Key Takeaways:
Zhongji Innolight told investors the 1.6T optical module price rumor was "very离谱" and that 2027 orders are already in hand.
Zhongji Innolight's emergency investor call pushed back against a market panic that wiped billions from AI supply chain stocks, calling a widely circulated $600 price for 1.6T optical modules "very离谱" and confirming that nearly all customers have placed real 2027 purchase orders with specified monthly delivery volumes.
"The price for next year's 1.6T products is definitely far higher than what the rumor says," a Zhongji Innolight management representative said on the call Tuesday. "From a weighted average ASP perspective, the rumored price is very离谱."
The company said key customers have already provided specific demand guidance for 2028 products including 2.4T transceivers and NPO (near-packaged optics), with order amounts described as "very large." Management also disclosed that the ratio of optical modules per GPU has at least doubled from the previous 1:3 standard as AI cluster sizes expand, and that optical connectivity's share of CSP capital expenditure — historically below 5% — is rising and accelerating.
The denial directly challenges the bearish thesis that AI capex is peaking and that optical module pricing faces a collapse. Zhongji Innolight, which trades on the Shenzhen Stock Exchange, said 2027 new product gross margins will exceed those of mature products, and that the company is securing supply through long-term agreements, prepayments, and equity investments in core component suppliers.
The panic began after US-listed AI stocks fell overnight and a rumor circulated that a new entrant had quoted 1.6T optical modules at $600 — roughly half the prevailing market price. Zhongji Innolight's shares dropped sharply before the company convened the call. Management dismissed the idea of industry-wide price warfare. "The industry does not have the kind of vicious competition that some imagine," the representative said. Annual price adjustments are normal, they added, but with demand surging and components in short supply, "there is no mainstream behavior of cutting prices by tens of percent."
Supply Constraints Favor Incumbents
The company stressed that 1.6T production capacity remains extremely scarce. "From the second half of this year through next year, I believe only a few manufacturers will be able to deliver 1.6T products at scale," management said. New suppliers are mostly entering at the 800G level, while 1.6T certification and qualification cycles are long and demanding. Major customers including hyperscale cloud providers have largely maintained their existing supplier rosters, with only limited additions.
On the demand side, the company said 2027 orders are "not general guidance, but real orders" with specified monthly delivery volumes. The ramp includes 800G, 1.6T, and early volumes of 2.4T and NPO products. At least two influential customers will begin bulk NPO purchases in the second half of 2027, with larger volumes expected in 2028. Management noted that NPO is likely to follow a similar adoption curve to 1.6T: initial deployment by a few industry leaders, followed by broader adoption.
Gross Margin Outlook and Technology Moat
Management expressed strong confidence in margin stability. "When 2027 new products begin ramping, their gross margins will definitely be higher than currently mature products," the representative said. "New product volume ramps will effectively pull our gross margins higher."
The company also pushed back against characterizations of optical module manufacturing as a low-tech assembly business. "I strongly oppose comparing this industry to certain other industries or saying there are no technology barriers," management said. The technology curve is "getting steeper," with requirements spanning silicon photonics, thin-film lithium niobate, Coherent Lite, and advanced packaging — capabilities that only a handful of suppliers possess. Zhongji Innolight said it is evolving into a platform company with multiple core technologies, positioning it for future applications including scale-up optical connectivity and eventually scale-in (cabinet-internal) connections, though the latter remains "further out."
For investors, the call provides the strongest counter-evidence yet against the narrative that AI infrastructure spending is approaching a peak. If confirmed by peer companies and customer disclosures, the 2027 order visibility and 2028 product roadmaps would suggest the optical module cycle has multiple years of growth ahead, driven by both volume expansion and rising ASPs from increasingly complex products.
This article is for informational purposes only and does not constitute investment advice.
