS may face pressure due to supplier diversification [5]. - The demand and valuation discussions for companies like Optolink focus on strong growth expectations for 2027, with potential valuation multiples reflecting market optimism [6]. Key Observations - The report emphasizes the importance of upcoming events such as GTC and OFC, with expectations for significant updates regarding CPU and switch technologies in late 2026 and 2027 [6][7]. - The transition to CPO architecture is expected to enhance energy efficiency and computational power, although the final form of this technology remains uncertain [8][10]. Long-term Outlook - The long-term penetration of CPU/CPO technologies and the total addressable market (TAM) will depend on the supply of chipsets and system-level operability, with significant developments expected by 2028 [11]. - The valuation for TFC is set at $446, based on a 25x multiple for 2027, reflecting both new CPU opportunities and adjustments in existing business lines [12].