CITIC Securities: AI Drives Both Volume and Price Growth for Optical Module Testing Equipment
Miles Bennett
CITIC Securities says AI is compressing the optical-module upgrade cycle from three–four years to roughly one–two, pushing test-equipment market size to an estimated RMB 22.9 billion by 2028 — while domestic substitution accelerates but the 1.6T high-end breakthrough remains the key proof point.
How big is the optical-module market?
Light Counting data show the global datacom optical-module market hit $6.25 billion in 2023 and is expected to reach $25.8 billion by 2029 — a 27% CAGR from 2024 to 2029.
Data centers already account for over 60% of total optical-module demand.
This means → AI infrastructure buildout is turning optical modules from a telecom accessory into a core compute component.
Why does each speed upgrade lift both volume and price for test equipment?
CITIC forecasts global datacom optical-module shipments of 130 million units in 2027 and 168 million in 2028, with 1.6T modules set to succeed 800G as the mainstream product.
Modules rated 800G and above will account for 96.2% and 98.2% of demand in those years — near-total replacement of lower-speed products.
In plain terms = every time the data rate doubles, modulation schemes, signal bandwidth, and channel density grow non-linearly, forcing test equipment to upgrade as well — and each upgraded unit costs more. Volume and price rise together.
Where else is new test demand emerging?
Silicon photonics — a chip technology that moves data with light instead of electricity — and CPO architecture — co-packaging the optical module directly onto the switch chip — are reshaping the test workflow.
The test interface is shifting from "post-packaging" to "wafer-level," creating entirely new needs: silicon-photonics wafer test, chip-on-carrier (CoC) test, and known-good-die (KGD) sorting — screening chips before they are packaged.
This means → the test-equipment market is not just scaling with module volumes; the technology roadmap itself is creating brand-new equipment categories.
How large can the test-equipment market get?
CITIC projects global datacom optical-module test-equipment market size at RMB 9.89 billion, 18.58 billion, and 22.90 billion for 2026–2028.
Year-on-year growth runs 196.1%, 87.9%, and 23.3% — nearly tripling in 2026, then decelerating off a much larger base.
This reflects a niche market rapidly expanding into a significant link in the AI infrastructure supply chain.
How far has domestic substitution come?
Overseas incumbents still lead in high-end segments: Keysight, Tektronix, Anritsu, EXFO, and VIAVI dominate high-speed oscilloscopes and bit-error-rate analyzers; Advantest, Teradyne, and FormFactor are extending into silicon-photonics wafer and CPO test.
On the domestic side, Lianxun Instruments, Filatech, Precisys, Galante, and Semitronics are building capabilities across high-speed communication test and wafer-level test, steadily narrowing the gap.
Put simply = CITIC is bullish on the domestic-substitution trend, but the pace of breakthroughs in the 1.6T high-end market is the key milestone that will prove or disprove the thesis — and that milestone has not yet arrived.
Content is for reference only, not financial advice.