Soochow: Iteration of High-Speed Optical Modules Brings Upgrade Opportunities for Thermal Management Materials

Soochow released a research report stating that optical modules are continuously iterating toward 800G, 1.6T, and 3.2T, with power consumption steadily rising, but the cross-sectional dimensions of the module body have not changed much, causing the heat load per unit space inside to continuously increase. External heat dissipation for optical modules uses the switch cage as the interface, transferring heat from the module housing to the external heat sink, and ultimately discharging it through air-cooling or liquid-cooling systems. Although the industrialization of new technologies such as silicon photonics and NPO is accelerating, traditional pluggable solutions still hold certain advantages and a significant share in scale-out scenarios. In the future, the upgrade of optical module speeds driving an increase in overall heat load will promote demand upgrades across the entire heat dissipation chain. Soochow's main viewpoints are as follows: Iteration of high-speed optical modules reveals heat dissipation bottlenecks Optical modules are continuously iterating toward 800G, 1.6T, and 3.2T, with power consumption steadily rising, but the cross-sectional dimensions of the module body have not changed much, causing the heat load per unit space inside to continuously increase. Optical chips are highly sensitive to temperature changes, and the optical output characteristics of EMLs differ significantly at different temperatures. Thermal management not only affects device performance but is also directly related to the transmission stability and service life of optical modules. Specifically, DSPs and optoelectronic devices such as lasers and modulators are the main heat sources inside optical modules. As optical modules continue to evolve toward higher speeds, performance upgrades of core devices and growth in overall heat load will drive continuous increases in demand for high-performance thermal materials and devices. In addition, high-end thermal materials also have domestic substitution demand: with the expansion of domestic optical module demand and the rising need for independent controllability, high-end thermal materials and modules are expected to usher in domestic substitution opportunities. At the industry catalyst level, on August 13, 2026, Zhongji Innolight plans to acquire 31.3725 million shares of Jones Tech Plc. The bank believes this strategic investment reflects that leading optical module companies are placing greater emphasis on the heat dissipation segment, and thermal management is expected to become an important incremental direction in the optical module industry chain. Optical module three-level heat dissipation system and core materials overview Optical module heat dissipation runs through three levels: chip packaging, module interior, and switch interface, forming a complete thermal management system that transfers heat from local heat sources to the external environment level by level. Specifically, within the optical chip package, active optical chips such as EMLs are the main heat sources. Heat is conducted through ceramic substrates and precisely controlled by TECs, while microscopic gaps at contact interfaces are filled with high-barrier TIM1 thermal interface materials to conduct heat generated by the optical chips outward. Inside the optical module housing, DSPs and optical devices are the main heat sources. TIM materials such as thermal gels and thermal pads fill the gaps between devices and heat dissipation structures, reducing contact thermal resistance and conducting heat to the metal housing; some high-power solutions can further introduce VC vapor chambers to rapidly spread heat from local hot spots over a larger area. External heat dissipation for optical modules uses the switch cage as the interface, transferring heat from the module housing to the external heat sink, and ultimately discharging it through air-cooling or liquid-cooling systems. Optical interconnect technology continues to evolve, with silicon photonics and NPO creating new thermal variables Optical interconnect technologies such as silicon photonics and NPO/CPO continue to evolve, and along with optical module speed upgrades, will impact heat dissipation solutions. Specifically, silicon photonics solutions are gradually increasing penetration in 800G/1.6T optical modules. Compared with traditional EML solutions, in which multiple EML devices integrating lasers and modulators separately handle the transmission of each optical signal channel, silicon photonics uses CW continuous-wave lasers to provide the light source and integrates multiple modulation channels through silicon photonic PICs, resulting in more concentrated heat sources, which in turn drives TECs and ceramic substrates to upgrade toward high performance and high value. NPO solutions drive the optical engine to migrate closer to the ASIC, and a unified technical route has not yet been formed. Among them, the built-in light source solution integrates the laser with the silicon photonic PIC, placing it closer to the high-power ASIC, making thermal crosstalk a prominent issue and imposing higher requirements on local heat dissipation and precise temperature control; the external light source solution places the laser away from the ASIC hot zone, which helps reduce thermal crosstalk, but additional optical path coupling loss may raise the laser output power requirement, thereby increasing demand for supporting thermal materials; the VCSEL solution uses high-density laser arrays and requires key attention to array temperature uniformity and local hot spot control. Going forward, attention should be paid to the industrialization progress of different technical routes and the evolution of supporting heat dissipation device solutions. Although the industrialization of new technologies such as silicon photonics and NPO is accelerating, traditional pluggable solutions still hold certain advantages and a significant share in scale-out scenarios. In the future, the upgrade of optical module speeds driving an increase in overall heat load will promote demand upgrades across the entire heat dissipation chain. Companies related to the industry chain: TEC and ceramic substrates: Ferrotec, Guangdong Fuxin Technology, Shandong Sinocera Functional Material, Chaozhou Three-Circle (Group), etc.; TIM materials and VC vapor chambers: Jones Tech Plc, Suzhou Tianmai Thermal Technology, Shenzhen FRD Science & Technology, Darbond Technology, Hongfucheng, etc.; Cage: YD Electronic Technology, Dongguan Dingtong Precision Metal Co., Ltd., etc. Risk warnings: risk of demand falling short of expectations, risk of technology iteration, risk of customer introduction progress falling short of expectations.