Event:
According to the latest report of lightcounting, 21q4 benefited from the demand of cloud and Internet, and the optical communication market hit several new highs. 1) The revenue of the top 15 major ICP cloud manufacturers reached a record high; 2) CSP telecom operators’ capital expenditure reached a new high; 3) The income of the top 14 digital communication equipment manufacturers reached a new high; 4) The shipment volume of optical modules reached a new high, and the 21q4 income of manufacturers such as xuchuang, Eoptolink Technology Inc.Ltd(300502) , Bochuang, Cambridge and Tianfu is expected to reach a new high.
Our comments are as follows:
The continuous development of cloud computing / AI promotes the long-term growth of the demand for optical modules, and the upgrading of superimposed products drives the increase of comprehensive value.
In 2021q4, the overall revenue of the global optical module and device industry reached a record high of US $2.5 billion. The growth of the optical module market comes from:
1) the growth of cloud computing traffic drives the growth of demand: the revenue of the top 15 cloud manufacturers (ICP) reached a record high of US $561 billion, and the growth of cloud traffic drives the revenue of the top 14 data communication equipment manufacturers to achieve a year-on-year growth of 8.4%. From the perspective of capital expenditure, seven major cloud vendors (ICP) in 2021q4 increased by 24% year-on-year;
2) the increase in the proportion of high-end and high-speed products drives the overall average price of optical modules to increase. The demand for Ethernet (data communication) increased by 11% and the average price increased by 21%; WDM shipments fell 12% but prices rose 37%. In the relatively competitive wireless and FTTx markets, the shipment volume of 25g optical modules decreased in 21 years, and the average price decreased by 7%. However, due to the upgrade of 10gpon, the overall price decline of FTTx is also relatively limited, and the average price decline is only about 4%.
The continuous investment of AI and other new technologies will promote the continuous upgrading of data communication products of major cloud manufacturers.
Facebook (now meta) is building a super large AI Data Center cluster and plans to build an AI network with 5 eflops computing power interconnected by 16000 GPUs through 200g data communication optical modules. Over the past few years, Google and Amazon have also been building AI computing clusters on a large scale, deploying a large number of 400g and 2 400g data communication optical modules and switching devices. With the continuous investment of cloud manufacturers in emerging technology fields such as AI, the demand for high-end data communication optical modules is expected to continue to grow, driving the continuous upgrading of the overall product structure and the long-term development of the industrial chain.
Looking forward to the first quarter of 2012, eight of the nine leading companies tracked by lightcounting said that their sales increased year-on-year. Only lumentum’s sales decreased by 7% year-on-year in 22q1 due to the impact of semiconductor supply chain shortage of about US $65 million. On the whole, the industrial chain is better able to cope with supply chain fluctuations. With the growth of cloud manufacturers’ traffic and the continuous growth of investment in new technology and new demand, the optical module / device industry is expected to maintain a high boom in 22 years, and the digital communication optical module market is expected to maintain a compound growth rate of 14% in 22-27 years, reaching a scale of US $10 billion by 2027.
Focus on:
Zhongji Innolight Co.Ltd(300308) (global leader in high-end optical modules, with obvious share advantage of 200g / 400g, and 800g is expected to occupy the first mover advantage again, 22 times in 22 years) Eoptolink Technology Inc.Ltd(300502) (Telecom + digital communication, overseas digital communication customers are expected to continue to break through, 19 times in 22 years) Suzhou Tfc Optical Communication Co.Ltd(300394) (the expansion of component categories creates platform capacity, and there are many incremental attractions such as optical engine + lidar, 25 times in 22 years) Broadex Technologies Co.Ltd(300548) (10gpon focuses on benefits, 5g + data communication is worth looking forward to, 19 times in 22 years).
Risk warning: downstream demand is lower than expected, the impact of the global epidemic is higher than expected, supply chain risk and market competition are higher than expected
