Open Source Securities: Rapid Development of AIGC Drives Demand Growth, Emphasizing Investment Opportunities in Optoelectronics Chips and Materials.

Open Source Securities released a research report stating that on March 17th, the 2026 Optical Fiber Communication Conference and Exhibition (OFC) opened in Los Angeles, where various optical communication manufacturers emphasized their plans to expand production of core optical module components and materials. The optical module industry is currently in a period of parallel development with traditional solutions and silicon photonics technology. The demand for optical chips and materials is continuously increasing, benefiting from the rapid development of AIGC. As optical communication upgrades and iterates, the demand for optical chips, the fundamental components for converting optical signals into electrical signals, is also increasing. The company believes that with the continuous upgrade of optical networks, the demand for EML, VCSEL, and CW lasers may continue to increase, and optical chip companies may usher in a golden opportunity for industry development. They emphasize the investment opportunities in optical chips and optical materials. The main points of the Open Source Securities are as follows: Major optical chip giants at the OFC conference have announced expansion plans to focus on the high prosperity cycle of optical chips. On March 17th, the 2026 Optical Fiber Communication Conference and Exhibition (OFC) opened in Los Angeles, where various optical communication manufacturers emphasized their plans to expand production of core optical module components and materials. Lumentum stated that by the end of 2026, the production capacity of EML will increase by over 50% compared to 2025. The company has already promoted approximately 40% of the InP expansion plan and predicts that by 2030, the demand for InP by AIDC will achieve a compound annual growth rate of 85%. In terms of shipments, the company expects the annualized growth rate of OCS shipments from 2025 to 2028 to exceed 150%, with a target of revenue exceeding $1 billion in 2027. Coherent management also stated that between 2026 and 2027, "the production capacity of InP will achieve 'super double-then-double' growth." The company believes that this expansion plan is a forward-looking layout made by various giants in response to the continuous expansion of AI computing clusters, and it also confirms from the supply side that the demand for optical chips is expected to maintain high prosperity. Lumentum's performance exceeded expectations, and optimistic guidance reinforces the logic of simultaneous increase in quantity and price. On February 3, 2026, Lumentum announced its financial performance for FY2026Q2, with the company's revenue reaching $6.66 billion, a year-on-year increase of 65.5%, close to the upper limit of the guidance range. Non-GAAP operating profit margin reached 25.2%, a year-on-year increase of over 1700 basis points, significantly improving profitability and far exceeding expectations. Driven by the construction of AI infrastructure, the company's OCS business expanded rapidly, with a backlog of orders exceeding $400 million, and the CPO field has obtained incremental orders worth hundreds of millions of dollars, which will be delivered in the first half of 2027. In terms of performance guidance, the company expects FY2026Q3 revenue to reach $7.8-8.3 billion, with a year-on-year growth rate exceeding 85%; Non-GAAP operating profit margin is expected to further increase to 30.0%-31.0%, and Non-GAAP earnings per share are expected to be $2.15-2.35. According to management, the company is still in the early stages in the OCS and CPO fields, and with production capacity ramp-up and order delivery, there is significant room for future growth. The company believes that Lumentum's impressive performance and optimistic guidance come from the strong demand for AI, and optical chip companies may continue to benefit. Traditional solutions combined with silicon photonics, the demand for optical chips and materials may continue to increase, benefiting from the rapid development of AIGC. Optical communication upgrades are accelerating, and as optical chips are the basic elements for converting optical signals into electrical signals, their demand is also increasing. The optical module industry is currently in a period of parallel development with traditional solutions and silicon photonics technology. In the traditional path, EML as the core component for electrical-optical conversion in optical modules will be the main force for short- to medium-term demand delivery; in the silicon photonics technology path, CW-DFB lasers as external light sources are the current mainstream solution. In addition, Coherent also proposed a multi-mode slot-based CPO based on high-speed VCSEL at the OFC conference. The company believes that with the continuous upgrade of optical networks, the demand for EML, VCSEL, and CW lasers may continue to increase, and optical chip companies may usher in a golden opportunity for industry development. In the era of ultra-high-speed AI, optical chips are moving from a competition between single materials to a resonant growth stage of collaborative development of multiple material systems: (1) InP is the core carrier of EML, DFB, and other optical chips, limited by factors such as complex epitaxial processes and long production cycles, it may become a supply bottleneck; (2) Silicon, with the advantages of CMOS compatibility, low cost, and large-scale integration, is the core platform for silicon photonics modules; (3) Thin film lithium niobate (TFLN) is the next-generation high-bandwidth star material with features of high bandwidth, low drive voltage, and high linearity. The company believes that the several material systems occupy different strategic positions and are expected to collectively benefit from technological iterations. Emphasis on investment opportunities in optical chips and optical materials (1) Optical chips. Recommended targets: Zhongji Innolight (silicon optical chip), Eoptolink Technology Inc. (silicon optical chip), Yuanjie Semiconductor Technology (EML+CW), Hgtech (EML+silicon optical chip+CW+TFLN); Benefiting targets: Suzhou Everbright Photonics (EML+CW), Accelink Technologies (EML+CW+TFLN), Jiangsu Etern (EML+CW), Henan Shijia Photons Technology (CW+AWG), Suzhou Dongshan Precision Manufacturing (EML+silicon optical chip+CW), Advanced Fiber Resources (TFLN), Anhui Anfu Battery Technology (silicon optical heterogeneous integration TFLN), Lumentum, Coherent, Broadcom, Marvell, Sumitomo Electric, Tower Semiconductor, etc. (2) Optical materials. Benefiting targets: TDG Holding (TFLN substrate), Castech Inc. (TFLN crystal), Hebei Sinopack Electronic Technology (TFLN substrate), Yunnan Lincang Xinyuan Germanium Industry, AXT, IQE, Coherent, etc. Risk warning: Unexpected delays in 5G construction, AI development, US-China trade frictions, etc.