NOAURAConnectingMarketsEast&WestGlobalMarketsResearchANCHORREPORT9January2026Global Al networking supercycle driven by tech upgradelsupply shortageAccumulatemarketleadersInnoLight,YOFC,TFC andT&SResearchAnalystsChinaTechnologyWebelievetheglobalAlnetworkingsupercycevwillcontinue in2026F;,andevenextendBingDuan-NIHKinto 2027F, driven by multiple technology upgrade roadmaps (i.e. SiliconPhotonicsbing.duan1@nomura.com(SIP),Co-packageoptics [CPO), OplicalCircutSwitch {ODCS),Active ElectronicCable,+85222522141(AEC],Holow Core Fiber(HiCF)andsuplyshortage(ie,opicalaserchiphmateralyEthanZhang-NIHKnsceivershipments will growfrom 20mn/2.5imn unitsinethan.zhang@rnomuracom25Fto43mn/20mnunits in 2026F, with SiPh transceivers gaining.50-70%market85222522157ectInoLight(300308CH,Buy,oursectortoppick)tocontinue toivebundingsalesstrategyeratefrom 2026(from alowbase),TFC(30394CH. Buy and Tr&S (G0570CH. Buy wil lheybekeglobalCPO value chain. We upgradeYOFC(6869HK)to Buynpany'sAlDCbusiness enjoys buoyant demand while theDetaileddiscussionon globalhyperscaleAlplayers'networkingroadmaps forscale-up and scale-out networks, including aopics, coper and networkingswitchesDemand-supply analysis onkeysegments,includingoptical transceivers and CPOUpgradeYOFCtoBuyandupdate financialsfrInoLight,TFC, andT&SSeeAppendixA-1for analyst certification,important disclosures and the status of non-US analysts
NOAURAGlobalMarketsResearchGlobal Al networking supercycle9January2026What to expectin 2026F(and 2027F onwardsChinaTechnologyUpgrade YOFC to Buy; maintain Buy on InnoLight, TFCBingDuan-NIHKand Shenzhen T&Sorking;solid demand through2026-2027F and accelerated techmigration toEthanZhang-NIHKuntplayers'growthomura.comWebelievethe Alinfaivestmentupcyclefromglobalhyperscale Alcloudcompaniesiwll+8522252215intinue in 2026F-27F, led by the intensive competition fr large language model (LLM)raining and inference.(GPU andASICplayers arestiving to gainmore market share in,in ourview. Weioptical cable / transceivers, andle inAldatacenters, andated innovationket)in scale-up, scale-outortageswill persist inbalAlnetworkingsegmentrs, as wellupcycle willeestimate800G/1.6T/2.5mn unitsin 2025Fto43mn/20mrgain50-60%/60-70%share in theNPO/CPOtechnologieswill continue tolons over the next 2-3 years in the scale-outd to bemindfulifleading CPOsolution,fortheirCPO switch products, which couldout network in the medium-term, while we believe thereale-up network in the long-term.To address the opticaltacewe noteChinese playersie. Yuanijie Technologymaker), SourcePhotonics(unlisted;an EMLtapping into this segment which is currently dominated byese new entrants could help to ease the componentshortlageompetition in the global market, which is likely to intensify, is alsoreplaced by optics? Still has significant room to growin scalegrowingnarativeinthe capitalmarket that opticalcommunication wllplace traditional coper-based connections. However,we think coperwllcontnue tocoppercableshavecostadvantagesvsoptics,and certaintypesofAEC(Active Electronic Cable), can extend the reach to as long as10 meter...
