Huagong Genuine Source General Manager Hu Changfei: Optical Module Industry Will Present a Leader Competition Landscape

Securities Times Reporter Liu Qian

This week, the Global Optical Communications Conference was held in Los Angeles, USA, with industry giants like Corning, Cisco, and Arista showcasing new products. The focus was on how to pack higher-density optical fibers into smaller spaces to meet the explosive demand for high bandwidth and low latency in AI data centers.

Huagong Technology (000988) subsidiary Huagong Zhengyuan announced two developments at the conference: first, becoming a founding member of the XPO MSA (Ultra-High-Density Pluggable Optical Module Multi-Source Agreement) and debuting the world’s first 12.8T XPO optical module; second, partnering with Alibaba Cloud to showcase the world’s first 3.2T NPO module.

On March 18, Huagong Zhengyuan General Manager Hu Changfei told Securities Times that as computing power demand rapidly grows, the optical module industry is experiencing a technology iteration cycle every six months. Huagong Zhengyuan’s layout in optical modules revolves around three core technologies: optical chips, advanced packaging, and optoelectronic signal processing. “Whether it’s NPO (Near-Package Optics), LPO (Linear Drive Pluggable Optical Modules), CPO (Co-Packaged Optics), or the recently released XPO (Ultra-High-Density Pluggable Optical Module), all are extensions and iterations based on these core capabilities.”

Deep Participation in Standard Setting

As the scale of computing clusters continues to expand, high-speed, efficient, and low-power interconnection and connectivity technologies have become key to supporting AI computing clusters. At this conference, multiple multi-source protocol organizations, including XPO MSA, announced their formation, focusing on interconnection needs for ultra-large-scale AI data centers.

Led by switch giant Arista, XPO MSA addresses heat dissipation challenges at ultra-high densities through innovative liquid-cooled pluggable optical module designs, meeting bandwidth demands while maintaining flexibility. Over 20 major optical module suppliers are participating.

Huagong Zhengyuan, as a founding member of XPO MSA, said they are deeply involved in standard setting, “marking a new stage of leading standards.” The 12.8T XPO module they launched features integrated liquid cooling, optimized thermal management, streamlined components, and compatibility with mainstream optical interconnect solutions.

Meanwhile, the jointly developed 3.2T NPO module with Alibaba Cloud also drew attention. Hu Changfei described it as “finding a balance between pluggability and CPO,” using fully self-developed silicon photonics technology. A single optical engine achieves 3.2Tbit/s transmission, with over 50% power reduction. Its per-area rate capacity is 11.4 times that of traditional 800G modules.

Progress in NPO Technology Deployment

During the conference, Nvidia’s “AI Spring Festival Gala” developer event was also underway. According to TrendForce’s latest research, Nvidia’s next-generation AI compute cabinets will focus on high-density chip interconnects and high-speed data transfer, with Scale-Up and cross-rack Scale-Out expected to become core topics for data centers. The penetration of CPO in AI data center optical modules is expected to continue increasing.

Hu Changfei noted that CPO optoelectronic integration still faces significant challenges in yield and reliability, and its high level of integration also brings operational risks. NPO, which neither uses traditional pluggable modules nor deep integration like CPO, seeks a balance between technological innovation and industrial feasibility.

Thanks to the openness and maintainability of the NPO approach, Huagong Zhengyuan has made substantial progress in technology deployment. Hu Changfei said their 3.2T NPO products are 80-90% mature. The main challenge lies in the packaging process of optoelectronic integration, but they have broken through key process nodes with their self-developed silicon photonics chips. NPO technology on switches is basically mature, while server-side applications still face some adaptation challenges, but overall, the difficulty is manageable, mainly requiring collaborative optimization with customers in new scenarios.

Hu Changfei predicts that at 3.2T speeds, pluggable optical modules will remain mainstream, NPO will become the second-largest solution, and CPO will hold advantages in specific scenarios.

Supply Chain and Delivery Key

With leading cloud service providers significantly increasing their capital expenditure plans for 2026, the industry’s growth certainty has become widely recognized. Hu Changfei revealed that orders for Huagong Zhengyuan’s 800G and 1.6T products already cover the entire year, with some customers locking in capacity for 2027.

LightCounting, a market research firm in optical communications, pointed out that multiple bottlenecks in the AI infrastructure supply chain—including GPUs, memory, and switching chips—will continue to limit market expansion. While capacity for optical chips and modules is gradually catching up with demand, this may intensify competition among suppliers.

“As industry iteration cycles shorten to six months, leading companies’ R&D investments have jumped from ‘hundreds of millions’ to ‘billions,’” Hu Changfei said. The future of the optical module industry will be characterized by fierce competition among top players, who must possess rapid R&D, global manufacturing, and cross-chain integration capabilities.

Meeting booming demand, delivery remains the biggest challenge. Hu Changfei admitted, “Orders far exceeded expectations. We started stockpiling six months ago, but current orders are two to three times what we anticipated.” Global shortages of upstream materials, especially DSP chips and high-end lasers, remain common industry issues.

To address supply chain pressures, Huagong Zhengyuan is building independent capabilities through self-developed optical chips, covering silicon photonics, EML lasers, CW sources, and more. They are also developing next-generation technologies like thin-film lithium niobate and quantum dot lasers. Hu Changfei expects that by April or May, their supply chain will be able to meet order demands, with overseas markets becoming the main growth engine for Huagong Zhengyuan.