CMSC: Continuous gap between supply and demand in optical chips, opening up growth opportunities for domestic manufacturers.

CMSC released a research report stating that silicon photonics solutions have significant advantages and have become the mainstream choice for high-speed optical modules. The production of optoelectronic chips covers four major processes: substrate manufacturing, epitaxy, wafer manufacturing, and testing and packaging. Currently, optoelectronic chips are in short supply, and based on a comprehensive analysis of supply and demand, the global imbalance between supply and demand for high-speed optoelectronic chips is expected to continue until 2027. Domestic optoelectronic chip manufacturers have made comprehensive breakthroughs in core areas such as high-speed EMLs and high-power CW light sources, with customer verification and mass delivery accelerating simultaneously, leading to the domestic substitution entering the large-scale implementation phase. Key points of CMSC are as follows: The core function of optical modules is to achieve optoelectronic conversion. The efficient operation of optical modules depends on the coordinated cooperation between optoelectronic chips and electronic chips, with optoelectronic chips playing a core role in optoelectronic conversion. Laser chip is the core component of optical modules, with a significant cost proportion (21% in traditional 800G modules and 9% in silicon photonics modules). Its selection and modulation directly determine the application scenarios of optical modules. Currently, the market has formed three mainstream technology paths: 1) VCSEL lasers for short-distance transmission scenarios; 2) EMLs for medium to long-distance high-speed transmission; 3) Silicon photonics solutions using CW light sources and adapting CPO technology, with the advantages of low cost and low power consumption. LightCounting predicts that the penetration rate of silicon photonics will exceed 50% by 2026, making it the mainstream choice for high-speed optical modules. The manufacturing process of optoelectronic chips is complex and the industry barriers are deep. The production of optoelectronic chips covers four major processes: substrate manufacturing, epitaxy, wafer manufacturing, and testing and packaging. From a technological perspective, epitaxy and grating processes require nano-level equipment precision and parameter control, with a narrow process window, making it difficult to improve the yield of optoelectronic chips. From a capacity perspective, core equipment such as MOCVD and EBL have a long delivery and debugging cycle of up to 1 year. High-end InP substrates are monopolized by overseas manufacturers, and the expansion cycle is long. The equipment and material constraints make large-scale expansion of the industry very difficult. From the industry chain perspective, the verification process for optoelectronic chips is strict and time-consuming, with a full cycle of about 2 years from internal testing, module manufacturer verification, end customer certification to volume production. Customers have high stickiness, making it very difficult for new manufacturers to enter the supply chain. Optoelectronic chips are currently in short supply, and the supply-demand imbalance brings a strategic window for domestic manufacturers. On the demand side, driven by the explosion of AI inference demand, the expansion of data center networking scale, and the self-developed ASICs of cloud service providers, LightCounting predicts that the sales of optical modules will reach $23.8 billion by 2025. Coupled with the continuous opening of incremental space by NPO/CPO/OIO technologies, the industry expects the global laser market to exceed $10 billion by 2030. On the supply side, high-end capacity is monopolized by overseas giants, the supply-demand gap of InP optoelectronic chips continues to widen, and CW light sources, with relatively low technological barriers and shorter expansion cycles, have become the pioneer direction for domestic manufacturers to quickly enter the mainstream downstream supply chain. Based on a comprehensive analysis of supply and demand, the global imbalance between supply and demand for high-speed optoelectronic chips is expected to continue until 2027. Overseas leaders accelerate production expansion and promote emerging technologies such as CPO, while domestic manufacturers make smooth progress in the commercialization of high-speed optoelectronic chips. On the overseas front, mainstream giants such as Broadcom, Lumentum, and Coherent are pushing forward their expansion plans, promoting the landing of 400GEML and CPO technologies, and achieving small-batch shipments. On the domestic front, Yuanjie Semiconductor Technology has mass-produced 70mW/100mWCW light sources for silicon photonics modules, Suzhou Everbright Photonics will mass-produce 100GEML in Q2 2025, Henan Shijia Photons Technology is building a 75-1000mWCW light source product matrix, Dingxin Optoelectronics has achieved mass production and shipment of 70mWCW light sources, and Suzhou Dongshan Precision Manufacturing subsidiary Solstice Optoelectronics has entered into large-scale production of 100G/200GEML. Domestic optoelectronic chip manufacturers have made comprehensive breakthroughs in core areas such as high-speed EMLs, high-power CW light sources, with customer verification and mass delivery accelerating simultaneously, and domestic substitution entering the large-scale implementation phase. Risk reminders: risks of unexpected delays in technology research and development and yield improvement, risks of supply chain and capacity release, risks of fluctuations in downstream demand, and risks of intensified market competition.