Guosheng: PIC reshapes the optical communication industry landscape and is expected to open up the entire scene of optical interconnection space.

Guosheng released a research report stating that Photonic Integrated Circuits (PICs) are the core of silicon photonics, focusing on industrial value towards design and process, and has the potential to restructure the profit distribution pattern. In terms of application scenarios, PICs are driving optical interconnect from the scale-out scenario of data centers to further penetrate the scale-up scenario, opening up a larger market from long-distance to short-distance, from device level to chip level. Currently benefiting from the demand of AI for optical communication, the demand for optical modules/engines has increased from millions to tens of millions, and is expected to reach billions in the future. From the perspective of capacity/cost/power consumption, the industry chain needs new forms of capacity to meet the growing demand. Key Points from Guosheng: PIC-Integrated photonics is the core of silicon photonics Silicon photonics/PIC is not a simple upgrade of the industry chain, but a systemic restructuring of optical communication. With the surge in AI-driven computation demands, traditional discrete device solutions are gradually facing bottlenecks in capacity/cost/power consumption and integration. Photonic Integrated Circuits (PICs) integrate multiple optical devices on a single chip, achieving highly integrated and modularized optical signal processing. This is not only a technological evolution, but also a paradigm shift for the optical communication industry from an "assembly mode" to a "chip-based manufacturing" revolution. PIC shifts the industry chain value core to design and process end In the traditional optical module value chain, upstream optical chips/electronic chips and downstream packaging and assembly account for the main value. PIC design transfers core capabilities to photon chip design and process implementation, allowing enterprises with independent PIC design capabilities to define optical path architecture, lead process routes, and thus control the discourse of the industry chain and high value-added links, restructuring the profit distribution pattern. Collaborating advanced packaging and system architecture, PIC opens up the entire optical interconnect space PIC is not only a chip-level integration breakthrough, but also lays the foundation for next-generation technologies such as CPO, LPO, and 3D optical packaging. Its high density, low power consumption, and scalability characteristics promote optical interconnection from data centers' scale-out scenarios to further penetrate scale-up scenarios, opening up a larger market from long-distance to short-distance, from device level to chip level. PIC is the inevitable result of the expansion of the photonics industry scale Currently benefiting from the demand of AI for optical communication, the demand level for optical modules/engines has increased from millions to tens of millions in the past, and is expected to reach billions in the future. From the perspective of capacity/cost/power consumption, the industry chain needs new forms of capacity to meet the growing demand. Silicon photonics empowers photons with mature semiconductor processes, transforming optical communication from "craft industry" to "precision industry", achieving high precision, high consistency, and scalable manufacturing. Targets PIC is the inevitable path for the long-term development of the optical communication industry, and its design capabilities and process accumulation will become core barriers. It is recommended to focus on enterprises that have leading layouts in PIC design, key processes, and upstream materials: PIC design: Zhongji Innolight (300308.SZ), Eoptolink Technology Inc. (300502.SZ), Suzhou K-Hiragawa Electronic Technology (603052.SH), Hgtech (000988.SZ), etc. Unlisted companies: Xiehe Technology, Siley Technology, Xilian Optics, Beipo Semiconductor, etc. PIC supporting chips/devices: Suzhou TFC Optical Communication (300394.SZ), Yuanjie Semiconductor Technology (688498.SH), Hubei DOTI Micro Technology (301183.SZ), Optowide Technologies (688195.SH), Henan Shijia Photons Technology (600522.SH), Jiangsu Etern (600105.SH), Advanced Fiber Resources (300620.SZ), etc. Packaging and system integration: Solstice, Accelink Technologies (002281.SZ), Cig Shanghai (603083.SH), Linktel Technologies (301205.SZ), etc. Risk Advisory The increase in the penetration rate of silicon photonics is lower than expected; intensified competition in the PIC industry; AI development falls short of expectations.