AI-Summary – News For Tomorrow
Optical module stocks saw mixed fortunes on October 30th. New Easy Access and Tianfu Communication shares significantly dropped after their earnings report. In contrast, Zhongji Xuchuang experienced a smaller decline, benefiting from revenue and profit growth. InnoLight Technology, a Zhongji Xuchuang subsidiary, cited product mix optimization, silicon photonics adoption, and improved yield as drivers of gross margin. A Citi roadshow indicated increasing institutional interest in Chinese tech stocks, particularly within the AI supply chain, positioning optical modules as a top investment.
News summary provided by Gemini AI.
Following the earnings report, New Easy Access and Tianfu Communication shares plummeted by 7.9% and 11.56%, respectively, on October 30. In contrast, Zhongji Xuchuang, which achieved quarter-on-quarter growth in both revenue and net profit, saw a narrower decline on the same day.
Zhongji Xuchuang: High Growth with Strong Certainty
As an industry bellwether, the details of InnoLight Technology’s earnings call provided a clear roadmap for its future growth trajectory.
At the supply chain level, InnoLight Technology acknowledged that the current tightness in optical chip supply is relatively high due to rapid demand growth. However, through early planning and advance orders, the company has successfully secured raw materials and received strong support from suppliers.
Regarding market concerns about gross margin, the company provided a positive response. InnoLight Technology attributed this primarily to three factors:
- First, a continuous optimization of the product mix, with higher-margin premium products such as 800G and 1.6T accounting for an increasing share of revenue.
- Second, the company’s silicon photonics solutions have gained recognition from key customers. The adoption rate of silicon photonics in 800G and 1.6T products is expected to rise, thereby optimizing costs.
- Third, ongoing improvements in production yield.
Yi Zhongtian’s Earnings Diverge
Compared to the steady performance of Zhongji Xuchuang, New Easyshine and Tianfu Communication, also popular targets in the optical module sector, showed signs of weakness in their third-quarter results.
Although year-on-year data shows that all three companies benefited from AI computing infrastructure development, achieving significant growth in revenue and profits, differences in quarter-on-quarter data revealed divergences in fundamentals.
Citi: Revaluation of AI Supply Chain, Optical Modules Take Top Investment Spot
From a broader institutional perspective, optical modules remain strategically positioned within China’s AI supply chain.
According to the Pursuit Wind trading desk, a recent roadshow feedback report by Citi covering 49 institutional investors shows a notable increase in long-term investor interest in Chinese technology stocks, with a particular focus on the AI supply chain.
This view aligns closely with InnoLight Technology’s assessment of future industry trends during its institutional conference call, where it noted that bandwidth demand for scale-up is growing rapidly and could reach ten times the bandwidth demand for scale-out (enhancing high-speed interconnection between nodes).
