Jefferies: Optical Module Market to Triple by 2027, 1.6T Still 30% Shortage

According to Jefferies' optical expert conference call on July 15, the optical module market will double in 2026 and triple in 2027, but 1.6T optical modules will continue to face a 30% shortage from 2026 to 2027. 800G optical module shipments in 2026 are expected to be approximately 40-42 million units, with demand exceeding 45 million units, resulting in a gap of about 10%; 1.6T optical module shipments in 2026 are expected to be approximately 18 million units, with demand around 26 million units, resulting in a 30% gap. Upstream DSP and 200G EML chips are monopolized by US and Japanese vendors such as Broadcom, Marvell, Lumentum, and Sumitomo Electric, and Chinese domestic substitution will take time. Indium Phosphide (InP) is a key link, with 70% of global supply located in China; Yunnan Germanium is a core target. Desay Battery's 200G EML is expected to enter mass production in the second half of 2026, which is a key node for domestic substitution. Jefferies believes optical module demand is certain, but the upstream supply landscape determines profit distribution; the InP supply chain and 200G EML breakthrough progress are worth focusing on.