Galaxy Securities Sees AI-Driven Structural Shift in Optical Communications

Galaxy Securities said the optical communications industry is undergoing a structural change driven by surging AI computing demand, with growth now supported by technology upgrades and higher capital spending rather than traditional cyclical swings. The brokerage said major cloud providers and AI companies around the world have continued to raise budgets for computing infrastructure, directly driving non-linear growth in demand for high-speed optical modules, according to Jiemian News. The report said penetration of high-speed products in data communications is accelerating from 2026, while 1.6T products have entered mass delivery. It added that strong demand is supporting capacity release and earnings realization across the supply chain, with capacity improvements having become quarter by quarter since the start of the year. Although shortages of upstream raw materials persist, the report said the shortage gap may keep narrowing as domestic substitution deepens.