New stock preview | Suzhou TFC Optical Communication (300394.SZ) A+H is coming soon, opportunities and challenges of leading optical device company.

Recently, according to the disclosure from the Hong Kong Stock Exchange, the A-share leading optical module company Suzhou TFC Optical Communication Co., Ltd. (referred to as Suzhou TFC Optical Communication) has officially submitted an application for listing on the main board of the Hong Kong Stock Exchange, intending to build an "A+H" dual capital platform, with Goldman Sachs, Bank of America Securities, and CICC as joint sponsors. In the current exponential surge in AI computing power demand, the optical communication sector has become one of the hottest tracks in the capital market. As one of the "three swordsmen of optical modules" (Zhongji Innolight, Eoptolink Technology Inc., Suzhou TFC Optical Communication, collectively known as "Yizhongtian"), Suzhou TFC Optical Communication's stock price has soared from 64 yuan at the beginning of 2025 to 388.94 yuan in March 2026, illustrating a "rocket-like" mythological rise. As this A-share hot target enters the Hong Kong stock market amidst the industry boom, will it be able to reproduce the "highlight moment" of its stock price surge? Strategic positioning in the core link of the industry chain, sustained high growth in performance The prospectus shows that Suzhou TFC Optical Communication is the world's largest provider of overall solutions for optical devices, offering a one-stop optical interconnection solution from passive optical devices, active optical devices to integrated co-development. The company's products are mainly used in the fields of data communication (datacom) and telecommunications to achieve efficient data transmission. The optical communication industry chain has clear division of labor: the upstream is optical fiber preform rods, optical chips (such as high-end laser chip and detector chip), the midstream is optical devices (such as WDM devices, splitters), optical modules (such as high-speed modules), and the downstream is optical fiber cables and system integration, with significant differences in technological barriers and pricing power between different links. Optical devices account for over 45% of the total cost of optical modules, making it the most technology-intensive and high-value segment. As a core component supplier of optical modules, Suzhou TFC Optical Communication provides optical components, high-speed optical devices, optical engines and other core products to global optical module manufacturers, enabling it to capture the most lucrative profits during industry upturns. In terms of performance, from 2018 to 2025, Suzhou TFC Optical Communication achieved eight consecutive years of double growth in revenue and net profit, maintaining a high gross profit margin of 52.9%-56.3% from 2023 to 2025. In 2025, the company achieved operating income of 5.163 billion yuan, a year-on-year increase of 58.79%; net profit attributable to shareholders was 2.017 billion yuan, a year-on-year increase of 50.15%; non-net profit was approximately 1.976 billion yuan, a year-on-year increase of 50.42%. The main reason for the performance growth is the continuous increase in demand for high-speed optical devices driven by AI computing power requirements and global data center construction. From the revenue structure perspective, the company's growth shows significant product structure optimization features: active optical devices have become the absolute main force, with revenue reaching 2.998 billion yuan in 2025, a staggering 81.11% increase year-on-year, accounting for 58.06% of total revenue. This is mainly due to the strong demand for core products such as high-speed optical engines. Revenue from passive optical devices was 2.084 billion yuan, a 32.23% increase year-on-year, maintaining a steady growth. Global layout is a major highlight of the company's fundamentals. It is understood that in recent years, Suzhou TFC Optical Communication has established an industrial layout with dual headquarters, dual production bases, and multiple research centers, with foreign sales revenue soaring from 689 million yuan in 2022 to 3.839 billion yuan in 2025, accounting for a high proportion of 74.35% of revenue, deeply embedded in the global AI computing industry chain. As a leader in the field of passive optical devices, Suzhou TFC Optical Communication has become a core supplier to global AI computing industry giants such as NVIDIA, exclusively supplying optical engines for NVIDIA's CPO, demonstrating strong customer stickiness. In terms of technological advantages, Suzhou TFC Optical Communication has a profound technical foundation and is the first company in the world to deliver 800G and 1.6T optical engines. Data shows that from 2023 to 2025, the company's cumulative research and development investment reached 642 million yuan, with research and development expenses maintaining double-digit growth rates. In 2025, Suzhou TFC Optical Communication's 1.6T optical engine achieved mass production, successfully passing verification by global core customers such as NVIDIA, and officially entering the mass delivery phase. Looking at industry trends, currently, 800G optical interconnect products are the most commercialized solution, with a compound annual growth rate of 26.7% from 2025 to 2028. By 2028, the market size will reach 16.2 billion US dollars, making it one of the mainstream solutions in the datacom market. At the same time, with the increasingly mature industrial chain of 1.6T and the gradual mass production of CPO, ultra-high-speed transmission solutions represented by 1.6T, 3.2T and higher rates are expected to experience surging demand, gradually replacing medium and low-speed rate products. CPO (co-packaged optics) integrates the optical engine and the electrical chip directly on the same substrate, reducing signal transmission distance from "meters" to "millimeters". Compared to traditional pluggable optical modules, this solution significantly improves bandwidth density, reduces energy consumption, and minimizes transmission latency, effectively solving the heating and power consumption bottlenecks faced by AI computing clusters in high-throughput, high-density operating scenarios. It is the only feasible path to support 800G, 1.6T and higher rate transmissions. When the parameter scale of AI large models reaches the trillion level, traditional 800G technology has reached its performance limit at the physical layer, and CPO will become the "standard technology" for AI computing clusters, supercomputing centers, and high-end data centers. According to public information, NVIDIA and Broadcom have both planned to launch CPO switches, GPUs/XPUs and related products in 2026, indicating that the commercialization pace of CPO is faster than market expectations. Faced with this next-generation core technology in the optical communication field, Suzhou TFC Optical Communication has successfully become the core partner of global leading AI computing infrastructure vendors in CPO solutions, and has begun to layout the next-generation technologies such as silicon photonics (SiPh) integration and thin-film lithium niobate (TFLN). By positioning itself in the high-value upstream segment of the industry chain, deeply binding with top clients like NVIDIA, and maintaining intergenerational leadership in existing and next-generation technologies, these three factors combined constitute strong support for its fundamentals and long-term prospects. Industry upturn cycle, industry leader faced with multiple challenges Optical communication, with advantages such as large bandwidth, low loss, low cost, and high fidelity, has become the mainstream transmission technology in core scenarios such as data centers, telecommunications backbone networks, and fiber optic broadband. Driven by the global surge in AI computing construction, data centers as the fundamental infrastructure are accelerating upgrading and replacement. On one hand, optical communication plays the role of a "super blood vessel" for data transmission, with market demand continuously rising. On the other hand, as AI computing accelerates from core training to large-scale reasoning, the internal data exchange volume within data centers is exponentially increasing, placing higher requirements on the bandwidth, rate, and stability of optical communication technology. Data from Frost & Sullivan shows that the global optical device market size reached approximately 6.1 billion US dollars in 2025, with a compound annual growth rate of 15.4% from 2021 to 2025, indicating that the industry has entered a period of high prosperity. Among them, the top five suppliers collectively occupy 25.4% of the market share, with Suzhou TFC Optical Communication ranking first globally with a market share of 11.7%. However, even in the midst of an industry upturn cycle, Suzhou TFC Optical Communication still faces multiple uncertainties and risks. Firstly, the continuous tight supply of optical chips may lead to a continuous rise in the company's raw material costs. Data shows that the proportion of raw material costs to sales costs increased from 6.07 billion yuan and 67.2% in 2023 to 17.77 billion yuan and 73.8% in 2025, an increase of 6.6 percentage points, mainly due to the continuous price increases and supply shortages of high-end optical chips (such as EML chips) globally. EML is the mainstream core solution that can cover 1.6T and 3.2T. Market information shows that Lumentum, a global optical chip leader, is currently operating at full capacity at its indium phosphide wafer factory, with the next six quarters of production capacity already sold out, resulting in a supply-demand gap of approximately 25% to 30% for EML optical chips, and the company plans to further expand its pricing range in 2026. Additionally, forecasts indicate that the price of 100G EML chips may increase by 15% to 20% in 2026, and the price increase of 200G CW light sources may reach 30%. In the domestic market, there are even cases of customers actively increasing prices by 10% to 15% in order to secure early delivery, indicating that the trend of optical chip price increases driven by supply and demand shortages in 2026 may continue. If the upstream chip supply bottleneck cannot be alleviated, Suzhou TFC Optical Communication's capacity delivery capability and gross profit margin level may face certain pressures. Secondly, although CPO is recognized as the core technology direction for the next generation of optical communication, its commercialization will still take time. Although NVIDIA has announced at the GTC conference that the Feynman architecture will adopt the CPO route, the expectation for achieving mass production on a large scale is estimated to be by 2027, with an interim transitional period of about 1 to 2 years. The industrial chain for CPO has not yet been completed on a large scale, and the commercial model for CPO switches has not been finalized. Until the product achieves mass commercial use, the actual benefit to Suzhou TFC Optical Communication as an upstream supplier remains unclear. Multiple industry analysts point out that in the short to medium term, the key to the company's performance growth still depends on the capacity delivery capability of the 1.6T optical engine products. Currently, Suzhou TFC Optical Communication's second phase capacity in Thailand has been put into operation, but there is still uncertainty in the specific progress of capacity ramping. Thirdly, the proportion of Suzhou TFC Optical Communication's foreign sales revenue has exceeded 70%, and it is deeply tied to the American AI industry chain. In the context of intensifying global technological competition, any policy changes related to supply chain decoupling, tariffs, or export controls could significantly impact the company's performance. Additionally, fluctuations in the exchange rate of the Renminbi may directly affect its foreign exchange gains and losses. Overall, Suzhou TFC Optical Communication is in a historic opportunity period brought about by the wave of AI computing power, with its leading technology and deep ties to top clients such as NVIDIA giving it a favorable position in the global optical device market. However, the short-term challenges of capacity ramping, upstream chip supply bottlenecks, and the time difference between the introduction and commercial use of CPO technology are potential variables that the market needs to closely monitor. For investors, amidst the AI frenzy, it is important to maintain a calm and critical assessment of the potential risks of the company.