In the first half of 2025, the optical communication industry chain showed an overall growth trend. Artificial intelligence
computing power and data center demand have become the core driving force of the industry, while the traditional
telecommunications market continues to recover. All links in the industry chain performed well: upstream chip vendors'
revenue increased by 43% year-on-year, midstream optical device vendors increased by 41%, and downstream equipment
vendors and optical fiber and cable vendors achieved 8% and 36% growth respectively. Geopolitics, tariff policies and
supply chain risks are generally regarded as major challenges.
The equipment market showed regional differentiation. The total revenue of the seven leading equipment vendors is
expected to increase by 8% year-on-year, and the North American market has become a growth engine. Cisco's Americas
business grew by 14%, and Ericsson's North American business grew by 26%, both benefiting from AI data center
construction and optical communication upgrades. However, the tariff policy brought uncertainty, Nokia expected to
lose 30 million euros in the second quarter, and Ciena added 10 million US dollars in costs each quarter. In the market
segments, radio access equipment (RAN) relies on North American growth to offset China's decline; mobile core networks
soared by 122% in the first quarter driven by China's 5G SA deployment; 800G data center switch demand surged by
more than 40%.
The field of optical devices has grown rapidly. The revenue of the five leading companies, including Coherent, Lumentum,
and Zhongji Xuchuan, increased by 41% year-on-year. The demand for AI data centers is the absolute main force:
Coherent's data center revenue increased by 54%, and Zhongji Xuchuan's Yisheng 800G optical module shipments
continued to rise. The technology iteration has accelerated significantly - 1.6T optical modules have entered the
shipment stage, Xuchuan has achieved delivery in Q2, and Xinyisheng has started small-scale production. In response
to tariff uncertainties, companies have actively adjusted their supply chains: the proportion of Chinese components
in AOI's US production line has been reduced to less than 10%, Lumentum has transferred its production capacity to
Thailand, and half of Fabrinet's bases are located in the United States.
The chip segment performed most outstandingly. The total revenue of the nine chip manufacturers increased by 41%
year-on-year (excluding Nvidia, the eight companies increased by 13%). Nvidia's data center business revenue in a single
quarter was US$39.1 billion, a year-on-year increase of 73%; Broadcom's AI chip revenue increased by 46%, and Marvell's
data center business surged by 76%. Geopolitics brings severe challenges: The US H20 chip sales restriction order to
China caused Nvidia to accrue a loss of US$4.5 billion, and its CEO Huang Renxun bluntly stated that "China's US$50 billion
AI market is closed to the United States." The technology competition is also fierce, and Nvidia's Blackwell architecture
and Broadcom's 3nm DSP chips are accelerating iterations.
The demand for optical fiber and cable has been structurally upgraded. The relevant revenue of the five leading companies
increased by 36%, the demand for Corning's AI products surged by 106%, and the orders for YOFC's AI optical cables
increased by 138% in 2024. The export market performed strongly: the export volume of optical rods increased by 60%
from January to May, and the export of optical fiber increased for 14 consecutive months. The premium of high-end
products is significant-the number of optical cables exported to the United States (mainly MPO) accounts for only
3.42% of the total, but the amount accounts for 27.52%, and the unit price is 11 times that of other regions. The
challenge comes from the US tariff policy and the extension of the BEAD plan. Corning estimates that the tariff will
affect earnings per share by US$0.01-0.02, and Furukawa Electric will pass on the cost by raising prices.
Looking ahead to the third quarter, growth momentum remains strong. It is expected that chip manufacturers'
revenue will increase by 35% year-on-year, device manufacturers will increase by 37%, and optical fiber and cable
manufacturers will increase by 25%. Global data center spending is expected to grow by 30% for the whole year.
Although telecommunications investment has stabilized, tariff policies and the extension of the BEAD plan will
continue to test the resilience of corporate supply chains. The industry consensus points out that the key to the
success or failure of semiconductor companies lies not only in technological innovation, but also in the ability to
cope with geopolitical risks.
