Rising demand from artificial intelligence servers is driving a surge in the need for high-speed optical modules, creating a significant supply gap in optical chips, according to Zhang Jie, founder of Guangling Shidai (Wuxi) Semiconductor Co., Ltd. The shortage is prompting price increases and investment across the industry.
Marvell, a U.S.-based network and optical communication chip manufacturer, recently announced a price increase across its entire product line, effective January 1, 2025. Simultaneously, investment is flowing into the development of optical chips from various sources, including government funds, state-owned enterprises, and major manufacturers like Nvidia and Zhongji Xuchuang.
Despite the investment, the supply of high-speed optical chips remains dominated by international manufacturers. Zhang Jie noted that domestic Chinese optical chip manufacturers still face challenges including technological gaps, reliance on foreign equipment – particularly lithography machines – low market share, and insufficient research and development investment. Currently, most Chinese manufacturers are limited to producing 10G and lower-speed optical chips. While companies like Yuanjie Technology and Guangxun Technology have released 100G EML chips, large-scale supply remains unavailable.
Shipments of 800G optical modules for AI servers began to increase significantly this year. A securities representative from Xinyisheng stated that demand and development trends for high-speed optical modules are positive, benefiting from demand from AI and data center operators.
Cignal AI predicts that 800G optical module shipments will jump from 1 million units in 2023 to over 9 million units in 2024. The firm also forecasts rapid growth in demand for 1.6T optical modules, anticipating that their volume will approach or exceed the combined total of 400G and 800G modules by 2028.
Demand for high-speed optical modules is expected to continue to rise in 2025, driven by the growth of global AI computing power and the emergence of numerous applications for 1.6T optical modules.
Nvidia is reportedly planning to procure 300,000 units of 1.6T optical modules in the fourth quarter of 2024, according to Zhang Jie.
Recently, Zhongji Xuchuang announced the mass production of its self-developed silicon photonics chips, sparking industry attention. Silicon photonics chips are a key component in optical communication technology, improving the speed and distance of optical signal transmission. Historically, this technology has been largely dependent on foreign companies.
Zhongji Xuchuang, a leading enterprise in the optical communication market, is expected to further consolidate its position with the introduction of its domestically produced silicon photonics chips. The technology holds significant application potential and could become a modern source of revenue for the company.
However, the silicon photonics chip market is rapidly evolving and becoming increasingly competitive, with other manufacturers investing in the development of more advanced products. Maintaining a competitive edge requires continuous investment in research and development and technological innovation.
The widespread adoption of silicon photonics technology is expected to bring significant changes to industry structure and business models, with Zhongji Xuchuang’s domestic production poised to play a key role.
