Summary of Conference Call on Optical Module Isolators Industry Overview - The demand for isolators in optical modules is surging due to their critical role in protecting lasers and enhancing system stability. The rapid growth in demand for 800G and 1.6T optical modules is expected to lead to a continued shortage of isolators in the coming years [1][2][12]. Key Points and Arguments - **Supply-Demand Imbalance**: The isolator market is experiencing a significant supply-demand imbalance, primarily due to cautious sales strategies from leading global supplier Coherent, which has limited overall production capacity. Domestic suppliers like Angna and Dongtianwei are also struggling to meet market demand in the short term, resulting in rising prices for isolators [1][2][6]. - **Core Component - Faraday Rotator**: The Faraday rotator is the core component of isolators, effectively blocking reflected light to protect lasers. Major suppliers include Coherent, Sumitomo Electric, and domestic companies such as Chengdu Feiruit and Xiamen Senyi, but overall production capacity remains insufficient [1][3][8]. - **Projected Demand**: For 800G optical modules, the DR8 EML solution requires 8 isolators, the DR8 silicon photonics solution requires 4, and the FR8 wavelength division multiplexing solution requires 1. By 2026, overseas demand for 800G and 1.6T isolators is expected to exceed 300 million units, with total demand potentially surpassing 400 million units when considering domestic markets and other specifications [1][5][12]. - **Market Trends**: The optical module industry is facing tight supply conditions across the entire supply chain, from optical modules to upstream chips and passive components like isolators. Recent observations indicate rising prices for isolators, CW light sources, and expedited fees, reflecting the tight supply situation [2][7]. Important but Overlooked Content - **福晶科技 (Fujing Technology)**: The company has a significant advantage in the Faraday rotator sector due to its self-manufacturing capabilities for SGGD chips, which effectively reduce costs. Fujing Technology is actively collaborating with domestic isolator and optical module manufacturers to continuously improve product performance, with expectations of significant production growth in the next one to two quarters [1][10][11][14]. - **Financial Performance**: Fujing Technology's main business has benefited from the growing demand for PCB ultrafast lasers and other optical components, with revenue and profit growth exceeding 40% and 50%, respectively, in the third quarter [3][14]. - **Investment Opportunities**: The ongoing development of high-bandwidth communication technologies will sustain the demand for high-performance passive components like isolators and Faraday rotators. The international manufacturers' control over production capacity exacerbates supply-demand conflicts, leading to price increases. Investors may consider companies like Dongtianwei and Fujing Technology, which have established positions in this supply chain and are likely to gain more market share as domestic production increases [7][12].