Research
研报3月25日 · Morgan Stanley

Investor Presentation: Greater China Technology Hardware: AI Transceivers: Growth Dominates Disruption; Big Smartphone D

300502.SZ2018.HK0285.HK
中文EN

AI Transceiver Market to Triple by 2028 Amid Structural Smartphone Weakness; Favor Apple Over Android Supply Chains

Core Conclusion

The Greater China tech hardware landscape is bifurcating: The AI-driven optical transceiver market is entering a multi-year expansion phase with a total addressable market set to triple by 2028, while the smartphone end-market faces a pronounced cyclical downturn in 2026. This divergence creates a clear relative investment preference for companies tied to AI infrastructure and the resilient Apple ecosystem over those exposed to the Android smartphone supply chain.

Evidence Chain

AI Transceiver Demand is Entering a Hyper-Growth Phase, Driven by Scaling AI Clusters. The optical transceiver total addressable market is projected to grow from ~$2 billion in 2022 to ~$6 billion by 2028E. This expansion is primarily fueled by the adoption of higher-speed 800G and emerging 1.6T modules for AI backend networks. The market for 800G/1.6T transceivers is forecast to grow 166% year-over-year in 2025, followed by a 34% increase in 2026. Investment Implication: Suppliers positioned in this high-growth product mix will see revenue and margin upside, with the growth trajectory overwhelming concerns about long-term architectural shifts like co-packaged optics.

Market Share is Shifting Toward Chinese Leaders Eoptolink and Global Player Coherent. The competitive landscape is dynamic, with Eoptolink and Coherent projected to gain meaningful share. Eoptolink's share is estimated to rise from 4% in 2022 to 18% by 2028E, while Coherent grows from 13% to 20% over the same period. This share gain comes largely at the expense of the market leader. Investment Implication: Eoptolink is a primary beneficiary within the China supply chain, with its accelerating growth profile not yet fully reflected in its valuation, which remains near its historical average forward P/E of 15.6x.

The Smartphone Market is Poised for a Sharp Downturn, with Diverging Fortunes Between Apple and Android. We forecast global smartphone shipments to decline 13% year-over-year in 2026. The downturn is exacerbated by a significant increase in memory costs and supply shortages, which will pressure margins, particularly for price-sensitive Android brands. Within this weak backdrop, Apple's supply chain demonstrates superior resilience. In 4Q25, Samsung and Honor were the only major Android brands to show positive shipment growth, while Apple sustained stable performance. Investment Implication: Investors should reduce exposure to generic Android component suppliers and favor companies with high exposure to Apple, such as AAC Technologies, which benefits from stable orders and improving product mix.

Key Risks

  • AI Demand Volatility: The transceiver growth forecast is contingent on continued, unbroken capital expenditure from hyperscalers on AI infrastructure. A delay or reduction in AI cluster deployments would directly impact demand.
  • Technology Disruption: The long-term migration from pluggable transceivers to co-packaged optics (CPO) or near-packaged optics (NPO) architectures poses a threat to the traditional merchant transceiver model, though this is a 2030+ risk.
  • Smartphone Inventory Cycle: The analysis indicates inventory restocking in 4Q25. A failure in demand recovery could lead to a prolonged inventory correction, extending the downturn beyond 2026.
  • Geopolitical and Regulatory Actions: Expanding U.S. sanctions or export controls could disrupt supply chains for both AI components and smartphones, affecting companies across both sectors.

Valuation and Trade Implications

The investment thesis calls for a barbell strategy: overweight AI infrastructure and Apple supply chain, underweight Android-exposed names.

  • AI Transceivers: Favor Eoptolink (300502.SZ) as a direct share gainer in a high-growth TAM. Its valuation does not yet price in the steepening growth curve from 800G/1.6T adoption.
  • Smartphone Supply Chain: Prefer Apple suppliers like AAC Technologies (2018.HK), which is showing margin recovery driven by content gains and a stable customer base. Avoid or underweight suppliers heavily reliant on Android OEMs like Xiaomi, OPPO, and Vivo, which face intense competition and margin pressure, particularly with Huawei's re-emergence in China.
  • Cross-Over Plays: Companies like BYD Electronic (0285.HK) are successfully diversifying from consumer electronics into higher-growth areas like automotive ADAS systems, providing a defensive growth profile amidst smartphone weakness.

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