Up over 600% in the past year! Leading optical module stock Tenda Communication earned 2 billion yuan last year, with over 60% of revenue coming from overseas major clients.

What operational risks might arise from AI customer concentration reaching 63.31%?

Source: Times Weekly Author: Song Yiting, Han Xun

On the evening of April 7, Tainf Communication (300394.SZ) released its 2025 annual report, achieving revenue of 5.16B yuan, a year-on-year increase of 58.79%; net profit attributable to shareholders was 2.02B yuan, a rise of 50.15%.

In the wave of explosive demand for AI computing power, optical modules have been favored by capital, with New Easy Sheng, Zhongji Xuchuang, and Tainf Communication being called the “Easy Zhongtian” by the market. Tainf Communication’s stock price also surged dramatically. On April 8, the stock price rose 6.19% to 337 yuan per share, with a market value surpassing 260 billion yuan. Wind data shows that the company’s stock price has increased by over 600% in the past year.

Of course, industry giants also face growth challenges. Tainf Communication’s revenue and net profit in Q4 2025 both declined sequentially, and the company’s gross profit margin for the full year also decreased compared to the previous year. On the other hand, the company’s revenue is heavily dependent on its largest customer, Fabrinet, which contributed 63.31% of revenue, up 1.62 percentage points year-over-year.

Regarding the company’s performance-related matters for 2025, Times Weekly sent an interview request to Tainf Communication on April 8. As of press time, no reply has been received.

Image source: Tuchong

Revenue growth exceeds 50%, gross profit margin declines

Although known as one of the “Three Swordsmen” of optical modules, Tainf Communication’s business model differs from New Easy Sheng and Zhongji Xuchuang.

Tainf Communication positions itself as an overall solution provider for optical communication devices and an advanced packaging manufacturer for optoelectronic components, not directly producing optical modules but supplying optical components, high-speed optical devices, and other products to optical module manufacturers, indirectly embedding into the global computing power supply chain. Zhongji Xuchuang and New Easy Sheng are directly targeting giants like Google, Microsoft, and Nvidia as manufacturers of optical modules and optical engines.

In 2025, Tainf Communication’s revenue and net profit both grew by over 50%. The company stated in its annual report that the accelerated development of the AI industry and global data center construction drove sustained and stable growth in demand for high-speed optical device products. Coupled with the company’s ongoing cost reduction and efficiency improvements through intelligent manufacturing, these factors jointly promoted revenue growth in both active and passive product lines.

Looking at quarterly data, Tainf Communication’s net profit attributable to shareholders in Q3 2025 slightly increased sequentially to 566 million yuan, but revenue had already declined sequentially, dropping from 8B yuan in Q2 to 1.51B yuan. In Q4 2025, revenue decreased by 14.87% quarter-over-quarter to 1.46B yuan; net profit attributable to shareholders decreased by 2.51% to 552 million yuan.

Tainf Communication stated in its annual report that, influenced by upstream capacity release, yield ramp-up, and other factors, some key materials in the industry chain face phased supply tightening, longer delivery times, and price fluctuation risks, which could adversely affect order delivery, costs, gross margins, and the speed of new product ramp-up.

The Times Weekly reporter noted that the gross profit margin of optical communication components decreased by 3.67 percentage points year-over-year to 53.62%.

Looking at product categories, Tainf Communication’s main products are passive optical devices and active optical devices. Passive optical devices have higher gross profit margins, at 63.67% in 2025; active optical devices’ gross profit margin was 46.63% in 2025.

In 2025, revenue from active optical devices increased by 81.11% year-over-year to 1.25B yuan, while passive optical devices grew by 32.23% to 3B yuan. The proportion of active optical device revenue also rose from 50.91% in 2024 to 58.06% in 2025.

Tainf Communication stated in its annual report that the optical device industry is highly competitive, and most of its products face downward price pressure. If product prices continue to decline in the future, and unit costs do not decrease proportionally due to raw material costs, mature technology processes, and limited room for management efficiency improvements; additionally, during the initial phase of the Thailand factory’s operation, production costs are higher than domestic facilities due to employee proficiency and capacity utilization, the company may face a risk of declining gross margins.

Dependence on overseas top client, planning H-share listing

Tainf Communication’s performance growth is closely tied to its deep reliance on its largest customer, but this also results in a high customer concentration.

According to the annual report, from 2023 to 2025, the revenue share of the top five customers increased each year, accounting for 81.64%, 86.80%, and 89.73%, respectively. Among them, the largest customer, Fabrinet, contributed 53.61%, 61.69%, and 63.31% of revenue over the past three years.

Fabrinet’s main operations and manufacturing bases are located in Thailand, focusing on providing advanced optical packaging and precision electronic manufacturing services (EMS) for complex products in optical communications, industrial lasers, automotive sensors, medical devices, and other fields. It is one of the world’s largest optical transceiver manufacturers and has participated in AI infrastructure projects for major tech companies including Nvidia and Amazon.

Tainf Communication indicated in its annual report that if demand from major customers slows down or procurement policies change, leading to a decrease in procurement scale, the company could face operational volatility due to high customer concentration and a large proportion of sales revenue from a single customer.

Professor Chen Jinzhì of Nanjing Audit University’s School of Finance analyzed on April 8: “Deep reliance on Fabrinet is a double-edged sword for Tainf Communication. While it can lock in Nvidia’s high growth in the short term, it faces long-term risks of customer dependence, weak bargaining power, and geopolitical risks.”

From export data, although the export ratio decreased from 76.06% to 74.35% in 2025, the sales amount surged significantly from 2.08B yuan to 2.47B yuan.

The substantial increase in export revenue also exposes Tainf Communication to foreign exchange loss risks. The company admitted in its annual report that in 2025, due to foreign exchange losses, financial expenses increased year-over-year, negatively impacting performance growth. Financial data shows that the company’s financial expenses rose from -90.67 million yuan in the previous year to -30.62 million yuan.

Tainf Communication continues to expand its overseas presence.

During an investor survey on November 27, 2025, Tainf Communication stated that its Thailand production base’s first phase project was put into operation in mid-2024, and capacity is being increased according to customer demand; the second phase is expected to be operational in 2025, with various product lines in Thailand gradually increasing capacity by 2026.

To further promote its internationalization strategy and global layout, and to build an international capital operation platform, Tainf Communication is planning to list in Hong Kong. On April 2, the company announced that its extraordinary shareholders’ meeting approved the proposal for issuing H-shares and listing on the Hong Kong Stock Exchange.