Hong Kong Listed Optical Communication Sector on the Rise

On Monday morning in the Hong Kong stock market, the optical communication sector suddenly gained momentum. Yangtze Optical Fiber and Cable Co., Ltd. and FIT HON TENG both surged more than 9%, with汇聚科技 and Hua Hong Semiconductor following the trend with a rise of over 4%, and Cambridge Technology increasing by more than 2%. The latter is scheduled to release its first-quarter financial report today, with the market placing bets in advance.

The trigger for this round of market movement was the remarks made by the management of Hengtong Optoelectronics at the performance briefing on the evening of April 26th: revenue grew by 150% year-on-year in January and February, and by 280% year-on-year in March. It is expected that the growth rate for April and May will exceed that of March, with the long-term target for the gross margin of the optical fiber business set at over 80%.

Computing Power Expands 30 Times, Network Only Increases by 4 Times

Over the past three years, global AI computing power has expanded by more than 30 times. However, the bandwidth of optical networks within data centers that connect this computing power has only increased by about 4 times during the same period. The continuously widening gap between these two curves is pushing optical communication from being a "supporting infrastructure" to the core constraint of AI expansion.

This judgment has been endorsed by the most significant actions within the industry. Google's latest TPU v8 training chip has increased the single card access bandwidth from 100G of the previous generation to 400G, with a comprehensive switch to a 1.6T specification on the Scale-Up side; the inference chip TPU v8I features a brand-new OCS optical switching architecture, reducing interconnections from 13 jumps to 7 jumps—this is not a gradual optimization, but an architectural reconstruction. More importantly, with only 134,000 cards per rack as a starting point, the future combination of 8 racks will achieve a massive network of over a million cards. Each architectural leap means a multiplication of the quantity of optical modules required.

The proportion of optical communication in AI capital expenditures is expected to rise from the previous 5%-10% to 15%-20%. This leap in proportion is the key premise for understanding the valuation logic of the entire sector.

Two Faces of the First Quarter Report

The first quarter report of 2026 presents two starkly different faces to the market, resulting in the greatest cognitive divide.

On the surface, some leaders fall short of expectations. EXCELSIOR's net profit for the first quarter was 2.78 billion yuan, a sequential decline of 13.25%, marking the first sequential decline in nine quarters; Tianfu Communication's net profit was 492 million yuan, only 15.2% of the Wind's annual profit expectation. Once the news was released, market sentiment shifted dramatically.

But the other side of the financial data tells a completely different story. The core reason for the aforementioned "shortfall of expectations" is the phase shortage of the key material 200G EML laser required for 1.6T optical modules — this is a supply constraint, not a retreat of demand.

In the meantime, the inventory data from various manufacturers shows a completely opposite signal: Xishuang一季度 prepayable account reached 1.5 billion yuan, an increase of elevenfold quarter-on-quarter; EXCELSIOR prepayable account 700 million yuan, an increase of fortyfold quarter-on-quarter; Tianfu Communication's prepayable account also grew more than threefold quarter-on-quarter. The entire industry is using real money to prepare for the demand explosion in the second half of the year.

In contrast, the performance of the fiber end has been cashed in first. Hengtong Optoelectronics' net profit attributable to the parent company for the first quarter was 1.105 billion yuan, a year-on-year increase of 98.5%, with more than 60% of the profit coming from the fiber business. Zhongji Xishuang delivered an explosive performance of revenue up +192% year-on-year, net profit up +262% year-on-year, proving that manufacturers with sufficient material reserves have entered the fast lane of performance acceleration.

The Second Half of the Year is the Real Big Year

Understanding the current moment requires a key