[Guotai Haitong Communications] Discussion on 1.6T Pricing 0728

English summary

Event comment: Today, market rumors that a new supplier's 1.6T price is $600 have been misinterpreted as hurting profitability, causing market panic. Our comments are as follows: 1. From the customer dimension, customers' allocation of market share and resources in optical modules, pricing strategy is a secondary factor. The key is the reliability accumulated historically, quality delivery capability, and technology iteration level of an enterprise. 2. 1.6T products also need to be divided into many categories: EML, silicon photonics, and for example DR, FR, with large price differences. We predict that silicon photonics prices in the range of $600-700 next year are quite normal, and may be even higher under material shortages. The EML solution will definitely be higher, expected around $700-800. If it is a new supplier with small-batch delivery, prices will also be significantly higher than the previous range. 3. From the supplier dimension, currently DSP and PCB are both rising in price, and material delivery is tight. Some customers' prices may not necessarily decline.…