Summary of the Conference Call for Shijia Photonics Company Overview - Shijia Photonics has successfully transitioned to the data center AWG chip market through collaboration with the Chinese Academy of Sciences, establishing partnerships with North American clients such as AOY and Intel, and expanding production capacity overseas [2][4] Key Industry Insights - The AWG chip is utilized in data center wavelength division multiplexing (WDM) solutions for data transmission over distances greater than two kilometers, offering cost and integration advantages. The penetration rate of AWG solutions is expected to increase as leading domestic optical module companies adopt this technology [2][3] - The establishment of overseas factories has led to a significant influx of MPO multi-fiber connector orders, successfully integrating with global cabling companies like Corning, CommScope, and Fujikura, driving rapid growth in the high-end connector business [2][9] Financial Performance - The ADWG product line is a cornerstone of Shijia Photonics, projected to account for nearly half of the company's revenue in 2024, with a high gross margin contributing significantly to profits [12] - The laser chip business, initially focused on the telecom sector, is expected to see substantial growth as validation from major clients in the data center market progresses [8] Market Dynamics - The FR optical module market is currently dominated by Meta's procurement, with Google also planning to increase its purchases. Demand is expected to rebound in 2024 as Meta and Google ramp up their FR requirements, following a decline in 2023 due to shifts in project focus [11] - The MPO connector market is fragmented, with a global market space estimated at approximately 20 billion RMB. Chinese companies possess a competitive edge in high-end MPO technology, which is expected to enhance their market share [14] Technological Advancements - Domestic companies have made significant progress in the independent research and supply of MTX chips, although high-end MTX chips still rely on overseas suppliers. The acquisition of Foxima by Shijia has notably improved its MPU competitiveness, creating synergistic effects within the industry [16] - The penetration rate of silicon photonics technology is rapidly increasing, with expectations to rise from 10% in 2023 to 20% in 2024, and potentially exceed 50% by 2026. This technology shift positions Chinese companies favorably in the market [17] Future Growth Prospects - Shijia Photonics anticipates significant business growth over the next two years, driven by the successful ramp-up of AWG and MPU products, alongside emerging product lines such as CW light sources and FAU passive devices [18] - The development of silicon photonics is expected to have a profound impact on the high-speed module market, with projected demand for high-speed modules exceeding 30 million units in 2025 and potentially reaching 50 million units in 2026 [19] Conclusion - Overall, Shijia Photonics is well-positioned for future growth, with a strong focus on data center solutions and a competitive edge in high-end optical components, supported by strategic partnerships and technological advancements. The company's financial outlook remains positive, with expectations for improved profitability and market share expansion.

Summary of the Conference Call for Shijia Photonics Industry Overview - The AI computing power demand remains optimistic, with high-frequency data showing explosive growth year-on-year and month-on-month, indicating a broad application of AI in the B-end market. The upcoming release of large models like GPT-5 is expected to catalyze the industry and enhance valuations, benefiting related stock trading strategies [2][3] - The optical module industry is experiencing significant growth opportunities, with an upward revision in the demand for 800G optical modules and a confirmed ramp-up in 1.6T optical modules. Shijia Photonics is expected to benefit from the increased production of 800G and 1.6T products and the rising penetration rate of CPU applications [2][5] Company Highlights - Shijia Photonics has acquired Fokexima, enhancing its technical strength and market competitiveness. Fokexima specializes in MPO components and holds nearly 60 patents, reporting revenue of 82.57 million yuan and a net profit of 30.68 million yuan in Q1 2025 [2][6] - Fokexima has been certified by several leading clients, including optical module manufacturers and structured cabling companies, with its 800G and 1.6T single-mode low-loss connectors already in mass production for high-speed data transmission applications [2][7][8] - The acquisition of Fokexima is expected to significantly enhance Shijia Photonics' technical capabilities and market position, particularly in the MPO component sector [6][30] Product Development and Market Trends - The optical module industry is witnessing notable trends, with a strong demand for 800G and 1.6T products. Shijia Photonics has a comprehensive layout in both passive and active products, benefiting from the ramp-up of its 800G and 1.6T products and the accelerated penetration of CPU applications [5][29] - The AWG (Arrayed Waveguide Grating) products of Shijia Photonics are competitive, with strong performance in loss metrics and leading capacity and customer response. The demand for AWG products continues to grow, covering major domestic optical modem manufacturers [4][23] - The company is also focusing on new product categories such as CW light sources and EML optical chips, which are expected to open up larger growth opportunities [5][30] Financial Performance and Future Outlook - The acquisition of Fokexima is anticipated to improve Shijia Photonics' capacity utilization and gross margin, although the specific impact is yet to be quantified. The company is adjusting its product structure to enhance the gross margin of MPO products [13][30] - The potential output value of the Thai factory, which is currently in the equipment debugging and employee training phase, is expected to be significant, although actual production value needs further enhancement [19] - The company’s MPO products are primarily multi-mode until 2024, after which there will be a gradual shift towards single-mode products, which are expected to improve gross margins [14][30] Competitive Landscape - The barriers to entry in the connector industry, particularly for MPO connectors, are primarily based on technological advancement. Fokexima has achieved mass production of products with 2 to 48 fiber holes, leading the domestic market in technology [11][12] - The company is also exploring the application of wavelength division multiplexing technology in DR optical module products, which is expected to reduce costs and meet increasing demand [24] Conclusion - Shijia Photonics is well-positioned for future growth, particularly in the AWG product line, which is expected to replace traditional filter methods. The company has achieved significant sales in MPO connectors, with a growth rate of approximately 400% in Q1 2025 compared to the previous year [29][30] - The active optical chip market is projected to reach around 15-16 billion yuan in 2025, with Shijia Photonics playing a crucial role in this growth [30]