Huaxing Lightwave expects better second half, orders visibility to 2028

Huaxing Lightwave (4979) anticipates a significant improvement in its operational performance during the second half of the year, buoyed by increasing demand for high-speed transmission in AI data centers. The company expects its DCI (Data Center Interconnect) new products, along with the volume production of CW Laser and EML, to drive this growth.

Looking ahead to next year, Huaxing Lightwave forecasts a continuation of the upward momentum seen in the latter half of this year. This optimism is based on the anticipated explosive growth of 800G technology, progress in the development of 1.6T products, and the expansion of its production capabilities. The company currently has order visibility extending to 2028, suggesting strong future demand.

In response to market needs, Huaxing Lightwave is undertaking substantial capital expenditures. The company plans to invest approximately NT$1.8-2 billion this year and conservatively estimates exceeding NT$3 billion by 2027, primarily for factory and cleanroom construction. This expansion is crucial as data center networks rapidly upgrade from 100G to 200G and 400G, driving the demand for single-mode, high-speed, multi-wavelength, and high-power optical transceivers.

The company's product portfolio currently consists of about 85% high-speed modules and packaging products, with 15% from Indium Phosphide (InP) supply chain products. For high-speed modules, Huaxing Lightwave has completed the design and initiated mass production for 100G, 400G, and 800G DCI products, with 800G shipments beginning this year and significant demand expected next year. Development of 1.6T products is targeted for completion before the second quarter of next year, with mass production planned for the second half of 2027 and volume production in 2028.

In packaging, Huaxing Lightwave is actively developing Near-Packaged Optics (NPO) and Co-Packaged Optics (CPO). NPO is seen as a medium-term transitional architecture, with development expected to complete next year and mass production in the second half. CPO is projected to become a market mainstream around 2030. Within the InP supply chain, both CW Laser and EML are seeing increased production; CW Laser production lines will double this year, and EML shipments will commence in the third quarter.