The Value of Analog Chips in Optical Modules Doubles: A Low-Penetration Segment with Less Than 5% Localization Rate

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Unassuming Analog Chips in Optical Modules In the highly sought-after optical modules for AI servers, major components like DSPs and lasers have long been dominated by overseas players. During this AI boom, industry attention has been heavily focused on these large components, with few noticing that each optical module also contains a dozen unassuming analog chips—TIAs at the receiving end, Drivers at the transmitting end, power management chips for DSPs and lasers, AFEs for monitoring, and an EEPROM for storing configuration data. According to sohu.com, the global market size for these small chips is projected to exceed 10 billion RMB by 2026, while the domestic market share remains below 5%. It represents the fastest-growing yet least localized segment in this highly prosperous industry chain.

From 800G to 1.6T: Value Doubles Let's first look at how the value increases. In 800G optical modules, this cluster of analog chips is valued at 8 to 10 USD. Moving to 1.6T, the value jumps directly to 16 to 20 USD; as the data rate doubles, the value also doubles. The reason is not complicated: the 1.6T mainstream adopts 8 lanes of 200G, doubling the single-channel bandwidth compared to 800G. This comprehensively elevates the requirements for TIA bandwidth, noise, and linearity. Meanwhile, the total power consumption of a 1.6T module is 25 to 30 watts, with the DSP alone consuming 10 to 15 watts, leaving only milliwatts of power budget for other chips. The dual pressure of requiring higher bandwidth and lower power consumption turns analog chips into a bottleneck.

Who is Taking the Money Now? Who is capturing the profits now? For high-end TIAs and Drivers, the market is dominated by three overseas companies; for DSPs, it is dominated by two other companies, with these two accounting for over 90% of the market share combined. Financial reports also confirm the destination of profits: one overseas company saw its data center revenue increase by 58% year-on-year, while another saw an 81.5% increase, with its book-to-bill ratio reaching a record 1.6 to 1, according to sohu.com. However, domestic manufacturers are not without opportunities—in the access network market of 10G and below, domestic players have long become the main force, with four of the top five being Chinese manufacturers. Youxun has already ranked second globally in TIAs for 10G and below. The real gap lies in the high-end: combining DSPs, TIAs, and Drivers, the localization rate of high-speed electrical chips is still less than 5%.

Why is High-End So Difficult? Why is the high-end segment so difficult to penetrate? Because the TIA faces the high resistive-capacitive load of the photodetector, it cannot be designed independently of the photodetector. As the first stage in the receiving link, noise, bandwidth, and dynamic range are mutually constrained. In terms of process, it relies on long-term accumulation in SiGe BiCMOS or even InP, with a single R&D cycle taking two to four years. This is not something that can be rapidly achieved simply by investing money in advanced nodes. The difficulty, conversely, indicates that once developed, the market position is secure—making it the hardest but best-positioned segment in domestic substitution.

New Architectures Reshuffle the Game New architectures are also reshuffling this game. The LPO and LRO routes completely remove the DSP, reducing module power consumption by up to half, but the task of signal compensation shifts to high-linearity TIAs and Drivers. Estimates suggest that in the 3.2T and NPO era, the value of TIA plus Driver could reach two to three times that of 800G. However, on the flip side, DSP manufacturers are also integrating Drivers into their own chips, which will squeeze independent Drivers in the long term. For domestic companies, chasing others' ten-year accumulation under the old order is difficult; new architectures bring everyone back to the same starting line—this is both a window of opportunity and a critical time point that must be seized.

Which Domestic Companies are Stepping Up? Which domestic companies are stepping up? The fastest to materialize is 3peak, whose AFE products now cover 400G, 800G, and 1.6T and have entered leading optical module manufacturers. In the first half of the year, its revenue reached 1.606 billion RMB, with a deducted non-recurring profit growth rate of 617%. SGMICRO, the largest in scale, derives about a quarter of its business from network and computing, which nearly doubled year-on-year. Youxun, the purest player, ranks second globally in TIAs for 10G and below, with 100G and 200G products already taped out; management indicated that mass adoption for 400G, 800G, and 1.6T is targeted for 2027. Giantec Semiconductor, a supporting player, supplies EEPROMs required in almost every optical module, ranking third globally with a 14.8% market share. However, its significant net profit increase in the first half was mainly due to floating gains from a strategic investment; optical module revenue was not listed separately, making it a beneficiary but difficult to quantify. It must be noted clearly: the revenue from high-speed components for these companies will likely only be revealed next year; the volume growth currently seen in financial reports is mostly from mid-to-low-end and power management components.

Silicon Photonics: The Next Layer of Variables Looking further ahead, 2026 is referred to by the industry as the first year of CPO commercialization, with silicon photonics solutions from TSMC and NVIDIA already in mass production. Domestically, Wuhan Xinxin's 40nm silicon photonics platform based on 12-inch SOI has been mass-produced, maintaining a continuous yield rate of 95%. The bandwidth of its germanium photodiodes (PDs) has been increased from 35G to 200G and even 400G. The proportion of silicon photonics in optical interconnects is expected to rise from the current 10% to over 50% in the future.

Three Things to Watch Next Next, keep an eye on three things: which company's high-speed TIA/Driver will enter leading optical module manufacturers in 2027; when LPO volume ramps up, whether the value flow will go to independent manufacturers or be integrated by DSP manufacturers; and whether the yield rate of silicon photonics platforms can be stabilized at 95%.

Sources

- sohu.com (2026-09-16) - Original link: The Value of Analog Chips in Optical Modules Doubles: A Low-Penetration Segment with Less Than 5% Localization Rate_Driver_Bandwidth_Youxun - https://sohu.com/a/1078486942_122944531