Staff Reporter |
Editor | Wen Shuqi
As of August 25th, the half-year reports from the “Big Three” of optical modules have all landed.
In the first half of 2026, Eoptolink, Zhongji Innolight, and TFC Communications all turned in scorecards that gave the market a shot of confidence. Zhongji Innolight posted a net profit of RMB 13.651 billion, up 241.70% year-on-year; Eoptolink’s net profit hit RMB 7.529 billion, a 90.98% jump; and TFC Communications earned RMB 1.204 billion, up 33.92%.
All three companies pointed to the booming construction of data centers and supercomputing hubs fueled by artificial intelligence as a major tailwind. But dig into the fine print of these reports, and it’s clear that the growth logic and business rhythm of this trio—nicknamed “Yi-Zhong-Tian”—are starting to take different paths.
Zhongji Innolight remains the undisputed leader, topping the industry in both revenue and profit. According to the report, the company generated RMB 41.778 billion in revenue during H1, up 182.49% year-on-year, with attributable net profit of RMB 13.651 billion, a surge of 241.70%. After stripping out non-recurring items, net profit was RMB 13.092 billion, up 229.32%. What’s particularly noteworthy is that profit growth is now outpacing revenue growth, while the gross margin for its optical module business climbed to 46.59%, a 6.63 percentage point improvement from a year earlier.
This isn’t just about surging industry demand—it’s also a story of shifting product mix. In its filing, Zhongji Innolight attributed the revenue jump to increased investment in computing infrastructure and related capital expenditure, which drove higher sales of high-end optical modules like 1.6T and 800G. More tellingly, the company stated that its 1.6T silicon photonics modules have entered the volume ramp-up phase, with shipments climbing quarter after quarter and becoming a core revenue driver. For Zhongji, AI-fueled demand has evolved from a simple order boost to a fundamental improvement in product structure.
Eoptolink also saw revenue keep climbing in H1, but its profit and gross margin gains were more subdued. The company reported revenue of RMB 20.910 billion, up 100.34% year-on-year, with attributable net profit of RMB 7.529 billion, a 90.98% increase. Per the filing, its optical interconnect product capacity expanded from 15.2 million units in the same period last year to 28.36 million units, while sales volumes rose from 6.95 million to 11.19 million units.
Beyond the headline growth, two data points in the report deserve a closer look. Geographically, Eoptolink is heavily dependent on overseas orders—in H1, it sold 9.73 million optical interconnect units abroad, generating RMB 20.460 billion in revenue, which accounted for over 97% of total sales. On the R&D front, Eoptolink’s spending rose 31.85% year-on-year, but that pales in comparison to Zhongji Innolight, whose R&D expenses jumped more than 110%.
Against the blistering growth of those two, TFC Communications’ half-year report looks comparatively modest. The company posted revenue of RMB 2.828 billion, up 15.15% year-on-year, and attributable net profit of RMB 1.204 billion, a 33.92% increase.
TFC sits upstream in the supply chain, offering a one-stop optical interconnect solution that combines passive optical components, active optical devices, and optical module contract manufacturing. But its fortunes are tied to even more upstream material suppliers. The company noted in its report that temporary shortages of certain materials significantly hampered production ramp-up for its active optical components, which in turn capped its growth.
That said, TFC is now pushing hard to boost output. On August 21st, the company said on an investor interaction platform that the material shortages in H1 2026 had affected its active component production ramp-up. To address the temporary constraints, it has taken proactive steps, including bringing on new suppliers to ensure stable delivery of core materials.
The filing shows that during H1 2026, TFC’s Thailand production base was steadily ramping up both passive and active component output, while the second-phase production building at its Jiangxi base had been completed and put into use. Meanwhile, construction is underway on a new Suzhou headquarters and a “super factory,” with operations expected to begin gradually from 2027.
Despite the divergent paths and varying mid-year results among the “Yi-Zhong-Tian” trio, their reports collectively confirm a few shared trends.
First, the relentless growth in AI computing demand is forcing faster product iteration. The 800G module remains a key workhorse in the market, but 1.6T is already transitioning from “technical validation” to full-scale shipment.
In their half-year reports,Zhongji Innolight noted that 1.6T silicon photonics modules have become a key revenue growth driver, while Eoptolink stated in an investor relations filing from June that orders for its 1.6T modules have grown significantly year-on-year and are expected to accelerate quarter by quarter throughout the year.
A research note from Guotai Haitong Securities highlighted that vertically integrated optical interconnect technologies centered on CPO and NPO are officially entering their commercialization cycle, opening a brand-new incremental market. This makes 2026 a pivotal inflection point for the industry: mature existing products are scaling up in their current applications, while frontier technologies like CPO and NPO are moving into mass production at the same time.
Riding these trends, Zhongji Innolight said in its report that it is already developing next-generation optical interconnect technologies, with products like XPO and NPO in various stages of custom development or R&D refinement. Eoptolink, for its part, has rolled out full 400G, 800G, and 1.6T product lines built on silicon photonics (SiPh) and thin-film lithium niobate (TFLN) technologies.
Second, from a sales perspective, expanding overseas production has become a non-negotiable move for top optical module makers. All three companies are getting ahead of the curve to serve their global customer base.
With overseas cloud service providers continuing to pour money into computing infrastructure, all three companies lean heavily on international revenue. Their reports also happen to mention production base updates: Zhongji Innolight operates facilities in Suzhou, Chengdu, and Thailand, while TFC Communications has established a footprint spanning Gao’an in Jiangxi, China, and Chonburi, Thailand.
These moves also hint at how optical module makers are hedging against future risks. Between demanding delivery schedules and overseas uncertainties, the competitive moat in this industry is widening from pure technical prowess to comprehensive capability—covering not just technology and products, but also large-scale delivery capacity and supply chain strength.
The explosion in AI computing demand triggered a major revaluation of the optical module sector. But after these half-year reports dropped, shares of all three companies pulled back, with their combined market value evaporating by over RMB 150 billion in a single day on August 24th. As of today’s close, Zhongji Innolight and Eoptolink were down 2.78% and 2.70% respectively, while TFC Communications edged up 3.05%.
The market’s attitude has shifted subtly. On the earnings front, high growth is still very much alive, but investors are no longer just chasing growth—they’re zeroing in on tangible delivery.
When stockpiling becomes an industry-wide strategy, the market needs the “Yi-Zhong-Tian” trio to demonstrate clearer returns on investment.The half-year reports show that prepayments to upstream core material suppliers have surged across the board. In Q1, Zhongji Innolight’s prepayments jumped from RMB 134 million at the end of 2025 to RMB 1.488 billion, Eoptolink’s rose from RMB 16.96 million to RMB 682 million, and TFC Communications’ climbed from RMB 20.77 million to RMB 96.63 million.
Reflected in company expenditures, spending is already running ahead of order revenue.
The reports reveal that Zhongji Innolight’s net cash flow from operating activities fell 44.08% year-on-year in H1. In an investor relations filing disclosed on the evening of August 23rd, the company explained that downstream demand is exceptionally strong—while racing to meet customer deliveries, it is also aggressively building inventory and securing materials. The bulk of its H1 operating cash outflows went toward purchasing raw materials, some for normal delivery cycles and a large portion for strategic stockpiling ahead of demand.
A senior executive at an optical industry firm told the media that in this growth cycle, every company is rapidly scaling capacity to meet demand, leaving little “room” for competitors—a pattern consistent with industry norms. But he cautioned that whether overall orders truly exceed expectations remains to be seen over the coming months.
The industry’s growth story is far from over, but the scrutiny on optical module makers has already begun. When earnings growth stops being a differentiator, the leaders who’ve raced to lock down capacity now face a fresh test: proving they can deliver.
