Core Insights - The article discusses the evolution of optical interconnect technology, highlighting three key structural patterns in the market: vertical integration vs. specialization, the scarcity of light generation, and the rise of SiPho foundries [5][6][10]. Group 1: Market Structure - Vertical integration offers structural advantages during technological transitions, as companies that can design across multiple layers can optimize the entire tech stack [9]. - Companies like Broadcom exemplify vertical integration, appearing across multiple layers of the value chain, while most others focus on specific segments [8]. - The semiconductor industry has historically shown that such advantages may not be permanent, as standardization can lead to the emergence of fabless models [9]. Group 2: Scarcity of Light Generation - The difficulty of producing light sources (Layer 1 and Layer 0) is highlighted, with InP and GaAs materials requiring specialized technology and equipment [12][13]. - Companies capable of mass-producing high-performance InP lasers are few, creating a concentrated market [13][14]. Group 3: Rise of SiPho Foundries - Layer 2, which focuses on SiPho foundries, is gaining attention as traditional semiconductor manufacturers like TSMC and GlobalFoundries enter the photonics space [17]. - TSMC's potential to optimize both AI chips and optical interconnects within the same ecosystem could disrupt existing vertical integration advantages [17]. Group 4: Layer Analysis - Layer 0 involves substrate supply, with companies like AXT benefiting from increased demand for III-V substrates, although geopolitical risks exist due to production in China [21][22]. - Layer 1 is dominated by Coherent and Lumentum, both of which manufacture InP lasers and are expanding production amid high demand [24][25]. - Layer 2 focuses on SiPho foundries, with companies like GlobalFoundries and TSMC leading in manufacturing photonic integrated circuits [27][29]. - Layer 3, represented by DSPs, faces potential obsolescence as CPO technology advances, with companies like Broadcom and Marvell adapting to this shift [33][36]. - Layer 4 sees companies like Innolight and Eoptolink currently leading in the pluggable module market, but their positions may be challenged as the industry shifts towards CPO [40][42]. Group 5: Future Signals - Key indicators to watch include pJ/bit energy consumption metrics, which reflect technological advancements and efficiency [56]. - The ongoing standardization efforts, such as OIF and UCIe, will shape the future market landscape and influence competitive dynamics [57][59]. - Recent mergers and acquisitions signal strategic directions in the industry, with notable deals like Marvell's acquisition of Celestial AI [60][62]. - The choices made by major cloud service providers like Google and AWS regarding their technology partnerships will ultimately determine market trajectories [63][64].

Summary of Key Points from the Conference Call Industry Overview - **Sector Focus**: The conference call primarily discussed the **semiconductor**, **consumer electronics**, and **optical transceiver** industries, with a specific emphasis on the **China Technology & Communications** sector [1][4][5][6]. Semiconductor Industry Insights - **Increased Interest**: Investor interest in the **China semiconductor** sector has risen due to the country's push for AI localization and new IPO listings [5][6]. - **Growth Projections**: China's AI accelerator units (GPUs/ASICs) are expected to grow from **2.2 million units in 2025 to 3.5 million units in 2026**, with domestic supply increasing from **45% to 60%** [5]. - **Key Players**: Notable companies include **CXMT** and **YMTC**, which are expanding their production capacity [5]. - **Investment Recommendations**: Top stock picks include **Montage Technology** and **ASMPT**, with Montage seen as a unique investment opportunity benefiting from global AI infrastructure investments [5]. Consumer Electronics Sector - **Investor Sentiment**: Interest in the consumer electronics sector is low, particularly in the **Android supply chain**, which is heavily shorted [6]. - **Key Concerns**: Discussions revolved around potential declines in smartphone shipments, memory chip availability, and the impact of memory price trends on companies like **Xiaomi** and **Luxshare** [6]. - **Resilient Names**: **Conant** is highlighted as a resilient player in the AI glasses market, with potential growth from partnerships with major tech companies [6]. Optical Transceiver Market - **Shipment Expectations**: The optical transceiver market anticipates shipments of **60-70 million units**, but achieving higher numbers may be challenging due to supply constraints [4]. - **Market Volatility**: Pair trading and rotation are expected to continue driving volatility in optical transceiver stocks [4]. - **Future Catalysts**: The upcoming **GTC/OFC** events are seen as potential catalysts for updates on CPO and 2027 optical transceiver demand [4]. Investment Risks and Opportunities - **Valuation Concerns**: High expectations in the AI supply chain are met with downside risks, leading to a cautious outlook on certain stocks like **VGT** and **FII**, which are viewed as having more downside than upside potential for 2026 earnings [1][4]. - **Preferred Stocks**: Investors favor stocks with exposure to substrate and CPU boards, as well as tier-2 names gaining market share in AI accelerator PCBs [1][4]. Conclusion - The conference call provided a comprehensive overview of the current state and future outlook of the semiconductor, consumer electronics, and optical transceiver industries, highlighting key players, investment opportunities, and potential risks associated with market volatility and valuation concerns.

9 February 2026 | 9:19AM HKT Equity Research GC Tech: CIG (603083.SS) Mgmt. visit: SiPh in expansion; CW laser supply secured for 2026; LPO, NPO progress on track We visited CIG (603083.SS, NC) management in Hong Kong on Jan 22. Management's positive tone echoes our positive view on SiPh optical modules: (1) AI servers ramp up with growing ASIC driving high-speed networking demand: As we highlighted in Jan (report link), we expect global AI servers shipment implied AI chips to increase by 49% / 31% YoY in 2 ...

： 管理层的积极态度与我们对硅光（SiPh）光模块的乐观看法相呼应： 正如我们在 1 月报告中所强调的，我们预计 2026/27E全球 AI 服务器出货量所隐含的 AI 芯片将同比增长 49%/31%，其中 ASIC 渗透率将提升至 40%/50%。 ： 正如我们在 1 月报告中所强调的，我们预计 800G 及以上光模块出货量将在 2026/27E同 管理层的积极态度与我们对硅光（SiPh）光模块的乐观看法相呼应： ： 正如我们在 1 月报告中所强调的，我们预计 2026/27E全球 AI 服务器出货量所隐含的 AI 芯片将同比增长 49%/31%，其中 ASIC 渗透率将提升至 40%/50%。 ： 正如我们在 1 月报告中所强调的，我们预计 800G 及以上光模块出货量将在 2026/27E同比增长 101%/53%，达到 5200 万 / 8000 万只，从而推动硅光（SiPh）渗透率提升。 ： 公司产品包括高速光收发器、无线与宽带接入、运营商以太网及边缘计算，助力下一代电信与数据中心网络 建设。 公司分支机构遍布美国、中国、日本、马来西亚及欧洲。 公司在光收发器领域的主要竞争对手包括 Innoligh ...

Summary of YJ Semi (688498.SS) Management Call Company Overview - **Company**: YJ Semi (688498.SS) - **Industry**: Semiconductor, specifically focusing on optical modules and lasers - **Revenue Growth**: Revenues increased by 71% year-over-year in 1H25, driven by strong growth in the data center business [2] Key Industry Insights - **AI Infrastructure Demand**: There is a significant ramp-up in AI infrastructure across both the US and China cloud markets. The projected demand for AI chips is expected to reach 11 million, 16 million, and 21 million units in 2025, 2026, and 2027 respectively, with ASICs making up 38%, 40%, and 50% of these chips in the same years [1] - **Optical Module Specifications**: The specifications for optical modules are being upgraded, particularly towards 1.6T in the US Cloud, with a notable increase in 800G modules in the China Cloud. Global shipments for 800G and 1.6T optical modules are expected to reach 38 million and 14 million units by 2026 [1] Company Strategy and Product Development - **Product Focus**: YJ Semi is focusing on CW lasers, particularly 70mW and 100mW models, with plans to develop 300mW CW lasers. The company aims to become a major supplier of CW lasers globally by 2026 [3] - **Silicon Photonics Adoption**: The adoption rate of silicon photonics is expected to grow faster than EML technology, with increasing optical connections in AI data centers. This shift is anticipated to provide larger bandwidth and reduced loss compared to traditional copper cables [3] Market Position and Competitive Landscape - **Supplier Diversification**: YJ Semi has diversified its InP substrate suppliers across mainland China and Japan, enhancing its supply chain resilience [3] - **Investment Recommendations**: Analysts recommend buying stocks of companies such as Landmark, VPEC for Epiwafer/CW lasers, and Innolight, Eoptolink, TFC Optical for optical modules, as well as Ruijie for ODM [1] Financial Outlook - **Confidence in Pricing**: Management expresses confidence in the pricing of CW lasers for 2026-27, supported by the anticipated upcycle in AI infrastructure and the rising adoption of silicon photonics and CW lasers [3] Additional Notes - **Client Verification**: YJ Semi has successfully passed client verification for its 100mW CW lasers, indicating strong product validation and market readiness [2] - **Growth Projections**: The company is positioned to benefit from the growing local ecosystem in China, particularly following the launch of leading foundation models in generative AI [1] This summary encapsulates the key points from the management call, highlighting the company's growth trajectory, market dynamics, and strategic initiatives within the semiconductor industry.

Summary of HG Tech (000988.SZ) Management Visit Company Overview - **Company Name**: HG Tech - **Ticker**: 000988.SZ - **Location**: Wuhan, China - **Specialization**: Laser equipment, optoelectronic devices, sensors - **Market Exposure**: AI data centers, consumer electronics, industrial, automotive - **Ranking**: Global top 9 in optical modules in 2024 [2] Key Industry Insights 1. **AI Infrastructure Growth**: - Positive outlook on AI infrastructure ramp-up in both US and China Cloud markets - Projected demand for AI chips: 11 million in 2025, 16 million in 2026, and 21 million in 2027 - ASICs expected to account for 38%, 40%, and 50% of AI chips in 2025, 2026, and 2027 respectively [1][3] 2. **Optical Modules Demand**: - Anticipated specification upgrades towards 1.6T in US Cloud and rising 800G in China Cloud - Expected global shipment of optical modules: 38 million units for 800G and 14 million units for 1.6T in 2026 - 1.6T optical modules projected to be sourced 60% from GPU AI servers and 40% from ASIC AI servers [1][3] 3. **Market Dynamics**: - Despite GPU restrictions, demand for generative AI is increasing in China, supported by local ecosystem growth post-launch of leading foundation models [1] - The company is expanding its market reach from China Cloud to US Cloud, enhancing competitiveness in high-end modules [3] Business Growth Drivers 1. **Optical Modules**: - Solid demand driven by AI infrastructure and continuous specification upgrades - Anticipated double-digit growth in optical module shipments in China for 2026, particularly in 800G and silicon photonics [3] 2. **Laser Equipment**: - Expected recovery in 2026, driven by sectors such as 3D printing, wearables, shipbuilding, precision agriculture, and PCB industry [3] Investment Recommendations - **Buy Recommendations**: - Epiwafer / CW laser: Landmark, VPEC - Optical module: Innolight, Eoptolink, TFC Optical - ODM: Ruijie [1] Additional Insights - Management maintains a positive outlook on business growth for 2026, emphasizing the importance of high-end optical modules and laser equipment recovery [3]

Summary of Global Optical Transceivers Conference Call Industry Overview - The focus is on the **Global Optical Transceiver market**, with significant updates on the **TAM (Total Addressable Market)** forecast for 2026-2028, driven by the increasing demand for AI servers and advancements in optical transceiver technology [1][26]. Key Insights - The **Global Optical Transceiver value TAM** is raised by **43%** and **46%** for 2026 and 2027, respectively, with projected shipments of **800G** and **1.6T** units reaching **38 million** and **14 million** in 2026 [1][28]. - The **CAGR (Compound Annual Growth Rate)** for shipments of **800G and above optical transceivers** is expected to be **34%** from 2026 to 2028, reaching **94 million** units by 2028 [1][21]. - The **ASIC penetration rate** for AI chips is projected to increase to **50%** by 2027, up from **45%**, indicating a shift towards more efficient AI server architectures [1][26]. Market Dynamics - **Upstream supply constraints** such as EML and CW lasers are critical factors affecting delivery timelines for optical transceiver manufacturers [1][29]. - The transition from **pluggable optical transceivers** to **on-board optics (NPO)** and eventually to **co-packaged optics (CPO)** is anticipated to influence market dynamics significantly [1][30]. Shipment and Revenue Estimates - The **Global Optical module market** is projected to grow from **$33.7 billion** in 2025 to **$49.5 billion** in 2028, with a notable shift in product mix towards higher-speed modules [1][28]. - Shipments of **400G or lower** are expected to decline from **94%** of total shipments in 2025 to **80%** by 2028, indicating a market shift towards higher-speed optical transceivers [21][22]. Competitive Landscape - Companies rated as **Buy** include: - **Optical transceiver makers**: Innolight, Eoptolink, TFC Optical - **CW lasers/Epiwafer suppliers**: Landmark, VPEC - **Data center switch**: Ruijie [2]. Potential Risks - **Geopolitical tensions** may impact the supply and demand dynamics of AI chip platforms, particularly in the Chinese market [29]. - The **size of AI server clusters** could affect the number of optical modules used, with smaller clusters potentially leading to lower attach rates [29]. Technology Trends - The **adoption of Silicon Photonics (SiPh)** is expected to increase, with projections indicating that SiPh will account for **15%** of the market by 2028, particularly in high-speed applications [9][25]. - The **migration to higher-speed connections** (800G and above) is becoming mainstream for large-scale data centers, with significant growth expected in the **1.6T** and **3.2T** segments starting from 2026 [22][23]. Conclusion - The Global Optical Transceiver market is poised for substantial growth driven by advancements in AI server technology and increasing demand for high-speed connectivity solutions. The ongoing shifts in technology and market dynamics present both opportunities and challenges for industry players.

Summary of RoboTechnik Management Call Company Overview - **Company Name**: RoboTechnik (300757.SZ) - **Established**: 2011 - **Initial Focus**: Photovoltaic cell manufacturing equipment - **Acquisition**: Entered the CPO market by acquiring FiconTEC, a leader in automated assembly and testing systems for integrated photonic devices and high-end opto-electronic components in 2020, with FiconTEC becoming a subsidiary in 2025 [3][9] Industry Insights - **Market Segment**: Co-Packaged Optics (CPO) and Silicon Photonics (SiPh) - **Growth Drivers**: Increased demand for SiPh solutions due to rising data volumes for AI model training and the need for higher computing efficiency [5][9] - **Technological Advancements**: SiPh optical modules are expected to contribute significantly to 800G and 1.6T optical modules due to their compact structure and production efficiency [2] Key Takeaways from Management Call 1. **Automated Assembly and Testing Systems**: - RoboTechnik utilizes advanced AI and machine learning algorithms for high-precision alignments, meeting customer requirements for 800G+ SiPh or CPO products [4] - The company has developed auto align technology capable of detecting defects as small as 0.5μm [4] 2. **Business Expansion Plans**: - Equipment revenues related to optical modules and engines increased by 229% year-over-year in the first half of 2025 [9] - Plans to establish production lines in mainland China and expand sales and technical support teams to provide localized services [9] 3. **Positive Market Outlook**: - Management maintains a positive outlook on the demand for high-precision automated equipment for assembly and testing, aiming to expand capacity to meet rising end demand [1][5] 4. **Technological Capabilities**: - RoboTechnik's experience in image processing and alignment algorithms enhances the precision of their equipment, which is crucial for the evolving demands of the SiPh and CPO markets [4][8] Additional Insights - **Strategic Positioning**: The acquisition of FiconTEC positions RoboTechnik favorably within the AI infrastructure cycle, aligning with industry trends towards automation and efficiency in optical components [1][3] - **Investment Recommendations**: Analysts recommend buying stocks of companies like Innolight, Eoptolink, Landmark, VPEC, and TFC Optical, which are expected to benefit from the growth in SiPh optical modules [2] This summary encapsulates the key points discussed during the management call, highlighting RoboTechnik's strategic initiatives, market opportunities, and technological advancements within the opto-electronic components industry.

Summary of Global Optical Transceivers Conference Call Industry Overview - The global optical transceiver market is projected to grow significantly, driven by the increasing demand for AI server infrastructure and the transition from copper to fiber optics [1][2] - The market is expected to reach US$24 billion in 2025, US$30 billion in 2026, and US$37 billion in 2027, with the 800G+ segment growing at an impressive 87% CAGR [2] Key Insights - **Adoption Trends**: - 1.6T optical transceivers are expected to ramp up adoption in 2026-2027, while 3.2T will start adoption in 2027 [1] - The penetration of silicon photonics (SiPh) solutions is anticipated to increase, reaching 60% for 800G, 80% for 1.6T, and 100% for 3.2T optical transceivers by 2028 [2] - **Market Demand**: - The demand for optical transceivers is expected to be driven by the AI server infrastructure cycle, with ASIC chips projected to account for 40% of total AI chips by 2025 and 45% by 2026 [1] - Shipment volumes for 800G and 1.6T are expected to grow from 36 million and 5 million units in 2026 to 56 million and 12 million units in 2027, respectively [2][17] - **Supply Chain Insights**: - Companies rated as "Buy" include optical transceiver module leaders Innolight and Eoptolink, CW laser manufacturers Landmark and VPEC, and data center switch provider Ruijie [3] Financial Projections - The global optical module total addressable market (TAM) is projected to grow from US$24.1 billion in 2025 to US$36.8 billion in 2027, with significant contributions from the 800G+ segment [2][8] - The average selling price (ASP) for optical transceivers is expected to decline year-over-year, with a notable drop for 800G and 1.6T products [14][15] Additional Considerations - The transition to high-speed connections is expected to accelerate the adoption of SiPh solutions due to their cost advantages over traditional EML modules [18] - The overall demand for optical transceivers is projected to reach 392 million units in 2025, increasing to 437 million units by 2028, with traditional applications declining from 89% to 66% of total shipments [16] - The market is witnessing a shift towards higher-speed products, with 800G becoming the mainstream specification for large-scale data centers [17] Conclusion - The optical transceiver market is poised for rapid growth, driven by advancements in AI infrastructure and the increasing adoption of high-speed optical solutions. Key players in the supply chain are well-positioned to benefit from these trends, making it a promising area for investment.

Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: The conference call primarily discusses the **China Technology & Communications** sector, with a strong emphasis on **AI hardware**, **AI networking**, **consumer electronics**, and **semiconductors**. Core Insights and Arguments 1. **AI Chain Sentiment**: There is an expectation for a rebound in AI chain sentiment due to several catalysts in October following profit-taking after the Golden Week [1][1] 2. **Apple Supply Chain**: Anticipation of profit-taking in the Apple supply chain after the next build plan update and the low season in Q1 2026 [1][1] 3. **Localization and Self-Reliance**: Companies benefiting from localization and self-reliance are expected to gain from domestic AI capital expenditure and updates on tariffs and restrictions [1][1] 4. **Camera Chain Opportunities**: The camera chain is expected to benefit from upcoming smart device launches, including action cameras and AI edge devices [1][1] 5. **Top Software Picks**: AI agents are highlighted as a top pick in the software sector, particularly in relation to AI+ policy [1][1] AI Hardware Insights 1. **Investor Interest**: There is strong investor interest in AI PCB, with key questions surrounding total addressable market (TAM) and supply situations [2][2] 2. **VGT Leadership**: VGT is identified as a leader in AI-PCB, capturing growth opportunities in GPU and ASIC markets due to secured upstream supply [2][2] 3. **Capacity Expansion**: WUS is expected to see a capacity expansion of 30-40% annually, benefiting from ASIC and high-speed switches [2][2] 4. **Market Volatility**: VGT's share price may experience volatility during the October earnings season due to backplane verification results [2][2] AI Networking Insights 1. **Positive Investor Sentiment**: Investors maintain a positive view on transceiver names, with improved confidence in demand visibility for 2027 [4][4] 2. **Key Catalysts**: Upcoming results from 3Q25 and conferences like OCP and ECOC are seen as potential catalysts for stock re-ratings [4][4] 3. **Preference for GDS**: Investors show a preference for GDS over VNET due to its exposure to both overseas and domestic markets [4][4] Consumer Electronics Insights 1. **Luxshare Interest**: Increasing interest in Luxshare is noted, driven by strong sales of the iPhone 17 in China [5][5] 2. **AI Edge Device Demand**: There is a growing potential for AI edge devices, which may create supply chain opportunities [5][5] 3. **Camera Supply Chain Trends**: The camera supply chain is expected to benefit from new applications and variable aperture adoption in upcoming smartphone models [5][5] Semiconductor Insights 1. **Domestic AI Accelerator Growth**: China's ban on Nvidia AI chips is seen as a significant tailwind for domestic AI accelerator growth, with a target of 1 million shipments in 2025 [6][6] 2. **Capacity Expansion**: Chinese foundries are expected to expand advanced logic and memory capacity, benefiting local vendors [6][6] 3. **Positive Outlook for Equipment Vendors**: ASMPT is viewed positively due to increasing demand for advanced packaging [6][6] Software/ITS Insights 1. **Low Investor Interest**: Overall interest in the software/ITS sector remains low, although AI policy and capital expenditure in China are driving some attention [7][7] 2. **AI Agent Contribution**: AI agent contributions are expected to increase to over 10% starting from the second half of 2026 among select software companies [7][7] 3. **Top Pick**: Kingdee is highlighted as a top pick due to its strong fundamentals and alignment with the AI agent theme [7][7] Additional Important Points - **Stock Picks**: The report lists several stock picks including Epotolink, Innolight, FII, WUS, GDS, VNET, ASMPT, Sunny Optical, Omnivision, and Q Tech as favorable investments in the AI chain and camera chain [1][1] - **Market Dynamics**: The overall sentiment indicates a cautious optimism with potential entry points for investors in the Apple chain and camera chain following profit-taking [5][5] This summary encapsulates the key insights and trends discussed in the conference call, providing a comprehensive overview of the current landscape in the technology and communications sector in China.