Recently, Zhongji Xuchuang provided commentary on the highly discussed and focused-on LPO in an investor relations event.

Zhongji Xuchuang stated that LPO, by eliminating the need for DSP chips, achieves low power consumption and low latency, proving effective in specific scenarios. While some customers are testing LPO, it requires specialized switch chips, and its ecosystem is relatively closed. Currently, there have been no LPO orders, indicating a potential delay or even lack of demand for this solution.

Additionally, Zhongji Xuchuang addressed rumors regarding major AI clients cutting orders for 800G. They clarified that after verification, the AI client did not reduce demand or cancel orders; on the contrary, they requested faster delivery of 800G. Moreover, Zhongji Xuchuang forecasts that shipments of 800G/400G will increase sequentially in the coming quarters, especially post-Q1 next year, where capacity and delivery ramp-up will be more evident.

Will the uptake of 800G affect the supply chain? Zhongji Xuchuang believes that due to the rapid adoption of 800G this year and continuous demand revisions, there have been shortages of DSPs, EMLs, and VCSELs successively. The company acted swiftly and placed orders timely, with significant DSP deliveries already by September, eliminating shortages. EMLs, primarily used for 800/400G single-mode, have been ordered, securing capacity. However, VCSELs, mainly for 800G/400G multimode, have relatively limited supply, leading to temporary shortages. The industry is actively introducing more VCSEL supply channels, expected to gradually alleviate shortages next year.

According to data, Zhongji Xuchuang achieved a Q3 revenue of 3.026 billion, a 14.9% year-on-year increase, with a quarterly net profit attributable to the parent company of 680 million, an 89.45% year-on-year increase. In Q3, 800G product revenue contribution ranked first, with 400G revenue contribution second. The growth in shipments and revenue of 800G is significant, with expectations for further revenue growth in Q4. It is anticipated that 800G and 400G will dominate the revenue share for the entire year of 2023.