BEIJING, June 7 (Xinhua) -- With the global push for AI computing power unleashing an unprecedented wave of infrastructure buildout, China-made optical modules that shuttle data and the chips that process it have become critical links. Featuring the world's leading market shares and accelerating upgrades, China's tech supply chains have become essential to sustaining global AI growth.
Numbers speak for themselves. Chinese firms claim seven spots among the world's top 10 optical module vendors, with their combined market share exceeding 60 percent globally, according to LightCounting, a research firm. In the first four months of 2026, China exported 117 billion integrated circuits worth 103.5 billion U.S. dollars, up 83.7 percent in value year on year. Export orders for optical modules have stretched into 2028.
Behind these figures lies a deeper shift: China is no longer just participating in the AI supply chain, but offers a supply chain that stabilizes global AI infrastructure.
OPTICAL MODULES FIRST
If AI is the brain, optical modules are the nerves -- converting electrical signals to light and back at blinding speed, shuttling data between servers inside data centers and across continents. A single 1.6-terabit optical module can transmit 95 high-definition movies in one second.
Chinese firms are leading the market. Zhongji InnoLight, based in Yantai in east China's Shandong Province, held over 40 percent of the global 800G optical module market and an estimated 50 to 70 percent of the 1.6T segment last year, securing first place for four consecutive years. Eoptolink, InnoLight's cross-province rival in Chengdu in southwest China, ranked second.
Both companies have secured their positions in the supply chains of companies building the AI clusters that are reshaping the global economy, such as NVIDIA, Google and Amazon. Delivery cycles that once took 12 weeks have been compressed to eight or fewer, as North American clients race to beef up computing capacity measured in weekly increments.
Customs data show that in March 2026, China's average export price of optical modules rose 23 percent year on year, while fiber and cable exports soared 263.8 percent in value year on year, with the average export price surging 204.3 percent.
Huagong Tech, an optical module manufacturer based in central China's Wuhan, launched the world's first 12.8-terabit XPO module in March, bundling the capacity of eight 1.6T modules into a single unit tailored for next-generation AI clusters of 100,000-plus GPUs.
Ma Xinqiang, the company's chairman, noted that the North American market for 1.6T modules alone has surpassed 20 billion U.S. dollars, while the global market will far exceed 30 billion U.S. dollars this year.
THE CHIP RISE
The chip story is newer but no less striking. China produced 127.2 billion integrated circuits in the first quarter of 2026, up 24.3 percent year on year and amounting to roughly 14 billion chips a day.
High-value products have become the mainstay of China's chip exports. In April alone, export value doubled to 31.1 billion dollars, an increase of 100.1 percent year on year, while export volume edged up merely 3.8 percent. Industry insiders said that such a gap, rarely seen in China's chip trade, signals a systemic revaluation of export product value rather than simple volume growth.
Among the country's leading chipmakers, SMIC ran at 93.1-percent capacity utilization in the first quarter of 2026, while Hua Hong Semiconductor saw its net profit attributable to parent company shareholders up 458.1 percent year on year to reach 20.9 million U.S. dollars, with its capacity utilization rate staying high at 99.7 percent.
Equally significant is what is happening on the equipment side. According to data from the China Semiconductor Industry Association, the domestic semiconductor equipment localization rate climbed from 25 percent at the end of 2024 to 35 percent in 2025. On new wafer-fab production lines, domestically made equipment accounted for 55 percent of total procurement value by the end of 2025, exceeding the national 50-percent target ahead of schedule, official data revealed.
CONVERGENCE & RESILIENCE
Optical modules and chips are not parallel stories but converging ones. The same AI boom that is driving insatiable demand for high-speed optical interconnects is also reshaping the chip landscape: MOS memory sales surged 236.4 percent in the first quarter of the year, while sales of logic chips increased by 40.1 percent, according to a recent report by the European Semiconductor Industry Association.
The phrase "compute-power coordination" entered China's government work report for the first time this year, with a CICC research report identifying it as a major industrial trend driven by soaring AI demand and the low-carbon energy transition.
The vehicle-chip nexus adds another dimension, meanwhile. Each new-energy vehicle features more than 1,000 chips, roughly double that of a traditional car. Chinese companies have outperformed foreign rivals in power semiconductors and are gaining ground in cabin-entertainment and body-control chips, though high-end autonomous-driving SoCs remain a work in progress, said Liu Quan, deputy chief engineer of the China Center for Information Industry Development.
The competitiveness of optical modules also largely hinges on the synergy of the complete upstream industrial chain, covering optical chips, ceramic packages and precision structural components. China has formed highly concentrated industrial clusters in the Yangtze River Delta, the Pearl River Delta and the Wuhan Optics Valley, where the localization rate exceeds 90 percent. This has enabled cost control and mass-production yields to reach world-leading levels.
Zhang Zhe, a researcher at the Electronic Information Research Institute under the China Academy of Information and Communications Technology, said the large-scale construction and expansion of AI data centers worldwide has generated rigid hardware demand.
While overseas manufacturers face supply-side constraints and limited capacity expansion, he said, Chinese manufacturers, backed by sufficient raw material supplies and a complete industrial chain, can rapidly respond to this round of demand explosion. ■
