Gf Securities Co.,Ltd. has released a research report stating that testing equipment, as a core component of optical module production lines, is poised to benefit from three major trends: capacity expansion by downstream manufacturers, increasing value per unit, and evolving new technologies. As domestic manufacturers continue to achieve breakthroughs in high-end product lines, local companies are expected to further increase their market share in the optical communication testing instrument sector, potentially accelerating the domestic substitution process. New technologies such as silicon photonics and CPO are creating novel testing requirements, with integrated photoelectric testing likely to become the mainstream approach.

The core viewpoints from Gf Securities Co.,Ltd. are outlined below. Testing apparatus constitutes a critical link in optical module manufacturing, benefiting from the dual drivers of downstream capacity expansion and rising equipment value. Optical module production line testing equipment includes devices for optical signal and electrical signal testing. According to a second-round inquiry response announcement from Lianxun Instruments, testing instrument expenditures currently account for approximately 40%-50% of total production line costs, underscoring their central role.

The optical module testing equipment market is primarily driven by two key factors. Firstly, since 2023, leading optical module manufacturers have initiated a capacity expansion cycle. For instance, in Q1 2026, Zhongji Innolight's capital expenditure reached 1.929 billion yuan, a year-on-year increase of 380%. As downstream optical module makers ramp up capital investment, the market size for testing equipment is expected to grow rapidly. Secondly, as optical modules evolve from 800G to higher speeds like 1.6T, the precision requirements for testing equipment are continuously rising. This trend is likely to further elevate the value proportion of high-end testing gear. Reflecting this, Lianxun Instruments' prospectus shows the average unit price of its sampling oscilloscopes rose from 116,500 yuan in 2022 to 280,000 yuan in 2025, mainly driven by increased demand for high-bandwidth equipment spurred by high-speed optical modules.

The competitive landscape is highly concentrated, with overseas leaders nearing a monopoly position, making the present an opportune time for domestic substitution. Data from Frost & Sullivan cited in Lianxun Instruments' prospectus indicates that in 2024, overseas companies like Keysight and Anritsu collectively held about 84% of the global optical communication testing instrument market, demonstrating a clear dominance by industry leaders. Local companies held a combined market share of approximately 16%, with Lianxun Instruments ranking third with a 9.9% share, making it the sole domestic player among the top five manufacturers. Looking ahead, as domestic firms make sustained breakthroughs in high-end product lines, their market share in the optical communication testing instrument market is anticipated to increase further, likely speeding up the domestic substitution trajectory.

New technologies like silicon photonics and CPO are introducing fresh testing demands, positioning integrated photoelectric testing as the future standard. Beyond the packaging and testing needs of traditional pluggable optical modules, new technological solutions such as silicon photonics and CPO are expected to bring changes to the testing framework. For silicon photonic modules, the gradual increase in the adoption of silicon photonic solutions is expected to drive demand for related testing processes like silicon photonic wafer testing, chip-on-carrier (COC) testing, and known-good-die (KGD) sorting. Regarding CPO (co-packaged optics), as the next-generation architecture for optical interconnects, it presents entirely new requirements for the testing workflow. Current CPO testing involves five major steps: electrical integrated circuit (EIC) wafer testing, photonic integrated circuit (PIC) wafer testing, double-sided wafer testing, optical engine packaging testing, and system-level testing. This process requires collaboration across three types of facilities: fab plants, optical component packaging plants, and back-end packaging and testing plants. Integrated photoelectric testing is poised to become the mainstream solution.

The report also notes potential risks, including slower-than-expected expansion of downstream optical module production capacity, a general cooling in global AI infrastructure investment, and risks associated with rapid technological iteration and a worsening competitive environment.