260610_CPO_ms_investor-concerns

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原始內容

M June 10, 2026 03:53 AM GMT

Greater China Technology Semiconductors | Asia Pacific

Thoughts on Investor Concerns Regarding CPO

Long-term story unchanged, while sentiment might be weak in the near term to reset expectations.

Key Takeaways

• Modeling 2027 optical engine shipments at 6-7mn units suggests a far smaller ramp than investor expectations of 20-30mn units.
• Linking capacity and output, PIC capacity expansion to 10kwpm in 1Q27 still leaves SoIC yield at 50-60% as a key swing factor.
• Stressing manufacturing bottlenecks, downstream assembly yield at 20-50% now sets another major swing factor for final CPO-related shipments.
• Positioning the inflection, CPO starting to boom from 2028 onward should support a longer-dated catalyst path despite near-term resets in expectations.

What's new? Investors' feedback shows they are worried about delays in CPO introduction, driving further sell-down in CPO-related names.

Our thoughts: In our CPO update, we estimate 2027 optical engine (OE) shipments likely at 6-7mn units, including scale-up and scale-out solutions. Although TSMC decided to expand PIC capacity to 10kwpm in 1Q27, SoIC yield (50-60%) and downstream assembly yield (20-50%) remain the key swing factors for final shipments. However, investors' expectations for OE sit at 20-30mn units, likely resetting near-term CPO stock sentiment. On the other hand, we agree 2026-28 would be a cadence where transceivers, optics (e.g., CPO/NPO) and copper co-exist, as the mainstream solution still stays at 1.6/3.2T and CPO still needs time to ramp, with CPO starting to boom in 2028 onward (see note).

Stock implication: We stay OW on key CPO enablers - TSMC (2330.TW), ASE (3711.TW), FOCI (3363.TWO), AllRing (6187.TWO), MPI (6223.TWO), Hon Precision (7769.TW) and Winway (6515.TW) - as the long-term CPO story remains unchanged. FOCI's CPO revenue should start to ramp in late 3Q; revenue before then should remain lukewarm as it prepares for mass production. For Suzhou TFC Optical (300394.SZ), while the company has a good opportunity to play an important role in CPO components; covering analyst Andy Meng EW on the stock, as the company also has material exposure to pluggable transceiver components business but at a significant valuation premium to A-share industry peers.

Idea

Greater China Technology Semiconductors

Asia Pacific Industry View

Attractive

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