Cignal AI attended the China International Optoelectronic Exposition in Shenzhen from September 11-13, 2024. The CIOE is the Chinese version of OFC, except without equipment exhibitors. While the number of exhibitors may be smaller, the show is well attended by engineers from all major equipment vendors as well as by Chinese hyperscalers. Scott Wilkinson was also invited to keynote an overflowing session about the state of AI optics.
Download PDF VersionRevisiting the 2018 Mandate
The Chinese government issued a mandate almost seven years ago to onshore optical component supply chains (definitely re-read China’s 5 Year Optical Component plan). A wave of Chinese commercial R&D investment followed, and it made a massive impact on manufacturing capacity and R&D capability. But aside from a handful of big Chinese component companies, most of the region’s vendors remain trapped in a subscale, low revenue world without much differentiation. There simply isn’t enough market in China for all of the supply.
Huawei purchases as many components from HiSilicon as possible and buys a little volume outside to sustain other companies, thereby continuing its longstanding 1+1 (in-house plus backup external supplier) supply chain strategy. Plus, it’s tough for Chinese suppliers to sell to Huawei because component supply chains still contain US content.
Large established companies that have longstanding commercial relationships in the west like Innolight, Source Photonics, or HG Genuine, are formidable competitors that can effectively block smaller companies lacking technical differentiation. And the smaller companies trying to gain a toehold in the market face two major problems:
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