CITIC SEC: Accelerated Release of Optical Modules Clearly Benefits the Simulation Industry

CITIC SEC released a research report stating that under the strong demand for AI computing power, the demand for optical module terminals continues to grow, and the upgrade of transmission rates is rapidly increasing the demand for related analog chip products. Major domestic and international manufacturers are providing positive guidance regarding their optical module-related businesses. For instance, the global analog leader ADI is expected to maintain doubled growth in its Optical Communication Solutions (OCS) from 2026 to 2027. Since 2026, leading domestic analog companies have also experienced rapid growth in their optical module-related businesses, further driving performance growth. The main viewpoints from CITIC SEC are as follows: The global analog leader ADI's guidance for optical module-related businesses is optimistic, with projections for OCS to maintain doubled growth in 2026-27. According to the global analog chip leader ADI's earnings call on August 19, FY2026 Q3 revenue from the company's communication business was $655 million, an 84% year-on-year increase, with data centers accounting for 80% of communication revenue. Revenue from optical communication and power products both grew by over 100% year-on-year. The company estimates that FY2026 Q4 revenue will be between $4.2 billion and $4.4 billion, approximately a 7% quarter-on-quarter increase. Among this, the communication business is expected to experience about a 10% sequential growth, serving as the main driver of growth. Additionally, the company anticipates that its optical module business will benefit from increased sales volume, a higher value per module, and market share gains, predicting that OCS revenue will nearly double in 2026 and continue to maintain doubled growth in 2027. The acceleration of optical module production has significantly benefited the analog industry. Driven by strong demand for AI computing power, interconnectedness is propelling rapid growth in global high-speed optical modules. According to Trendforce data, the company expects global shipments of 800G/1.6T optical modules to reach approximately 50-60 million and 20-30 million units, respectively, by 2026, with 3.2T modules expected to start shipping in 2028. Yole Group predicts that the global market size for optical modules will grow at a CAGR of around 30% from 2025 to 2031. Based on Yole Group's analysis, the BOM value of analog chips in 800G/1.6T optical modules is estimated to be about $8-10 and $16-20, respectively, with the continuous production and upgraded iterations of optical modules driving performance growth for analog companies. Risk factors: The risk that the recovery pace of the analog chip industry may not meet expectations; the risk of intensified market competition; the risk that local manufacturers may fall short in new product development expectations; the risk that local manufacturers may not achieve anticipated new customer acquisitions; the risk that mergers and acquisitions or integration situations may not meet expectations; the risk of capacity constraints.