Guotai Haitong: AI demand continues to rise, continue to pay attention to optical interconnection

Guotai Haitong released a research report stating that the industry's position has improved, valuation is at the historical high, reflecting the expectation of the AI industry chain driving the sector upwards. The upgrade of AI-driven networks, strong overseas demand, and domestic core enterprises benefiting from the global infrastructure boom. The start of a new generation of computing power infrastructure domestically has opened up a new cycle for the entire industry chain. A new wave of industry development is expected to usher in an industry development peak in 2026, with more investment opportunities emerging. Driving network upgrades - the need for communication capacity has increased with the training and application of large AI models. Network innovation and the rapid advancement of new technologies are being promoted. Overall, AI data centers have officially entered the era of terabit speeds, with leading technologies such as CPO, Silicon Photonics, and Thin-film Lithium Niobate rapidly gaining ground. The localization and industrialization process of the domestic optical communication industry chain is accelerating, significantly enhancing the competitiveness and commercial capabilities of relevant companies. Guotai Haitong's main points are as follows: Optical communication is a high-growth direction for AI infrastructure. From 2023 to 2025, the demand for optical interconnects will mainly focus on Scale Out scenarios and the iteration of speeds. It is expected that the demand for Scale Out scenarios will maintain high growth from 2026 onwards, based on expansion plans and long-term commitments across various levels. Meanwhile, the penetration of optical interconnects in Scale Up scenarios, such as CPO/NPO, is beginning, opening up new growth markets. We predict that the value of optical interconnects in AI clusters will continue to rise. In 2026, both existing scenarios and products will continue to expand, and new scenarios and products will enter mass production, suggesting an allocation to areas and companies with high barriers to entry. Breakthroughs in core optical interconnect technologies. The OFC 2026 Global Optical Communications Conference concluded on March 19 in Los Angeles, USA, with a concentrated presence of domestic and foreign optical interconnect industry chain companies showcasing technological innovations and accelerating commercialization. In the fields of Silicon Photonics and advanced packaging, Shanghai Sail Technology and Gould Reach have reached a strategic cooperation agreement to mass-produce 200G/Lane silicon optical receiving chips and 100G/200G transmitting chip solutions, starting production in Q3; MRT, the first domestic thin-film lithium niobate optical chip mass production line, officially launched its PDK to break through the yield bottleneck in a Foundry+Fabless model, accelerating the shift from technology verification to mass production for thin-film lithium niobate. In the high-speed optical module sector, Linktel Technologies displayed a 1.6T high-speed optical module product portfolio and 12.8T XPO cutting-edge interconnect solutions; Coherent Optics showcased 400G/channel, 3.2T transceivers as well as emerging architectures for 12.8T and above, covering CPO, multi-channel transmission, and open optical network platforms; Advanced Fiber Resources and its subsidiaries showcased a variety of optical interconnect devices, with stable mass production of 800G/1.6T optical fiber arrays and deployment in various scenarios like CPO, OCS, WSS, and coherent PIC. In terms of innovation in optical switching and optical interconnect, Eoptolink Technology Inc. launched the self-developed MEMS technology-based OCS optical cross-connect switch NX200/300, with low latency and low power consumption, suitable for high-speed interconnection in AI clusters; Deep Optics and YiYuan Tong jointly introduced the multi-core MT-FIFO component based on 3D optical waveguide technology, featuring low loss, high integration, and production advantages. Overall, AI data centers have officially entered the era of terabit speeds, with leading technologies such as CPO, Silicon Photonics, and thin-film lithium niobate rapidly gaining ground. The localization and industrialization process of the domestic optical communication industry chain is accelerating, significantly enhancing the competitiveness and commercial capabilities of relevant companies. Risks: The commercialization of new technologies may be slower than expected, CSP capital expenditures may fall short of expectations, and so on.