Zhongji InnoLight Investor Q&A: The demand for 800G will be stronger next year, and the proportion of silicon photonics product shipments is increasing - Xunshi Optical Communication Network

Abstract: Zhongji InnoLight replied to investors' questions that the downstream computing power infrastructure construction-related expenses have driven the sales of 800G/400G high-end optical modules to increase significantly. Next year, the demand for Ethernet 800G will be further strong and the 1.6T will gradually increase, the company's silicon photonics product shipment ratio will continue to increase, and the 1.6T product will be fully tested and verified and will be shipped soon.

ICC News October 22 300308 Ms. Wang Xiaoli, vice president and chief financial officer of the company, and Wang Jun, vice president and secretary of the board of directors of the company, attended and answered the questions raised by the research institutions.

The cumulative operating income of Zhongji InnoLight in the first three quarters of 2024 was 17.313 billion yuan, an increase of 146.26% year-on-year and 9.37% month-on-month, of which the revenue in the third quarter was 6.514 billion yuan, mainly due to the significant increase in the sales of 800G and 400G high-end optical modules brought about by the growth of downstream computing infrastructure construction and related capital expenditures, and the industry demand was very strong.

The company said that because the strong demand for 400G/800G will continue until the end of the year, the shortage of upstream optical chip supply will not be alleviated in Q4, but the expansion of supplier capacity will effectively improve the supply capacity of optical chips next year. Zhongji InnoLight has taken sufficient material preparation in advance, coupled with the further increase in the proportion of silicon photonics shipments, which has effectively guaranteed the delivery capacity of high-speed products. Next year, the Ethernet market will further increase the volume of 800G and the gradual increase of 1.6T, and the market will see further growth in the overall demand of the industry. By continuously expanding production capacity, improving yield and reducing BOM cost, and actively promoting silicon photonics solutions, Zhongji InnoLight has increased the proportion of silicon photonics module shipments to maintain the overall business to continue to grow upward.

Compared with traditional optical modules, the silicon photonic chips developed by Zhongji InnoLight can bring great advantages on the cost side, and the main customers have good feedback on the company's silicon photonics products, and it is expected to introduce the company's silicon photonic modules next year. For the situation that the demand for 800G will be further strong next year and the demand for 400G may gradually weaken, the company will maintain close contact with long-term cooperative manufacturers in the core materials of EML chips and CW light sources, and appropriately introduce some new cooperative suppliers to enhance the ability to obtain and ensure the smooth progress of business.

In terms of next-generation products, with the stable price of chips, the arrival of iterative demand for 1.6T new products in the industry is conducive to optimizing the overall gross profit level. Zhongji InnoLight 1.6T optical module has fully completed the preliminary testing and certification work, and is expected to start with Shipments began in December. The company has pre-researched 3.2T optical modules, and the specific release time and timing of launching new products will depend on customer needs, and the technical route will include silicon photonics solutions and traditional EML solutions.

In addition, Zhongji InnoLight also attaches great importance to it CPO R&D, because it is a form of future development path for optical modules. By investing a lot of R&D resources, the company has made significant progress in the design, R&D and technical reserves of silicon photonics chips, and has successfully applied to 400G and 800G and even 1.6T and other higher-level optical transceiver products. The company already has a certain technical foundation to develop CPO-related products.