Source Photonics, a subsidiary of a Chinese electronics manufacturer, plans to invest $1.2 billion to expand its production capacity for optical chips and modules. The company aims to enhance the capabilities of its manufacturing facilities, including its plant in Changzhou, to meet the rising demand driven by the rapid growth of the artificial intelligence computing sector. Details regarding product types and production volumes were not disclosed.
The company operates a factory in Hsinchu, China’s Taiwan region, specializing in optical chip wafers and other upstream components, a facility in Changzhou primarily producing midstream items like optical chips and parts, and another in Chengdu focused on downstream optical modules. Additionally, a new plant in Thailand has yet to begin mass production.
This expansion will increase output of premium optical chips and modules, helping to fulfill medium- and long-term supply needs of downstream AI server clients, and is expected to boost overall financial performance. The parent company’s shares rose by 2.5% to CNY 255.20 (USD 37.76) per share as of early afternoon trading in Shenzhen, with an earlier peak increase of 6.8%.
Initially known for printed circuit boards, optoelectronic display products, and precision components, the parent company completed the acquisition of Source Photonics last September. Since then, its stock has surged approximately 260%.
The acquisition allows the company to quickly penetrate the optical communications market while leveraging combined customer bases, manufacturing know-how, and supply chain advantages. In the first quarter, Source Photonics contributed 16% of the parent company’s revenue and 53% of its net profit.