In the blink of an eye, 2023 has come to an end. This year's optical communication market can be described as exciting and diverse. With the opening up of the epidemic, 2023 has become a year of tremendous transformation for us. At the beginning of the year, Chat GPT initiated the entry of the optical communication industry into AI application scenarios and achieved a breakthrough in mass supply of 800G high-speed optical modules. Setting aside the influence of AI factors, the sluggish traditional optical communication market has once raised doubts about the industry's demand at all levels of the industry chain, and seeking a second growth curve has become a new layout for many enterprises. But overall, the performance of the optical communication market in 2023 is still impressive. We will summarize this year with ten key words. Have you also found resonance?
1. Southeast Asia
Transferring to Southeast Asia has become a strategic plan for more optical communication companies this year. According to C&C's statistics, there are currently over 80 Chinese optical communication companies with factories in Southeast Asia, involving optical communication chips, devices, modules, systems, and fiber optic cables, distributed in Vietnam, Thailand, Malaysia, Singapore, Indonesia, and other places. However, with the continuous advancement of the TAA trade agreement law, it may accelerate the return of manufacturing in the United States.
2. AI/Large Model/800G
At the beginning of 2023, with the emergence and application of AI models represented by ChatGPT4.0, the iteration rhythm of high-speed optical modules was promoted, and 800G optical modules became the standard configuration for the new generation of data center servers and switching machines, opening up the time point for the commercial scale of 800G ahead of schedule.
3. LPO
At this year's OFC, LPO (Linear Drive Pluggable Optics) linear drive pluggable optical modules have become popular due to the removal of DSP chips in the optical modules, which can significantly reduce power consumption and latency, and have cost advantages, enabling pluggable modules to quickly achieve low-power, low-cost, high-speed, and high-density optical connection requirements. However, the LPO scheme has limitations in terms of system error rate and short transmission distance, making it suitable for some application scenarios.
4. CPO sector
With the rapid development of AIGC applications, AI training models represented by ChatGPT have shown explosive growth in computing power and data demand. As a result, the demand for high-speed optoelectronic conversion has shown high growth. The market has shown a high level of attention to stocks of optical communication related companies mainly engaged in optical module manufacturing, forming the CPO (CO-PACKAGED OPTICS) concept stock, which has become a hot topic in the securities market this year.
5. Rampage: Breaking through 100 Billion Market Value
Benefiting from the development of AIGC applications, CPO concept stocks have performed exceptionally actively this year, showing a frenzy. Optical communication, especially optical modules, have achieved growth of 100% -600%, and have given birth to optical communication stocks with a market value of billions for the first time.
On June 14th, Zhongji Xuchuang set a new historical high with a price of 133.75 yuan during trading, and its market value successfully exceeded 100 billion yuan.
On June 20th, Zhongji Xuchuang welcomed another bright moment and its stock price rose by 6.24% at the close, with a total market value of 136.5 billion yuan at 170 yuan per share.
6. Thin film lithium niobate
With the continuous improvement of single wave rate, thin film lithium niobate modulators have become an important breakthrough in new technologies this year. According to statistics from Fiber Optic Online, there are over 10 manufacturers of thin film lithium niobate chips, all of which have received investment support from the capital market this year, further promoting the ecological improvement and commercialization of thin film lithium niobate high-speed modulators and module series, and making future higher rate optical module products a reality.
7. 400G silicon light
The silicon optical module using silicon optical chips can achieve ultra large capacity data exchange while effectively controlling cost and power consumption. This year can be said to be an important year for domestic silicon optical modules to break through the bottleneck period. From design to providing samples, some silicon optical chip manufacturers have received orders for large-scale supply. With international semiconductor giants represented by TSMC gradually launching silicon optical process platforms, it is expected that the silicon optical technology platform will show explosive growth from 2024 to 2025.
8. Vehicle mounted optical communication
The current in car optical communication is moving towards iterative solutions for Ethernet or PON network on board vehicles. With the official implementation of the admittance and pilot access notice of L3 and L4 autonomous vehicle, it is expected to further promote the optical network on board. Vehicle mounted optical communication is expected to become the second growth curve of the optical communication industry,
9. The market of internal competition
The competition is not fresh, and all industries, individuals, and enterprises are all competing internally. However, this year, with the simultaneous decline in volume and price in the transmission and access market, our device modules have emerged as a new horizon: costs are already approaching the ceiling, but the industry is still constantly self stimulating: further automation, how to save human factors in the process, or material substitution, In order to meet the low cost of customers, it can be said that a new horizon has emerged.
10. Ice and Fire Double Heaven
From last year's cold weather to the continuous decline in order volume in the first half of this year, the demand for the optical communication industry can be described as freezing. According to statistics from Fiber Optic Online, a revenue decrease of less than 30% in the first half of the year is already considered an excellent enterprise. As we entered June, as AI orders gradually fulfilled, the demand of top enterprises gradually released. By the end of September, fiber optic connectors, isolators, FA, AWG, and optical modules all showed a rapid recovery and growth trend. In the last quarter, many companies were probably entering the long-awaited expansion stage.