Suzhou Everbright Photonics Co. Ltd. A

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.

The A-share optical chip concept sector weakened today, with many stocks falling sharply. As of press time, Yuanjie Technology and Changguang Huaxin were down 20% at the daily limit, Dongshan Precision hit the limit down, Shijia Photonics fell more than 16%, and Yongding Co. dropped over 7%. The glass substrate concept also weakened in the afternoon, with Woge Optoelectronics hitting the limit down intraday, and Dier Laser, Meidikai, and Delong Laser among the biggest decliners. Comprehensive market analysis suggests today's sector plunge resulted from multiple overlapping factors. First, Morgan Stanley recently published a research note saying that after discussions with Washington telecom experts, the Federal Communications Commission, and export-control veterans, its team judged that potential FCC restrictions on Chinese-made optical modules would most likely be implemented in phases starting from the 3.2T generation, with a possible 'US-content exemption' path: if the value share of US companies in the bill of materials reaches 65%, imports could still be allowed. Since the combined value of US-made DSPs and lasers is already close to that threshold, some analysts believe that if this framework is implemented, the substitution space and overseas channels for domestic optical chips could come under pressure. In addition, market sources indicated that 1.6T optical chip prices have already declined, because the market overestimated short-term chip premiums, the smooth ramp-up of silicon photonics solutions has exposed the cost floor, and customer purchasing attitudes have shifted. Regarding the price-cut rumors, according to China Securities Taurus, Changguang Huaxin said the company has not received any news about optical chip price cuts and did not speculate on the reason for the sharp share-price decline. Yongding Co. said it was unaware of the situation and would not speculate on the cause of the abnormal share-price movement. Shijia Photonics said it had not received any news about optical chip price cuts, but believed this round of sector adjustment may have stemmed from the Morgan Stanley research report on FCC policy published on October 1.