China optical firms target photonics with mixed high-end, lower-cost push

The spotlight on optical communications at CIOE2026 reflects a dual trend in China's semiconductor supply chain: moving toward both high-end capabilities and cost efficiency. Upstream, chip design and fabrication face mounting pressure to advance laser and photodetector technologies, while also meeting surging demand for domestic substitution. Midstream optical module firms are investing heavily in high-bandwidth, low-power solutions to support data center and 5G infrastructure growth. From a policy standpoint, the U.S.-China tech decoupling trend is pushing companies to prioritize supply chain resilience, especially in critical materials and equipment sourcing. Internationally, firms like Ciena and Finisar may accelerate local production or partnerships to maintain market share. Over the next 12–24 months, the optical communications sector will see rapid technological advancement alongside cost pressures, with leading players likely to gain market share through technological leadership and supply chain integration.