Summary of Conference Call Notes Industry Overview - **Industry**: Co-packaged optics (CPO) supply chain and optical components market - **Key Players**: Nvidia, TFC, T&S, Eoptolink, Lumentum, Corning Core Insights and Arguments 1. **CPO Deployment Timeline**: CPO is expected to start being deployed in scale-up networks by late 2027, with significant demand anticipated in the second half of 2027 [2][11][14] 2. **Market Size Projections**: - Total demand for CPO switches is projected to reach 209,000 units by 2027, up from previous estimates of 100,000 units [2][31] - Market sizes for key components in 2027 are forecasted as follows: - FAU/connectors: US$2.2 billion (Rmb15.7 billion) [3][31] - ELSFP modules: US$7.7 billion (Rmb55.4 billion) [3][31] - Fiber shuffle: US$5.6 billion (Rmb40.5 billion) [3][31] - Fiber tray: US$3.3 billion (Rmb24.0 billion) [3][31] 3. **Demand Adjustments**: The demand forecast for scale-out networks has been revised down from 100,000 to 40,000 units for 2027, while scale-up demand is expected to drive overall growth [2][12] 4. **Optical Transceiver Demand**: The forecast for optical transceivers demand in 2027 has been raised from 103 million to 115 million units, indicating stronger than expected market conditions [4][34] 5. **Stock Recommendations**: - TFC and T&S are identified as key beneficiaries in the upcoming CPO era, with Eoptolink also presenting an attractive risk-reward opportunity [5][39] - TFC is expected to be a major supplier for FAU/connectors and ELSFP modules, benefiting from early CPO deployment [53] Additional Important Insights 1. **Technological Advancements**: The upcoming Nvidia Rubin Ultra NVL576 rack, expected to launch in late 2027, will utilize CPO technology to enhance bandwidth and reduce latency [16][17] 2. **Market Dynamics**: The report highlights a potential oversubscription rate in the NVL576 architecture, indicating a robust demand for optical components [27] 3. **Supplier Landscape**: Key suppliers for the CPO supply chain include Lumentum, TFC, and Corning, with a focus on the integration of optical engines and switch ASICs [25][28] 4. **Earnings Estimates**: Earnings estimates for TFC and Eoptolink have been significantly raised, reflecting the anticipated demand surge in optical components [55][44] This summary encapsulates the critical insights from the conference call, focusing on the CPO supply chain's growth trajectory, market dynamics, and key players poised to benefit from upcoming technological advancements.

Summary of Key Points from the Conference Call Industry Overview - The conference call focused on the **CPO (Co-Packaged Optics)** technology within the **technology sector**, particularly its application in networking and data centers [1] Core Insights - **CPO Penetration Forecast**: Expected to rise starting from the second half of 2027, with a projected penetration rate of **3-5% by 2026** [5] - **NPO (Next-Generation Pluggable Optics)**: Considered a transitional solution, anticipated to be deployed in **2026**, offering lower power consumption and easier production compared to CPO [5] - **Market Dynamics**: CPO switches are currently in small-scale shipment stages, with Broadcom holding a significant market share. Major bottlenecks for mass production include thermal management materials and yield rates in optoelectronic co-packaging [5] Competitive Landscape - **Broadcom vs NVIDIA**: - **NVIDIA** aims for a fully integrated CPO system using advanced technologies like **3D packaging** and **Micro-Ring Modulator (MRM)**, which enhances performance but is technically challenging [2] - **Broadcom** focuses on compatibility with various network architectures, utilizing the more established **Mach-Zehnder Modulator (MZM)** [2] Pricing and Cost Structure - CPO switches are generally **30-40% more expensive** than traditional switches and pluggable optical modules. The cost breakdown indicates that switch chips account for about **one-third** of the total cost, with optical engines at **30%**, and external lasers at **10-15%** [5] - Once mass production is achieved, costs for CPO switches could potentially be **30% lower** than traditional solutions [5] Supply Chain Insights - Major laser providers include **Lumentum**, **Coherent**, and **Broadcom**. Fiber array manufacturers include **Senko Advanced Components** and **US Conec**, while fiber cable manufacturers include **Corning** and **YOFC** [5] - A projected **20% supply gap** for EML (Electro-Absorption Modulated Laser) chips is expected in **2026**, driven by high demand for optical transceivers [6][7] Data Center Trends - In the data center switch segment, **400G switches** are expected to maintain a **50% penetration rate** in **2026**, while **800G switches** are projected to see significant growth, also approaching a **50% penetration rate** [5] - **1.6T switches** are anticipated to be shipped in small batches this year, indicating a slower adoption rate [5] Additional Considerations - The overall demand for **100G and 200G EMLs** is estimated at **500 million units** this year, while production capacity is only **400 million units**, leading to a **20% overall shortage** [7] - The long lead time for optical chip production (approximately **9 months**) suggests that supply constraints may persist for the next **2-3 years** [7]