Goldman Sachs Significantly Raises 2027/2028 Optical Transceiver Demand Forecasts, Citing Supply Chain Tightness as the Biggest Shipment Bottleneck Next Year

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The true constraint in the optical transceiver industry has shifted from the demand side to the supply side. The scarcity of raw materials such as DSPs and lasers, along with the capacity-locking strategies of leading manufacturers, will become the key variables determining the profit distribution landscape in 2027.

According to a research report by Goldman Sachs cited by SMM (Shanghai Metals Market), after visiting 15 optical communication companies in China, the firm significantly raised its demand forecasts for high-speed optical transceivers and judged that pricing discipline will be better than market expectations. The core logic revealed by this research report goes far beyond order scheduling—the raw material bottlenecks on the supply side and the capacity-locking strategies of leading enterprises are quietly reshaping the profit distribution landscape of this round of AI infrastructure investments.

According to the report cited by SMM, Goldman Sachs has raised its demand forecasts for 800G and above optical transceivers in 2027 and 2028 by 39% and 36%, to 144 million units and 171 million units, respectively. At the same time, the report judges that the price of 1.6T optical transceivers will remain above USD 700, and the price reduction for 800G products in 2027 will be only in the single digits. The supporting logic for this pricing judgment lies in the continued shortage of key components such as DSPs, lasers, and PCBs, as well as the supply chain management strategies of leading manufacturers who proactively lock in capacity through advance payments and long-term agreements.

On the commercialization path of CPO (Co-Packaged Optics), Goldman Sachs points out that testing and coupling equipment manufacturers are the first to realize revenue. Robotechnik's Q2 revenue increased by 172% month-on-month, 141% higher than Goldman Sachs' expectations, confirming this judgment. The report also expects CPO switch shipments to leap from 10,000 units to 131,000 units between 2026 and 2028, with equipment-side order visibility extending to 2028.

Demand Upward Revision:

Dual Drivers of Scale Expansion and Specification Upgrades

According to the SMM report, the basis for Goldman Sachs' upward revision this time comes from the comprehensive judgment of the visited companies on the global demand for 800G and 1.6T optical transceivers. The range given by the interviewed companies is 130 million to 200 million units, and Goldman Sachs finally set the 2027/2028 forecasts at 144 million units and 171 million units.

The driving forces come from three levels: the continuous expansion of AI server racks, the extension of optical transceiver application scenarios from horizontal scaling (scale out) to vertical scaling (scale up) and cross-layer interconnection (scale across), and the continuous upgrading of product specifications. This means that this round of demand upward revision is not driven by a single factor, but a superimposed effect of cluster scale expansion and specification iteration occurring simultaneously.

In the Chinese market, according to the interviewed companies cited in the report, overall demand is expected to achieve double-digit growth, with a scale exceeding 50 million units. The main body will still be 800G and 400G, while 1.6T is in the initial stage of volume ramp-up. It is worth noting that the interviewed management generally emphasized that every shipped optical transceiver has been actually deployed in data centers, reflecting real terminal demand rather than channel inventory stockpiling. This reduces the risk of repeating the "double ordering" mistake of the dot-com bubble in the 2000s to a certain extent.

Shortage of Lasers and Other Components Becomes the Actual Upper Limit for 2027 Shipments

While demand is revised upward, the constraints on the supply side are becoming the true variable in the industry. According to the interviewed companies cited in the SMM report, the continued shortage of DSPs, lasers, and PCBs may suppress actual shipments in 2027. This means that the demand forecast of 144 million units faces the risk of being unable to be fully realized on the supply side.

In the laser segment, Chinese suppliers are accelerating the improvement of 200G EML capacity and technical capabilities to support the volume ramp-up of 1.6T optical transceivers in 2027. Among the laser capacity prepared by Everbright (688048.SS) for 2027, EML is slightly more than CW lasers. Within EML, 100G is the main type, and the proportion of 200G is still small. Dongshan Precision's 200G EML has entered mass production, but due to the constraint of DSP supply, shipments are currently still limited. The company has locked in the supply of 10 million DSPs for 2027, providing support for laser and optical transceiver shipments.

Regarding VPEC, a leader in InP epitaxial wafers, with export licenses becoming more stable, more customers bringing their own InP substrates, and the gradual growth of second to fourth suppliers outside China, the supply of InP substrates is improving. The number of MOCVD equipment at VPEC will expand from the current 62 units to 69 units in the second quarter of 2027, and it plans to build a new production base in 2027.

Leading Companies Lock in Capacity: Why Prices Do Not Collapse

Against the backdrop of tight supply, Goldman Sachs judges that the price reduction of 800G optical transceivers in 2027 will be controlled within single digits, and 1.6T prices will remain above USD 700, according to the report cited by SMM. The core support for this judgment lies in the industry competition landscape and the supply chain management strategies of leading manufacturers.

The management of the interviewed companies emphasized that optical transceivers are not a pure assembly business. There are numerous product SKUs, which places extremely high demands on suppliers' R&D capabilities and response speeds. Compared to the 5-year product cycle in the telecom market, the product iteration cycle in the data communications market has been shortened to 1 to 2 years. This makes R&D capabilities and mass production execution the competitive barriers, rather than pure price competition.

The practice of the global leader Innolight (300308.SZ / 3308.HK) is representative: by carrying out R&D collaboration with suppliers, directly investing in suppliers, signing advance payment agreements and long-term supply contracts, it locks in sustainable capacity during the supply tight cycle. This strategy of deeply binding the supply chain further strengthens the competitive advantage of leading companies against the backdrop of geopolitical pressures and customers' demands to diversify production bases, and also provides structural support for overall pricing discipline.

CPO Commercialization:

Equipment Manufacturers Realize Revenue First, Order Visibility Extends to 2028

The commercialization process of CPO technology still faces challenges. Laser suppliers point out that in the external light source (ELS) scheme, 300mW/400mW continuous wave (CW) lasers face heat dissipation problems. The current priority is to promote the NPO scheme with over 100mW paired with PAs. Optical transceiver manufacturers have also observed that 3.2T NPO optical engines show strong demand in both the Chinese and overseas markets.

Although the large-scale volume ramp-up of CPO will take time, testing and coupling equipment manufacturers have already benefited first. Goldman Sachs points out that expensive final modules require multiple testing processes during production. The earlier defects are found, the lower the loss cost, which provides structural support for the demand for testing equipment.

Robotechnik's Q2 revenue increased by 172% month-on-month, 141% higher than Goldman Sachs' expectations, directly confirming this logic. Both Robotechnik and FiconTEC stated that the number of tools planned to be shipped in the next year will exceed half of the cumulative shipments over the past 25 years, with order visibility extending to 2028. Goldman Sachs expects CPO switch shipments to grow from 10,000 units in 2026 to 92,000 units in 2027, and then to 131,000 units in 2028.

At the level of technological upgrading, Robotechnik and FiconTEC plan to shorten wafer-level testing time by 50% to 60% next year, and achieve a 4-fold increase in chip-level testing speed. Enlitech's launched NightJar hyperspectral imaging system can realize Known Good Die (KGD) screening in the early wafer testing stage, further reducing failure costs.

Validation Window:

Three Key Indicators Determine Whether the Judgment Holds

The above judgments all have clear verifiable conditions.

On the demand side, if the actual shipment of 800G and above optical transceivers in 2027 reaches the lower end of the 144 million units range, the upward revision judgment holds; otherwise, it needs to be revised downward. The validation window is the annual shipment guidance of various manufacturers in the first quarter of 2027.

On the pricing side, if the average price of 1.6T optical transceivers falls below USD 700, the pricing discipline judgment will be overturned.

On the equipment side, if the month-on-month revenue growth rate of equipment manufacturers turns negative for two consecutive quarters, the order visibility judgment will not hold. The validation window is the Q3 2026 earnings release period (October to November).

Sources

- SMM (Shanghai Metals Market) · Industry Terminal - Original link: Goldman Sachs Significantly Raises 2027/2028 Optical Transceiver Demand Forecasts, Citing Supply Chain Tightness as the Biggest Shipment Bottleneck Next Year - https://news.smm.cn/news/104113899