Optical communications surge across the board! The breakthrough of 6G combined with AI computing power is skyrocketing, and the industry is entering an acceleration phase.

AI large models iteration and breakthroughs in next-generation communication technologies are driving the global optical communication industry into an accelerated explosive growth phase. Along with the exponential increase in underlying computing power demand and the commercialization of photonic-electronic co-packaging technology (CPO), the optical communication supply chain is experiencing a comprehensive resonance between fundamentals and capital markets.

Driven by multiple positive catalysts, A-share optical communication concept stocks surged collectively on February 24. By the close, the entire optical communication sector rose over 3%, with Farlight opening with a straight limit-up just one minute after trading started, and more than a dozen stocks like Huagong Tech, Longfei Fiber, and Yunzhong Technology hitting the daily limit or gaining over 10%.

The influx of market funds directly reflects the industry’s unexpectedly strong prosperity and technological breakthroughs. On one hand, domestic research teams published the latest results in Nature, achieving the first seamless integration between fiber optic and wireless communication systems internationally, and breaking three world records in data transmission speeds; on the other hand, the surge in computing infrastructure has driven a sharp increase in manufacturing orders, with leading domestic companies’ core business orders booked through Q4 2026, and related high-speed optical module production lines operating at full capacity during the Spring Festival.

In response to the massive bandwidth demands brought by AI applications, traditional pluggable optical modules are gradually approaching physical and power consumption limits. Multiple research institutions point out that the continuous rise in capital expenditure by North American cloud providers, combined with the evolution of CPO architecture, is reshaping the technological foundation of computing interconnects. The upstream core components and advanced packaging segments of the optical communication industry are expected to see a reassessment of value and certain growth.

AI applications ignite demand for computing power, leading to full-capacity production lines

Driven by the global evolution of AI large models from “parameter competition” to “productivity competition,” the core components of optical modules—key hardware infrastructure—are experiencing a surge in demand. Tech giants like ByteDance, Alibaba, and Google are continuously updating large models, directly boosting the need for token processing and complex task handling capabilities.

Huashui Securities states that the surge in capital expenditure by cloud providers is transmitting through the entire industry chain. According to reports from “China Optical Valley,” during the Spring Festival, leading companies like Huagong Tech and Longfei Fiber maintained continuous production. A senior manager of Huagong Tech’s optical module business revealed that the company’s connection business orders are booked through Q4 2026, with AI high-speed optical module production lines operating 24/7 at full capacity, ensuring mass delivery of products like 1.6T and 800G. Meanwhile, the Wuhan optical fiber production workshop of FiberHome Communications remains busy, and institutions like Jiufeng Mountain Laboratory are operating at full throttle, highlighting industry’s confident expectations of explosive growth in computing demand.

Breakthroughs in 6G photonic-electronic integration set three world records

While accelerating mass production on the industry side, China’s research strength has achieved landmark breakthroughs in basic communication infrastructure. According to Science and Technology Daily and the National Information Photonics Innovation Center, Professor Wang Xingjun’s team from Peking University, in collaboration with Pengcheng Laboratory, ShanghaiTech University, and the National Information Photonics Innovation Center, first proposed the concept of “fiber-wireless integrated communication” internationally, published in Nature on January 19.

This research used self-developed ultra-broadband optoelectronic integrated chips and AI-powered advanced equalization algorithms to bridge the “bandwidth gap” between optical and wireless communication at the physical layer for the first time. The system successfully broke three world records: modulator bandwidth exceeding 250GHz, single fiber data transmission rate reaching 512Gbps, and wireless transmission rate hitting 400Gbps. Notably, all key technologies are based on fully domestically produced integrated photonic platforms, without relying on traditional microelectronics advanced processes, providing a highly economical and scalable solution for large-scale deployment of 6G base stations and wireless data centers.

CPO architecture reshapes interconnect foundations, industry chain begins value transfer

Facing the physical limits of future computing expansion, the optical communication industry is undergoing a fundamental architecture shift from traditional pluggable modules to co-packaged optics (CPO). Guotou Securities’ industry deep-dive report states that CPO, as the core technology for next-generation data center interconnects, has achieved generational leaps in density, performance, and energy efficiency. Compared to pluggable modules, CPO solutions can reduce system-level power consumption by over 50%, increase bandwidth density by an order of magnitude, and directly support data rates above 224G and terabit-level switching architectures.

Overseas tech giants are accelerating the commercialization of this technology. NVIDIA has clarified plans to promote CPO commercialization between 2025 and 2026, evolving from quasi-co-packaged to deep co-packaged forms to serve ultra-large AI clusters; Broadcom continues to push CPO platforms toward 102.4T switching bandwidth; Intel is transitioning through four phases toward 3D photonic integration.

Guotou Securities emphasizes that the true growth driver of CPO comes from the rigid demand for scale-up high-bandwidth interconnects. Taking NVIDIA’s Blackwell architecture as an example, the inter-GPU bandwidth has reached 7.2Tbps. Under this trend, the value of the industry chain is rapidly shifting upward toward upstream silicon photonic chips, high-performance lasers, and midstream advanced packaging segments.

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