Optical module companies plan to issue convertible bonds to expand production, aiding the construction of global AI infrastructure.

A certain optical module manufacturing company recently announced plans for the issuance of convertible corporate bonds to raise no more than 1.88 billion yuan. The funds will be used for two major projects: the Chengdu high-speed optical module expansion project (960 million yuan) and the new high-speed optical module project in Thailand (920 million yuan).

With the rapid growth of global computing power demand, the demand for optical modules, which are core components connecting servers and building AI computing power clusters, has also shown explosive growth. The AI era has placed higher requirements on the performance, quality, and supply stability of optical modules. In recent years, several leading domestic companies have made breakthroughs in the global high-end optical communication market with high-quality products and stable supply.

At the starting point of a new round of global technological revolution, optical modules, as a core component of AI, represent a capacity reserve that not only relates to the development of enterprises themselves but also is a crucial factor in determining China's discourse power in the global high-end manufacturing industry.

The financing round completed by the company in December 2020 (1.65 billion yuan) was used for the construction of high-speed optical module production capacity, laying the foundation for the company to seize the opportunities of the global AI wave. After the financing, the diluted ROE of the company continued to grow in 2021 and 2022, and in 2023, it stood out in the rapidly developing AI market thanks to the new production capacity. As an industry leader, the company has a keen grasp of the industrial cycle and capacity demand, and it is expected that this round of financing will further enhance the company's operational quality and industry position.

Currently, the development of AI overseas continues to accelerate. From the launch of new AI chips to the enhancement of AI model capabilities, industrial transformation is deepening continuously. Many technology giants are increasing their investments in AI infrastructure, which also brings more development opportunities for domestic leading optical module companies.

With the continuous driving demand for AI, the demand and market space for high-speed optical modules are expected to further expand, and high-speed products are likely to accelerate their release. However, investors should also be aware of potential risks such as AI development falling short of expectations, computational power demand not meeting expectations, and intensified market competition.