2026.5.13 Review - The new king of silicon photonics modules is about to arrive!

1. Market Summary
   Yesterday, the US stock CPI core index exceeded expectations, causing a sharp decline in US stocks. But this morning, I woke up to see the US stocks have recovered some. Correspondingly, the A-shares opened low at the bid, which was the intraday low point. (Shouting that the A-shares opening low is invincible.) The strongest sector during the session was the compute power leasing sector, which has been correcting its deviation value in recent days (mainly represented by Token Factory’s Runjian Shares, with core compute leasing companies being Tongtong Electronics and Xiechuang Data), as well as the green energy sector related to compute electricity collaboration (Datang Power, which is the core sentiment driver). The CPU and storage sectors are unquestionably led by Lianqi Technology. The PCB sector is represented by Dazhu Laser, which was previously excavated for laser drilling. Advanced packaging uses high-end packaging materials like spherical silicon micro-powder from Lianrui New Materials. The electronic cloth sector is represented by International Composites. Sectors without rotation include fiber optics and commercial aerospace. Concerning the evening, Corning showed signs of recovery, US aerospace stocks performed well, and tomorrow is a good preemptive point for a rally to sell high.

Past events are no longer elaborated on; in trend markets, the core strategy is just to do T+ (trade and hold).
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Next, we move to our traditional CP segment. Today’s main topic is silicon photonics modules.

There is a piece of news tonight. Tower signed a $1.3 billion order for silicon photonics wafers in May 2026, plus an unretractable prepayment of $290 million in 2027. This news is similar to the previous $2 billion prepayment received by Lumentum and Coherent. After that news, Lumentum, Coherent, and the related optical chip field all surged significantly, as everyone has seen. This time, Tower’s large order essentially means top-tier customers are “pre-buying” the most scarce global capacity, and these are real orders with prepayments.

Who is Tower? Tower is the world’s leading foundry for pluggable silicon photonics PIC chips, with nearly 90% of global pluggable silicon photonics PIC chip capacity concentrated in Tower Semiconductor. This large order indicates that the capacity for silicon photonics modules in 2027 is basically fully locked in. The performance advantage of silicon photonics is especially prominent at 1.6T products, with even more obvious advantages at higher speeds. In other words, the mainstream solution for 1.6T products in the future will be silicon photonics modules, surpassing EML modules in market share.

Compared to EML modules, which rely on optical chips, what are the core components of silicon photonics modules?
(1) DSP chips. This still accounts for the majority. But currently, the absolute core in the market is Broadcom in the US, holding over 92% of the market share. The domestic leader in chip manufacturing is Huawei, but Huawei’s chips are for internal use only (Huawei is impressive; core domestic substitution still depends on Huawei), so domestic optical module manufacturers buy chips from Broadcom. Any claims of domestic DSP chips are just riding the coattails of concepts.
(2) Silicon photonics chips (design). In this field, the global leader (not just domestic) is #中际旭创#. This news from Tower is one of the most certain positive catalysts. The second leader is Innolight.
(3) Silicon photonics chip (foundry). Tower is the only core player in this field, monopolizing about 72% of the global market share. Domestic technology is still in the early stages, with a tiny share—less than 5%. Saiwei Electronics announced acquiring a 10% stake in Singapore’s CompoundTek, with 800G silicon photonics process (82% yield), and developing 1.6T silicon photonics chips expected to mass produce by the end of 2026. However, Saiwei Electronics previously had issues, so the domestic market share is minimal, and expectations should be lowered.
(4) External CW lasers. Yuanjie Technology has mass production of 100mW CW lasers domestically; Sanan Optoelectronics, Guangxun Technology, and Shijia Photonics are currently in sample delivery stages.
(5) FAU/V-slot array. Tanfeng Communications is the global leader (38% market share), with gross margins reportedly over 60%.
(6) Silicon lens array. This is an underestimated high-margin segment, with a global supply-demand gap of about 40% in 2026. Only a few companies like Extris and #炬光科技# possess relevant high-end technology, and Juguang’s related business also has about 60% gross margin.
(7) Other low-margin segments, mostly earning through hard work, not analyzed here; interested parties can research on their own.

Finally, someone high-level will ask: besides core component suppliers, who are the equipment and tool sellers? Such questions come from highly knowledgeable investors. Here we go.
(1) Optical coupling equipment. This is the core of the core—the vital equipment for silicon photonics mass production. High-end 800G/1.6T and above are monopolized by FiconteC, which has already been acquired by #罗博特科#.
(2) Wafer-level optoelectronic testing equipment. US-based FormFactor is the global leader in probe stations; domestically, Stronger Co., Ltd. is the substitute. However, high-end market share still favors overseas companies, and domestic technology gaps remain, with less than 5% of high-end share. Others include Lianxun Instruments, but this is more of a recent startup with mid-to-low-end technology.
(3) Module-level high-speed testing equipment. The final step before optical module shipment. US Keysight is the leader. Domestic substitutes are Huashengchang and Puyuan Precision. But all optical modules require these, not just silicon photonics modules; this is more of a positive signal than a new opportunity.

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Today’s market low open and high recovery just told everyone: even if the US stock market plunged before Trump’s arrival, it cannot affect the main A-shares trend. This is the national will—financial security is always in the hands of the state. When the state wants you to rise, you must rise; when it wants you to fall, you cannot rise. Always follow the national pace—long China, buy China!

That’s all. Brother Lang has other matters to attend to. I went to help entertain him. I forgot to bring a few boxes of milk for my big brother. I need to deliver them quickly. See you at the open tomorrow. Wishing everyone continued success this week.

$Juguang Technology(sh688167)$ $Roboteck(sz300757)$ $Zhongji Xuchuang(sz300308)$ $Tanfeng Communications(sz300394)$ $Huashengchang(sz002980)$