Core Viewpoint - The company emphasizes the growing importance and adoption of LPO technology due to its unique advantages such as low power consumption, low latency, and low cost, despite its current market presence being limited compared to DSP-equipped optical modules [1] Group 1: LPO Technology - LPO technology is currently not comparable to DSP-equipped optical modules in terms of application breadth and shipment scale [1] - The unique advantages of LPO, including low power consumption, low latency, and low cost, are increasingly recognized by customers [1] - LPO can complement DSP-equipped optical modules in various scenarios [1] Group 2: Company Initiatives - The company places significant importance on LPO technology and is one of the early developers and providers of LPO products in the industry [1] - In 2023, the company has already sent LPO samples to key customers for testing and certification [1] - Multiple series of LPO products have been introduced to customers and have generated sales revenue [1]

Core Viewpoint - The company acknowledges the growing importance of LPO technology, highlighting its unique advantages and the increasing customer adoption, while also noting that LPO is not yet comparable to DSP-based optical modules in terms of application breadth and shipment scale [1]. Group 1: LPO Technology Strategy - The company is focusing on LPO technology, recognizing its low power consumption, low latency, and low cost as key advantages that are gaining attention from customers [1]. - The company has been one of the early developers and providers of LPO products in the industry, having sent samples for testing and certification to key customers as early as 2023 [1]. - Multiple series of LPO products have already been introduced to customers and have started generating sales revenue [1].

Summary of the Conference Call for NewEase (新易盛) Company Overview - NewEase is benefiting from an increase in market demand and client orders, leading to a rise in sales, with expectations for strong market demand to continue into 2026 [2][3] Key Points Industry and Market Dynamics - The optical module industry is experiencing a rapid evolution, with the introduction of 1.6T products expected to ramp up in the second half of 2025, contributing to sales growth in 2026 [2][4] - The company is well-prepared to meet the challenges posed by shortages of upstream components due to the rapid growth in AI demand, ensuring production and shipment schedules remain stable [2][5] Financial Performance - In Q2 2025, NewEase reported revenue close to 6.4 billion RMB, attributed to improved market conditions, increased client orders, and a higher proportion of high-speed products [3] - The company maintains a cautious approach to profit margins, expecting them to remain stable despite the increasing share of products above 800G [5][22] Supply Chain and Production - NewEase has implemented unique supply chain management strategies to mitigate the impact of raw material shortages, ensuring production remains within controllable limits [5][6] - The first phase of the Thailand factory has been operational since 2023, with the second phase expected to come online in early 2025, aimed at expanding capacity to meet future market demands [2][7][20] Research and Development - R&D expenses have doubled quarter-on-quarter due to increased investment in technology and new projects, aimed at maintaining a competitive edge [2][9][21] - The company is focusing on advanced technologies, with a gradual increase in the proportion of silicon photonics products and early disclosures of LPO product solutions [2][13][16] Inventory and Financial Management - Inventory levels have remained stable relative to revenue, attributed to consistent stocking strategies and collaboration with clients [6][10] - The company has not faced significant adverse impacts from tariff policies, as optical module products are on the exemption list, and it has established robust supply capabilities in both China and Thailand [8][12] Future Outlook - The company anticipates continued strong demand in the market, with a focus on adapting to changes in client needs and market conditions [2][3][22] - NewEase is actively following up on client demands for LPO products, aiming to capture a significant market share [16][17] Additional Insights - The company is cautious about predicting future profit margins but expects them to remain stable despite market fluctuations [5][22] - There is a noted increase in employee compensation due to rapid company growth and an expanding workforce [19]

Group 1 - The article emphasizes the importance of timely and professional information interpretation in investment decision-making [1] - CPO, a subsidiary of Huawei, ranks eighth globally among optical module manufacturers and has launched a 3.2T module solution [1] - The company holds a 70% market share in the global sensor product segment and has expanded its client base in China to include major players like Huawei, ByteDance, and ZTE [1] - CPO is actively investing in silicon photonics and LPO products to enhance its market position [1]