PETALING JAYA: The proposal by the United States to ban imports of new models of Chinese optical transceivers into the country is viewed as incrementally positive for the non-Chinese optical supply chain.
“This is true for particularly established US optical transceiver vendors such as Lumentum, Applied Optoelectronics and Coherent,” said Kenanga Research.
As hyperscalers place greater emphasis on supply chain resilience and national security, procurement is likely to continue shifting towards trusted non-Chinese suppliers.
Based on Kenanga Research’s compilation, Chinese vendors remain the dominant suppliers to major US hyperscalers (likely accounting for more than 50% of the optical transceiver market), highlighting the significant scope for market share reallocation should procurement shift towards non-Chinese suppliers.
“While the transition could result in higher procurement costs as customers replace lower-cost Chinese vendors, we believe the strategic priority of securing artificial intelligence infrastructure is likely to outweigh near-term cost considerations.”
Nationgate Holdings Bhd
and Inari Amertron Bhd have exposure to leading US optical customers, Kenanga Research said.
“Under our coverage, we see this development as incrementally positive for Nationgate, should the proposed restrictions eventually be implemented.
“During our recent site visit, management highlighted the firm’s continued investment in expanding its optical manufacturing capabilities. We believe the ongoing capacity expansion suggests a certain level of customer commitments is already in place, thereby reducing utilisation risk.”
It noted that the company is an established manufacturing partner to several leading US optical networking firms.
Should these customers gain incremental market share as procurement gradually shifts away from Chinese suppliers, Nationgate could see a corresponding increase in manufacturing volumes and capacity utilisation, it said.
Inari could also benefit through its optoelectronics segment, which accounted for approximately 36% of group revenue in the third quarter of financial year 2026.
A tech analyst told StarBiz the proposal could strengthen optical transceiver prices across the non-China supply chain.
Hong Leong Investment Bank (HLIB) Research said in a note that Inari’s datacom photonics growth is currently anchored by Broadcom Inc’s indium phosphide laser ramp, which it estimates could increase four to six times in the coming years.
It said the next leg of upside could come from Customer L, adding that the proposed ban strengthens the case for Customer L to accelerate capacity expansion through external manufacturing, increasing both the probability and potential value of outsourcing for Inari.
HLIB Research said the proposal remained subject to revision or withdrawal with the final details and criteria determining the extent of supply chain reallocation.
“We believe even if the proposal does not materialise, the recurring risk of a potential US regulatory ban on Chinese suppliers is enough to steer hyperscalers’ procurement toward securing non-Chinese capacity over the medium to long term.”
At last look, Nationgate and Inari were at RM1.37 and RM2.39, respectively.
