Value Investing: Latest Industry Research Report – HC SemiTek (4979-TW) and United Monolithic (3450-TW) Benefit from AI Data Center Transmission Upgrades Driving Demand for High-Speed Optical Communication

Recently, stocks in the optical communications sector have surged strongly, with long-term investors viewing any pullbacks as buying opportunities. As AI server computing speeds increase, data transmission must also upgrade. Data centers are currently transitioning from 400G and 800G to 1.6T—higher numbers indicating greater data throughput per unit of time. Traditional copper cables are increasingly limited by transmission distance, power consumption, and heat dissipation, leading to greater fiber optic adoption. HC SemiTek (4979-TW) and United Monolithic (3450-TW) are direct beneficiaries of this trend.

This demand is not limited to emerging technologies still in development. 800G optical modules are already being mass-produced, while 1.6T modules have entered customer testing and mass production preparation. Currently, fiber optics are primarily used for high-speed transmission between server racks. If internal rack connections also shift toward greater fiber usage, demand for optical modules, laser components, and packaging will rise further.

First, consider HC SemiTek (4979-TW). The company specializes in medium-to-long-haul optical modules for data centers. Its 400G products already have a solid shipment base, and its 800G products have passed certification with major North American cloud customers, entering small-volume shipments. According to brokerage reports, volume shipments are expected to ramp up from Q3 2026, with more significant growth anticipated in 2027.

HC SemiTek has integrated capabilities spanning laser chip materials, laser dies, and optical module assembly, and also handles backend laser processing. Faster transmission speeds require more high-speed lasers and precision packaging per module. The company plans to increase its monthly laser production capacity from 1.5 million units in Q4 2026 to 3–4 million, then to over 6 million units by 2027. To support future expansion, it has acquired a factory in Bade.

Next, examine United Monolithic (3450-TW). The company primarily provides laser packaging contract manufacturing, with products shifting from traditional packaging to high-speed laser die packaging and external laser source modules. These new products require higher packaging precision and testing standards, resulting in higher unit prices and gross margins—making them the core of the company’s recent product transformation.

A single high-speed optical module requires approximately 4 to 8 lasers, and faster transmission speeds increase packaging and testing demands. United Monolithic has increased its high-speed laser die packaging capacity fivefold this year compared to last year. Related products now account for over 60% of its optoelectronics division revenue, clearly shifting its operational focus toward AI-driven high-speed transmission.

In the short term, United Monolithic’s optical module capacity utilization was low in Q2 and Q3 but is expected to recover from Q4 onward. Laser packaging, however, remains in a supply-constrained state. Brokerage estimates project 2026 revenue of approximately NT$10.83 billion and EPS of NT$8.45, driven primarily by higher high-end laser packaging penetration and a rebound in optical module shipments.

HC SemiTek (4979-TW) focuses on laser dies, optical modules, and backend laser processing, while United Monolithic (3450-TW) specializes in high-end laser packaging and external light source modules. Although their entry points differ, both companies are benefiting from the growing demand for 800G and 1.6T solutions. To receive real-time stock alerts and identify optimal entry points, join Professor Qing-Long’s official LINE account by entering @ai8085 or clicking the link below for free intraday and post-market calls that help you master the present and foresee the future.

"Value Investing" Daily Post-Market Analysis Program

21 Free Stock Alerts Daily

Join the Value Investing LINE Official Account: https://lin.ee/3rueKmz

Source: Analyst Tsai Ching-Long – Moore Investment Advisory

The securities recommended by our company involve no improper financial interests. Past performance does not guarantee future returns. Investors should make independent judgments, conduct careful evaluations, and assume investment risks on their own.