Optical interconnection business drives hundreds of millions in revenue, Shanghai unicorn Xizhi Technology rushes toward Hong Kong stocks

Ask AI · Behind the rush to Hong Kong stocks, what market opportunities and risks does Xizhi Technology face?

Jiemian News Reporter | Xu Meihui

Jiemian News Editor | Wenshu Qi

Following the early-year IPO boom in the AI and integrated circuit industries, Shanghai hard-tech companies are accelerating their push into the capital markets.

On March 30, the IPO prospectus of Shanghai Xizhi Technology Co., Ltd., a photonic hybrid computing unicorn, was filed with the Hong Kong Stock Exchange.

Xizhi Technology was founded in 2017, headquartered in Shanghai, focusing on the field of photonic hybrid computing. Its core products include near-package optical (NPO), co-packaged optical (CPO), and photonic hybrid computing acceleration cards.

Founder Shen Yichen graduated from MIT with a Ph.D. in Physics. In 2017, he published a paper in Nature Photonics, first verifying the feasibility of computing using light, laying the foundation for subsequent technological development in the field.

Shen Yichen previously stated in interviews with media including Jiemian News that China’s advanced process technology for compute chips is constrained by external competition, resulting in a clear physical limit on the compute power per chip. Strict external restrictions on advanced processes essentially block the path that domestic companies could have confidently followed, which instead forces Chinese companies to stimulate creativity and develop breakthrough underlying routes such as optical interconnects and optical computing.

Shen Yichen said that in the next three to five years, interconnections among mainstream global chip manufacturers will gradually be replaced by optical transmission, which is an irreversible technological evolution. He emphasized that for compute clusters with tens of thousands or even millions of cards, only fiber optics can support the enormous communication demands.

He estimates that within five years, the share of photonic chips in intelligent computing centers will reach 30%.

Frost & Sullivan reports that the market size for Chinese scale-up optical interconnects is expected to grow from 5.7 billion RMB in 2025 to 180.5 billion RMB in 2030, with a compound annual growth rate (CAGR) of 99.6%.

The Chinese optical computing product market is projected to grow from 63.7 million RMB in 2025 to 1.46 billion RMB in 2030, with a CAGR of 87.2%. Over a longer period from 2031 to 2036, the market is expected to further expand from 2.55 billion RMB to 34.76 billion RMB, with a CAGR of 68.7%.

In this regard, Xizhi Technology’s IPO prospectus estimates that after around 2035, optical computing and electronic computing products and solutions are likely to coexist on a large scale.

Image source: Jiemian News

Data disclosed in the IPO prospectus shows that from 2023 to 2025, Xizhi Technology’s revenue will be 38.23 million RMB, 60.19 million RMB, and 106 million RMB respectively, with a compound annual growth rate (CAGR) of 66.9%. The revenue ramp-up is mainly attributed to the company’s first mass production of scale-up optical interconnect products in 2024, and the large-scale delivery of scale-up OCS (optical circuit switch) products with optical paths, scheduled for mass production at the end of 2025.

From 2023 to 2025, R&D expenses will be 280 million RMB, 352 million RMB, and 479 million RMB, respectively, accounting for 731.8%, 584.9%, and 450.4% of the respective year’s total revenue. Due to factors such as massive R&D investments, the company recorded net losses of 414 million RMB, 735 million RMB, and 1.34B RMB during the reporting periods.

High-intensity capital expenditure tests the company’s financing ability. Before submitting the application, Xizhi Technology completed multiple rounds of large-scale financing. In September last year, it announced the completion of a Series C funding round exceeding 1.5 billion RMB, with a valuation surpassing $1 billion, entering the unicorn club.

The IPO prospectus shows that Tencent, Shanghai China Mobile Fund, China State-owned Assets Supervision and Administration Commission (SASAC), and other institutions are among its major shareholders.

In terms of products, according to the prospectus, Xizhi Technology mainly covers two product lines: optical interconnects and optical computing. In the optical interconnect field, the company has launched Scale-up EPS and Scale-up OCS solutions. Among them, the Scale-up OCS product LightSphere X has successfully achieved end-to-end commercialization verification in multiple thousand-card GPU clusters.

In the optical computing field, the company’s core commercial product, the PACE series, is undergoing rapid iteration. The latest PACE 2 photonic hybrid computing acceleration card integrates over 40k photonic devices and is exploring deep applications in complex commercial models.

Additionally, to further break through the single-chip compute density limit, the company is actively developing next-generation co-packaged optical (CPO) technology and next-generation PACE 3 optical processors, providing underlying hardware support for broader commercial scenarios such as large language model inference.

Recently, during AWE 2026, Shanghai Electric Power Equipment Co., Ltd., together with Xizhi Technology, Biran, and ZTE, officially released the LightSphere 128, a commercial version of the optical leap super-node with 128 cards, capable of supporting deployment of thousands of cards, marking the transition of China’s original optical interconnect and optical switch super-node solutions from concept verification to actual commercialization.

Despite the promising prospects, the IPO prospectus also openly acknowledges current structural challenges. Currently, the overall optical interconnect and optical computing markets are at an early turning point, with downstream applications still evolving. Additionally, supply chain issues, potential geopolitical impacts, and heavy reliance on five major customers for revenue pose risks.