Optical Tour Top 10 takeaways from our visits with entrepreneurs on technology development, demand, supply, and competition

Equity Research 14 September 2026 | 2:34AM HKT

Optical Tour: Top 10 takeaways from our visits with entrepreneurs on technology development, demand, supply, and competition

We visited optical companies during the Asia Leader Conference, Semicon Taiwan, Allen Chang | and China AI Tour on Aug 31 to Sep 7 in Hong Kong, Taiwan, and Suzhou: (1) Optical Goldman Sachs (Asia) L.L.C. module: Innolight (300308.SZ / 3308.HK, Buy), Dongshan Precision (002384.SZ, Not Verena Jeng Covered), HG Tech (000988.SZ, Not Covered), CIG (6166.HK, Not Covered), | Goldman Sachs (Asia) L.L.C. Lightelligence (1879.HK, Not Covered), (2) Photonics IC testing and coupling equipment suppliers: Robotechnik (300757.SZ, Buy), ASMPT (0522.HK, Neutral), Ting Song | Goldman Sachs (Asia) L.L.C. GMT (4573.TWO, Not Covered), Enlitech (7728.TWO, Not Covered), Fittech (6706.TW, Not Covered), (3) FAU for NPO / CPO: FOCI (3363.TWO, Buy), (4) InP Yifan Hu | epiwafer / CW lasers: VPEC (2455.TW, Buy), Everbright (688048.SS, Not Covered). Goldman Sachs (Asia) L.L.C.

We summarize the key takeaways in this report.

1. Optical module demand outlook: Companies we visited remain positive on optical module demand, driven by AI server racks ramp up, optical module adoption expansion (from scale out to scale up / across), and specification upgrade. On global market demand on 800G and 1.6T, demand could be at 130m to 200m; for the China market, overall demand could also grow at mid double digits to 50m+ units, with the majority 800G and 400G, and 1.6T emerging. Nevertheless, companies we visited with also mentioned that tight raw material supply (e.g. DSP, lasers, PCB) could continue to cap shipments in 2027. The positive tone echoes our positive view on global demand, on which we raised 800G and above optical module demand by 39% / 36% in 2027E / 2028E to 144m / 171m (report link). Supply chain positive tone reflects further upside to our estimates.

2. Optical module competition: Companies we visited see pricing competition remaining healthy, with 800G optical module pricing decline within single digits in 2027, and 1.6T optical module price to sustain at US$700+. Managements highlight that optical module is not a pure assembly but with multiple SKUs and require suppliers’ strong R&D and timely development as compared to telecom, the product cycle could shorten to 1-2 years in datacom vs. 5 years in telecom. Supply chain management and mass production capability are also important to win orders, especially under the current tight supply situation and clients’ requirements of diversifying production sites under geopolitical tension. Innolight, as the global leader works with supply chain closely, including R&D collaboration, invests directly in their suppliers, and pre-payment and long-term agreements to secure a

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sustainable supply through cycles.

3. Laser supply: Chinese suppliers are ramping up capacity and capability in 200G EML, supporting the 1.6T optical module ramp up in 2027. Nevertheless, shipment also depends on other raw material supply (e.g. DSP), and customers penetration. Everbright‘s laser capacity prepared for 2027 is EML slightly higher than CW laser, and within the EML majority is for 100G, with the remaining for 200G; Dongshan Precision highlights their 200G EML is already in mass production, while volume is still small currently given the tight supply of DSP; nevertheless, the company also secured 10m supply of DSP in 2027, supporting their lasers and optical modules shipment ramp up. VPEC, global leading InP epiwafer supplier, also sees improving InP substrate supply, with steady export permission from China government, more customers bringing…