Zhongji Xuchuang quickly clarifies: The CSP client directly places orders with the company, and there is no bypassing of the intermediary layer for order transfer.

On February 11, a widely circulated screenshot on social media claimed that the order flow for optical module companies has changed, with CSPs bypassing companies (such as Zhongji Xuchuang) by placing orders directly with upstream laser equipment manufacturers like Lumentum, and then Lumentum designating module/assembly factories, thus skipping intermediate layers and reducing the gross profit margins of Chinese module manufacturers.

CSP refers to large cloud service providers such as Google, Amazon, Microsoft, Meta, and other tech giants.

This online “small article” sparked market concerns about leading optical module companies. On February 11, the stock prices of Zhongji Xuchuang, New Ease, Guangku Technology, and other optical module concept stocks all declined to varying degrees. Among them, Zhongji Xuchuang, which was specifically mentioned, fell by 4.28%.

In response, some investors asked Zhongji Xuchuang on the interactive platform to have the company’s secretary of the board come out quickly to clarify the rumors.

Zhongji Xuchuang stated on the interactive platform that optical module products are customized and developed by optical module manufacturers according to the data center network needs of CSP customers. This requires optical module manufacturers to have efficient R&D capabilities, mature manufacturing processes, sufficient production capacity, and large-scale manufacturing and delivery capabilities. Only after strict product testing, qualification certification, and factory audits by CSP customers can they become qualified suppliers in the CSP supply chain. Therefore, CSP customers place direct orders with the company, which manufactures and delivers directly to the CSP customers. This business model has not changed. There is no situation where CSP customers place orders with upstream optical chip manufacturers, bypass the company, and then transfer orders to designated module/assembly factories for optical chips.

Source: Shanghai Securities News

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