Poised to become a global optical chip leader: Multiple drivers in the near term (1.6T /2.4T /3.2T transceivers) and long term (NPO and CPO)

Research evidence excerpt

Poised to become a global optical chip leader: Multiple drivers in the near term (1.6T /2.4T /3.2T transceivers) and long term (NPO and CPO)

Global Markets Research

Yuanjie Semiconductor Technology 688498.SS 688498 CH 8 July 2026

EQUITY: TECHNOLOGY

RatingPoised to become a global optical chip leader Starts at Neutral

Multiple drivers in the near term (1.6T / 2.4T / 3.2T transceivers) and long Target price Starts at CNY 1,655.00

term (NPO and CPO)

Closing price CNY 1,715.04 7 July 2026Action: Initiating coverage at Neutral with TP of CNY1,655, implying 3.5% downside; secular

growth trend in optical communication market while valuation slightly stretched

As one of the leading suppliers of optical communication chips in China, Yuanjie’s penetration in the optical Implied upside -3.5%

transceiver leader’s supply chain in recent years has led to better AI product exposure and margin

expansion. We estimate Yuanjie’s datacom laser chip segment to deliver a revenue CAGR FY26-28F of Market Cap (USD mn) 139,776.7

ADT (USD mn) 978.2119%, and in this segment, high-end CW (continuous wave) lasers (70mW+) would be the key revenue

pillar, contributing 92% to total sales in FY28F. We believe there are multiple near-term drivers for the

company, including further penetration in the CW laser-based silicon photonics (SiPh) transceiver market, Relative performance chart

1.6T/2.4T/3.2T upgrades, while long-term drivers include NPO (near-field packaged optics) and CPO (co-

packaged optics). We expect the company to record revenue/earnings CAGRs of 109%/114% over

FY26-28F. We initiate coverage with a Neutral rating due to its rich valuation; our TP of CNY1,655 is

based on 65x FY28F EPS of CNY25.47 (in line with China’s A-share optical laser sector median P/E). The