Top Five Critical Shortage Materials in Upstream Optical Modules

The explosive growth in AI computing power has driven a surge in high-speed optical module demand, with upstream core material supply and demand remaining unbalanced. The five major shortage materials have become key bottlenecks in the industry chain, with shortages expected to persist through 2026-2028.
1. Indium Phosphide Substrate
The core substrate for optical chips, with a global capacity gap of 70%, and the shortage situation expected to continue until 2028. Supply is highly monopolized; AXT, listed in the U.S. stock market, has seen a price increase of over 60 times this year, making it the most critical bottleneck for high-end optical modules.
2. Laser Chip
EML chips remain under significant tension, with a notable supply-demand gap, especially for 200G EML chips.
3. DSP Chips
Industry supply is constrained, becoming a major limiting factor for mass production of high-end optical modules.
4. Optical Isolators
Essential for high-speed optical modules, used to suppress reflected light interference with lasers. Core technology is mainly monopolized overseas, with leading optical module manufacturers stockpiling large quantities in advance to ensure production.
5. Thin-Film Lithium Niobate
An essential material for 3.2T optical modules, with demand expected to explode in 2027. The industry’s capacity expansion cycle is long, and capacity release is slow, leading to imminent definite shortages.