--- title: "First Introduction to the Optical Communication Industry" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39925290.md" description: "Every video you scroll through on your phone, every message you send, has gone through a journey you might not have imagined—data travels from your phone as an electrical signal to a base station, is then converted into a beam of light, races through a glass fiber thinner than a strand of hair, and finally arrives at a data center thousands of miles away. The core of this journey is optical communication. What is optical communication? Simply put, it's using light to transmit information. It uses light waves as the carrier and optical fibers as the transmission channel. Why use light? Because it's fast and travels far..." datetime: "2026-04-15T08:56:16.000Z" locales: - [en](https://longbridge.com/en/topics/39925290.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39925290.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39925290.md) author: "[百科君](https://longbridge.com/en/profiles/26848909.md)" --- # First Introduction to the Optical Communication Industry Every video you scroll through on your phone, every message you send, has undergone a journey you might not have imagined—data travels from your phone as an electrical signal to a base station, is then converted into a beam of light, races through a glass fiber thinner than a strand of hair, and finally arrives at a data center thousands of miles away. The core of this journey is optical communication. ## What is Optical Communication? Optical communication, simply put, is the use of light to transmit information. It uses light waves as the carrier and optical fibers as the transmission channel. Why use light? Because it's fast and travels far. Currently, the communication methods we use daily can be roughly divided into three types. Radio communication, such as mobile phone signals and WiFi, relies on electromagnetic waves propagating through the air. The advantage is flexibility and convenience, but the drawbacks are limited bandwidth and susceptibility to interference. Wired electrical communication, commonly known as network cables (copper cables), is more stable than radio, but copper wires attenuate signals, causing speed to drop sharply over long distances, and copper itself is expensive. Optical communication is completely different. An optical fiber is an extremely thin glass fiber where light propagates through the principle of total internal reflection—a simple analogy is like a marble bouncing forward inside a smooth pipe, hardly leaking out. Optical fibers have enormous bandwidth and minimal signal attenuation, allowing a single fiber to transmit massive amounts of data simultaneously. To draw an analogy: if copper wires are country roads, then optical fibers are twelve-lane highways. But there's an unavoidable problem here: your phone, computer, and servers all process data using electrical signals. No matter how good light is, electronic devices don't understand it. This leads to a crucial role in the optical communication industry chain—the optical module. ## Optical Module: The Translator Between Light and Electricity The function of an optical module, to put it simply, is to translate electrical signals into optical signals, or vice versa. It typically consists of two parts: the transmitter (TOSA) is responsible for converting electrical signals into optical signals and emitting them, while the receiver (ROSA) is responsible for receiving optical signals and restoring them to electrical signals. Specifically, for a single communication process, it roughly goes like this: You send a message from your phone, the phone converts this message into an electrical signal, and transmits it via radio waves to a nearby base station. After the base station receives the electrical signal, the TOSA of the optical module converts it into an optical signal. The optical signal enters the optical fiber and races all the way to the data center. Upon arrival at the data center, the ROSA of the optical module converts the optical signal back into an electrical signal, which the server can then read and process. This process seems simple, but the technology behind it is far more complex than imagined. The optical module also contains many sub-components. Among them, optical chips are responsible for generating and receiving optical signals (e.g., lasers and photodetectors). Optical components (such as lenses, beam splitters, etc.) are used for coupling, distributing, and modulating optical signals. The optical module integrates these core components with the circuit system to form a directly applicable communication component. ## Key Players in the Optical Communication Industry Chain We can look at it from upstream, midstream, and downstream: Upstream is optical chips and optical components. This is the segment with the highest technical barriers. $Coherent Corp.(COHR.US) and $Lumentum(LITE.US) are the two most representative American companies in this field. Their products cover core components like laser chips and optical engines, directly determining the performance ceiling of optical modules. In March 2026, $NVIDIA(NVDA.US) announced investments of $2 billion each in Coherent and Lumentum to advance silicon photonics technology, also reflecting the importance of the upstream segment in the AI era. Midstream is optical modules and network equipment. $Fabrinet(FN.US) is one of the world's largest optical module contract manufacturers, assembling products for most leading optical module brands. In terms of finished optical modules, Chinese companies dominate globally, with InnoLight being one of the world's largest optical module manufacturers by shipment volume. On the network equipment side, $Cisco(CSCO.US) is a traditional giant, having acquired Acacia as early as 2021 to complement its high-end coherent optical transmission technology. $Arista Networks(ANET.US) is a strong competitor in the data center network equipment field, with continuous growth in major customer orders in recent years. Downstream is data centers and telecom operators. Hyperscale cloud vendors like Microsoft, Amazon, Google, and Meta are the ultimate demand side for optical modules—every new AI data center built requires the purchase of a large number of optical modules to connect tens of thousands of GPU servers. ## Why is Optical Communication So Hot Right Now? The core factor driving the optical communication industry into a "super cycle" is AI. The demand for data transmission bandwidth for large model training and inference is growing almost exponentially. Thousands or even tens of thousands of GPUs need high-speed interconnection to work together. Copper wires suffer severe attenuation and excessive power consumption at high speeds, making optical interconnection almost the only solution. According to LightCounting's forecast, the global optical module market will continue to grow in 2026, with shipments of 800G optical modules expected to more than double, and 1.6T optical modules beginning to move from small batches to volume shipment stages. But is it really that simple? Not necessarily. The optical communication industry also faces some structural risks. Technology roadmaps are still evolving rapidly, with multiple solutions coexisting, including the current mainstream pluggable optical modules, CPO (Co-Packaged Optics), OCS (Optical Circuit Switching), etc. Uncertainty remains about which path will ultimately prevail. Furthermore, the optical module industry has strong cyclical characteristics, with demand concentrated from a few hyperscale cloud vendors. Once these customers slow down their capital expenditure pace, the entire industry chain will be impacted. But it's undeniable that optical communication is the invisible yet critically important "highway" in today's AI infrastructure—without it, even the strongest computing power would just be isolated islands fighting their own battles. ### Related Stocks - [META.US](https://longbridge.com/en/quote/META.US.md) - [CSCO.US](https://longbridge.com/en/quote/CSCO.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [LITE.US](https://longbridge.com/en/quote/LITE.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [FN.US](https://longbridge.com/en/quote/FN.US.md) - [ANET.US](https://longbridge.com/en/quote/ANET.US.md) - [COHR.US](https://longbridge.com/en/quote/COHR.US.md) - [300308.CN](https://longbridge.com/en/quote/300308.CN.md) ## Comments (4) - **Mk77163 · 2026-06-04T23:58:33.000Z**: Nokia - **_3Mqugq · 2026-05-16T18:34:18.000Z**: Everyone is standing in the light - **0x123456 · 2026-04-15T12:37:12.000Z**: InnoLight has surged dozens of times and is already worth trillions. - **superwong · 2026-04-15T11:10:06.000Z**: Read