CITIC Construction Investment: CPO/NPO drives FAU volume and price to double rise, manufacturers benefit from the expansion of traditional optical module demand and next-generation CPO/NPO architectures

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that FAU is a key passive device to achieve optical coupling. The traditional solution is mainly in the MT-FA form. With the iteration of high-density optical interconnection solutions such as CPO/NPO, FAU shows a trend of high channel and high density. Channel expansion and core pitch compression bring increased process difficulty and pressure on yield, driving up value. Traditional pluggable optical modules drive steady growth in demand for basic FAU. As CPO/NPO industrialization continues to advance, demand for high-channel FAU will also explode. FAU related manufacturers will also benefit from the expansion of demand for traditional optical modules and the volume-price increase dividends brought by next-generation CPO/NPO architectures.

CITIC Construction Investment's main views are as follows:

FAU is a key passive device to achieve optical module/light engine coupling

There is a natural mismatch between single-mode optical fiber and silicon optical waveguide in mode field size, shape, and polarization, and direct coupling loss is serious. FAU relies on V-slots to achieve micron-level positioning of multi-channel optical fibers, and uses microlenses to complete mode field conversion to achieve batch coupling between optical fiber and silicon optical PIC. Traditional optical modules use the MT-FA form, and CPO/NPO places higher requirements on the number, density, and alignment accuracy of FAU channels.

The iteration of CPO/NPO technology drives the volume and price of FAU to rise sharply, and AI computing power drives the rapid growth of the industry

The architecture iterates from pluggable modules to CPO/NPO, increasing the number of FAU channels and decreasing processing yield, boosting ASP. Traditional MT-FA mostly has 4/8/12/16 channels and 250 μm core pitch; CPO/NPOFAU has been upgraded to a high density core pitch of 127/80 μm, such as 32/36/42 channels, the scale of the number of channels has increased, the difficulty of processing, fiber removal, alignment, and curing of multi-channel arrays has increased simultaneously, yield is under pressure, and the unit price of the final product has jumped multiple steps. According to Aidtech's prospectus forecast, the market size of CPO optical fiber array units is expected to reach 21.3 billion yuan in 2030, and the industry space is broad.

Parallel evolution of multiple FAU technology routes

1) 1D/2D FAU: Traditional MT-FA mostly has a one-dimensional linear arrangement; for high-bandwidth CPO switches such as 51.2T/102.4T, FAU compresses channel spacing on the one hand, and develops two-dimensional matrix fiber arrays on the other hand to increase optical interconnection density. 2) Fixed/detachable D-FAU: The traditional FAU is permanently cured through glue, and the light engine needs to be replaced as a whole; the next-generation CPO solution evolves to a detachable D-FAU. Using a separation base+positioning plug+FAU structure, the FAU can be replaced separately to preserve the light engine body and reduce operation and maintenance costs. 3) Edge coupling/vertical grating coupling: Grating vertical coupling is compatible with multiple rows of optical fibers, supports wafer-level testing, and has a larger alignment tolerance, but has high insertion loss and polarization sensitivity; edge coupling enters light horizontally from the side of the chip, and has the advantages of low insertion loss and multi-wavelength adaptation, but the alignment requirements are strict and are greatly affected by thermal drift. Generally, it is a one-dimensional array.

FAU benefits from AI computing power and CPO/NPO industrialization, and the market space is highly flexible

Domestic manufacturers have entered the global supply chain through multiple channels: some manufacturers directly connect with end customers; some manufacturers enter the supply chain as Tier 2 suppliers and rely on Tier 1 solutions; others choose upstream core component cards to lay out key structural components such as V-slot substrates and microlenses. The bank is optimistic that domestic manufacturers will continue to make breakthroughs in technology, structural parts, automation, etc., and suggests focusing on the FAU industry chain.

Risk warning: the risk of AI development falling short of expectations, the risk of technological innovation, the risk of changes in the competitive landscape, the risk of cyclical industry fluctuations and macroeconomic downturn, and the risk of international trade friction.