On September 22, optical module leader LIGENT (9856.HK) listed on the Hong Kong stock exchange at an issue price of HK$32.96 per share, raising nearly HK$5.7 billion. On its first trading day, the stock rose as much as about 19% before finishing up 4.6%, making it one of the few Hong Kong IPOs in September to close higher.

LIGENT President Hong Jin told media that "today (September 22) was good," and that the sponsors and other intermediaries "were very strong."

The ultimate support point for computing power is optical connectivity

LIGENT focuses on the research, development and mass production of optical modules and optical chips. According to Frost & Sullivan statistics, the company holds about 4.0% of the global professional optical module market, ranking fifth.

Based on different institutions' statistical methods, the top player is Zhongji Innolight with a market share of about 28-30%; the second is Eoptolink with about 15-18%; the third is U.S. company Coherent; and the fourth is Accelink Technologies under China Information and Communication Technologies Group.

With the large-scale application of AI, reports from multiple data institutions believe the global AI optical transceiver module market will maintain high growth over the next three to five years. LightCounting forecasts that the AI optical interconnect market will grow from US$10 billion in 2025 to US$80 billion in 2030, with a compound annual growth rate of more than 50%.

In its latest global optical module report released in September, foreign investment bank Goldman Sachs also sharply raised its industry forecasts, expecting the global optical module market to reach about US$67.7 billion, US$131.4 billion and US$148.5 billion in 2026, 2027 and 2028, respectively. Its longer-term 2028 forecast was revised upward by more than 115% from the previous estimate.

The market believes the growth of optical modules is not a short-term pulse, and the industry has entered a dividend phase of "volume growth, price increases and structural optimization."

At present, among the top five optical module companies globally, four are from China, and a group of Chinese optical module companies including LIGENT are leading the world in performance growth.

In addition to LIGENT, Zhongji Innolight's H shares also listed at the end of July. Optical module companies listing at this time appear to be using capital expenditure expansion to catch up with the pace of industry volume growth.

According to LIGENT's prospectus, 52.9% of its IPO proceeds will be invested in research and development, while 25.1% will be used for optical module and optical chip capacity expansion and automation upgrades.

Hong Jin believes that as AI technology continues to develop, exploration at the application level will also continue to expand. "There is still a lot to do in the future, but no matter what we do, in the end it all requires computing power, and computing power ultimately has a support point, which is 'optical connectivity.' As computing power becomes larger and requirements become higher, light, as the fastest thing, becomes an indispensable technology."

Technology keeps breaking through, and the real challenge lies in mass production and cost

At present, the technical threshold for "optical connectivity" continues to be broken through, and product iteration is extremely fast. Hong Jin said that starting from 2.5G and progressing all the way to 100G, 200G, 400G, 800G and 1.6T, product iteration in the industry has clearly accelerated.

At the optical chip level, the industry currently also has multiple technology routes including high-power lasers, ultra-high-speed lasers, silicon photonics, InP and hybrid integration.

But Hong Jin believes technology can continue to be broken through, and the real challenge lies in mass production and cost. "How to manufacture it with the greatest efficiency and supply the global AI market at the lowest cost."

From the perspective of mass production scale, the supply and demand sides of the industry are in a state of tight capacity and full orders, and companies generally hope to expand mass production to ensure delivery.

However, Hong Jin said mass production places high demands on capital, automation and technology. "Having technology does not necessarily mean success; technology development must be fully combined with manufacturing and automation capabilities."

For optical module companies, mass production is not simply a matter of "building factories at scale." From the perspective of capital support for mass production, a single expansion by an optical module leader can involve investment measured in tens of billions of Hong Kong dollars, with an expansion cycle measured in years, requiring enormous investment.

From the perspective of mass production automation capability, traditional optical module coupling was previously mainly manual, time-consuming and experience-dependent, while automated assembly lines can improve efficiency by about six times compared with manual work. However, they place higher demands on machines and require "placing components in the right position," with precision requirements at the "micron" or even "nanometer" level, and not all companies' production lines have such capabilities.

Hong Jin believes that when everyone is on the same technical starting line, the real dividing line lies in mass production. According to the prospectus, 25% of LIGENT's fundraising amount will be used for optical module and optical chip capacity expansion and automation upgrades.

Weaving a global network: multi-regional layout to dissolve geopolitical risks

In recent years, the logic of global technology supply chain layout has continued to adjust. For global optical communications companies, a complete multi-regional production capacity layout is an important support for maintaining cooperation with top customers and enhancing global market competitiveness.

Hong Jin cited LIGENT as an example, saying, "LIGENT has built a global R&D system covering China, Silicon Valley in the United States and Singapore, as well as a manufacturing network in China, Thailand, the United States and other places."

For Chinese companies building factories both domestically and overseas, multi-base coordination can reduce performance volatility and improve growth certainty.

Overseas markets have become an important growth engine for LIGENT. Data shows that in the first half of this year, the company's overseas revenue accounted for about 40%. Hong Jin revealed that with positive progress in developing global customers, the overseas market share is expected to increase significantly next year.

Setting foot in Hong Kong: a financing platform and a bridgehead for talent

Hong Kong's new stock market performed sluggishly in September, with only two companies currently not breaking issue. LIGENT surged at the open, then pulled back and still closed higher, which was relatively rare in this month's IPO market.

Hong Jin believes the company's initial entry into the capital market performed "well," and that the sponsors and other intermediaries were very strong. Having just listed on the Hong Kong Stock Exchange, the company will treat Hong Kong as an important bridgehead.

The financing function of the Hong Kong market goes without saying. As for technology manufacturing, the market generally believes Hong Kong lacks land resources and a complete industrial chain. But from a corporate perspective, Hong Jin believes Hong Kong has its own advantages.

"Hong Kong's universities themselves have a relatively large reserve of optical professionals and have the conditions to gather talent from home and abroad, so they can become an R&D base."

Backed by the support of its major shareholder Hisense Group, LIGENT plans to set up an innovation center in Hong Kong. Leveraging Hisense's advantages in global capital, talent, customers and supply chain, it can quickly build a development platform.

Hong Jin also said the company is exploring the use of local Hong Kong resources to advance its R&D layout from a more global perspective.

For a technology company that has just stepped into the capital market, the long-term logic of the optical module track has already been established, but whether it can convert technical reserves, global production capacity and capital strength into a competitive advantage that continuously surpasses peers still needs to be tested by time and financial reports.

What is certain is that as the global AI computing infrastructure construction enters deep waters, the strategic value of optical interconnect as the foundation will only become more prominent. LIGENT's globalization journey has only just begun.