Guosheng Securities: Optical communication technology accelerates iteration, computing power drives the start of a new cycle.

Guosheng Securities released a research report stating that the optical communication industry has entered a new cycle of technological iteration with computing power demand as the core driver. The 800G optical module has started the process of large-scale commercialization, and the breakthrough of 1.6T technology is accelerating. Silicon photonics and Co-Packaged Optics (CPO) are driving the low-power revolution, while new types of optical fibers and connection technologies are addressing complex wiring challenges. Based on the new product directions announced at the OFC 2025 exhibition, optical communication is accelerating towards higher bandwidth, lower power consumption, and higher density. The main points of Guosheng Securities are as follows: DCI: Computing power drives long-distance transmission upgrades, technology evolves towards higher speeds The demand for AI cluster cross-regional collaboration has increased significantly, requiring DCI to support higher bandwidth, lower latency, and better energy efficiency. Currently, the 800G optical module has been commercialized, and 1.6T products have become the next focus. Eoptolink Technology Inc. in China has displayed an 800G module supporting multi-core optical fibers, and their 1.6T LRO module has reduced power consumption by 30% by removing the receiver-side DSP. Overseas, products from Coherent and Lumentum are targeting long-distance transmission. Meanwhile, CPO technology is progressing rapidly, with Broadcom showcasing an XPU-CPO solution offering 6.4Tbps bandwidth to support long-distance expansion of AI servers. CPC: High-density copper cable breaks physical limitations, reconstructing short-distance connection ecosystems Co-Packaged Copper (CPC) is an innovative interconnection solution that integrates high-speed connectors directly onto the chip substrate, designed for ultra-high density and ultra-high-speed data transmission needs. By co-packaging, CPC technology significantly shortens signal transmission paths, effectively reducing signal transmission losses and improving data transmission performance. Compared to optical interconnections, copper interconnections eliminate the optical-electrical conversion steps, enhancing cluster stability. Nvidia has used a large amount of high-density copper cable interconnection in its B-series products. Progress has been made in CPC-related products at the OFC conference, such as Broadcom's CPC solution using 200G/channel copper wire links for economically efficient high-bandwidth connections in emerging AI architectures. LPO: Standardization of ecological low-power competition To address the power consumption challenge of AI computing clusters, LPO has become a market focus. The LPO MSA announced the completion of the 100 Gb/s linear pluggable optical single-mode data transmission standard per channel, with the goal of achieving Ethernet connections of up to 800 Gigabits. Along with the completion of the 100 Gb/s specification, the LPO MSA is now focusing on achieving linear implementations of 200 Gb/s per channel. Lowering power consumption, costs, and delays while improving the reliability of high-speed optical interconnections has become an industry consensus. Products launched by various manufacturers at the OFC conference have preliminarily confirmed this trend, such as Semtech's DirectEdge LPO solution saving 50% power compared to traditional DSP modules, suitable for large-scale data centers; Broadcom's leading industry 400G PCIe Ethernet NIC and LPO module connection solutions. The firm believes that optical communication has entered a new cycle of technological iteration with computing power demand as the core driver, and breakthroughs in DCI, CPC, and LPO technologies and commercialization processes will deeply influence the industry chain competition landscape. They recommend paying attention to related industry chain changes and advancements in 800G LPO optical module production and optoelectronics module leaders with first-mover advantages in CPO-related technologies, while also suggesting monitoring the progress of CPC-related technologies. In conclusion, the firm continues to be bullish on the domestic computing power industry chain and strongly recommends the computing power sector, suggesting keeping an eye on advancements in optical modules and AI infrastructure. They recommend focusing on industry leaders in the optical module sector such as Zhongji Innolight, Eoptolink Technology Inc., Suzhou TFC Optical Communication, and also suggest monitoring the progress of computing power-related entities like T&S Communications, Chaozhou Three-Circle(Group), Henan Shijia Photons Technology, Broadex Technologies, among others. Recommendations: - Computing Power - Optical Communication: Zhongji Innolight, Eoptolink Technology Inc., Suzhou TFC Optical Communication, T&S Communications, Optowide Technologies, Advanced Fiber Resources, Accelink Technologies, Wuxi Taclink Optoelectronics Technology, Linktel Technologies, Huagong Tech, Yuanjie SemiconductorTechnology, Cig Shanghai, Dongguan Mentech Optical & Magnetic. Copper links: Shenzhen Woer Heat-shrinkable Material, Tongling Jingda Special Magnet Wire. Computing equipment: ZTE Corporation, Unisplendour Corporation, Ruijie Networks, Shengke Communication, Shenzhen Phoenix Telecom Technology, Foxconn Industrial Internet, Wus Printed Circuit, Cambricon, Hygon Information Technology. Liquid cooling: Shenzhen Envicool Technology, Guangdong Shenling Environmental Systems, Guangzhou Goaland Energy Conservation Tech. Edge computing platform: MeiG Smart Technology, Fibocom Wireless Inc., Quectel Wireless Solutions. Satellite communication: China Satellite Communications, China Spacesat, Genew Technologies, Guangzhou Haige Communications Group Incorporated. IDC: Range Intelligent Computing Technology Group, Beijing Sinnet Technology, Guangdong Aofei Data Technology, Kehua Data Co.,Ltd., RunJian Co.,Ltd.Data elements Operators: China Telecom Corporation, China Mobile Limited, China United Network Communications. Data visualization: Beijing Haohan Data Technology, EmbedWay Technologies, Shenzhen Sinovatio Technology. Risk Warning: AI development falls short of expectations, insufficient computing power demand, market competition risks.