Broadex Technologies Co Ltd

On October 8, CPO concept stocks in China's A-share market fell sharply. Yuanjie Technology and Changguang Huaxin hit their 20 percent daily limit down, Shijia Photonics dropped more than 15 percent, Dongshan Precision hit its 10 percent daily limit down, Dekeli fell more than 10 percent, and Changxin Bochuang dropped more than 8 percent. On the news front, Morgan Stanley recently issued a report noting that potential U.S. restrictions on optical modules from China may be implemented through the FCC controlled list mechanism rather than a full embargo. The core of the policy is the 65 percent U.S. content rule, meaning Chinese-made transceivers can still be imported but must meet the condition that 65 percent of the value in the bill of materials comes from U.S. companies. The report stressed that this is a reshaping of the supply chain and a redistribution of profits along the value chain, rather than a simple positive or negative from sanctions. The rule could be implemented as early as the 3.2T optical module stage, with mass production expected in 2028. At that point, Chinese manufacturers would be allowed to continue assembly, but procurement of core components such as DSPs and lasers would be locked in with U.S. suppliers. The report specifically noted that the combination of DSPs and lasers could easily reach the 65 percent threshold. The report believes the short-term impact is limited, because large-scale adoption of 3.2T products is not expected until 2029, and hyperscale cloud service providers have already arranged for U.S. domestic manufacturing. The policy goal is to target the production location of next-generation products, not to immediately replace the existing supply chain.