Great Wall Fund's Liu Jiang: Focus on optical communication and other AI computing power niche areas

Recently, the optical communications concept has been active again and again, and sector sentiment has continued to climb. In a media interview recently, Liu Jiang, fund manager of Great Wall Jiu Xiang Fund, said that technology growth is still expected to be the market’s main storyline this year, and that the “shovel sellers” of the AI industry—namely the fields related to compute infrastructure—will become a key area of focus for his in-depth efforts. Among the sub-directions in the compute power supply chain, he is particularly interested in the optical communications sector.

“Since the compute power supply chain is the ‘shovel’ segment in the AI industry, it is expected to continue to benefit from demand growth driven by industry development.” Liu Jiang believes that the market’s prior concerns about capital expenditures of leading manufacturers stem from static thinking. In fact, as large-scale models continue to iterate and as AI application ecosystems develop, compute power demand and capital expenditures are expected to form a dynamic positive feedback loop. The explosion of downstream applications will continue to drive the construction of compute power infrastructure, and improved compute power supply can in turn fuel the prosperity of the application ecosystem. As the core foundation of the AI industry, the compute power supply chain is expected to continue to benefit from industry expansion.

In the sub-directions of the compute power supply chain, Liu Jiang focuses on the optical communications sector. His reasons are not only that compute power demand is growing, but more importantly that the optical communications technology itself is undergoing significant changes. He pointed out that from the perspective of the underlying logic of the industry, as a key link in the AI compute power supply chain, optical communications has shown an upward trend in its long-term penetration rate. The development of emerging solutions such as OCS, NPO, and CPO promoted by overseas tech giants also fully demonstrates the importance of optical interconnect, further driving continuous increases in the value amount of optical interconnect.

“Optical communications is experiencing a surge in business conditions, showing an outlook that it may even surpass the overall compute power industry chain. Both the industry-chain data and the logic of technological substitution verify its current investment value.” Liu Jiang said that as compute power card performance continues to expand and compute power clusters keep getting larger, requirements for interconnect speed, bandwidth, and power consumption are continuously increasing. With its performance characteristics, optical interconnect is expected to penetrate into more scenarios such as scale up, as well as larger markets, through emerging forms such as NPO and CPO.

Regarding the market concern that CPO solutions would encroach on the optical module market, Liu Jiang believes this is more an impact at the narrative level. For domestic optical module leading companies, there has not yet been any substantive change in fundamentals. Under the drive of strong industry-wide high sentiment, all technical solution routes are showing strong development momentum.

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Editor: Liu Wanli SF014