Morgan Stanley: US Plans to Restrict Chinese Optical Module Components, Coherent and Other Non-Chinese Suppliers Face Substitution Window

TechFlow news, according to Chaoxiang Research, Reuters reported on August 4 that the Trump administration and the FCC are preparing to restrict Chinese data center components from entering the US, with optical modules specifically mentioned. Morgan Stanley's research report on the same day pointed out that InnoLight and Eoptolink jointly occupy about 50% of the optical module market share; if the ban is implemented, this portion of demand will shift to non-Chinese suppliers. Coherent (COHR) is the biggest beneficiary, Lumentum (LITE) indirectly benefits from the continued tight supply of EML, and Applied Optoelectronics (AAOI) and Fabrinet (FN) also have the capacity to take over.

Morgan Stanley believes that the short-term implementation of the ban faces two major bottlenecks: non-Chinese manufacturers' capacity cannot quickly fill the demand gap; Indium Phosphide (InP) substrates rely on Chinese AXTI, Lumentum just signed a new supply agreement last week, and one of the purposes of Coherent's CEO visiting China several months ago was to ensure InP supply. The ban will cause a supply shock in the short term, but is beneficial for the restructuring of the non-Chinese supply chain in the long term.