Gf Securities has released a research report indicating that the Ministry of Industry and Information Technology is promoting the application and deployment of Optical Circuit Switching (OCS) technology. This initiative aims to reduce network latency between computing application terminals and servers, thereby enhancing the interactive experience of applications. The adoption of OCS is being driven by multiple stakeholders including cloud providers, telecom operators, and equipment manufacturers, accelerating its real-world implementation. The industry is expected to experience synchronized growth domestically and internationally. Investors are advised to focus on opportunities in OCS component supply and complete system manufacturing among domestic companies. Furthermore, the Optical Fiber Communication Conference (OFC) held in March proceeded as scheduled. At the event, companies such as Lumentum, Coherent, Terahop, Eoptolink, and Accelink showcased complete OCS solutions, highlighting the significant investment opportunities presented by the anticipated volume increase in OCS.
Key viewpoints from Gf Securities are as follows:
Regarding domestic telecom operators, on October 12, 2025, during the Computing Power Network Innovation Consortium sub-forum at the China Mobile Global Partner Summit, China Mobile Cloud, in collaboration with core industry chain enterprises including the Institute of Computing Technology of the Chinese Academy of Sciences and the China Mobile Research Institute, released the "Cloud Intelligence Computing Optical Interconnection Development Report." The report pointed out that at the Scale-Out level, China Mobile Cloud is considering replacing the original SuperSpine with OCS across various planes in the future. This replacement is not merely a single equipment upgrade but represents a paradigm shift in China Mobile Cloud's computing-network architecture from "electricity-based, optics-assisted" to "all-optical native." The essence of this shift is the all-optical reconstruction of the underlying computing network, which aims to overcome the bandwidth bottlenecks, latency losses, and scalability constraints of large-scale AI computing clusters. This provides core support for the elastic networking of "N+X" intelligent computing nodes.
At the domestic regional level, on March 23, 2026, the Shenzhen Municipal Industry and Information Technology Bureau issued the "Shenzhen Action Plan for Accelerating High-Quality Development of the AI Server Industry Chain (2026-2028)." The plan proposes promoting the technological evolution and industrial application of all-optical switching technology, and enhancing the independent R&D capabilities in core materials, optical chips, and optical devices.
Investment opportunities arising from the volume increase in OCS warrant attention. At the OFC held in March, companies including Lumentum, Coherent, Terahop, Eoptolink, and Accelink displayed their complete OCS solutions. Lumentum stated at OFC that its OCS business exceeded expectations, with demand coming from three core clients who have significantly increased their orders. The OCS order backlog has surged to over $400 million, with the delivery peak expected in the second half of 2026. Annualized OCS revenue is projected to exceed $1 billion by 2027. At the OFC conference, Coherent revised its guidance for the global OCS market size in 2030 upwards from $2 billion to $4 billion.
Opportunities in OCS component supply and complete system manufacturing for domestic manufacturers should be monitored. Tengjing Technology stated on an exchange interactive platform that its products can meet the high-reliability stringent standards required for core optical switching components in AI computing clusters. The company has been involved early in the preliminary R&D projects of major system manufacturers, giving it a first-mover advantage in the supply chain. Zhongji Innolight's overseas operating entity, TeraHop, showcased a 300x300 scale OCS optical switch at OFC 2026. Compared to the 64x64 low-channel version displayed last year, the port count has significantly increased, with loss controlled within 2dB, achieving industry-leading performance. Eoptolink showcased its new OCS product for the first time at OFC 2026. Its OCS switches, the NX200 and NX300, support 140 ports and 320 ports respectively, enabling architectural optimization for AI networks of different scales. The core of both products utilizes Eoptolink's independently developed MEMS micro-mirror arrays.
Risk warnings include the potential for AI infrastructure construction to fall short of expectations, slower-than-expected development of AI applications, changes in import/export policies related to AI, and a reduction in international cooperation.