Glonghui, May 21丨Changguang Huaxin (688048.SH) unveiled at the 19th “China Optics Valley” International Optoelectronics Expo on May 16-18, 2023, and released 56G PAM4 EML optical communication chips to enter the high-end optical chip market. Guohai Securities May 20 Research Report review: The 56G PAM4 EML optical communication chip is the core device for interconnecting optical modules in current 400G/800G supercomputing data centers. The single-wave 100Gbps (56Gbaud four-level pulse amplitude modulation (PAM4)) electroabsorption modulator laser diode (EML) chip released by Changguang Huaxin: ① Using a spine waveguide structure, it supports rough wave division multiplexing (CWDM) of four wavelengths (1271, 1291, 1311, and 1331 nm) to achieve optical signal transmission of different wavelengths in a single optical fiber, effectively reducing the number of optical fibers required; ② It can achieve a transmission rate of 400 Gbps when using 4 chips, or can achieve a transmission rate of 400 Gbps when using 8 chips 800Gbps transmission Rate capability; ③ The modulation rate in the electrical absorption modulation zone reaches 56GbD, and the 56Gbd PAM4 signal can be used to support 112 Gb/s, which has the advantages of low threshold current and a wide operating temperature range. The 56G PAM4 EML optical communication chip complies with RoHS standards and Telcordia GR-468 standards, and is the core device of 400G/800G supercomputing data center interconnect optical modules. The booming development of the AI industry is expected to drive the market demand for high-end optical chips. The release of the 56G PAM4 EML chip means that Changguang Huaxin has achieved horizontal expansion in the field of optical communication. In 2023, the company will increase the progress of its optical communication business, mainly 10G and 25G products; at this stage, the company mainly provides EML chips and plans to develop silicon optical platforms later. Currently, the optical communication business accounts for a relatively low revenue share. It has just started, and the product line layout is gradually improving. High-end optical chip products may be ready to go, and the pace is worth paying attention to. According to the company's development situation, adjusted profit forecasts, the company's operating income is expected to reach 6.50/951/1,294 billion yuan in 2023-2025, a year-on-year change of +68%/+46%/+36%. The net profit of the mother is 2.12/3.16/440 million yuan respectively, up +78%/+49%/+39% over the previous year, corresponding to PE in 2023-2025 67/45/32 times, respectively. Changguang Huaxin is a leading semiconductor laser chip company in China. It is expected that it will continue to benefit from the increase in the localization rate of semiconductor laser chips in the future. Maintain a “buy” rating.