Huafu Securities: AI big model training enters the “10,000 card cluster” era, OCS switches are expected to enter the fast track of development

The Zhitong Finance App learned that Huafu Securities released a research report saying that as AI large-scale model training enters the “10,000 Card Cluster” era, traditional network architectures based on electricity exchange are facing bottlenecks with high network power consumption and high bandwidth requirements. The “all-optical switching” mechanism of OCS switches fundamentally guarantees the ultimate bandwidth and forward-looking compatibility of the network. Currently, the mainstream commercial OCS switches are MEMS technology solutions, accounting for more than 70%. In terms of core links, a number of excellent OCS core component suppliers have emerged in China, and their business covers core components such as MEMS galvanometers, lenses, and optical devices.

The main views of Huafu Securities are as follows:

OCS switches have a wide range of application scenarios, benefiting from large-scale AI training and application

As AI large-scale model training enters the “10,000 Card Cluster” era, traditional network architectures based on power exchange are facing bottlenecks with high network power consumption and high bandwidth requirements. OCS switch is a network device that directly exchanges and path reconstructs optical signals in the optical domain. Its core is to establish an end-to-end pure optical physical channel. The “all-optical switching” mechanism makes it completely transparent to signal rates, protocols, and modulation formats, and can seamlessly carry services from 400G to 1.6T and above, fundamentally guaranteeing the ultimate bandwidth and forward-looking compatibility of the network.

Looking at the overall scale, according to QY Research, the global all-optical switching (OCS) switch market grew from 72.78 million US dollars in 2020 to 366.47 million US dollars in 2024. The compound growth rate (CAGR) from 2020 to 2024 was 49.80%. It is expected to reach 2022.21 million US dollars in 2031, and the compound growth rate (CAGR) from 2025 to 2031 is 17.12%.

Currently, commercial OCS switches are mainly MEMS technology solutions, and Google is the world's largest OCS switch manufacturer

MEMS solutions are currently the mainstream of the market, accounting for more than 70%, and are particularly widely used by companies such as Google. Google will introduce this technology in its traditional data centers in 2022, and will apply it to the TPU V4 in 2023, and plans to further promote it in the 2025 TPU V5P. According to QY Research, the OCS switch market for MEMS technology solutions in 2024 is 192.36 million US dollars, accounting for about 52.49% of the total all-optical switching (OCS) switch market. It is expected to reach 836.79 million US dollars in 2031, and the global share will decrease to 41.38% at that time.

Domestic manufacturers actively participate in the development and manufacture of OCS switches

On the whole machine side: At the 2024 Huawei Full Connectivity Conference, Huawei launched its latest all-optical switch, the Huawei OptiXtrans DC808; Ling Yunguang participated in OCS complete machine development and represented the piezoelectric ceramic route; in addition, Zhongji Xuchuang, Optical Bank Technology, and Decolly participated in the manufacture and development of OCS switches through self-development or OEM. In terms of core links, a number of excellent OCS core component suppliers have emerged in China, and their business covers core components such as MEMS galvanometers, lenses, and optical devices. China has the ability to cover the entire industrial chain from parts to manufacturing.

It is recommended to focus on the OCS industry chain

Siwei Electronics (300456.SZ), Xinyi Lianke (688582.SH), Juguang Technology (688167.SH), Changxin Bochuang (300548.SZ), Tengjing Technology (688195.SH), Taichenguang (300570.SZ), Zhongji Xuchuang (300308.SZ), Optical Bank Technology (300620.SZ), Guangxun Technology (002281.SZ), Gongjin Shares (), Decolly (Dubai), Ling Yunguang (Shui). 603118.SH 688205.SH 688400.SH

Risk Alerts

AI progress falls short of expectations, downstream demand falls short of expectations, and the development of the OCS industry falls short of expectations.